The Oxford Club had a Private Wealth seminar recently at the stunning Four Seasons Resort located in Santa Fe, New York. One of the attendees asked the amount of cash they should hold on stocks before they retire. The answer to this question partly depends on the health, age and the monthly overhead of each. The portfolio size also plays an important role, and all this is known as retirement rebalancing.
Americans are retiring at 65 years with excellent health hence living longer than anticipated. It means living around three full decades after retirement. Given that after retirement it’s almost 20 years in time horizon an individual needs an excellent portfolio of equities that will generate a long-term return to guarantee a comfortable life exceeding the inflation rate. Because as the inflation is tricky today, the future measured in decades may be different. In the early 80s and late 70s, there was hyper-inflationary.
Due to age and contributions made towards investments portfolio, it’s easy to find a retiree having potential threat of lots of cash in stocks. It is because they invested young when the bear market has favorable returns and excellent buying opportunities. On the other hand, depending on your investments as a supplement for other cash flow like retirement benefits may be tricky. Cashing out on your stocks during a bear market and financial crisis results to smaller portfolio. However, you can avoid this by using what The Club refers to as retirement rebalancing where you use percentages to calculate your cash and low-risk bonds for funding the monthly overhead.
It is advisable to use retirement rebalancing when the market has reached new highs by liquidating stocks to fund your expenses and the reserves. It means that when the market goes on the bear market instead of redeeming your stock on lower prices, you use the reserve to pay for your expenses.
The Oxford Club is global and private networking circle of successful entrepreneurs and investors. They have a different principle, and investment system tested over the years to overpower the market. Oxford Club encourages investments in equities, options, bonds, real estates, funds, currencies and precious metals. The exclusive members of the Oxford Club have a privilege of business and social connection with other club members. The Oxford Club was formed in 1989.