One size does not fit all. It applies to investment strategies as well. Investment strategies can range from a very simple one to fairly complex depending on how much interest you have, the amount of time you want to devote and your income-needs vis-a-vis your portfolio size.
For managing your financial assets, what you need is a well laid out strategy, discipline and will to execute it. The 34th American President, General Dwight D. Eisenhower said, “Plans are nothing. Planning is everything.” Make your goals and objectives, know your risk-tolerance and start planning. Write it down and most importantly, execute it. Review it periodically, what is working and what is not, and adjust accordingly.
Strategies:
In this article, I am going to lay out three strategies, starting from a very simple one to fairly complex. The first two strategies aim at 3-4% income to be withdrawn like the traditional norm that we have heard so often. However, the third strategy aims for 6% income. So, what is a good and reliable withdrawal rate? Is 4% withdrawal rate good enough for everyone, or is it too much that you may run the risk of depleting the portfolio before its time.
The answer to this question is not that straightforward. However, if your income needs are greater than 4%, traditional approach may not work. As we will see in the third strategy, the solution may lie in diversification by deploying multiple strategies. So, just relax, let your guard down, read away and you be the judge!
For the sake of illustration, we will assume $1 million in investment assets. It does not mean that everyone needs to have that amount to retire. It all depends upon your expenses in retirement.
Strategy # 1:
The Lazy Man’s Portfolio:
I do not take credit
