JK Lasser's New Rules for Estate, Retirement, and Tax Planning, 6th Edition
by Stewart H. Welch III, J. Winston Busby
CHAPTER 4Investment Strategies for Maximizing Estate Growth
Traditional investment philosophy suggests that as you get older you should invest more conservatively. Not long ago, commonly accepted wisdom employed the following investment allocation formula as a rule of thumb: 100 minus your age equals the percentage of stocks you should have in your portfolio. This means that a 70‐year‐old would have only a 30 percent allocation to stocks. While this strategy should reduce portfolio volatility, it also significantly reduces the long‐term growth potential of your holdings. We believe this “old‐age” way of approaching investing is out of touch with today's world. Advances in medicine and biotechnology have allowed scientists to better understand the aging process and develop methods for enhancing longevity. Some scientists now believe the average 50‐year‐old will live to age 120. Talk about a need for growth in your portfolio! One of retirees' greatest fears is that they will outlive their financial resources and become dependent on their children (or the government) for their financial support. In order to address the need for a portfolio that could provide significant long‐term growth and income for retirees, coauthor Welch developed the Growth Strategy with a Safety Net®, which today represents one of the best solutions for the possibility of living too long. Here's how it works.
The goals of the Growth Strategy with a Safety Net® are as follows:
- Protect your retirement income ...