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Maintaining your Investment Strategy in Retirement

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maintain investment assets in retirementPreviously on the Cordant blog, we discussed the importance of building an optimized portfolio in retirement. Taking an intentional approach to selecting and managing your assets is crucial to developing an effective investment strategy – particularly in retirement, when these decisions can have a significant impact on the amount you can prudently spend.

While building an optimized portfolio is important, it represents only half the battle when it comes to preserving your wealth in retirement. Once you’ve built a robust portfolio, it is equally important (if not more so) to stay disciplined with your investment strategy. Doing so can add tremendous value to your assets – allowing you to enjoy retirement with confidence in your financial plan.


Seek behavioral / coaching advice

Overcoming behavioral tendencies means keeping emotions at bay, particularly when it comes to managing the timing of your investment decisions. Traditionally, the two emotions that interfere most directly with maintaining strategic discipline are:

  • Greed: It is tempting to give into the seduction of trying to time the market or chase a recent hot-performing stock or sector, but historically, these kinds of emotional drivers do far more harm than good.
  • Fear: Stick to your long-term investment strategy, and avoid timing mistakes by jumping ship. For example, in early 2009 money was pouring out of stock funds. In hindsight, this turned out to be a great time to be buying stocks.

Numerous studies have been conducted on these phenomena of investor behavior, revealing that greed and fear (and the subsequent mismanagement of timing decisions) have a detrimental effect on returns. This tendencyis coined the “Behavior Gap.”

'Behavior Gap': The difference between returns investors actually receive and the returns on the funds they own.

By managing the emotions of fear and greed and maintaining discipline through all investment environments, you can add significantly to your portfolio returns.

develop a strategic Withdrawal Strategy

Reaching retirement means shifting from accumulating assets to withdrawing and spending them. And believe it or not, the order in which you withdraw assets from your various investment accounts does matter. In order to reduce taxes, develop an optimized portfolio withdrawal strategy that focuses on the sequence of withdrawals from your taxable, tax-deferred, and tax-free assets.

Execute, Monitor, & Adjust as necessary

Portfolio management is not something you can “set and forget.” It is important to periodically revisit and rebalance your accounts to ensure you remain close to your target risk tolerance and asset allocation. Additionally, making adjustments—such as rebalancing and tax-loss harvesting—can add significantly to your returns and the amount of taxes you pay over time.

 

wp-managing-investment-assetsWhile developing a long-term investment strategy is important for preserving your wealth, there’s a lot more to consider when managing your investment portfolio after retirement. If you would like to learn more about minimizing the Behavior Gap, developing a strategic withdrawal strategy, or how to periodically revisit and rebalance your accounts – as well as how to build and optimize your investment portfolio, we invite you to download our whitepaper, “Managing Investment Assets in Retirement.”

In the whitepaper, we provide a proven, seven-step framework to help you make deliberate investment decisions, stay disciplined with your strategy, and holistically manage your assets after you retire.

Download the Whitepaper


Want to learn more about how Cordant can help you manage your investment portfolio? Click here to download the whitepaper, or give us a call at 503.621.9207.


Click here for disclosures regarding information contained in blog postings.

Click here for disclosures regarding information contained in blog postings.
Cordant, Inc. is not affiliated or associated with, or endorsed by, Intel.

Published on July 17, 2014

Isaac Presley, CFA

Isaac Presley, CFA

Isaac Presley is Director of Investments for Cordant, a wealth management firm serving current and former Intel employees. To learn more, you can read Isaac's full bio.

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