Saturday, June 8, 2019

Home RetireMentors Investing 6 steps to the ultimate retirement portfolio - step six

June 8, 2019

Here is the article.

Step Six takes us beyond the borders of the U.S. to invest in international stocks. Like U.S. stocks, they have a long-term upward bias. Over shorter periods, the trends in U.S. and international stock markets often offset each other, giving the combination less volatility.
Step Six slices the stock portion equally 10 ways, adding international large, international large value, international small, international small value and emerging markets stocks, which have become an increasingly important part of the world's total market capital — and which have outperformed the S&P 500 over long periods.
With this final step, the 44-year return of the portfolio jumped to 10.5% and had a standard deviation of 11.2%. Recall the industry standard we described in Step One; it had a return of 8.8% and a standard deviation of 11.3%. And for the record, during this same period the S&P 500 returned 10.4% with a standard deviation of 15.5%.

Over 44 years, this portfolio would have grown to almost $8.2 million, twice as much as the traditional pension model we introduced in Step One.


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