When to rebalance and baseball analogy by Ken Mahoney

The general rule of thumb is that you should rebalance your asset allocation when your assets drift 5% or more away from your original allocation plan. A portfolio that is too heavily weighted in one area can be dangerous because the economy moves in cycles, which means your stock holdings could end up plunging so deeply that moving your portfolio back to its original allotment might take years, or might never happen.

Example: Tim Middleton, in his MSN article Spring Training for Your Portfolio in February 2007, compares portfolio rebalancing to bunting in baseball. By re-balancing you may not knock the ball out of the park, but by making small adjustments you’ll gradually move your assets toward home plate, and eventually you’ll score that big winning run.

Re-balancing helps take the emotion out of investing also. Instead of following the herd and selling when others are selling, or buying when everyone else is buying, you can become a contrarian—a maverick investor.

That is, you can zig while the market zags and vice versa. So often, when the market or an industry is doing poorly, there are panic sell offs by those with “weak stomachs.” This is the time when “long-term” investors, like Warren Buffet, step in and buy up the bargains.

While re-balancing is not a guarantee against loss, it:
Ensures that you’ll be buying low and selling high
Reduces volatility in your portfolio
Gives you a sense of consistency
Offers a process in which emotion and guesswork are eliminated

Asset Allocation, (Re-) Balancing and Your Retirement by Ken Mahoney

Because baby boomers are living longer than the generations before them, the United States Labor Department recommends that baby boomers plan for a 30-years worth of income to cover their expenses during retirement. This helps boomers to ensure that they don’t run out of money before they die. Your financial affairs are not going to organize and plan themselves, which means you need to be proactive in planning for your retirement.

And getting your financial future in focus requires taking steps to understand the state of your finances today and to make a plan for what kind of income and expenses you will have during retirement. Once you have these figures, you will be able to plan out the steps you need to take now in order to get you to where you need to be for retirement. It does not end there either. It is not a plan you create and walk away from for 30 years until you are ready to retire. Your retirement plan requires you to regularly review your financial investments to see how each one is performing and making necessary adjustments as time goes by.

Risk

Risk is something you need to adjust as the years go by. When you are in your 20s, you have forty years or so for your investments to grow before you retire. You have the time to take on more risk when choosing investments than you do in your 40s when you only have 20 years or so until retirement time. Even during your retirement years, your risk level changes, decreasing more and more as you get further and further into your retirement.

Asset allocation

It is also important to diversify your retirement investment portfolio. Diversification helps you to balance your portfolio, so when one investment is not doing well, the other investments that are doing well balance the portfolio out—reducing your losses. Once you have a clear sense of your current asset allocation, it is also important to remember that you have to be flexible—even as the years pass away. Flexibility is important because it will allow you to make clear and educated choices on changes that you need to make in your portfolio to get your investments back on track—helping you to reach your retirement goals.

Types of investments

Everyone is different and investment needs are just as different as people. Luckily, there are many different investment possibilities to choose from, which means you can look for and invest in investment vehicles that are right for you.

n Passbook Savings Accounts
n Certificates of Deposit (CDs)Real Estate
n Stocks
n Bonds
n Mutual Funds
n Precious Metals and Commodities
n Foreign currencies
n Annuities

Investment rule of thumb

The rule of thumb used to keep financial portfolios balanced is to deduct your current age from 100. The answer you get is the percentage of your portfolio that should be invested in stocks. The remaining percentage should be invested in bonds and cash. So if you are 40 years old now, 60% of your retirement investment portfolio should be invested in a variety of stocks. The remaining 40% of your portfolio should be in bonds and cash.

Why is this the rule? It goes back to the thought process of asset allocation, which states that as we get older, we should take less risk. Since stocks tend to be volatile, while bonds and cash are more stable, it makes sense that the older we get the more we will reallocate the stock investments in our portfolio into cash and bonds—the safer investments. A stock heavy portfolio can leave you with big losses, which can wreak financial havoc on your retirement when you need to sell or liquidate the stocks for income.

On the flipside, cash and bonds are victims of inflation. These investments usually do not grow at a value that keeps up with or is higher than the inflation rate. For example, cash and bonds may grow at a rate of 2% per year and inflation may increase by 4% per year. In this type of a scenario, your portfolio is not growing enough to cover the costs. So while you may decrease the risk of capital losses by limiting the percentage of your stock investments as time goes by, you can decrease your buying power as inflation eats away at your cash and bond earnings. This is why it is important to find a balance in the investments in your retirement portfolio.

Abundance Thinking: The Laws of Attraction by Ken Mahoney

To a large extent, the sort of retirement you have will be determined by your outlook, as well as by the energy you put into creating the life you want.

Let’s start with the outlook you have about your retirement. How do you view your retirement years? Do you see the glass as half-full or half-empty? People who see their glasses as half-full, tend to be positive thinkers. And positive thinkers tend to attract positive results. Their glasses keep filling up. Negative thoughts, on the other hand, tend to drain those glasses. In the end, those who think they can achieve a goal, whether financial, political, or social, are generally proven correct, while those who think they can’t are similarly likely to be proven correct. Abundance in your positive thinking proves the laws of attraction correct.

We’ve all been in uncomfortable situations with our minds racing, exaggerating likely outcomes, and raising our blood pressure. Those fantasies and fears that compulsively race through our minds need to be noted and consciously controlled. Otherwise, the fears take charge of our lives. This is especially true when planning for your retirement years. It is similar to a self-fulfilling prophecy. If you spend so much time worrying about the doom and gloom of your retirement years—being financially strapped, being bored, contracting a horrible disease—it detracts from the time you have to prepare for your retirement. Spend your time wisely. Prepare now. Worrying about it isn’t going to change the outcome because what is going to happen is going to happen whether you worry about it or not. But you can put plans in place and prepare now for what is to come. This planning and positive thinking can help to alter the outcome, or at least prepare you for it.

We can re-program our minds to think positive by consciously replacing compulsive, half-empty thoughts with those likely to lead to a ‘brighter’ outcome. What are your goals for this free period of your life? What footprints do you wish to leave in the sand? If you have ever taken a yoga class, you have already been introduced to the power of positive thinking. Before every practice, as you are settling into self, you make a purpose for your practice. Then, you have to envision yourself fulfilling your purpose. Doing something similar for envisioning your retirement can work you toward the way of life you are seeking during retirement.

The concept of the power that positive thinking can have on your life isn’t a new concept, but it was most recently revisited by the best-selling book The Secret by Rhonda Byrnes. It covers how to harness positive thinking and use it in every aspect of your life -- money, health, relationships, happiness, and in every interaction you have in the world. As you progress into retirement, use the positive power within you to set and achieve your goals.

You see, who you are affects how you plan for your retirement, and in the book you'll learn more about whether you're empowered, a boomer that's ready to take on retirement or whether you're a Wealth-builder, someone who's still looking to grow their wealth.

Maybe you're a Leisure Lizard where leisure is the name of the game. Or perhaps the ultimate optimist, an Anxious Idealist, and who knows, maybe you're the ultimate pessimist, Stretched and Stressed.

It does not matter, Now What by Ken Mahoney describes and explains everything you need to know about how to retire the right way, the way for you. If you're looking for tips on how you can prepare yourself emotionally for retirement, you'll find them.

Keeping both mentally and physically fit, eating healthy, using medication in a healthy manner, to learning more about regular checkups and even learning about the options available for funding your retirement. All these things are answered and explained in Now What? A Guide to Retirement During Volatile Times.

When we enter the workplace, our five basic needs are met. When entering retirement; do you think your basic needs will be met? Not sure what the basic needs are? The Now What Book defines, and explains these needs.

Just so you know, the best way to fulfill those needs is to not lose touch with your capacity to love; in fact, nurture it, for you will find that it is something that can grow. Let yourself need people, and let them need you. Elizabeth Drew.

The Now What Book also shares with retirees what they need to know about the places they should retire in. Everything from the best towns to the best places for the most affordable homes.

So many factors can alter your retirement plans and cause financial shortages for your plans for retirement. Planning ahead, figuring on needing more than you originally thought you would, all this helps and you'll learn everything you need to in The Now What Book.