Close to 50? What’s Your Risk Tolerance?

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jason1122
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Close to 50? What’s Your Risk Tolerance?

Post by jason1122 »

Interested to hear what folks around 50 are at as far risk tolerance. Lots of target date funds for 2035 and 2040 seem a tad too aggressive?
sailaway
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Re: Close to 50? What’s Your Risk Tolerance?

Post by sailaway »

70/30, with no intention to adjust.
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jazzcat73
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Re: Close to 50? What’s Your Risk Tolerance?

Post by jazzcat73 »

75/25, which has slid toward 78/22 over the past year. I am thinking of actually changing my AA to 80/20. I figure I may have 50 more years to go so we are still early in the game :-)
MarkRoulo
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Re: Close to 50? What’s Your Risk Tolerance?

Post by MarkRoulo »

jason1122 wrote: Fri Jan 07, 2022 6:52 pm Interested to hear what folks around 50 are at as far risk tolerance. Lots of target date funds for 2035 and 2040 seem a tad too aggressive?
Vanguard Target Date 2040 seems to be about:
  • 80% stocks
  • 20% bond
With a US:International split of about 60:40 for stocks and 2:1 for bonds.

I'm a bit over 50 and aiming for
  • 60% stocks
  • 30% bond
  • 10% cash
With stocks about 66:33 US vs International and all my cash and bonds US.

80% stocks 10 years away from retirement does seem a bit risky to me (though, with enough investments vs spending it can clearly work).
lostdog
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Re: Close to 50? What’s Your Risk Tolerance?

Post by lostdog »

For investors that don't mind the risk, the Vanguard questionnaire has an allocation of 80/20 for 10 years out from retirement.

Vanguard has an allocation of 70/30 for someone retired that doesn't mind the risk.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Monsterflockster »

jason1122 wrote: Fri Jan 07, 2022 6:52 pm Interested to hear what folks around 50 are at as far risk tolerance. Lots of target date funds for 2035 and 2040 seem a tad too aggressive?
Are bonds even a safer investment these days? Last big downturn they crashed just as hard until a major government intervention. Total bond is still negative over the past 12 months.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by student »

I am 55 and currently at 63/37 but the target is 60/40.
Normchad
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Normchad »

I started buying more bonds when I was 50. Went to 65/35. However, this was based on me being 5 years from retirement, rather than 50 years away from birth.
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jason1122
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Re: Close to 50? What’s Your Risk Tolerance?

Post by jason1122 »

Monsterflockster wrote: Fri Jan 07, 2022 7:26 pm
jason1122 wrote: Fri Jan 07, 2022 6:52 pm Interested to hear what folks around 50 are at as far risk tolerance. Lots of target date funds for 2035 and 2040 seem a tad too aggressive?
Are bonds even a safer investment these days? Last big downturn they crashed just as hard until a major government intervention. Total bond is still negative over the past 12 months.
Good question!
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Re: Close to 50? What’s Your Risk Tolerance?

Post by lazynovice »

Monsterflockster wrote: Fri Jan 07, 2022 7:26 pm
jason1122 wrote: Fri Jan 07, 2022 6:52 pm Interested to hear what folks around 50 are at as far risk tolerance. Lots of target date funds for 2035 and 2040 seem a tad too aggressive?
Are bonds even a safer investment these days? Last big downturn they crashed just as hard until a major government intervention. Total bond is still negative over the past 12 months.
No, they did not crash “just as hard.”

BND fell from $87 on 3/9/ 20 to $81 on 3/19/20. That’s a 7% drop.

S&P 500 dropped from 3,374 on 2/13/20 to 2,237 on 3/23/20- that’s 34%.
Last edited by lazynovice on Fri Jan 07, 2022 9:37 pm, edited 1 time in total.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Da5id »

jason1122 wrote: Fri Jan 07, 2022 6:52 pm Interested to hear what folks around 50 are at as far risk tolerance. Lots of target date funds for 2035 and 2040 seem a tad too aggressive?
I'd think this is a complicated question if you are hoping to learn things that apply to you personally.

e.g. I'm an early retiree in my mid 50s, with 50% stocks. That is way below Target Date 2035's 73% equities. My risk tolerance would allow more equities, but I don't need them to succeed. So I don't have them.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by dogagility »

FWIW: mid-50s; 80:20 asset allocation
The more flexibility you have the less you need to know what happens next. -- Morgan Housel
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Re: Close to 50? What’s Your Risk Tolerance?

Post by BogleFan510 »

sailaway wrote: Fri Jan 07, 2022 6:57 pm 70/30, with no intention to adjust.
More or less same. Retired at 53, but we have about 50x our highest expense year, and about 80x typical spending, plus health care and a small pension.
Last edited by BogleFan510 on Fri Jan 07, 2022 8:18 pm, edited 1 time in total.
lazynovice
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Re: Close to 50? What’s Your Risk Tolerance?

Post by lazynovice »

We are at 10x bonds and cash and the rest to equity. That works out to almost 70/30. One retired, the other one a few years out from retirement. It’s the most aggressive we have been since our thirties. As the pie has gotten larger, and the income from the person working has gotten higher, kids off the payroll and almost launched, we have a higher risk tolerance.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by SpeyDragon »

Age 59.5 YO
I was 90/10 until 2 weeks ago. Now, I'm 70/30 in the 3-Fund Portfolio. Will go to 60/40 when I retire in 5.5 years.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by theorist »

We are at just under 75/25 and heading for 70/30 at age 51. I’m thinking of cutting equities a bit more, to maybe something like 67/33 in the next few years.

I also find some of the target funds a bit too aggressive. My retirement plan recently moved me into Fidelity 2035 freedom index, and it was at just below 80/20. I really don’t want to lose 40% in a crash now! But with bonds giving no real return, I have to remember that inflation is also a stealth enemy. 70/30 seems like a reasonable compromise.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by jvini »

55 yr. old couple. 30x yearly spending in our portfolio. 60/40 portfolio. 3-5 years until I retire or cut back because I like what I do. I rebalance at 5% out of whack. For my allocation I used age-20 in bonds in my 30s. Age-15 in my 40s. Age-10 going forward. May switch to 50/50 if we reach 40x earnings.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Vanguard User »

44 later this month. 100% stocks.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by sailaway »

BogleFan510 wrote: Fri Jan 07, 2022 8:16 pm
sailaway wrote: Fri Jan 07, 2022 6:57 pm 70/30, with no intention to adjust.
More or less same. Retired at 53, but we have about 50x our highest expense year, and about 80x typical spending, plus health care and a small pension.
We aren't that set, but we did move to the 70/30 allocation as we approached our minimal "yeah, we could make that work" numbers a few years ago, rather than actually having anything to do with my turning 50 later this year.
Notsobad
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Notsobad »

70/30 because I felt it was age appropriate. On further reflection, I think I would have been comfortable at 80/20
fortunefavored
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Re: Close to 50? What’s Your Risk Tolerance?

Post by fortunefavored »

Late 40s.. early retired.. 70/30.

I'd prefer go be less equity heavy but bonds/cash are trash, so what are you gonna do? I hope I won't regret it when we hit the next 10 or 15 year secular bear.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by carminered2019 »

Deleted, I am over 50.
Last edited by carminered2019 on Fri Jan 07, 2022 9:18 pm, edited 1 time in total.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Artful Dodger »

Da5id wrote: Fri Jan 07, 2022 8:12 pm
jason1122 wrote: Fri Jan 07, 2022 6:52 pm Interested to hear what folks around 50 are at as far risk tolerance. Lots of target date funds for 2035 and 2040 seem a tad too aggressive?
I'd think this is a complicated question if you are hoping to learn things that apply to you personally.

e.g. I'm an early retiree in my mid 50s, with 50% stocks. That is way below Target Date 2035's 73% equities. My risk tolerance would allow more equities, but I don't need them to succeed. So I don't have them.
This. I often hear from people who complain that others with lower equity allocations are "leaving money on the table". There is a balance between risk and necessity. If your plan will return what is needed, there is no need to take on greater risk.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by pizzy »

lazynovice wrote: Fri Jan 07, 2022 8:04 pm
Monsterflockster wrote: Fri Jan 07, 2022 7:26 pm
jason1122 wrote: Fri Jan 07, 2022 6:52 pm Interested to hear what folks around 50 are at as far risk tolerance. Lots of target date funds for 2035 and 2040 seem a tad too aggressive?
Are bonds even a safer investment these days? Last big downturn they crashed just as hard until a major government intervention. Total bond is still negative over the past 12 months.
No, they did not crash “just as hard.”

BND fell from $87 on 3/3/20 to $81 on 3/3/20. That’s a 7% drop.

S&P 500 dropped from 3,374 on 2/13/20 to 2,237 on 3/23/20- that’s 34%.
Shouldn’t you at least use the same two dates for bonds and stocks?
Last edited by pizzy on Fri Jan 07, 2022 9:34 pm, edited 1 time in total.
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windaar
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Re: Close to 50? What’s Your Risk Tolerance?

Post by windaar »

At 50 I was 50% Equities and 50% Fixed. Would most here think it too conservative? Yes. Has the "age in fixed" kept me from selling after major crashes and corrections? Yes. In March 2020 it was crazy how many people were posting here that they were selling out... at what turned out to be the bottom.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by lazynovice »

pizzy wrote: Fri Jan 07, 2022 9:21 pm
lazynovice wrote: Fri Jan 07, 2022 8:04 pm
Monsterflockster wrote: Fri Jan 07, 2022 7:26 pm
jason1122 wrote: Fri Jan 07, 2022 6:52 pm Interested to hear what folks around 50 are at as far risk tolerance. Lots of target date funds for 2035 and 2040 seem a tad too aggressive?
Are bonds even a safer investment these days? Last big downturn they crashed just as hard until a major government intervention. Total bond is still negative over the past 12 months.
No, they did not crash “just as hard.”

BND fell from $87 on 3/3/20 to $81 on 3/3/20. That’s a 7% drop.

S&P 500 dropped from 3,374 on 2/13/20 to 2,237 on 3/23/20- that’s 34%.
Shouldn’t you at least use the same two dates for bonds and stocks?
I used from high to low. If I compare BND in February to end of March, it dropped even less.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by pizzy »

lazynovice wrote: Fri Jan 07, 2022 9:40 pm
pizzy wrote: Fri Jan 07, 2022 9:21 pm
lazynovice wrote: Fri Jan 07, 2022 8:04 pm
Monsterflockster wrote: Fri Jan 07, 2022 7:26 pm
jason1122 wrote: Fri Jan 07, 2022 6:52 pm Interested to hear what folks around 50 are at as far risk tolerance. Lots of target date funds for 2035 and 2040 seem a tad too aggressive?
Are bonds even a safer investment these days? Last big downturn they crashed just as hard until a major government intervention. Total bond is still negative over the past 12 months.
No, they did not crash “just as hard.”

BND fell from $87 on 3/3/20 to $81 on 3/3/20. That’s a 7% drop.

S&P 500 dropped from 3,374 on 2/13/20 to 2,237 on 3/23/20- that’s 34%.
Shouldn’t you at least use the same two dates for bonds and stocks?
I used from high to low. If I compare BND in February to end of March, it dropped even less.
That was my point, using the same two dates solidifies your point even more.

Using different dates looks like you are trying to manipulate even though you aren’t.
Late 30's | 90% VT | 10% Cash
wordsmith11
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Re: Close to 50? What’s Your Risk Tolerance?

Post by wordsmith11 »

Accumulation phase. Moved from 70/30 to 80/20 because I was losing sleep over having too conservative an allocation. Could easily drift to 85/15.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by sf_tech_saver »

The older I get (almost 45) the more I focus on the Jack Bogle comments about "dividends" being my income foundation.

This means:

--I'm GLAD I'm 10% VCLAX (long term muni) vs. intermediate-term. I follow the longer term is suitable if you plan on holding them that long mantra. Distributions fell from 3.2% to 2.4% over the last two years but generally kept a meaningful tax-free income stream coming that I diversified into monthly stock purchases.

--I'm 85/15 (similar to Vanguard 2045 fund) and generally moving away from 100% VTI for equities into doing 50/50 VT/VTI for 'new' purchases. International and VT has a generally higher dividend yield.

--For me being 'more conservative' at this age means planning to build a larger overall portfolio suitable to live off the income it produces and managing expenses in retirement accordingly. This likely means planning to work a bit longer and continue to set goals that take me into a larger portfolio to accomplish this. Essentially this is shifting from the 4% rule to the 2-3% rule.

--The longer I think about the BH philosophy the more AA and personal risk tolerance feels like the Astrology section of the Wiki! It's so soft and squishy and 'personal' -- but it hides the real risk of long-term portfolio exhaustion to focus on 'panic selling' phenomena which are easier to avoid by just having a rule that I 'never sell'. My investing rule? I never sell, and I only rebalance through future purchases...there done..no panic possible :)

--This approach might not be for everyone but it's how I'm looking at things as I approach 45!
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Grt2bOutdoors »

A band between 65/35 and 75/25. Right now, I'm closer to the midpoint.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Raspberry-503 »

60/40 but I'm in good shape so why rock the boat?
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Basis »

One month from 48 years old…

100% equities in retirement accounts. Nearly equivalent amount in real estate outside of retirement accounts.
You see what you know.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Grt2bOutdoors »

Basis wrote: Fri Jan 07, 2022 11:47 pm One month from 48 years old…

100% equities in retirement accounts. Nearly equivalent amount in real estate outside of retirement accounts.
sounds like 50/50
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Re: Close to 50? What’s Your Risk Tolerance?

Post by invest4 »

Between 60/40 and 70/30.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by WannabeBogleHead01 »

53 years old and at 70/30. Planning on that allocation until 60, then migrate to 60/40.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by winterfan »

Spouse and I are 61/49 and we are 80/20, but that 20% represents about 10 years of basic expenses for us.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Outer Marker »

70/30 forever . . .
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Re: Close to 50? What’s Your Risk Tolerance?

Post by stoaX »

WannabeBogleHead01 wrote: Sat Jan 08, 2022 6:38 am 53 years old and at 70/30. Planning on that allocation until 60, then migrate to 60/40.
When I was near 50 that was my plan as well. I'm now in my 60's and it has worked out so far. At age 50 there are a lot of years left to plan for, assuming good health.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by nura »

My risk tolerance is 18 months of living expenses in fixed income, balance in equities; rationale being if you don't have to sell equities even without no income for 18 months the portfolio will recover.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by 1moreyr »

I am 58, retire this month...... i am 65/35 but 50X expenses.... the 35 is 40% cash at the moment which is quite a drag but also makes the 65/35 a heck of a lot more conservative. I expect to do something with cash shortly. a CD ladder or Bond ladder as interest rates improve or continue to buy more Ibonds.

currently it works for me as I head into retirement and get a feel for my new life.

note, a significant portion of this cash was over the last year. I retired and worked "one more year" on a contract job and lived on my pension from a previous job. this confirmed I could do it and allowed me to bank a significant amount of cash as I figured it out.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by WhenIsItTime »

Long time reader, first time poster. Spend some time at early-retirement.org.

Doesn't withdrawal rate play a factor here? I'm fortunate to be < 50 retired, with a <2% withdrawal rate. I always thought I'd go conservative, but I remain 85% stocks. Cash plus interest and dividends covers my withdrawal rate for a few years. History proves market crashes typically recover in 3 years. If I can let my stocks ride 3 years, especially now, why have more bonds or low fixed interest investments?

I've also seen studies where 10-20 point changes in AA don't make a big difference over time.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by Flashes1 »

I'm early 50's with 8 years to go: I've been drifting upward over the past 5 years and have moved some $ from Target Date 2025 to TSM because I'm not okay with the heavy Intl and Bond in the 2025 fund. But I also have a spouse whose 7 years my junior and will work for approx. 5 years after I retire.

I'm currently at ~82/18.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by SunRainSnow »

Turning 50 at the end of this year, retiring mid year and I’m:

60% stock (80/20 mix domestic/international)
35% bonds
5% cash

Can’t see me getting more aggressive as I age, I’ve got more than enough and plenty of flexibility. All good here!
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Re: Close to 50? What’s Your Risk Tolerance?

Post by teen persuasion »

Went to 70/30 around age 50. It has drifted to more like 75/25. I will rebalance after we clean up and roll a few employer accounts into tIRA - DH retired last year at 55.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by fortunefavored »

WhenIsItTime wrote: Sat Jan 08, 2022 9:12 am Long time reader, first time poster. Spend some time at early-retirement.org.

Doesn't withdrawal rate play a factor here? I'm fortunate to be < 50 retired, with a <2% withdrawal rate. I always thought I'd go conservative, but I remain 85% stocks. Cash plus interest and dividends covers my withdrawal rate for a few years. History proves market crashes typically recover in 3 years. If I can let my stocks ride 3 years, especially now, why have more bonds or low fixed interest investments?

I've also seen studies where 10-20 point changes in AA don't make a big difference over time.
If you can tolerate seeing your balance be flat to down for 10 to 15 years, the math says you're fine. Typical cyclical bears have been in the 10 year range.

At your withdrawal rate you're dealing mostly with psychology, not safety.
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Re: Close to 50? What’s Your Risk Tolerance?

Post by mr_brightside »

jazzcat73 wrote: Fri Jan 07, 2022 7:03 pm 75/25, which has slid toward 78/22 over the past year. I am thinking of actually changing my AA to 80/20. I figure I may have 50 more years to go so we are still early in the game :-)
agree

-------------------------
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Re: Close to 50? What’s Your Risk Tolerance?

Post by dbr »

WhenIsItTime wrote: Sat Jan 08, 2022 9:12 am Long time reader, first time poster. Spend some time at early-retirement.org.

Doesn't withdrawal rate play a factor here? I'm fortunate to be < 50 retired, with a <2% withdrawal rate. I always thought I'd go conservative, but I remain 85% stocks. Cash plus interest and dividends covers my withdrawal rate for a few years. History proves market crashes typically recover in 3 years. If I can let my stocks ride 3 years, especially now, why have more bonds or low fixed interest investments?

I've also seen studies where 10-20 point changes in AA don't make a big difference over time.
All of this is true except that your statement about the cash, interest, and dividends has nothing to do with it. <2% has everything to do with it and 85/15 is fine if you have an objective of dying quite wealthy but also a psychological tolerance for big downturns. AA makes a huge difference only because it can be varied so extremely from 0/100 to 100/0 but I doubt it makes much difference to change 85/15 for 70/30.

Probably the biggest risk for an early retiree is not allowing for enough contingencies in what you need to spend, particularly with a view to possible ill health, disability, etc.
elnegativo
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Re: Close to 50? What’s Your Risk Tolerance?

Post by elnegativo »

51/49

66/34 (20% of equities in international). Planning to use new contributions to add a percent or two per year to bonds until we get 60/40 - 55/45 range at retirement at 60.
ALinLI
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Re: Close to 50? What’s Your Risk Tolerance?

Post by ALinLI »

Age 50 here. Am about 68/32 - up from 65/35 in IPS. Will leave it , looking to early retire soon with this allocation maybe closer to 70/30.
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jason1122
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Re: Close to 50? What’s Your Risk Tolerance?

Post by jason1122 »

theorist wrote: Fri Jan 07, 2022 8:20 pm 70/30 seems like a reasonable compromise.
I like your reasoning here. Thinking 70/30 sounds like a good middle ground right now.
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