At the moment my retirement investments are spread over two different "2050" funds. (For any who are unfamiliar, these "target date" funds slowly grow more conservative as you get closer to your retirement date, in order to maximize returns while you are younger and earlier in your career, while minimizing risk when you are closer to retirement.) I plan on retiring early, and drawing from my retirement accounts starting in 2045 - the standard advice would be to move my investments into 2045 funds, but I am considering doing the opposite and moving them into 2055 funds. My thoughts are: the target date funds tend to be very conservative, aiming for a 40:60 stock:bond ratio at retirement, which I personally think is far too risk-averse. If I move my money into 2055 funds and retire in 2045 then I'd be around a 65:35 stock:bond ratio, which is much closer to the 60:40 I'm actually aiming for in retirement. Theoretically this strategy will see higher returns overall, especially in the shorter-term, as the 2050 fund is already up to 15% bonds (which I think is just unnecessary at this point). Of course a significant market downturn in the next 5 years would hit me a bit harder, but I'd still have 15+ years of higher average growth which should make up for it...
I would love to hear your thoughts, whether the idea is riskier than I am thinking, or whether you'd do the same in my shoes.
I would love to hear your thoughts, whether the idea is riskier than I am thinking, or whether you'd do the same in my shoes.
Statistics: Posted by Ambassador Spock — Thu Mar 07, 2024 5:42 am — Replies 3 — Views 96
