Too Young to Think About Retirement? Think Again!

Jacobs first converted his 401(k) into a traditional IRA, which consists of a series of no-load mutual funds in addition to a small percentage, less than 4%, of individual stocks. Jacobs says he has been successful in saving for retirement by learning and applying the asset allocation model, diversification strategies, dollar-cost averaging, and starting early.
By following these models, he and his wife, Josephine Lee, have been able to protect their assets from market fluctuations.

“During those rare occasions when I was able to anticipate market declines, I shifted our asset allocation from a fully invested position to a much more conservative 40% stocks, 30% bonds, and 30% cash allocation. This not only helped ensure we had cash available to reinvest near the bottom of market decline cycles, but it also helped to minimize but not prevent losses,” explains Jacobs.

They now hold about 70% in stocks, 30% in bonds, and very little cash, which is a fairly aggressive position for his age and one he does not recommend for others close to retirement or who have very little experience in investing.

The layoff and the birth of his son five years ago have pushed back Jacobs’ retirement goal of 62. But due to careful planning in the past, in addition to his home, he and his wife combined have more than $1.2 million in liquid assets and a total net worth of about $1.7 million.

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  • Ashley Vaughn

    Nice Article, Black Enterprise! We need more articles like this because I’m sure it’s not being taught at home like Mr. Davis’s. I actually fit the same criteria as him. It makes me feel good that there are more people who are trying to make a better future for themselves. Unfortunately, this story would have been a lot more heartfelt if he was not an engineer. I’m an engineer as well and it makes it feel as though we are the only ones who can do this.

    Ashley
    Kabul, Afghanistan

    • LaToya Smith

      Thank you for your valued feedback Ashley. I will indeed create more content such as this for individuals at all income levels and show how they can get started building their nest egg.

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