Is it wise to continue an aggressive investing strategy as a 61-year-old with a considerable amount of assets and money saved?

I have an IRA account with approximately $150,000, a 401(k) with approximately $30,000, and a mutual fund with approximately $25,000. I own a rental property, two homes, and my spouse plans to work 10 years beyond my retirement. I plan on retiring at age 67. I invest aggressively, mostly in stocks, with my retirement accounts. Is an aggressive investing strategy a good approach, considering my financial situation and age?

Retirement, Investing, 401(k), Asset Allocation, IRAs, Mutual Funds
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March 2018

Congratulations on the money you have saved!  If there is no debt on the rental homes, you have a great basket of assets amassed.  I do not know your current income and spending habits, but your potential largest problem in life longevity. 

We can be systematic about answering your question from a longevity standpoint. If you are a heterosexual couple, there is a 50% chance that one of you will be alive at age 90 and a 20% chance that one of you will be living at age 95 (The percentages would be lower for a homosexual male couple and higher for a homosexual female couple.)  Thus, you have to plan for at least another 30 years.  Over every 30 year period since 1912 (which includes many peiods encompassing the Great Depression), the range of average annual returns is 4% to 9%. Since it is risky to try to get 4%+ from bonds in the current environment, you should own stocks to the extent that you can stand a potential 50% drop in the stock market such as we saw in the 2007 to 2009 bear market.  If you believe you would be tempted to sell out of all stocks if the market dropped greater than 33%, you should own 66% stocks and 34% bonds.  Most importantly, you need to stay invested in your stock holdings through thick or thin.

There are investment mangers that offer strategies that attempt to minimize downside risk while participating in much of the upside movement.  With those type of strategies, it is likely you can have more invested in stocks at any level of risk tolerance than in a vanilla index fund.

March 2018
March 2018
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March 2018