Retirement Income Portfolio Management: Plan

The main reason why people take on investment risks is the prospect of achieving a higher “realized” rate of return than can be achieved in a risk-free environment … ie a bank account with a compound interest rate FDIC.

  • Over the past decade, such risk-free savings have been unable to compete with more risky environments due to artificially low interest rates, forcing traditional “savers” into mutual stock and ETF markets.

  • (Funds and ETFs have become a “new” exchange, a place where individual stock prices have become invisible, questions about the company’s fundamentals are being ignored, and media executives are telling us that individuals are no longer on the exchange.)

Risk comes in many forms, but the main concern of a middle-income investor is “financial” and “market” risk when investing for income without the right mindset.

  • Financial risk covers the ability of corporations, government agencies and even individuals to meet their financial obligations.

  • Market risk refers to the absolute certainty that the market value of all marketable securities will fluctuate … sometimes more than others, but this must be planned for the “reality” and dealt with, never to be feared.

  • Question: Is it the demand for individual stocks that raises the price of stocks and ETFs, or vice versa?

We can only minimize financial risk by selecting high-quality (investment rate) securities, diversifying them properly, and understanding that changes in market value are in fact “unprofitable”. By having a plan of action to deal with “market risk”, we can turn it into a real investment opportunity.

  • What do banks do to depositors to get the amount of interest they guarantee? They invest in securities that pay a fixed rate of return, regardless of changes in market value.

You do not need to be a professional investment manager to manage your investment portfolio professionally. However, you need to have a long-term plan and know something about asset allocation … a often misused and misunderstood portfolio planning / organization tool.

  • For example, the “rebalancing” of the annual portfolio is a sign of a dysfunctional distribution of assets. The distribution of assets should monitor the investment decision each year throughout the year, regardless of changes in market value.

It is also important to admit that you do not need high-tech computer programs, economic scenario simulators, inflation estimators or stock market forecasts to properly adjust yourself to your retirement income target.

All you need is common sense, reasonable expectations, patience, discipline, soft hands and a big driver. The KISS principle should form the basis of your investment plan; The complex gains epoxy that keeps the structure safe and reliable during development.

In addition, the emphasis on “working capital” (as opposed to market value) will help you in the process of managing all four major portfolios. (Business majors, remember PLOC?) Finally, a chance to use something you learned in college!

Schedule for Retirement

A retirement income portfolio (almost all investment portfolios eventually become a retirement portfolio) is a financial hero who appears in time to fill the income gap between what you need to retire and the guaranteed payments you will receive from your aunt and / or past. employers.

The strength of a superhero does not depend on the amount of market value; From the point of view of retirement, it is the income earned in a suit that protects us from financial mischief. Which of these heroes do you want to fill your wallet with?

  • A $ 1 million VTINX portfolio that produces about $ 19,200 in annual spending.

  • One million dollars, a well-diversified CEF portfolio with an annual income of more than $ 70,000 … even with the same capital allocation as the Vanguard Fund (less than 30% alone).

  • The $ 1 million portfolio of GOOG, NFLX and FB does not make money at any cost.

I have heard that 4% withdrawal from the pension income portfolio is normal, but only if it is not enough to fill the “income gap” and / or if it exceeds the amount produced by the portfolio. If this “what if” is both true … well, that’s not a pretty picture.

Actual 401k, IRA, TIAA CREF, ROTH and so on. When you look at your portfolio and realize that it doesn’t even bring in nearly 4% of your real income, it gets ugly faster. Total income, yes. Realized income, ‘do not be afraid.

  • Of course, your portfolio has been “growing” in market value over the past decade, but it is likely that no effort has been made to increase its annual revenue. Financial markets live by market value analytics, and as the market rises each year, we are told that everything is fine.

  • What if your “income gap” is more than 4% of your portfolio; What to do if your portfolio produces less than 2% as Vanguard Retirement Income Fund; or if the market stops growing by more than 4% per year … you still run out of capital with a 5%, 6% or even 7% clip ???

The less popular (only available in individual portfolios) Closed End-to-End Fund approach has been around for decades and covers all “what ifs”. Together with Investment Value Shares (IGVS), they have a unique ability to take advantage of changes in market value in both directions, increasing the production of portfolio income with a monthly reinvestment procedure.

  • Please note that monthly reinvestment should never become a DRIP (dividend reinvestment plan) approach. Monthly income should be combined for selective reinvestment, where the most “bang for money” can be obtained. The goal is to reduce the value per share and increase position earnings with one click of the mouse.

The retirement income program, which focuses solely on increasing market value, is doomed to ghettos, even at IGVS. All portfolio plans require the allocation of at least 30%, often more, but never less, income-oriented assets. Decisions regarding the purchase of all individual securities should support the transaction’s “growth goal and profit target” asset distribution plan.

  • The Operating Capital Model is an automated pilot asset distribution system that has been tested for more than 40 years, which almost guarantees annual revenue growth when used properly for a minimum of 40% return.

The following reference points apply to the distribution plan of assets that manage individual taxable and deferred portfolios … Not 401k plans because they usually do not generate adequate income. Such plans should be broken down into the maximum possible security within six years of retirement and handed over to a personally administered IRA as soon as possible.

  • The distribution of “income target” assets starts from 30% of working capital, regardless of the size of the portfolio, the age of the investor or the amount of liquid assets available for investment.

  • Start-up portfolios (less than $ 30,000) should not have a capital component and should not exceed 50% until you reach six digits. From 100 thousand dollars (up to 45 years) to 30% income is acceptable, but not particularly profitable.

  • At age 45, or $ 250,000, go for a 40% income goal; 50% at age 50; 60% are 55 years old, 70% are securities with a goal of income, which comes first after the age of 65 or after retirement.

  • The income target portfolio of the portfolio should be invested as fully as possible and the determination of the distribution of all assets should be based on working capital (ie, based on the value of the portfolio); Cash is considered part of the capital or “growth target” distribution

  • Equity investments are limited to CEFs with seven years of experience and / or “investment grade securities” (as defined in the Brainwashing book).

Even if you are young, you should stop smoking a lot and develop an increased income flow. If you continue to increase your income, the increase in market value (which you are expected to worship) will be taken care of. Remember, a higher market value can increase the size of the hat, but it does not pay the invoices.

So here’s the plan. Identify your retirement income needs; start your investment program with a revenue center; add stocks as you get older and your portfolio becomes more important; When your retirement age comes or your portfolio size becomes more serious, make sure your income is determined.

Don’t worry about inflation, markets or the economy … asset distribution will continue to move in the right direction as you focus on increasing your income each year.

  • This is the main point of the whole “retirement income readiness” scenario. Each dollar added to the portfolio (or earned by the portfolio) is redistributed according to the distribution of “working capital” assets. When the distribution of income is above 40%, you will see a magical increase in income every quarter, regardless of what happens in the financial markets.

  • Note that all IGVS pay dividends, which are also divided according to the distribution of assets.

If you are ten years of retirement age, an increased income stream is something you want to see. Applying the same approach to your IRAs (including 401k rollover) will generate enough revenue to pay the RMD (required mandatory distribution) and allow you to say unconditionally:

Neither stock market adjustments nor rising interest rates will have a negative impact on my retirement income; in fact, I will be able to improve my income in both environments.