Three Model Portfolios Designed to Help You Sleep Well At Night


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Sunday, March 08, 2009

Bob Brinker on Approaching Retirement

Bob Brinker on Approaching Retirement vs. The Retirement Advisor

Bob Brinker has been able to reach a wide audience over the years by virtue of the syndication of ABC’s Radio Show, Moneytalk which he hosts on the weekend. Mr. Brinker has often discussed asset allocation, but in recent years we believe his market timing choices, and other recommendations have included poor recommendations. For example, he told a person approaching their retirement years that he wouldn't have a problem having more than 50% equities given his bullish outlook at the time. His Model Portfolio which was designed for someone in retirement, had well over 50% in stocks at one point. This came at a time when Bob Brinker was extremely bullish on stocks, and was recommending to lump sum purchase into equities when the S&P 500 was around 1450. His subsequent “buy” signals were lower and lower, but the market continued to go lower. At The Retirement Advisor, our most aggressive portfolio for someone approaching or in retirement has maximum exposure of no more than 50% in stocks. Our other two model portfolios have even less exposure to the stock market and have weathered this bear market quite favorably.

Brinker also had recommended the Vanguard High Yield Corporate Bond fund for one of his Model Portfolios that invested solely in the fixed income arena. At The Retirement Advisor, we completely disagree with this investment choice. We believe fixed-income holdings should be conservative investments that investors do not have to lose sleep over. That fund lost over 20% in one year -- which we regard as totally unacceptable losses for someone approaching or in retirement who invests in bonds.

The Retirement Advisor Model Portfolios were constructed with the goal of safety and one other important goal in mind: Simplicity. Studies have shown that the most effective way to save and invest for retirement is to construct and maintain a diversified portfolio of low-cost index funds matched to one’s retirement needs and risk tolerances. There is no need (and in fact, this may be detrimental to your financial health) to invest in the hottest technology fund, or buy actively managed mutual funds where annual expenses could be over five times as high as low-cost index funds.

We invite you to learn about our newsletter which is very reasonably priced and hopefully will help you achieve your goals as you head into your retirement years. You can download a free sample, and learn how to subscribe to The Retirement Advisor by going to this URL:

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The Retirement Advisor Model Portfolios all began with $200,000 on 1/1/2007