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We have been discussing the value of a 60/40 investment portfolio in HD as a way to balance risk/reward over the long term.
A report I read today suggests an all-equity portfolio, with a focus on international stocks, could be the key to maximizing retirement wealth compared to 60/40 allocation or target-date funds. It says an all equities portfolio is the far better way to build the largest nest egg possible for retirement; to generate a larger paycheck in retirement; to make sure you don’t run out of money in retirement; to create the largest possible bequest for your loved ones. The recommendation is to Invest 100% of your savings earmarked for retirement in equities: one-third in U.S. stocks and two-thirds in international stocks.
If you are more risk averse, having an annuity to cover basic expenses may make it easier to use an aggressive stock allocation with the remaining investments.
This is different from my current allocations. I am exploring any changes I should make.
See link
Some may already be using such a strategy or similar ones. What are the pros and cons based on your experience? Would you consider changing your current strategy?
We opted for a TIPS ladder for our reliable income to supplement delayed social security payments. We built this in 2023 as I started my retirement planning. My spouse wants to work a few more years after I retire.
This afforded us a 90-10 equities/bonds risk portfolio where the equities are 70-30 US/foreign and equal weighted across large/small and growth/value. We hope this portfolio to cover our discretionary spending desires.
We plan to take a reverse mortgage when eligible for reserves to pay for any LTC and other unanticipated spending shocks.
Mark, do you mean equal weighted or market weighted?
“and equal weighted across large/small and growth/value.”
We invest the same percentages in index funds across small, large, value, and growth. We rebalance based on a threshold.
I’m familiar with the article. My take is it is “not for us in retirement”-too much risk (and we have “enough”). We had basically a 50/50 AA until last year when I adjusted the investable assets to 60/40 after buying QLACs. (If we factor in the QLACs its more like 53/47). I’m mulling the idea of moving the investable assets to 70/30 when my wife begin SS and a couple of delayed small pensions in a couple of years. I feel like we have longevity risk covered by the delayed SS, pensions and QLACs and inflation risk covered by a rolling TIPs ladder, SS, one small pension with diet COLA and the stock allocation. d