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.