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Subject:  Re: The 30 year portfolio performance Date:  1/9/2011  6:42 AM
Author:  temsike Number:  68171 of 101592

Again, this is why gauging one's risk tolerance accurately and holding an asset allocation that will allow the retiree to stay the course and not panic is so important.

Yes. An asset allocation of 80/20 (stocks/fixed income) is far more likely to have a higher terminal value after 30 years of inflation adjusted withdrawals than one with an AA of 60/40.

But when the markets go absolutely batguano and your stock portfolio loses half its value, it's far less scary with 60% stocks vs 80%.

I have a far higher financial risk tolerance than does my spouse. We've watched our stock portfolio melt by 50% twice in this decade. On both occasions my spouse wanted to sell it all and run for the hills. Risk tolerance and asset allocation need to be comfortable for both.
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