• Skip to main content

Sabela Consulting Group

Main Street Values, Wall Street Expertise

Jul 12 2018

Am I safe continuing to invest in Warren Buffet’s 90% stock, 10% bond recommendation?

QUESTION:
I’m 53 years old and have $1,100,000 in my Roth 401(k) and traditional 401(k). I have another $500,000 in various funds and stocks. Currently, 92 percent of my portfolio is invested in stocks and 8 percent is invested in bonds, and about 85 percent of that is invested in index funds.

Am I safe to continue investing in Warren Buffet’s 90 percent stock, 10 percent bond recommendation, or should I play it safe and become more conservative as I near retirement?

At 53 you are still a long-term investor, especially when you take into account the additional 20-25 years for which you should continue to plan after you retire. Therefore, your risk exposure should not simply depend on your age, as I think you are already aware by asking the question. Your capacity, tolerance, and need for risk also depend on other factors as well.

Although investors in their 50s on average have more conservative asset allocations than 90% stocks/10% bonds, you seem to be more sophisticated about investing than the average investor (you invest in index funds, you have a Roth and traditional 401k, and you have additional investment accounts). By understanding key principles about investing and how the markets work, you may be more comfortable with risk than someone who isn’t as sophisticated. Therefore, your tolerance for risk may be higher, which may mean that perhaps your current allocation is appropriate.

However, it’s very difficult to answer these types of questions without more information, and I’m sure you understand that. You’re always better off discussing your specific scenario with a fee only fiduciary investment advisor. Until then, be comfortable about what you are doing. It’s gotten you this far already. Good luck.

Read more from Dejan or submit a question on the Advisor Insights Network at Investopedia.

Share this:

  • Click to share on Facebook (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to email a link to a friend (Opens in new window)
Previous Post
Next Post

Written by Dejan · Categorized: Issue Briefs, Question

Copyright © 2023 Sabela Consulting Group, Inc.