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What’s a Smart Way to Organize Your Retirement Portfolio?

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Rather than just relying on interest rates to fund your retirement spending, another good approach is called bucketing. So what we want to do is put aside 12 months of your spending in a bank account. And you’re going to spend from that.

But then you’re going to invest the rest of your portfolio in another bucket. That’s your long-term portfolio. Now, here’s the key. Within that long-term portfolio, you want to make sure you have two to four years of investments that are relatively stable. So cash or short-term bonds, those are there to provide spending for the next two to four years.  

And then you invest the rest of your portfolio for the long term. So the key to this is just to make sure you have some assets invested that are there when you need them so that you can invest for the long term with stocks and other assets that'll support you through really a long life in retirement.

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