Question

Think about your own retirement investment portfolio or find an example of one online. Discuss how you might use a model to create the optimum portfolio allocation for your risk level.

Answer 1

The retirement investment portfolio can be defined as an investment plan after retirement which includes the allocation of money in various aspects of life after retirement. It includes the money allocated for housing, healthcare, transportation, food, and clothing. The portfolio should be as follows:

Housing: Expected investment in housing after retirement can be $1,340 to $1,400.

Healthcare: The Possible healthcare expenses after taking retirement can be $600 to $650

Transportation: Expected transportation expense after the retirement should be $570 to $650

Food expense: The Monthly investment for food purpose can be $530 to $670

Clothing: Expected investment for clothing purposes after investment maybe $170 to $230.

The six staged asset allocation model may be utilized to create the optimum allocation of the portfolio for your risk level which is mentioned below:

Strategic asset allocation: this stage can be utilized for optimum portfolio allocation by maintaining a proportional combination of asset-based on the rate of return. It can be used after retirement as a buy and hold strategy.

Constant-weighting allocation: Constant-weighting allocation can be useful to create a rebalance in the portfolio.

Tactical asset allocation: This asset allocation requires a chain of the process which includes short-term opportunity, re-balancing portfolio, and long-term opportunity.

Dynamic asset allocation: Mix of assets can be properly adjusted in this stage keeping sustainability with market falls and rise. Assets can be sold and purchased based on their market value. It is a safe portfolio plan after retirement.

Insured asset allocation: A baseline of the portfolio, the value can be developed at this stage. It can be considered as the safest portfolio value which does not allow the fall of the value of the portfolio.

Integrated asset allocation: Both economic expectation and risk mitigation can be established in integrated asset allocation. This is the most suitable stage to tolerate monetary risks and ensures a secured investment portfolio.