Portfolio planning and allocation 5-10 years

Eco_Miser

Monevator's take on investing for retirement: http://monevator.com/category/deaccumulation-2/

Prism

aroominyork wrote: »

Can you direct me to some good reading on this? Investing during accumulation phases seems relatively straightforward compared to de-risking as retirement looms on the horizon and then structuring a portfolio during retirement.

I am looking after my dad's money and referring losely to a book called 'Living off your Money'. That covers a very statistical way of doing it but I'm sure people here will have other less maths based approaches. I am also quite new to it. The general rule of thumb seems to be stay invested, take less risk and be flexible with income. Basically if the stock market crashes then take less income for the time being.

bostonerimus

aroominyork wrote: »

Can you direct me to some good reading on this? Investing during accumulation phases seems relatively straightforward compared to de-risking as retirement looms on the horizon and then structuring a portfolio during retirement.

Retirement income can come from a variety of sources; SP, BD pension, annuity, interest, dividends, capital gains, rent.....or even part time work. I like to approach it by setting an income floor with guaranteed sources, so SP, pensions and annuituies.....I think as interest rates climb people will start to consider lifetime annuities again. Then you can supplement those with interest, dividends and capital gains. You get those from a portfolio and I would advocate one that has at least 50% equities so you get some growth and that also includes a 2 year spending amount in cash and very short term bonds to give you a buffer against an equity crash.

The general principles of retirement income generation are universal so google things like "safe withdrawal rates", but the details of income tax and pensions are country specific and as I'm in the US I'll leave it to others to recommend boos and links.

aroominyork

bostonerimus wrote: »

You get those from a portfolio and I would advocate one that has at least 50% equities so you get some growth and that also includes a 2 year spending amount in cash and very short term bonds to give you a buffer against an equity crash.

What do you mean by a 2 year spending amount in cash? Do you mean drawing your income two years in advance so that if there is a downturn you may have a surplus from previous good years to plug the gap without have to dig into capital?

bostonerimus

aroominyork wrote: »

What do you mean by a 2 year spending amount in cash? Do you mean drawing your income two years in advance so that if there is a downturn you may have a surplus from previous good years to plug the gap without have to dig into capital?

If you spend 20k a year then you keep 40k in things like cash, savings accounts and very short term bonds so you can spend from them rather than having to sell equities at a loss. It's just a defensive asset allocation for the particular circumstance of retirement income drawdown.