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Author: joew3 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74759  
Subject: Porfolio Diversification Date: 11/19/1998 9:39 PM
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Any thoughts (or experience) with how to split up an IRA for Income Production and of course Capital Preservation?

Something about $450K in size. My first thought was to put the whole thing in either FF or HY10. But, I am not too sure if that is a good idea.

I ran a bunch of tests through a spreadsheet (with FF and HY10 returns) using a number of different starting years to get an idea how various time periods affected the bottom line and most looked pretty good.

But I am still not sure if a single approach for the entire portfolio is Foolish.

Thanks for any input.

Joe
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Author: zgriner Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6683 of 74759
Subject: Re: Porfolio Diversification Date: 11/19/1998 10:47 PM
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Capital preservation implies that you can't tolerate it if your capital value goes down. This will happen with the FF4, HY10, BTD5, etc.

If you like the DDA, but are leary about the lack of diversification, you can also use the method on other stock collections. There is also Beat the S&P, Beat the Money 30, etc. Here is a calculator you can use to determine the stocks: http://www.serve.com/tsmith/dda/strat.cgi.

If you are relying on the $450k for your primary income, then the safer recommendation is to put 3-6 month's income into cash (MMF), and ladder 2-5 years income, using a 3-6 month interval, into CDs and Ts. The rest of the money goes into stocks. During an up market, you spend your interest, dividends, and some cap gain. During a down market, you spend your interest, dividends, and cash. When the market turns up, you replenish your cash.

Zev

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6710 of 74759
Subject: Re: Porfolio Diversification Date: 11/21/1998 3:49 PM
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Joe asks:

<<Any thoughts (or experience) with how to split up an IRA for Income Production and of course Capital Preservation?

Something about $450K in size. My first thought was to put the whole thing in either FF or HY10. But, I am not too sure if that is a good idea.

I ran a bunch of tests through a spreadsheet (with FF and HY10 returns) using a number of different starting years to get an idea how various time periods affected the bottom line and most looked pretty good.

But I am still not sure if a single approach for the entire portfolio is Foolish. >>


You might want to look at the 23 or so posts on this board concerning Retiree Portfolios. They address this issue and may give you some food for thought. They are in consecutive order starting at this link: http://boards.fool.com/registered/Message.asp?id=1040013000079000&sort=postdate

Regards….Pixy


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