Asset allocation is one of the most important, least understood, and easiest parts of retirement planning. The following article explains what asset allocation is, how to properly allocate your assets, and the asset allocation model everyone should be using.
What are Your Assets?
Your assets are everything you own. Your house, cars, collectibles, couches, and retirement savings. The total value of your assets minus the total value of your debts is your net worth. Read: How to Calculate Your Net Worth
What is Asset Allocation?
Asset allocation is how everything you own, your assets, are divided up or allocated.
From the asset allocation image above, your house would be 51% of your total assets, 30% of your assets is in stocks, 10% bonds, 4% cash etc.
Why is Asset Allocation Important?
Allocate your assets properly, and you can beat 90% of money managers and mutual funds, retire when you want, and enjoy 90% odds that you will not run out of savings.
Use the wrong asset allocation model, and you will work longer than necessary or worse, run out of savings during retirement. Fortunately, creating and maintaining the right asset allocation model, is easy and quick.
Free Asset Allocation Model
The asset allocation model everyone should use, before and during retirement, is the same. Based on the Safe Withdrawal Percentage, the best performing asset allocation model is, 70% S&P 500 Stocks and 30% U.S. Treasury Bonds.
How to Allocate Your Assets
Once a year, examine your asset allocation, and re-allocate your assets to match the Free Asset Allocation Model. So for instance, if your retirement savings is $100,000, and you have $73,000 in S&P 500 stocks and $27,000 in U.S. Treasury Bonds, take $3,000 from your stocks and put it into your bonds.
Free Asset Allocation Analysis Software
Our free early Retirement software includes asset allocation analysis. enabling you to instantly see how your assets are allocated, so you can take the steps explained above, to maintain a safe asset allocation.
Use our free retirement tools to calculate your asset allocation and to easily achieve your retirement goals for free!
Free Retirement Tools:
Free Early Retirement Calculator
Free Retirement Planning Software
Free Retirement Planning Guide