Hi DD, Re: asset allocation for retirement.....
I found it helpful to start with the annual budget and work backward. Develop the various devices that you'll need to produce the annual income. If that's $100,000 a year, then find income producing assets that will generate that level of income without invading the principle.
Let's say you find a govt bond fund yielding 8%, a corp conv. bond fund yielding the same and a REIT fund generating 6%. Let's say you decide on 1/3 each for diversified income production.
$66,666 / 0.08 = $833,325 invested in govt and corp bonds
$33,333 / 0.06 = $555,550 invested in REIT fund
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$100,000 income from $1,388,875 invested.
What would also be nice is to have enough left over to generate enough growth to compensate for inflation. Anything you have left over can then be invested for that sort of growth. An index fund might be the answer. Or, if there's enough principle, a variety of business sector ETFs.
Best regards,
Tom |
