| Surprisingly few new retirees or pre-retirees have | | | | portfolio policy. Your funds are invested in various |
| a plan for the allocation of their portfolio assets. | | | | types of assets thus allowing you to achieve your |
| However, if your portfolio is to be a source of | | | | financial goals and take advantage of risk |
| financial security during your retirement years, | | | | reduction through optimal portfolio diversification. |
| then it must be carefully tended, like a garden, so | | | | The three basic types of asset classes are |
| that it continues to grow. Apart from the obvious | | | | stocks, bonds and cash. The percentage of each |
| benefit of additional resources during your | | | | asset class in your portfolio depends on a number |
| retirement years, there are a number of factors | | | | of variables, including but not limited to your |
| that reinforce the necessity for continued portfolio | | | | financial goals, current savings and investment |
| growth. | | | | plan, time horizon and risk tolerance. Bear in mind |
| - Inflation erodes assets, which could make it | | | | that over 90 percent of the performance of your |
| necessary for you to lower your standard of | | | | portfolio is predicated on how the assets are |
| living, not a happy thought. | | | | allocated. |
| - You might be forced to make withdrawals at a | | | | To reduce risk (and maximize return), select |
| percentage rate that is higher than your portfolio | | | | asset classes that compliment each other. Bearing |
| is actually earning. This substantially shortens the | | | | in mind, once again, that you are likely to live |
| life of your portfolio. Remember, your goal is to | | | | twenty-five to thirty years into retirement., keep |
| make your assets last as long as you do, or | | | | at least a portion of your assets in equities for |
| longer. | | | | the long term. |
| - With medical science now making it possible for | | | | New retirees (or those retiring soon) are often |
| us to live longer, maintaining steady growth in | | | | tempted to switch their portfolios into a very |
| your portfolio's assets takes on a completely new | | | | conservative mix. Although such a mix may |
| level of importance. | | | | protect your portfolio from a decline, it also limits |
| - Finally, a weakened portfolio necessarily limits | | | | growth potential. If during your working years you |
| what you can pass onto your heirs. | | | | maintained a balanced combination of stocks, |
| In the event that your retirement income alone | | | | bonds, and short-term investments, and if you |
| will not cover your post retirement expenses, | | | | have made periodic adjustments as needed to |
| ideally the earnings from your portfolio will make | | | | maintain the right mix of growth, income, and |
| up the difference. Even if you are one of those | | | | stability, you may not need to make changes in |
| who have saved enough so that you will not have | | | | your portfolio when you retire. As you get further |
| to work after you retire, your portfolio will require | | | | into retirement, however, you will need to |
| regular attention if it is to help support the lifestyle | | | | consider shifting to a more conservative mix. |
| you wish to enjoy during retirement. | | | | Asset allocation is the single most important step |
| Asset allocation is part of the general retirement | | | | in making your retirement years the golden years |
| planning process, the goal of which is to determine | | | | you thought they would be. It is better to spend |
| the optimal allocation prior to the selection of | | | | your time to get this step right instead of |
| individual assets or classes of assets. Put a | | | | worrying about the individual investment |
| different way, asset allocation establishes your | | | | themselves. |