How To Define Your Investment Strategy
Investment Strategy Based On Life Expectancy
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David Petersen, a leader in the field of financial planning for people with a life-challenging condition, created the following strategy for people living with a shortened life expectancy. Keep in mind that statistical projections do not predict what will happen to you or any other individual.
Life Expectancy of 5 years or more
- Invest like a person of your age with no health condition, except less speculatively and with more of a focus on liquidity.
- Avoid complicated investments because you need to be able to change strategies quickly.
- A conservative guideline is that the percentage of stock in a person's portfolio should equal 100 minus your age. For a more aggressive guideline, subtract your age from 110 and then multiply that figure by 1.25
Life Expectancy of 2 - 5 years
- A combination of growth strategy and income strategy is appropriate.
- Consider the extent to which you may need to access principal to meet your needs.
- Do not focus on the short term. It is advisable to prepare for the possibility that you may live much longer than your current life expectancy.
Life Expectancy of 2 years or less
- Maximize available cash in case you need it, particularly if your assets are limited.
- Adopt an income strategy that maximizes liquidity and minimizes risk.
- If you have resources that you will not need to live on, you may want to pursue a growth strategy to increase the dollar value of those assets.
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