Comment by
Richard Jackel
8 Nov 2009


Are you happy staying an aggressive investor? If the answer is yes you can set up a monthly systematic withdrawal plan from you existing aggressive funds and just draw income monthly. There are some simple common sense rules to follow in setting up this plan. Send me an email and I will explain in full detail.
If you no longer wish to be as aggressive as you have been then you will need to establish a totally different asset allocation.

Comment by
muncie birder
8 Nov 2009


How long until retirement? If less than 10 years, he definitely wants to begin moving these funds asap–the sooner the better. Here is the problem. Aggressive is with extreme risk. Look back at 2001-2003. Some of the aggressive funds lost 2/3 of their value during that epic and have not completely recovered to date and may never. If the U S goes into a recession, a very likely scenario, aggressive growth with go with it. It is appropriate to have a small portion of your funds in aggressive growth as retirement approaches and even as retirement has commenced but the risk of such a fund is just too great when the need for a constant dependable income stream is required. The portion of ones investments dedicated to producing that income stream and the portion dedicated to keeping ahead of inflation depends on the amount of income that is required, but in my mind it should be about 50-50. But of the 50% dedicated to keeping up with inflation no more than about 15% should be aggressive. The remainder should have a target of about 9% to 11% annual return.
Unfortunately, U S government policy is very detrimental to income producing investments. The policy is low interest rates to fan inflation. As one of the previous responders mentioned, periodically withdrawing money from your equity funds is one way to produce the needed income stream. But one should not rely on that method entirely because it does have significant risk especially if the equity funds suffer a prolonged period of significant negative returns.

Comment by
keral
8 Nov 2009


change poor perfoming to good perfoming and partitionaly redeem only monthly expense. it will be good strategy for early retiered person. balance amount will grow.

Comment by
jlf
8 Nov 2009


You definitely need to figure out an appropriate asset allocation, but there are many variables – age, total financial assets, anticipated retirement date, etc. Generally, financial advisors recommend a gradual shift from growth to income investments as you approach and then enter retirement.

Comment by
Andy
8 Nov 2009


Is the aggressive fund a broker-sold fund or no-load? If broker-sold, first investigate the other funds in the fund family; are any of them suitable as more conservative investments? An exchange into another fund in the family will be commission-free.
Income comes from bonds, income trusts, and dividend-paying stocks. It can be boosted by leverage (the fund borrows money to invest) as is typical in closed-end bond funds; or, it can be boosted through option premium income, also typical of many closed-end funds. Remember, “reaching for yield” can be just as risky, if not riskier, than aggressive stock investing. So make sure you invest in as many of the income-producing categories as you can and within each category diversify your investments; ladder bond portfolios.
The market is in a precarious position right now. Dow Theory practitioners believe we entered a primary Bear Market on 11/21. I suggest you “sell into strength” at every opportunity.
As to asset allocation and timing — that can’t be addressed without knowing the size of the portfolio, the age of the individual, his or her health, income expectations, risk tolerance, a host of issues that must be considered. It’s probably best to hire a fee-only financial planner to draw up a retirement plan to help you make these decisions. It will be a one-time expense that, if well done, will last through retirement.

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