thanks.

I have written about both the Grangaard Strategy (Paul Grangaard)and Worry-Free Investing (Zvi Bodie) – probably the two best ‘alternative’retirement strategies that I have come across. The better (but more hands on) strategy is a combined portfolio of direct real-estate investment + a few well-selected stocks.

The weakest strategy is a diversified portfolio through managed funds … you can only safely withdraw 2.5% – 3.5% of your portfolio every year IF you want to be at least 90% certain that your money will last as long as you do!

This is for Nikhila… Annuities

Annuities are basically a “savings account” or investing account with an insurance company. There are 2 types. Fixed annuities, and variable annuities.

Fixed annuities include one or more of things like CD’s, money market funds, bonds and T-bills, etc.

Variable annuities usually involve one or more growth stock mutual fund(s) inside of the annuity.

All an annuity basically is, is a deal between you, the insurance company and the IRS to determine how that savings/investment deal is handled for taxes. Annuities grow tax deferred and you pay taxes on the money when you take it out in retirement.

Now annuities arent evil, but I think alot of people get in to them at the wrong time and under the wrong circumstances because of sales pressure from the insurance company to buy them (especially as part of a Life Insurance Policy).

Since the annuity (tax shelter) itself has a fee, plus the mutual fund company’s fees and other fees associated with the investments themselves, annuities are the more expensive tax shelters for retirement, compared to 401K type plans, IRA’s (including ROTH), and other options. Most of the other options are usually really low cost or dont cost anything, and you’ll do better in those because you aint getting eaten up by fees.

I would do annuities only after you have maxed out all other tax advantaged retirement options and still have money to throw at retirement savings.. After annuities are maxed out.. your on to taxed accounts.

Again this is just my understanding of this.. anyone feel to make corrections, please feel free.

BTW, BoomerMingle is a niche dating site caters to singles in my age group.

I would still argue that total asset allocation is just as important as pure re-balancing. Re-balancing allows you to maintain a balanced portfolio given market changes, while pure asset allocation changes allow you to maintain a portfolio that fits lifestyle changes.

Bernstein’s “Intelligent Asset Allocator” does a great job explaining the point. To summarize generically, if you aren’t rebalancing your portfolio on a regular basis, at least every 2-3 years, then you are not getting the proper risk-reducing benefit from non-correlated asset classes.

Rebalancing is way more important than actual allocation. If your allocation is reasonable then rebalancing will make the most of it. If you don’t rebalance, it doesn’t matter if your (original) allocation is optimal because you won’t benefit appropriately from it.