3 Asset Allocation Rules for Retirement
The rules for divvying up your assets are a bit different in retirement than during your working years. The reason? When you still have a paycheck coming in from work, you can afford to take on more risk in your investment portfolio. Once that steady paycheck goes away, you'll want to minimize (though not eliminate) investment risk because during retirement, you'll probably be using your investments as an income source. With that in mind, here are a few important guidelines for seniors to follow.
The bulk of your retirement savings should be kept in a 401(k) or IRA, where it can remain invested and continue producing tax-advantaged gains. But it does pay to retain some money -- namely, enough to cover three to six months of bills -- in cash. The reason? If unplanned expenses strike, you'll have a means to cover them without running the risk of having to sell investments at a loss.
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Source Fool.com
