Am I using an adequate approach for my retirement?

Question

The following is my investment stradegy for my retirement.
Stock 92.06%
Bonds 2.09%
Short-term 4.44%
Other 1.41%

Is my stradegy too agressive?
I'm 26 years old. Investing in my IRA. Mostly Real estate and Foreign equities.

Answer 1

Only " slightly" too aggressive for your age...
Your equities in R.E. and Foreign...are they individual stocks or in the form of funds? Funds a little less risky ( more diverse)
.... and I might suggest something like a bigger " core" holding in American companies ( you could select a few that do a lot of business overseas...but still get that stability of more accountability ( and maybe some divvy's for long-term growth)
.... and a little more in bonds...you can even go a little "foreign" with something like Fidelity's FNMIX ( gov bonds and financials of emerging mkts...safer than the stocks, but nice dependable returns.( avg. 13.6% last 5 yrs)..w/ monthly divs)
Max the IRA portions of your investments....but don't put it all in them, because from the looks of it you may be retiring long before 60 !!

Answer 2

You have a long time horizon, so the being agressive is good.

The lack of diversity should be addressed.

Real estate can be volatile and a lot of pundits think we are in a bubble ready to burst.

Foreign equities are also a little more risky because there is a lack of transparency from foreign companies when it comes to performance.

I am not going to tell you what to do, just what I like doing.

I have 4 Roth IRA's, and I keep adding to the lowest one every 3 months in order to keep them all equal in value.
Total Market Index, Mid-cap, Emerging markets, Equity income.

I also have some stocks and non-retirement mutual funds. The mutual funds are Growth and overseas oriented with one being Blended (has about 40 bonds in it).

I have been looking at those retirement oriented funds a lot of the houses are coming out with. Names like "Retirement 2035" etc.
They seem neat cause the manager of the fund adjusts the mix the closer you get to retirement, meaning you don't have to spend as much energy tinkering around with your selections.

I have always been keen on the index funds, cause as John Bogle likes to point out: index funds beat active funds about 75% of the time. The 25% of the funds that beat index funds usually end up with worse total returns because of expense ratio issues.

No matter what path you choose, I must congratulate you and investing in the first place; there just aren't enough young bucks out there paying attention to their retirement needs.

Answer 3

My personal view is that this is way too aggressive. I would think a 75% equity 25% cash and fixed income would serve you better long term as long as you manage the account. You will need to rebalance the protfolio periodically.
The statement about being 90% to 95% equity when you are young is always followed by the statement "if you lose it all you are still young enough to make it up".
Try to have an average annual return of 8% to 12% and you should be better off.

Answer 4

For your age, your strategy is not too aggressive. Just ensure that that mix becomes more conservative through the years.


Waggy 33: I can't think of ANYONE for whom 75% equities and 25% cash would be appropriate. This guy has a 40 year time horizon. The only thing he should have in cash is an emergency fund and his current expenses. Anyone for whom 25% cash is appropriate (someone in or very near retirement) has no business having the rest entirely in stocks.

Answer 5

There is nothing wrong with being mostly in stocks if you are young and have a high risk tolerance. However, you should have a diversified stock portfolio, and not be concentrated in just a few areas. I know people who concentrated most of their money in Internet stocks in 2000. They may never recover.

Answer 6

depends on your stocks what you are investing in your IRA what real estate (not smart right now) securities you have and where your foriegn equities (careful this correction is for real) lie.

too little info and i don't see a cash position (not smart)

Answer 7

No.

In my humble opinion you should reduce your bonds to 0%

Top 3 Answerer.