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.

different ages. It is designed to give you a blueprint for your portfolio’s composition.

Having recently turned 50, Rasheedah Ali of Atlanta has started looking over just where her assets are. It’s an important time to do so, because she’s begun to worry more about her retirement, a concern that she had paid only minor attention to before as she launched her own broadcast communication consulting firm, Spectrum International Communications Inc. Now that her venture is offend running, Ali says, “I’m thinking about the future more seriously than I have before, because frankly, this is the first time in years I’m not technically raising someone,” says Ali, who has four adult children (Sekou, 26, Najuma, 25, Tarik, 23, and Anwar, 20). But having separated from her husband, she began to mull over whether her investments suited her vision of 10, 20, even 30 years down the line.

Ali’s been diligent for quite some time. She pays herself a base salary of $55,000 and saves a minimum of 15%-20% of her gross income. Over the last 15 years, she had built up a decent-sized stock portfolio including holdings in Turner Broadcasting, a former employer and Unilever. But as she took a closer look, she started thinking about adding a position in bonds to balance the stock she holds in the 401(k) plan
she had at Tumer. Ali now has approximately $20,000 invested, about half in fixed- income securities — or what bonds are called in investing circles — another 30% in a money market mutual fund, and 20% in capital growth funds.

Of course, you should feel free to adjust the percentages according to your profile as an investor, as determined in the second worksheet of this series. An example: a 45 year-old gets a big promotion, and now that she’s bringing home more, she decides to beef up the amount she squirrels away in stocks to make up for early, more lean years when she just didn’t have that much leeway. In her case, knowing that stocks have historically averaged an annual return of 10%, she might decide to shoulder a bit more risk and position 25% in bonds and 75% in mutual funds or stock.

In closing, we’ll repeat another lesson. Stick to your plan and keep investing for the long haul. Williams says that’s the most important thing he’s learned so far. “Foremost, I’d say I’ve gained patience. I invested a lot in my company’s shares when American States went public about a year and a half ago. I saw the stock slip about $3 from the offering price in the mid-$20x; it’s at $46 a share now, but I wouldn’t have gotten in on the gain if I had cashed out.”

To obtain back issues containing other parts of this series, please call our circulation department at 212-886-9568.

Perhaps you’ve taken a different route in life — you married later than your friends, and an entrepreneurial itch to start your own business sapped your savings. Maybe you just didn’t bear down and

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