Russell Investments Asset Mix in Retirement

Q; What is the most appropriate asset mix in retirement? Why is it important?

A: An old standard is 100 - your age determines your equity exposure. Ie. 100- 70 would mean 30% in equities. Studies have shown that historically, a mix of 35% equity/65% fixed income is optimal from a volatility & growth standpoint or a risk and return standpoint.

Why is your asset mix important. Russell has another rule I didn't mention yesturday. The 10/30/60 Retirement Rule. Your total capital to fund your retirement is typically made up of 10% from pre-retirement money saved, 30% from pre-retirement investment earnings and 60% from post-retirement investment earnings. Given that 60% of your capital to fund your income throughout retirement is derived from post-retirement earnings,deciding on the most appropriate asset mix in retirement is vital!

Russell Investments 3 Rules for Retirement

1. Equity Investing is still important after retirement. So don't retire from investing. Invest for retirement. If you don't feel like doing it hire someone.

2. Retirement spending should be segmented by needs, each with an appropriate investment strategy. For example an estate pool where assets are set aside for inheritance, charity, etc.. A lifestyle pool. Funds set aside for entertainment, travel, etc.. and an essentials pool to fund your income for life.

3. It takes approxiamately $20 to fund $1 of annual post retirement spending. For example if you have $1 million, it should provide $50,000 income.

K96.3 Kelowna's Classic Rock - Radio Rallies & Reversals

Back on March 8, I told listeners to look for equities to move higher and take out their January highs, and for the CDN$ to push for parity with the US$, and that's exactly what we got. Looking forward, the technicals, with the exception of volume, tell me there is more upside; However, relative strength is in overbought territory so expect periods of consolidation such as last week, with the 50 day MA holding as support. Fundamentally, this rally's days are numbered and perhaps this is reflected in the downward trend in volume and the rounding out in the charts.

For investment opportunities, one theme to follow is mergers and acquisitions; For threats, keep following the sovereign debt story plus the growing spat between the U. S. and China over the value of the yuan. The last thing the global economic recovery needs is a trade war.

That's it for today. Keep tuning into Rallies & Reversals as we explore these issues further. You can also read Rallies & Reversals on Castanet or follow our blog at yourlifeyourplan.ca.

GB