Q&A: Asset Allocation

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A reader is afraid of rising interest rates but also of running out of money


Q – I am 64 and my spouse is 68. What should be my asset allocation be? I am reluctant to include bonds and bonds funds as part of my fixed income due to fear of interest rates rising. I have been advised to keep five years of my expenses in layered GICs. Since rates are low I am afraid of running my money out. Your thoughts please. – Peter H.

A – Your asset mix should be conservative, especially with your fear of possible rate hikes and, presumably, the stock market. So I’d say something like 75% cash/fixed income, 25% equities.

Since you are unwilling to invest in bonds (a mistake in my view) your fixed income component will be GICs. At current rates, that means you won’t even keep pace with inflation. But you can’t have it both ways. If you want to reduce risk to an absolute minimum, you need to accept low returns. There’s no way around it. – G.P.



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