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re: Volatility at age 26

Posted on 4/3/14 at 11:26 am to
Posted by Ace Midnight
Between sanity and madness
Member since Dec 2006
89633 posts
Posted on 4/3/14 at 11:26 am to
quote:

At the age of 26 should I be predominantly in "Growth" funds or "Aggressive" funds? I am pretty diverse in my fund options, just wanted to know which way should I lean more now and at what age should I change?


You have approximately 40 years exposure to the market. I would pick a strategy that maximizes growth, within your comfort zone of volatility - and understand, if you set up steady contributions, dollar cost averaging will eliminate a significant portion of your volatility curve (in other words, the volatility will be on paper only - if you're comfortable with that - it CANNOT hurt you) - so, at that point, you're only trying to protect yourself from a sustained bear market immediately prior to your retirement.

Therefore, I would plan on shifting from a Growth/Aggressive heavy portfolio to things with less volatility at about the 5 to 7 years prior to retirement year - pick a window and plan, and shift a portion every year until with about a year or two to go, you're pretty much 100% in income producing, low-to-no risk funds, bonds, etc. - but I wouldn't even worry about making that plan for 25 to 30 years, much less executing it before age 60.
This post was edited on 4/3/14 at 11:28 am
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