The Stoplight Approach To Retirement Planning - The Money Update

Retirement planning can be scary, and many of us don?t have the first clue on where to place our hard earned savings to generate the best and safest return possible for retirement.? David Vick, Author of ?Bat-Socks, Vegas and Conservative Investing? Offers some very practical advice in regard to asset allocation for retirement. Using his theory, all investments can be classified as Green, Yellow, and Red money investments.? Using his stoplight method, you can properly allocate your assets given your individual needs and bee well on your way to a financially secure retirement.

Investments can be viewed as a stoplight at a busy traffic intersection.? There are many vehicles whizzing by, without paying attention to the stoplight it would be easy to get run off the road.

Green Money Investments For Retirement Savings

Green Money investments are considered to be your protected growth money.? This is the money that you want to see safety of principal.? No matter what happens to the economy, or to the world, you want to make sure that your green money investments leave your principal intact.? These investment vehicles are kind of like the ?mini-van? of investments.? You are looking for safety, tax deferral, and a guaranteed retirement income that you will not outlive.? An example of a green money investment is a fixed index annuity. ?Another example of green money is a cash value life insurance.? The primary goal is security.

Yellow Money Investments For Retirement Savings:?

Yellow money investments are still low on the risk spectrum.? The goal of your yellow money investments is to have liquidity.? You need the ability to have cash on a moment?s notice without taking a financial hit.? An example of yellow money is a CD, a savings account, money market accounts etc.? This is your rainy day fund for emergencies.? This is your 4-wheel drive on a snow-day.

Red Money Investments For Retirement Savings:

If your other investments are tied up in minivans and 4-wheel drive, this is your investment Farrari.? Your red money investments are at risk for loss, because you are looking for a higher rate of return.? The amount you put into red money investments depends on factors such as your age, your risk appetite, how much you have tucked away in green money etc.? Red money investments include stocks, bonds, variable annuities, ETFs, commodities, and anything with a higher rate of volatility.

As an investor, the amount of money you allocate to green, yellow and red investments is determined primarily by your age, and your risk appetite.? If you are young and just beginning your retirement savings it would be wise to choose some appropriate red-money investments to help your portfolio grow at a higher rate of return.? The closer you are to retirement, the more your portfolio craves security and safety and the more you want to be invested in green money.

For more information on how to properly allocate your retirement savings visit greenmoneyupdate.com?

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Source: http://themoneyupdate.com/the-stoplight-approach-to-retirement-planning-how-to-properly-allocate-your-savings/

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