The Best Asset Mix near Retirement
By Saghir Aslam
Rawalpindi, Pakistan


(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live with dignity and fulfill their moral obligations towards charitable activities)


Here is another way of investing which you may want to consider. This will give you an opportunity to diversify. Keep in mind my philosophy of investment which I have written about month, year after year matter of fact for decades that whatever sector you want to invest in you must first do your homework I repeat do your homework thoroughly. Without the homework it is dangerous to invest. I am sharing with you another option to invest but make sure you use all the tools available either on net or otherwise with your full attention before you decide to invest .You will be rewarded according to the time and effort that you put into before investing.

The key for retirement is to start early. As early as possible we all know in the earlier years you have lots of obligations, commitments first newly married then children, children education, it sounds like it will never end however you must bite the bullet and start saving even before get married and continued onward. It doesn’t matter how small even if you were to save one dollar a day even that would help or let’s say once a week the money you were going to spend on the junk food which is not good for your health. Take that amount of money and invest. Possibly you could also once a season don’t go to or skip you favorite football game and basket ball game. The money you were going to spend on those games save that and invest.

Starting retirement saving early is so important that it is difficult to put it in words. All I want to say is decide make up your mind and start saving any of the above. I have written here is another little idea for you. Plan to save some from your vacation money for example if you plan to go on vacation for 2 weeks cut couple of days a short and add that money to your retirement investment. You will be glad that you did.

The best allocation for any investor is the one where the mix of stocks, bonds, cash and alternative investments allows you to sleep at night. That said, this question raises a good point: A nasty bear market early in retirement, coupled with steady withdrawals from a nest egg, can quickly drain one’s savings.

The traditional advice is to subtract your age from 100, which gives you the percentage of assets you should hold in stocks. (If you’re 65 years old, 35% of your assets should be in stocks; the balance goes in bonds.) As you age, you gradually shift the bulk of your portfolio to the relative safety of bonds.

Today, many advisers—given increases in life expectancy—are urging would-be retirees to tweak this formula and subtract one’s age from 110 or even 120. This means individuals age 65 would have 45% or 55% of their holdings in stocks, which, presumably, would help generate the growth needed for a long retirement.

That is all well and good. But ask yourself: Could you stomach a drop of almost 40% in the S&P 500 (see: 2008) if half of your nest egg was invested in stocks?

With all of this in mind, first consider one of the most noteworthy financial studies of recent years.  It is found that individuals who start retirement with as little as 20% or 30% of their nest eggs in stocks and gradually   raise their exposure to stocks over time are likely to make their money last longer.

The bonus: You have better downside protection in the early years of retirement, because if a bear market hits, you are less likely to have to sell stocks whose values are depressed as a result. (Go to   and search for: Reducing Retirement Risk with a Rising Equity Glide Path)

Second, run some numbers. A number of financial calculators can show you how various asset allocations might play out over time. Among them:  

Finally, never rely on any single calculator for answers. Try several and compare results.

(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)



Editor: Akhtar M. Faruqui
2004 . All Rights Reserved.