The Big Boomer Theory

The baby boom generation has had a long time to accumulate wealth and income. Now it's time for them to reevaluate their portfolios.

Part three of the lifetime investment Guide looks at how baby boomers in their 40s and early 50s can mold their portfolios to best build upon the financial foundations they’ve worked hard to set up. Its a time to expand horizons and pick up new financial investments, while still keeping your eyes on the prize — financial stability.

These don’t look like pivotal years for baby boomer Robert Williams. By all outward appearances, he’s living large. Now 40 years old, he’s settled quite comfortably in Indianapolis, and built a marvel of a home for his family — wife Marsha, 36, and daughter Brandy, 18. His job as a product manager at American States Insurance Co. looks solid, even more so now that he’s designing a computer system to let field sales agents underwrite commercial properties at the blink of an eye. With Marsha working as a claims specialist at CNA Insurance, the two bring in $120,000 a year. And after 10 years of investing, his portfolio is already in the mid-five figures and includes 10 companies that are as rock solid as any around.

Even as he relishes the rewards he’s worked hard to obtain, Williams sees his 40s not as a time to relax, but to build upon the solid foundations he’s put down for the future. And, with Brandy starting college this fall at Kansas University in Lawrence to the tune of $10,000 a year, he’ll have to keep his wits sharp. “I feel that I’m starting to get the knack of investing, and over time, I’ve learned all those lessons the financial professionals repeat over and over,” he says.

Experience also teaches baby boomers like Williams that their 40s and early 50s are no time to coast. They’ve shown their backbone — making emotional commitments to family, making a difference at work or even starting their own businesses; slacking up now would risk everything they’ve gained. That’s because many have begun to construct a sound financial future, saving for a college education for the kids and retirement for themselves.

So why not loosen up a little? Consider a few things. Medical advances and healthier living have pushed life expectancy, once stuck around the mid-60s to early 70s up toward the 80s, making retirement all the more costly a proposition. That’s also strapped boomers with the responsibilities for older parents. Meanwhile, kids you had in your 20s are fast approaching college age; children born to parents in their 30s aren’t lagging too far behind, either, and will probably hit the dormitories before you reach retirement.

KEEP KEEPING ON
These are pivotal years. You’ve come into your own, perhaps managed to put down solid roots and figured out the high-wire act we call family finance. You’ve put away some cash, and now we’re here to tell you how to move . around to increase gains and minimize risk. It’s time now to get more sophisticated by branching out into individual stocks and bonds. It’s called “asset allocation,” but amounts to no more than positioning your investments according to

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