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Hello all,

I am planning on an early retirement, 7 years from now at age 52, and I am trying to come up with a good asset allocation for that time period. These funds are in my after tax savings, not to be confused with my 401k funds in my retirement account. At age 59 1/2, I will begin drawing funds from my 401k. So my after tax funds are what I will be living on during ages 52 - 59 1/2. I am also planning working part time to supplement my income during that period. However, the point of this bit lenghty setup is to pose this question to the Fools out there.

I am planning an asset allocation along the lines of the following:

20 % Vanguard Growth Index fund
20 % Vanguard 500 Index fund
20 % Janus Mercury fund
20 % a Hi Yield Tax Exempt Bond fund (undetermined as of yet)
20 % Certificates of Deposit

7 years is not a long time frame so I want to be a bit conservative and a big agressive at the same time. I am willing to take some risk, but want to be cautious also, hence the CDs and Bond fund.

I would be very interested in any opinions anyone may have at to the asset mix, other investment objective types to include, and/or specific funds.

Thanks to all

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You have 40% in what amounts to fixed assets, which would be way too high for my tastes. The Vanguard Growth Index is nothing more than the growth stocks in the Vanguard Index 500, resulting in a major duplication of stocks. A more aggressive mix would still fall within the range of conservative, at least I would tend to think so. Good luck.
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Hello jimmonroe,
I am planning on an early retirement, 7 years from now at age 52, and I am trying to come up with a good asset allocation for that time period.

I've seen some propose that the % of your assets you keep in equities be figured by taking 100 and subtracting your age and using that figure as a general guide. But that may not work for everyone, due to several factors like what lifestyle you plan to lead after retiring, the total retirement assets you have, risk tolerance, etc.

You could toy with several scenarios to get an idea of what will work best for you. The following link may be able to help you do some calculations with several of those scenarios and suggest how to allocate your funds. In fact, the entire site is worth perusing. You'll probably find answers to questions you haven't even thought of yet that will eventually come with retiring "early". intercst, one of the Fools here, maintains this site, so you know the info there is Foolish. Here's the link:

http://www.geocities.com/WallStreet/8257/accum1.html

Also, watch for more knowledgable Fools than I to respond to your post.

HTH

BmF
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Quite a number of people somehow come to the conclusion that their investment strategies should somehow change once they are retired. I don't buy it. At age 52 or 60; you still have 30ish years to go as an investor --- that kinda looks pretty long term to me. The only new investment demand you will have that you didn't have before is a periodic withdrawal so you can put bread on the table.

As a result, I would hold somewhere in the 15% range in cash/cash equivalents area as your immediate stockpile from which to make periodic withrawals (simply so you are not forced to sell a security at an inopportune moment to buy groceries) & take the remaining 85% and invest aggressively to for the long term.

TheBadger
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I am planning on an early retirement, 7 years from now at age 52, and I am trying to come up with a good asset
allocation for that time period. These funds are in my after tax savings, not to be confused with my 401k funds in my
retirement account. At age 59 1/2, I will begin drawing funds from my 401k. So my after tax funds are what I will be
living on during ages 52 - 59 1/2. I am also planning working part time to supplement my income during that period.
However, the point of this bit lenghty setup is to pose this question to the Fools out there.

I am planning an asset allocation along the lines of the following:

20 % Vanguard Growth Index fund
20 % Vanguard 500 Index fund
20 % Janus Mercury fund
20 % a Hi Yield Tax Exempt Bond fund (undetermined as of yet)
20 % Certificates of Deposit

7 years is not a long time frame so I want to be a bit conservative and a big agressive at the same time. I am willing to
take some risk, but want to be cautious also, hence the CDs and Bond fund.

I would be very interested in any opinions anyone may have at to the asset mix, other investment objective types to
include, and/or specific funds.

Thanks to all


The 40% in CD's and Bonds would be to high for me.

First start building the CD's and bond funds in another two or three years.

Even better plan on 5 years of living expenses in CD's/Bonds and start building that fund when you are 5 years away from retirement.

Might want to look at taking some money out of the retirement funds also. Look at you income tax picture to deceide. You can do it without the 10% penality.

Remember capital gains in a retirement account do not get capital gain tax rates so try and spend down the retirement fund and let the growth take place in the non tax deferred assets.
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