Tag Archives: Ibbotson

Saving and Investing for Retirement: Part Four

Generating Income: Part Four of Our Special Five Part Series

During their working years, investors focus on saving and investing with a goal of building wealth.  As they enter retirement, either by ceasing paid employment entirely or by scaling back paid employment, investors shift their focus to using their portfolios to provide a reliable long-term stream of income.  This transition from building wealth to income generation is the subject of a great deal of research in retirement planning.  Once investors are at or near retirement, the most significant financial challenge is using their accumulated savings to provide substantial income for their retirement years.  Continue reading

Saving and Investing for Retirement: Part Three

Realities of Investing: Part Three of Our Special Five Part Series

In the various calculations that project retirement portfolio accumulations through time (such as the two discussed in the previous article), there are assumptions about how investors will allocate their savings and how those investments will perform.  In the case of the Fidelity study, no specific asset allocation is provided that would achieve the assumed risk-free 5.5% annual return.  In the Ibbotson study, the authors assume that investors hold a combination of a stock index fund and a bond index fund that progressively allocates less to stocks and more to bonds as investors get older.  The Ibbotson study also assumes that the stock index (the S&P 500) will have an average annual return of 10.96% per year and that the bond index will have an average return of 4.6% per year.  The Ibbotson study ignores expenses associated with investing. Continue reading

Saving and Investing for Retirement: Part Two

Figuring Out Whether You Are On Track: Part Two of Our Special Five Part Series

Fidelity just came out with a study that estimates that people will need about eight times their final salary level, assuming they work until age sixty seven, to be able to retire and subsequently to have 85% of their pre-retirement income provided from retirement savings plus social security.  Fidelity also helpfully provides estimates of what they believe people need to have acquired at different ages. Continue reading

Are You a Stock or a Bond? How to Factor Your Job Security into Your Investing Portfolio

Are you a stock or a bond?

Answering that question is one of the keys to successful asset allocation and financial planning according to a growing number of academics and financial executives. Continue reading

Commodities in Asset Allocation

A recent Wall Street Journal article discusses a growing movement among Target Date Funds (TDFs) to include an allocation to commodities.  This article is notable not least because it gives a sense that the methods applied to retail investing lag well behind institutional thinking. Continue reading