What do a 64 and 30 year old investor share in common?

by brendon on August 11, 2011

Thank you Kansas City investors for feedback to messages about prudent investment advice!  Keep the emails coming and post comments on the web site so others can join the conversation.

Being a “long-term investor” doesn’t mean each of you share the same percentage allocated to STOCKS and BONDS.   A 64 and 30 year old investor should BOTH be LONG TERM investors BUT NOT SHARE THE SAME ALLOCATION (% of your money invested in STOCKS versus BONDS).

For your peace of mind, the percentage you allocate to STOCKS versus BONDS should be personalized to your risk tolerance by knowing what the expected rate of return and volatility measurement for the allocation is.   Systematically, 1-5% per year of this allocation should be shifted to more BONDS thereby making your allocation less volatile and more CONSERVATIVE.  This is a systematic adjustment like quarterly re-balancing of your investments.

You shouldn’t change your allocation because of unpredictable and unknown events that make markets move like they have in the last 8 weeks.  This is “market-timing” and academically proven to lower your investment returns.   It also decreases your “peace-of-mind-factor”.

Said with further clarification–“Don’t let ‘news-of-the-day’ and current volatility influence you to treat your investments like a day-trader and therefore lose a LONG TERM VIEW of your investments.”

If you don’t have an allocation you can live with for at least 10 years, we need to talk.

{ 2 comments… read them below or add one }

Philip A. Guske August 11, 2011 at 11:49 am

Great video Brendon! Keep up the great coaching!


Dennis D. Duffy January 7, 2012 at 11:16 am

Great educational video.


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