Why Most People Pick The Wrong Asset Allocation For An Early Retirement!
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- Опубликовано: 12 июн 2024
- When it comes to asset allocation, many fall into common traps and often choose investment strategies that don't align with their early retirement goals or timelines.
Today's podcast episode gives you insights into where it could go wrong and how you can make it right!
Learn how to align your asset allocation with your goals for a better retirement.
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Time Stamp
00:00 Intro and Quick Story
01:33 What Does Conservative Mean To You?
02:40 Timing For Shifting The Allocation
03:06 Start with Your Expenses First
05:03 What is An Asset Allocation
06:00 Spending More Vs. Less
07:28 Investing in Safer/Fixed Assets
10:30 Quantifying/Analyzing The Tradeoffs
12:42 Important Tip/Advice
13:30 Dont Invest If You Dont Understand
15:56 Fixed Income Vs. Investment/Portfolio Income
16:48 What Is An Asset Location
19:45 Identifying the Position
202:25 Conclusion
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Ari Taublieb, CFP®, MBA, is the Vice President of Root Financial Partners (Fiduciary) and host of the Early Retirement Podcast.
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⚠️ "DISCLAIMER:⚠️
All content is not to be received as financial advice, and each individual should consult with their dedicated financial planner, tax preparer, estate attorney, etc., before making any financial decisions.
This video contains content that I solely created and got permission from its creators to use. This Channel DOES NOT Promote or encourage Any illegal activities; all contents provided by This Channel are meant for EDUCATIONAL AND ENTERTAINMENT purposes only.
This is exactly why I watch you guys. This is solid advice coupled with examples thank you once again for another good video truly looking forward to joining the Root Financial partners family.
Thank you Earskin. We’re excited to help you begin optimizing.
Wow. Your example is spot on for us. 100% equities looking to retire next spring at 55. Decent pension that will cover 75% of our DESIRED spending and well past needs. I also want to guard against things like inflation and realize that although we are on the edge of retirement, our money still has, we hope, decades in the market to grow. I feel like people retire and want to sit in cash and bonds for decades which is the real risk in our opinion. If you have 3M and you "only" want about 1-2% from it per year to augment things like pension and ultimately SSA, in a decade or so in our case, then why not maintain a similar plan as when you amassed it?
I've watched several videos and it's a little weird listening to retirement advice from such a young looking guy but everything is spot on! Another great video that's very informative.
Glad you find it helpful!
Wow. Thank you. So many things to take into consideration. Really enjoying your channel🤗
Love the clear, concise information you share. Can you talk about HSAs with regards to order of withdrawal in early retirement? No one seems to address this. Thank you Ari.
Yes! I like to use cash if possible and let my HSA grow tax free so it’s right before my Roth :) in terms of order of operations!
When you have guaranteed income like SS, think of it as part of your conservative piece of your portfolio (or bucket 1, if you use the 3 bucket strategy)
Yes, That's the right way!
100%!
Ari - do you have any episodes that include rental income in the portfolio? If not can you make a video to speak on that and how to factor in rentals in the portfolio?
Thanks for another great video! The video was very inforamtive and you broke down your points in a very easy to understand way.
Glad you enjoyed it!
This sheds a lot of light on how to allocate.
Ari, this was brilliant!! I’m a 53y/o RN working 24hrs/wk, making $105,000. Possible retirement at 55. I’ve been thinking about this recently. Currently have $1,800,000 in 401k & Roth. I’m 100% equities. I think I’ll stay there for the duration.
Thanks James! Sounds like a good plan to me.
Good job getting to $1.8m.
Niiice
Very informative. Currently, I've got 6 years of cash with Treasury Direct laddered in 26 week T-bills with 10-20k maturing weekly. So I do have quick access if need be. My traditional 401k was 100% equities with 60% company stock. Yes, I know, a no-no. Sold out in October. Now, in conservative positions as I will Roth convert into 100% equities. At this point, I only need to keep up with inflation, so returns of 4-6% is fine with me.
Excellent idea!!! But do you really need 6 years of cash reserves? Ari just mentioned the market usually corrects itself in 2.5 years. Either way I love your strategy
Nice work!
This is a subject you rarely hear about since pensions are rare except for government employees. I plan to keep a 90/10 balance in retirement with a pension covering all household bills.
Thank you! Glad it was helpful
This makes perfect sense for planning for guaranteed income and not selling during down times. But the bonds don’t fit into this as a goal since they can decrease in value. So how do I determine what my bond allocation percentage should be? What are the factors in that decision?
Check this out: ruclips.net/video/5KLErHOpgUU/видео.htmlsi=t8drRT0go0M9I2Ok
I am only 75 and I have had my investments 100% in index finds my entire investing life. Yes, I had money invested prior to retirement. Like S&P 500 index funds, my investments returned over 10% annualized over 30 year periods.
Looking at the S&P 500 from 1/1//2019 until the market low around 1/1/2023. That index returned over 13% annually. It is hard to argue that a "conservative" portfolio would have left one in a better economic position.
Financial advisors as well as retirees need to accept the fact that the short term - 5 or 10 years, market changes do not affect investors. They all reach a reasonable goal of 10% annualized return with long term holdings in index funds. Financial advisors should not turn investors into traders by emphasizing short term time frames.
There are many factors that affect the end result but I like your take on it!
Fixed income is bunk, stonks for life!!!
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Ari, I want to stay in Cali in retirement but am likely to move to a no income tax state like Nevada from age 62-72 to convert as much pre tax dollars to Roth as possible. Sound strategy, yes?
1. Do you want to live there?
2. Do you need to live there to accomplish other goals?
Those are the questions I’d ask!
Thank you Ari. I don't, just an address for state tax purposes, will just travel most of the time.
California taxes brokerage and HSA capital gains as ordinary income is too much!