| The best way to plan your retirement fund | | | | late. You need to know how to plan on |
| nest egg is to layout an investment roadmap | | | | living, and you need to plan on living |
| early in your career life. Mapping out each | | | | longer!That comes to another important |
| phase of your life the important investment | | | | financial planning knowledge; how to manage |
| portfolio you should have. Financial advisor | | | | longevity risk.What is longevity risk? |
| recommends a multistage retirement path which | | | | Simply state longevity risk is the |
| needs a multistage approach to investing. | | | | possibility that you'll run out of money |
| In the first stage, you could be begin with | | | | before you die. Most people start retirement |
| some income from part-time work or side | | | | without realize that their portfolio isn't |
| income after retiring from your main career. | | | | big enough. So what's the solution? Save |
| That steady secondary cash flow means you'll | | | | more when you're working. As you approach |
| need less income from your portfolio, | | | | retirement, you'll need to reconcile your |
| allowing you to invest aggressively for | | | | budget with your portfolio. For example, if |
| growth. Even if you retire at 60, you could | | | | you expect your annual expenses to be around |
| still have 20 to 30 years ahead of you. Most | | | | $50K, then according to scientific financial |
| financial advisor agrees that you need to be | | | | calculation you may need at least $1.25 |
| a long-term investor.Once you have entered | | | | million in order to satisfy your expenses. |
| the second stage of retirement, in which you | | | | Also depending on many factors, such as |
| retire from work completely, you will need | | | | marker performance, life expectancy, you may |
| more portfolio income. But financial advisor | | | | not able to withdraw a large sum out of your |
| suggest that you need not invest in bond too | | | | investment. If you want your portfolio to |
| aggressively. Bear in mind that we are | | | | last a life time, financial mathematics show |
| coming off a 20 year bull market in bonds in | | | | that you may not withdraw more than 4.5% per |
| which investors were rewarded with both | | | | annum; assuming your portfolio carries at |
| income and capital appreciation that came | | | | least 60% in stocks.Financial advisor |
| from falling yields. As interest rates fall, | | | | recommends retiree to invests in both |
| older and higher yielding bonds became more | | | | short-term and long-term growth. One of the |
| valuable. Now that long term government | | | | recommended investment strategies is to |
| bonds yield less than 5 percent, so there is | | | | invest five year or more of living expenses |
| not much to gain.Seriously speaking, | | | | in high quality bonds, some which will mature |
| financial advisor recommends that retiree | | | | every year. For example, you may buy $50K |
| really need a strategy that is a bit more | | | | worth of 1 year bond, $50K worth of 2 year |
| sophisticated particularly if they want | | | | bonds and so on. This strategy ensures that |
| their money to last through the third or | | | | retirees will have income every year, plus |
| sunset stage of retirement. This is more | | | | access to the principle as each bond or group |
| evident with raising health care and living | | | | of bonds matures. You may then sell some |
| costs.As such, financial advisor recommends | | | | stocks to repurchase another year worth of |
| that you invest in the following | | | | bonds set to mature in another 5 years. |
| portfolio:1.Midcap stocks 10%2.Small cap | | | | However, what happen if your portfolio |
| stocks 10%3.International stocks | | | | suffers a bad year or two? In this case, you |
| 10%4.Short-term fixed income 30%5.Large cap | | | | should hold off selling stocks; and if you |
| stocks 40%Your retirement nest eggs should | | | | have gains in any year, then you may invest |
| continue to grow with the stocks market while | | | | in more years ahead. The rest of your |
| the bonds cover living expenses. In order | | | | portfolio can then be growth-oriented |
| to achieve success in retirement finds | | | | invested entirely in stocks.Another way of |
| investing; one thing everyone should do is | | | | investment is to buy an immediate annuity |
| not to procrastinate in your aggressive | | | | with big enough payout to cover costs from |
| retirement funds investment planning. Some | | | | health care insurance, taxes and living |
| people view retirement as some event that is | | | | expenses.However you may want to wait until |
| too distant and don't save enough. But once | | | | your second or third stage of your retirement |
| they hit retirement age, suddenly they | | | | before you purchase an annuity, because the |
| realize they don't know anything and too | | | | payout is larger for an older buyer. |