In this online article, Alexander Green the Chief Investment Strategist for the Oxford Club explains the concept of “retirement rebalancing.”
Retirement rebalancing is vital for every investor who is no longer in the workforce. If you’re in the stage of life of living on wealth instead of building it, you need to understand this concept.
That’s because, on average, people are living longer than ever. You will likely need to use your portfolio to bolster your lifestyle for two to three decades. Depending on how medical science advances in the years to come, you might live far longer than you now believe.
That increases the risk that your portfolio will face in the financial markets. There’ll certainly be a bear market (or two or three) in the next few decades. If you sell stocks when their prices are low, that will weaken your portfolio even after the market again turns up. Inflation could certainly go up again in the future.
People often ask Green how much money they should keep in stocks. In the article, he explains the need to keep enough money in low-risk bonds or cash to meet your living expenses during bear markets. Keep the remainder of your capital in the stock market to take advantage of price rises caused by bull markets.
During bear markets, you live on cash. During bull markets, you live on stocks.
The Oxford Club is an international network of investors and entrepreneurs who seek to build and protect their wealth using the best available financial strategies and information available.
Based in Baltimore Maryland, The Oxford Club has over 80,000 members. Investment U is the teaching branch of the Oxford Club, one of the first financial education websites online. Investment U offers everyone a free daily email service, Investment U Daily. Membership gives access to a tremendous number of courses, books, videos, conferences and other educational opportunities. Their goal is to help members create freedom through extraordinary wealth creation. Investment U Daily also has a premium version, Investment U Plus, which gives stock tips you can use immediately to make money with.
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