Smart Money magazine is saying goodbye after 20 years and moving to an all- digital format. Barry Glassman helped to usher in their new age with financial advice in their column Perfect Portfolios: Your Next Move in This Market.
Below is the excerpt from his interview with Jonnelle Marte.
35-Year-Old Couple with a Young Child
Asset Allocation: 55% Stocks 20% Bonds 10% Alternative Assets 15% Cash
This couple is potentially struggling to collect the down payment for a new home, build up an emergency fund and start saving for future college costs — all without ignoring retirement savings. Each goal may require a different approach, says Barry Glassman, an adviser in McLean, Va. Savings for a down payment should be kept risk-free in a CD or savings account. Ditto for any cash set aside for emergencies.
However, you can take on more risk with tuition savings if college is still 15 years away or so, he says. The bulk of your retirement and college savings should be invested in equities, with an emphasis on large-cap companies. The bond portion of the portfolio should be concentrated in short-term bonds, which are less volatile than long-term bonds.
65-year-old marathon runner
Asset Allocation: 55% Stocks 25% Bonds 10% Alternative Assets 10% Cash
If you’re in good health, advisers say you should consider delaying Social Security retirement benefits to take advantage of a maximum 32% boost. (Payments are increased by 8% for each year you wait beyond full retirement age until age 70.) To prepare for a potentially long retirement — you may have to stretch your savings for another 30 years or so — you should take some investment risk.
Consider putting a portion of your bond portfolio in high-yield bonds, which yield about 7%, far above 10-year Treasuries, which are yielding less than 2%, says Barry Glassman, an adviser in McLean, Va. Use global bond funds that have the ability to hedge against changes in certain currencies, he says, which could boost returns at a time when the dollar is gaining against the euro and other currencies.