Subj: An Intrusive QuestionDate: 95-07-25 19:48:23 EDTFrom: Brazen1Posted on: America OnlineMF Ham,Now that you have "retired" and are no longer thinking of reaching that blissful, eagerly awaited state but are actually there, I would appreciateyour thoughts re a pet theory of mine. I earn my living travelling the countryside for a major benefits provider (and no, I am not in sales byany stretch of the imagination). My job entails conducting personalfinancial planning/retirement planning seminars and workshops for theemployees of the companies using our benefits plans. For the younger employees and spouses, the task is straight forward: Give the nuts and bolts on the "how to's" of financial planning and establishing investmentobjectives. Then show them the mysterious magic of compounding so they can see how they'll be able to reach the pot of gold provided they startearly and have a viable plan in place.For those at retirement, the job is tougher. I'm often asked what I willdo with my money when I finally retire to ensure it will last. So I give them what I intend to do: Determine how much money I will need in the first five years of retirement. Put the first year's need in a money marketaccount and use that for expenses. Put the next four year's needs inshort-termbond funds (I know squat about buying the actual securities) to minimizeinterest rate risk and preserve the capital. Everything else gets invested for the long term with a minimum 80 percent in stocks. In year two, look atcash needs for the next five years (taking inflation into account). If the long term portfolio is NOT in a down cycle, cash out a portion to fill year two needs and build up the short term bond accounts if necessary because of inflation. If the long term portfolio is in a slump, take the needed yeartwo money from the short term bond portfolio. Replenish the short termportfolio when the long term holdings recover. Continue this process ad infinitum or until the money runs out. If the latter happens, I dida poor job of accumulating my nest egg during my working years anyway, so I have no one to blame for that circumstance except myself.That simplistically stated theory has a lot more to it than the abbreviated discussion above, but the outline of my plan is there. I think it will work -- for me and perhaps others who think like me. Yet I'm not retired, so I'm not faced with such a decision yet and won't be for at least seven more years. Therefore, I still think long term (probably always will, too). You, on the other hand, are there and are faced with the predicament of "how to make it last."Question: What approach are you taking with (dreaded thought!) all the money you probably will have for the rest of your life?? If that ain't nosy, I don't know what is, so tell me to MYOB if I'm beingtoo personal. Nevertheless, I am interested and promise not to tella soul except the 5,000 or so folks I'll be educating over the next year.:-)
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |
BATS data provided in real-time. NYSE, NASDAQ and NYSEMKT data delayed 15 minutes.
Real-Time prices provided by BATS. Market data provided by Interactive Data.
Company fundamental data provided by Morningstar<