Retirement Planning With The 'Tism - Part 5: Portfolio Allocation Over Time
Everything Goes to Plan...Then you find out your plan sucks
“De-risk your portfolio as you head into retirement.”
“Compound interest over 40 years leads to high account values.”
Two very common pieces of advice. But rarely do you see anyone mention what de-risking your portfolio does to your compounded returns over a long time frame.
Here at BowTiedF’er’s Financial advice, we got you…
Because there is a very real issue when the same people are providing both pieces of advice. Even if both pieces of advice are good on their own, they are potentially conflicting with one another.
If you recall in Part 4 of the Retirement with the ‘Tism series we deep dove on sequence of return risks. We covered how compounding is the 8th wonder, but also a double-edged sword.
This time, we will go back to assuming everything goes to plan, and ask the question, “What if your plan sucks?”
In the free post this week we introduced target date funds and de-risking as you approach retirement by changing your portfolio allocation. It lays out a good case for why diversifying out of equities may save your retirement. It is common and generally accepted advice. You have your plan to move more and more of your portfolio into “safe & less-volatile” bonds as you approach retirement…
Now let’s go deeper and say “I like your plan, except that your plan sucks”.