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Subject:  Re: Stock/Bond allocation based on age Date:  9/14/1999  1:07 AM
Author:  zgriner Number:  13886 of 97882

Please look at message #13041, which codifies what previous posters have said. The difference between the 'total return' portfolio, as I call it, and the fixed percentages that you use, is that the bonds are not held for interest income exclusively. The idea of the portfolio is to create a steady, inflation-adjusted income. If the stock portfolio underperforms the bond portfolio, on a percentage basis, then the bonds that mature that year are kept in cash to pay for living expenses. If the stock portfolio outperforms, then enough stock is sold to pay for a year's worth of living expenses, plus any cash used in prior years.

The idea, of course, is to cash your bonds in while the market is down, so as not to affect your income. You have to believe that the market will recover in time to replenish the bonds/cash that you spent.

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