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i am concerned about the question of ALLOCATIONS of of "Nest egg funds." Does the old rule of thumb "take your age (e.g., 60) and put that into "safe" investments (i.e., 60% in Bonds plus Money Market),and with the remaining funds (in this e.g. 40%) into stock funds.

It appears to me that this "rule" is of little to NO value! It does not account for your need for growth (so you don't outlive your money), or on the other side of the coin - being you don't need this for living expenses, but wish to share your good fortune with your children, etc. - so they can spend it and have a good time after you are gone! Any thoughts ?


I share your misgivings about this allocation rule. It seems to me that instead of a rule like that, a more appropriate one would be:

* Estimate the length of the longest "dip", "bear market", etc., that you would need to live through.
* Put the amount of money that you need from your investments to live on for that period from your portfolio into something liquid and safe, such as a money market fund.
* Keep the rest invested in stocks.
* If the market tanks some year, live off the money in the money market fund.
* Otherwise, sell only enough stock to top up the money market fund.
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Estimate the length of the longest "dip", "bear market", etc., that you would need to live through.
* Put the amount of money that you need from your investments to live on for that period from your portfolio into something liquid and safe, such as a money market fund.


Thanks for this advice.
It has helped me see something that has, gut feel, been nagging at me.

What this says (at least to me) is that you cant do allocation on a percentage basis, cause somewhere it will have to deal with just total bucks (the amount YOU will need to weather a storm) which could be any percentage of what your worth (depending on how much you are worth).

Anyhow, thanks, you just made my day, or at least sure validated a dislike I have for the percentage allocation pie charts that seem to be all that I can find from advice type software/people.

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* Put the amount of money that you need from your investments to live on
for that period from your portfolio into something liquid and safe, such as a
money market fund.


I agree with your overall point.

If the above reserve runs for several years I would lean toward investing in bonds (not bond funds) with a laddered maturity. Could also use CD's.
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