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How to Select & Manage your Assets in Retirement

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Preserving your quality of life in retirement is no simple task. It requires not only a holistic approach to your overall wealth management, but also a deliberate focus on building an optimized portfolio. Being intentional with your investment decisions can add tremendous value to your portfolio in retirement.

Therefore, when designing a portfolio and managing your investment assets in retirement, there are several important things to consider:

Strategically allocate your assets

Asset allocation is one of the most significant considerations to preserve and grow your wealth after you retire. In order to build a customized portfolio to achieve your financial goals, be sure to:

Optimize your risk exposure

The first step to making any investment decision is determining your risk tolerance. Selecting and controlling the amount of risk you are willing (and able) to take with your investments is one of the most crucial parts of constructing your portfolio.

This is especially important in retirement, as you don’t have the same luxury you had in your twenties to recover from bad investment decisions – and volatility risk can greatly impact the amount you can prudently spend. Be sure to take all risks into account when constructing your portfolio, including volatility, concentration, liquidity needs, and investment time frame.

Develop a robust asset allocation

Once risk tolerance is established, building an investment strategy in retirement requires intentional asset allocation. A more robust portfolio—one including diversified private investments such as hedge funds, private equity, REITs and commodities—can produce a greater return than a portfolio only invested in stocks and bonds.

Avoid Unnecessary Investment Costs

Building an optimized portfolio also means taking into account the fees and expenses you pay inside of your investment. These “hidden” expenses can be a big detractor from the net returns you end up realizing in your portfolio. Typical expenses include the expense ratio, taxes, cash drag, and transaction costs.

Looking closely at the fees and expenses you pay inside the investment vehicles you own is an important step. Evaluating and selecting tax-efficient and lower cost investment vehicles for your portfolio can help you reduce or eliminate these unnecessary, “hidden” costs – costs which often have a significant cumulative total.

Minimize taxes with asset location

Another way to cut costs is to ensure that your investments are “asset located” to help lower your tax responsibility. This means holding assets with the highest expected tax impact in your tax-deferred accounts (e.g., Rollover IRA) whenever possible. Examples of investments that are less efficient include:

  • Equity strategies that trade frequently (e.g., actively managed mutual funds, hedge funds, etc.) and therefore generate short-term capital gains
  • Taxable bond investments that generate interest payments taxed at higher ordinary income tax rates.

 

A lot goes into building an optimized investment portfolio in retirement. If you would like to learn more about allocating your assets, reducing unnecessary expenses, or minimizing taxes – as well as how to stay disciplined with your investment strategy, 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, and holistically manage your assets after you retire.

Download the Whitepaper


Want To learn more about how Cordant Can help you optimize your investment portfolio? Click here to download the whitepaper, 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 01, 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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