Asset allocation for a retired 84 year old Now is 40%stock 53%bonds
I have an allocation of 40% stocks, 53% Bonds rest cash Mostin mutual funds with the exception
of 110K of I bonds purchased in 2001 with a base of 3% . In todays environment, how am I positioned ?
Terry Says
That all depends on how much of the money you think you will use in your lifetime — and who gets the leftovers! I’m serious. I don’t see any liquidity in your portfolio, which means that you might have to sell in a down market. That’s a problem with stocks, though a diversified stock portfolio should provide you protection from inflation.
Bonds on the other hand, could be a real disaster if inflation comes along, pushing interest rates higher. You’d be stuck with a low yielding portfolio or be forced to sell your bonds at a loss for living expenses.
Please read this article; Beware of Bonds to understand those dangers.
I know you don’t earn much at the bank these days, but if this is your only money and you expect to use it during the next 10-15 years of your lifetime, I would think you would want at least 30 percent in cash equivalents at the bank (CDs, etc, maturities no longer than one year, staggered) . And that money should come from your bond portfolio.