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How Much Investment Risk Should You Take?

edited April 2019 in Fund Discussions
In this article Paul Merriman offers up his thoughts on the subject of how much risk investors should take with their portfolio. One of the links within the article opens a chart that reflects the annual return of differenet asset allocation models by year and over time. An asset mix of 50% bonds and 50% stocks offered up an average annualized return of about eight and one half percent over an extended period of time.

The study used the S&P 500 Index to represent stocks and intermediate term US Treasuries to represent bonds.

https://www.marketwatch.com/story/how-much-investment-risk-should-you-take-2019-04-03/print

Enjoy the article.

Old_Skeet

Comments

  • sorry O_S . Ted posted this 4/3
    Derf
  • edited April 2019
    @Derf: I try not to post over something that has already been put up. But, at times, it happens.

    Perhaps, the class needed another lecture on the subject and there just might be some that simply missed its first posting as I did. Often times, a professor will offer the same lecture more than once. And, besides @hank, @Old_Joe and @MikeM had a great discussion and exchange going between themselves on this very subject; but, under another thread topic.

    For me, what is important about this study, with me being in retirement, is that it reflects that a 50/50 portfolio can substain a 4% withdrawal rate and grow principal over time as the 50/50 portfolio averaged an 8.5% return over time. I'm thinking, the 4% withdrawal rate would have to be computed on the portfolio's average value. This is why I set my own withdrawal rate to generally not exceed a sum of what one-half of my five year average return has been. I found in doing this about twenty years ago when I governed my parents portfolio's provided them ample income plus grew their principal. Now, I have adopted this very same distribution withdrawal method.

    Sorry @Ted. My bad. I simply missed it's first posting.

    Skeet
  • Thanks for posting @Old_Skeet. If it was posted before it was lost in the mix. And who the heck cares if it was posted before!!! Ridiculous.
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