Good Morning
Good Morning

Don’t be the all-or-nothing 34%: Balancing stock exposure

A couple reviewing their financial investments. All or

A couple reviewing their financial investments. All or nothing is not a winning asset allocation, experts say when it comes to saving for retirement, the goal should be balance. Credit: Getty Images / shapecharge

There’s something to be said for balance. According to research from the Employee Benefit Research Institute and the Investment Company Institute, 12 percent of workers in their 60s had no equities in their 401(k) plans and 22 percent had 80 percent to 100 percent of their portfolios in equities.

All or nothing is not a winning asset allocation. Too little equity exposure can result in loss of purchasing power, points out Peter Maris, founder of Resource Financial Group in Wilmette, Illinois. But taking on too much risk when you have fewer years to recoup losses isn’t wise either.

What’s the solution? There’s no one-size fits all answer.

Assess your situation

“What are your current savings, expected guaranteed income in retirement, retirement income needs, and personal risk tolerance?” asks Arthur Flores, a certified financial planner with Flores Wealth Planning in Manhattan.

Someone with a large nest egg who lives within their means now and in retirement may not need as much money in equities. Big spenders who continue their ways into retirement may need more growth to keep living that good life.

Start with a rule of thumb

“Typically a 60-something’s portfolio would be comprised of 60 percent equities and 40 percent bonds and cash equivalents. From there, make adjustments based on your goals and comfort level,” says Maris.

Consult an investment adviser

Finally, says Sarah Rebosa, a partner and trusts and estates lawyer with Cullen and Dykman in Garden City, “Talk to an investment adviser. You have to balance your risk tolerance, age, cash needs, overall net worth and market conditions.”

More news