Hydracarina http://hydracarina.org/ Tue, 10 May 2022 17:18:07 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://hydracarina.org/wp-content/uploads/2021/10/icon-4-120x120.png Hydracarina http://hydracarina.org/ 32 32 Billionaires are backing an anti-reawakening asset manager https://hydracarina.org/billionaires-are-backing-an-anti-reawakening-asset-manager/ Tue, 10 May 2022 17:18:07 +0000 https://hydracarina.org/billionaires-are-backing-an-anti-reawakening-asset-manager/

Two American billionaires are backing a fledgling investment firm that will push companies to avoid taking a stand on social issues.

The company, Strive Asset Management, is based in Columbus, Ohio, and will be led by Vivek Ramaswamy, the former CEO of Roivant Sciences, a biotech company. The Wall Street Journal first announced the formation of the company, which was later announced via press release.

Ramaswamy, who will serve as executive chairman, has raised $20 million to start the company, which he says will go against the “stakeholder capitalism” of BlackRock, Vanguard and State Street and the idea of ​​”mixing business with politics”.

Sources of the company’s seed capital include PayPal co-founder Peter Thiel and hedge fund manager Bill Ackman (pictured), among others. The company’s other co-founder is Anson Frericks, a former executive at Anheuser-Busch InBev in St. Louis, Missouri.

Strive expects to launch its first product in Q3 2022.

“We want iconic American brands like Disney, Coca-Cola and Exxon, and American tech giants like Twitter, Facebook, Amazon and Google to deliver high-quality products that improve our lives, not controversial political ideologies that divide us,” Ramaswamy said in a statement.

“The Big Three asset managers have fueled this polarizing new trend in American business, and that is why we will compete head-on with them to refocus American business on the common pursuit of excellence rather than politics,” he added.

Ramaswamy is launching the business at a time when stakeholder capitalism is gaining popularity. The three companies mentioned in his statement — Disney, Coca-Cola and Exxon — have all recently taken what have been seen as political positions.

Disney opposed Florida’s opposition to the state’s “Don’t Say Gay” law, Coca-Cola opposed voting restrictions passed by the GOP in Georgia, and an activist hedge fund , Engine No. 1, led a successful campaign to add two board members to Exxon Mobil’s board of directors over the oil company’s climate change plans.

BlackRock CEO Larry Fink insisted in January that his brand of stakeholder capitalism was not “woke” after criticism from conservatives for its ESG support, as it did when BlackRock backed the No. 1 engine in the Exxon case.

“It’s capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers and communities your business relies on to thrive,” Fink said. “We focus on sustainability not because we are environmentalists, but because we are capitalists and trustees for our customers.”

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Pillar 1: assess asset management carve-out https://hydracarina.org/pillar-1-assess-asset-management-carve-out/ Mon, 09 May 2022 12:15:29 +0000 https://hydracarina.org/pillar-1-assess-asset-management-carve-out/

On May 6, the OECD published its proposals for the exclusion of regulated financial services activities from the first pillar of the BEPS 2.0 project.

The first pillar is the initiative to reform the rules governing the allocation of the right to tax the profits of multinational enterprise groups. Under the first pillar rules, a greater share of these taxing rights will be allocated to the countries where the clients of the groups are located. The new rules will initially only apply to the largest and most profitable groups – those with a turnover of at least 20 billion euros and a profit margin of at least 10% . Over time, the income threshold will be reduced to €10 billion, bringing more groups within the scope of the rules.

What is the rationale for excluding regulated financial services firms?

The first pillar was driven by concerns that existing profit attribution rules focus too much on physical presence. This means that companies that can operate in a market without a significant physical presence – most obviously, digital companies – can generate significant profits from sales in a country by making commensurate taxable profits there.

For many financial services groups, however, the key factor that will determine where taxable profits are earned is the location of capital, which is governed by regulatory requirements. This means that financial services firms are less able to control where taxable profits are made through structuring, and there is more acceptance that their profits are taxed in the “right” place.

How does exclusion work?

The exclusion applies to several types of financial services activities, including retail and investment banking, insurance and asset management. The definition of excluded asset management activities is broad and formulated in general terms, rather than referring to specific types of regulated funds or activities.

Exclusion is assessed entity by entity. For example, any entity in a group that derives 75% or more of its gross income from excluded asset management activities will be fully excluded, while entities that do not meet this threshold will not. A group with excluded activities will only fall within the scope of the first pillar if its non-excluded activities alone reach the turnover and profitability thresholds.

Is it settled?

Not necessarily. The consultation paper specifically reminds readers that the proposals do not represent the final or consensus views of Inclusive Framework countries, and notes that some countries believe that reinsurance and asset management should not be excluded.

The fact that these activities are covered in the published proposals indicates that most countries want to exclude them from the first pillar, but this is not done. The OECD invites the public to comment on the exclusion proposals until May 20, so interested financial services industry stakeholders should consider making their voices heard.

As part of the ongoing work of the OECD/G20 Inclusive Framework on BEPS to implement the two-pillar solution to address the tax challenges arising from the digitalisation of the economy, the OECD is seeking public comments on the exclusion from regulated financial services under amount A of the first pillar.

www.oecd.org/…

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Institutional investors are eyeing alternative asset classes https://hydracarina.org/institutional-investors-are-eyeing-alternative-asset-classes/ Mon, 09 May 2022 06:34:52 +0000 https://hydracarina.org/institutional-investors-are-eyeing-alternative-asset-classes/

Institutional investors are increasing their exposure to alternative asset classes in an effort to diversify their portfolios, generate higher returns and minimize risk.

Demand for alternative asset classes such as private equity, hedge funds, infrastructure, private debt, real estate and natural resources has increased and is expected to increase further in the coming years.

Assets under management (AUM) across all alternative asset classes are expected to hit $23 billion in 2026, up from $11.32 billion in 2021, according to data provider Preqin. This shows consistent growth since 2015, when AUM was just $7.23 billion.

Lose the taste of regular vanilla

The shift towards alternative investments comes as institutional investors move away from traditional assets such as fixed income securities in search of higher yields. Some investors may choose to invest across the full spectrum of alternative asset classes, while others may choose classes that best suit their risk profile and level of sophistication.

Retail investors tend to allocate less to alternatives, while more sophisticated investors will typically devote more than 10% of their portfolio to these asset classes.

Research from Manulife Investment Management shows that the largest Canadian pension funds allocated between 34.7% and 54.3% of their portfolio to alternative assets in 2020. This is about 10% more than in 2015, when the allocation to alternatives varied between 24.6% and 44.1%.

The data shows that the Ontario Teachers’ Pension Plan had the highest allocation to alternatives in 2020, followed by the Canada Pension Plan Investment Board, the Board of investment from public sector pension plans, the British Columbia Investment Management Corporation and the Caisse de depot et placement de Québec. .

Inflation drives investors to allocate more to alternatives

Macroeconomic indicators such as inflation also play a key role in pushing institutional investors towards alternatives.

In fact, a snapshot poll by advisory firm Bfinance shows that macro conditions are driving allocations to illiquid strategies, with real assets leading the way. Specifically, 46% of investors expect to increase their exposure to infrastructure, with inflationary conditions providing additional stimulus to infrastructure investors.

The survey also reveals that there is strong momentum behind investments in private debt and real estate, with institutional investors planning to increase their exposure to these asset classes over the next 12 months, far more than they have not done so in the last 12 months.

Additionally, the survey shows that institutional investors plan to reduce their exposure to all public stocks and inflation-linked bonds over the next 12 months.

The most attractive sectors in private markets

According to a report by Natixis Investment Managers, “the hunt for yield leads to alternatives” was seen as one of the key themes that would shape the strategies of institutional teams looking to position their portfolios to handle the unknowns ahead in 2022.

The Institutional Outlook 2022, which presents the results of a survey of 500 institutional investors, reveals that information technology, healthcare, infrastructure, energy, real estate and finance were considered the sectors most attractive for private markets before 2022.

The report also indicates that inflation was ranked as the main concern, with the majority believing it to be transitory. Other key risks include interest rates, valuation, volatility and environmental, social and governance (ESG) issues.

Indeed, ESG has been a key topic within the institutional investor community, with all types of investors seeking to embrace it. However, it is important that investors avoid approaching ESG as a short-term opportunistic engagement and instead view it as a long-term strategy.

The same goes for alternatives, as it is essential to have a longer investment time frame when allocating to such assets. In short, investing in alternatives can provide institutional investors with opportunities to generate higher returns, manage inflation and volatility, and minimize risk by diversifying their portfolio. There are also challenges, as the alternatives are considered riskier assets compared to the regular vanilla variety. However, investors are willing to move beyond their risk curve in order to generate higher returns and beat rising inflation rates.

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LGT Bank Selects SEBA Bank to Provide Digital Asset Custody and Brokerage Services https://hydracarina.org/lgt-bank-selects-seba-bank-to-provide-digital-asset-custody-and-brokerage-services/ Sun, 08 May 2022 20:56:54 +0000 https://hydracarina.org/lgt-bank-selects-seba-bank-to-provide-digital-asset-custody-and-brokerage-services/

SEBA Bank, a fully integrated FINMA-licensed digital asset banking platform, announced that it has partnered with LGT Bank, an international financial services provider focused on private banking and asset management, to provide custodial and brokerage services for digital assets.

LGT Bank is part of the LGT Group, one of the leading international private banking and asset management groups with more than CHF 280 billion in assets under management. LGT Bank leverages SEBA Bank’s fully regulated banking platform and institutional-grade digital asset custody capabilities to launch digital asset custody and trading services for its clients.

LGT Bank will initially offer investment services for Bitcoin (BTC) and Ethereum (ETH). Digital asset investment services will be fully integrated with traditional assets, allowing clients to seamlessly integrate crypto into their existing portfolio.

Franz Bergmüller, CEO of SEBA Bank, said: “As a FINMA-licensed and regulated Swiss bank with core competence in cryptocurrencies and digital assets, we enable banks and their customers to manage assets traditional and digital in complete safety. We have the know-how, established processes and above all an ISAE 3402-certified custody solution established by independent organizations. The range of services combined with the highest security standards makes SEBA Bank’s service offering unique and we are very pleased to be able to support LGT with our expertise in expanding its services around digital assets.

A highly successful and trusted counterparty in the digital asset industry, SEBA Bank supports a range of investment services including: trading in over 14 cryptocurrencies, a comprehensive crypto yield offering, SEBA Earn and the SEBA Gold Token, an innovative digital token backed by physical Swiss gold. SEBA Bank’s ISAE 3402 certified hot and cold storage solutions will enable LGT and its customers to benefit from the highest security standards for the safekeeping of their digital assets and private keys.

“The demand for cryptocurrencies has also increased among our customers in recent years”, says Roland Matt, CEO of LGT Bank, Liechtenstein, “we are very pleased to now be able to offer our customers easy access to this asset class. During the development of our new offer, we paid particular attention to security while betting on clear and reliable processes and procedures, which are central to dealing with this dynamic and still quite young asset class. our cooperation with SEBA Bank, our customers’ digital assets are entrusted to the custody of a professional and certified provider with extensive experience in this field”.

LGT Bank’s digital asset investment solutions will initially be available to certain customer groups of LGT Bank, Liechtenstein. Clients must be domiciled in Liechtenstein or Switzerland and be classified as professional clients or be managed by an external wealth manager to access the services.

About SEBA Bank AG – Redefining finance for the new economy
Founded in April 2018 and based in Zug, SEBA Bank is a pioneer in the financial sector and the only smart bank in the world to offer a completely universal suite of regulated banking services in the emerging digital economy. In August 2019, SEBA Bank received a Swiss banking and securities dealer license, and in September 2021 the CISA license – the first time that a reputable regulatory authority such as FINMA has granted such licenses to a service provider financiers with basic capability in digital assets. In February 2022, SEBA Bank obtained Abu Dhabi Global Market Financial Services Authorization and opened an office in Abu Dhabi.
The wide range of vertically integrated services combined with the highest security standards make SEBA Bank’s value proposition unique – this is why the Banque de France selected SEBA Bank to test the integration of Central Bank Digital Currency (CBDC) . CVVC Global Report and CB Insights named SEBA Bank one of the top 50 companies in the blockchain ecosystem for two years in a row. Aite Group awarded SEBA Bank its 2021 Digital Wealth Management Impact Innovation Award in the category “Digital Startup of the Year”. one of the Top Startups 2021 in Switzerland.
For more information about SEBA Bank, please visit our website.

]]> FDIC Announces Notice Requirement for “Crypto-Related Activities” | PC Weiner Brodsky Kider https://hydracarina.org/fdic-announces-notice-requirement-for-crypto-related-activities-pc-weiner-brodsky-kider/ Sat, 07 May 2022 00:21:07 +0000 https://hydracarina.org/fdic-announces-notice-requirement-for-crypto-related-activities-pc-weiner-brodsky-kider/

The FDIC recently announced, via Financial Institutions Letter 16-2022 (FIL-16-2022), that FDIC-supervised institutions must notify the FDIC if they intend to engage or are currently engaging in activities related to “cryptographic assets”. The institution is required to provide the FDIC with “all necessary information that would enable the FDIC to engage with the institution regarding related risks.” The notice should describe the activity in detail and include a proposed timeline for engaging in the activity. The institution must provide the initial notification to the FDIC Regional Director. The letter also encouraged institutions that notify the FDIC to notify their state regulator.

Once an institution submits the notice, the FDIC may request additional information, which will vary depending on the type of crypto-related activity described in the notice, and then the agency will provide relevant supervisory comments, if applicable.

The letter defines a “cryptographic asset” as generally “any digital asset implemented using cryptographic techniques.” The letter also gives examples of what constitutes “cryptography-related activities”, although it notes that given the evolving nature of the subject, there may be other activities that constitute cryptographic activities that would require a notice. The letter cautions, however, that this list of activities should not be construed as a statement that the activities are deemed permitted. The letter includes the following activities in its description of “crypto-related activities” requiring notice:

  • Act as custodians of crypto-assets;
  • Maintaining reserves of stablecoins;
  • Issuance of crypto and other digital assets;
  • Acting as market makers or exchange or redemption agents;
  • Participate in blockchain and distributed ledger-based settlement or payment systems, including performing node functions; and
  • Related activities such as research activities and loans.

In explaining the background to FIL-16-2022, the FDIC cites various concerns regarding the risks of cryptographic activities, including security and soundness and anti-money laundering; financial stability and “systemic risks to the financial system”; and consumer protection issues. The agency also explains that due to the nature of crypto-related activities and the fact that this field is rapidly changing, it believes that the agency should assess activities on an individual basis. The letter notes that supervised institutions “are able to demonstrate their ability to conduct crypto-related activities in a safe and sound manner.”

The FDIC previously included cryptoasset risk assessment in its list of 2022 priorities (see WBK’s previous coverage of 2022 priorities here). The OCC issued an interpretative letter in November 2021 that required a national bank or federal savings association to notify its supervisory office of its intention to engage in certain cryptocurrency, distributed ledger and stablecoins, discussed in the letter.

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Valuation of popular asset classes for inflation protection https://hydracarina.org/valuation-of-popular-asset-classes-for-inflation-protection/ Fri, 06 May 2022 21:18:00 +0000 https://hydracarina.org/valuation-of-popular-asset-classes-for-inflation-protection/

Torsten Asmus/iStock via Getty Images

Defining the inflationary environment

Reference is made to the University of Michigan: Inflation Expectation© (MICH) series.

Surveys of Consumers, University of Michigan, University of Michigan: Inflation Expectation© (MICH), retrieved from FRED, (accessed 5/4/2022)

Surveys of Consumers, University of Michigan, University of Michigan: Inflation Expectation© (MICH), retrieved from FRED, (Accessed 5/4/2022) (FRED)

For In this study, an inflationary environment was assumed to exist when simultaneously the MICH is above 3.2% and the 6-month moving average of the inflation rate is also above 3.2%.

Both series contain monthly data, but are not point-in-time. Series values ​​are listed with the date of the first day of the month to which they refer. Since MICH values ​​are only known at the end of the month and inflation rate values ​​near the end of a month, a month must be added to the series dates for a real-time series.

Valuation of popular asset classes for inflation protection

The Investopedia article “9 asset classes to protect against inflation” considers the following asset classes and corresponding ETFs for inflation protection:

  1. Gold – SPDR Gold Shares ETF (GLD)
  2. Commodities – iShares S&P GSCI Commodity-Indexed Trust (GSG)
  3. A 60/40 equity/bond portfolio – 60% SPDR S&P 500 ETF (SPY) / 40% Vanguard Total Bond Market Index Fund (BND)
  4. Real Estate Investment Trusts (REITs) – Vanguard Real Estate ETF (VNQ)
  5. The S&P 500 ETF – SPDR S&P 500 (SPY)
  6. Real Estate Income – VanEck Vectors Mortgage REIT Income ETF (MORT)
  7. The Bloomberg Aggregate Bond Index – iShares Core US Aggregate Bond ETF (AGG)
  8. Leveraged loans – Invesco Senior Loan ETF (BKLN)
  9. TIPS – iShares TIPS Bond ETF (TIP)

Table 1 below lists the total returns and excess returns relative to SPY for the various asset class ETFs when invested during the defined inflationary periods of the Risk-on and Risk-off phases signaled by the iM-Multi-Model Market Timer. The performance was obtained by backtesting over the period 2005-2022 using the online portfolio simulation platform Portfolio 123 which provides historical data for stocks and ETFs from 1999 as well as historical economic data.

Table-1 Total returns of inflationary periods with and without risk 2005-2022
Symbol Risk Periods Total Return Risk periods Excess return on SPY Risk-free periods Total return Risk-free periods Excess return over SPY Risk-on & Risk-off periods Total return Risk-on & Risk-off periods Excess return
(VNQ) 113% 50% -45% -5% 68% 45%
(GSG) 84% 21% -62% -22% 22% -1%
60% SPY / 40% (BND) 32% -31% -22% 18% ten% -13%
(GLD) 23% -40% -12% 28% 11% -12%
(POINT) 0% -63% -1% 39% -1% -24%
(AGG) -2% -65% 5% 45% 3% -20%
(TO SPY) 63% -40% 23%
Risk-on & Risk-off Inflationary periods Total returns 2011-2022*
(BKLN) ten% -14% -1% 4% 9% -ten%
(DEAD) 8% -16% -1% 4% 7% -12%
(TO SPY) 24% -5% 19%

* The performance of the MORT and BKLN ETFs relates to the period 2011-2022 because their creation dates are in 2011.

It is evident that for all inflationary periods during the Risk-on and Risk-off phases, only the ETF (VNQ) provided some inflation protection relative to the benchmark ETF (SPY), while that none of the other asset classes provided protection.

Best asset classes for inflation protection

Better protection against inflation during risk-on phases is provided by ETFs in the energy sector. Energy Select Sector Fund SPDR (XLE) posted excess returns over SPY of 204% and Invesco Dynamic Energy Exploration & Production ETF (PXE) provided the highest excess return of 283%. During Risk-off phases, the ProShares Short S&P 500 ETF (SH) produces the highest excess return versus SPY.

Table-2 Total returns of inflationary periods with and without risk 2005-2022
Symbol Risk Periods Total Return Risk periods Excess return on SPY Risk-free periods Total return Risk-free periods Excess return over SPY Risk-on & Risk-off periods Total return Risk-on & Risk-off periods Excess return
(PXE) 346% 283% -58% -18% 288% 265%
(XLE) 267% 204% -50% -ten% 217% 194%
(SH) -48% -111% 47% 87% -1% -24%
(TO SPY) 63% -40% 23%

Figure 1 shows the performance of PXE for all inflation periods during the risk phases signaled by the iM-Multi-Model Market Timer. Note that in the “General Info” the Number of Positions = 0 and Last Trades (1) = 05/02/22. This indicates that the model sold PXE and the Risk-on phase ended on May 2, 2022.

PXE performance over periods of inflation

iMarketSignals

Conclusion

It would seem that the best protection against inflation is provided by funds in the energy sector and to a lesser extent by funds in the real estate sector. However, analysis shows that during periods of market decline, they also underperform SPY, thus offering no protection during Risk-off phases. During these phases, bond funds or the Short S&P500 ETF (SH) will offer better protection.

For better returns on investment, it is important to have good timing information for the Risk-on and Risk-off phases that the iM-Multi-Model Market Timer could provide. This timer, updated weekly on iMarketSignals.com, recently switched to Risk-off. Since the current inflationary period is not over, the current best asset allocation from the Investopedia list would be AGG, or SH from the “Top Asset Classes” list.

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Retirement Asset Allocation: 2022 Guide https://hydracarina.org/retirement-asset-allocation-2022-guide/ Fri, 06 May 2022 12:31:51 +0000 https://hydracarina.org/retirement-asset-allocation-2022-guide/

Retirement Asset Allocation: 2022 Smart Asset Guide

The general rule of asset allocation in retirement is this: you should move to more conservative investments when you retire, since you no longer have any active income to replace losses. However, you will need this money for decades, so you should not completely abandon your growth-oriented positions. And therefore find the exact balance according to your personal spending needs. Here are three steps to building your asset allocation for retirement in 2022.

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A Financial Advisor can help you create a financial plan for your retirement needs and goals.

1. Set your goals, then adjust them over time

When planning for retirement, it is important to anticipate two issues:

Life expectancy. According to OECD data, the average American aged 65 can expect live another 18 to 20 years. However, retirees should not anticipate this number. A healthy American can often expect to live well into their 80s and 90s, and for people currently planning their retirement, there’s good reason to expect that will continue to stretch out.

If you’re retiring at age 65, it’s wise to plan for at least 30 years of money. More, if possible. This means that you will need a nest egg large enough to last for years. It also means that inflation should be an integral part of your planning. Even 2% (the Federal Reserve’s target inflation rate) can significantly reduce your savings when accumulated over decades.

Way of life. Retirees who want to travel and have adventures will need more money than those who want to fish and catch up on their favorite movies. If you have significant health care needs by age 65, you’ll want to plan for more medical expenses than someone retiring in good health. Your needs and preferences in retirement will determine your expenses, which in turn will determine how you should plan your finances.

Together, your life expectancy and lifestyle will help you understand how you should structure your finances as you approach retirement. The earlier you retire, the more money you need to save for the future. Meanwhile, the more you plan to spend, the more money your account will need to generate.

This means that your needs will generally change as you retire, so your asset allocation should too. Your financial plan at age 65, when you may still have many years to come and relative youth and health to spend more freely, will likely be very different from your asset allocation at 85 years old.

2. Allocate assets to manage your risk

Retirement Asset Allocation: 2022 Smart Asset Guide

Retirement Asset Allocation: 2022 Smart Asset Guide

The rule of thumb when it comes to managing your retirement portfolio is that you should be more aggressive earlier. The younger you are, the more time you have to make up for losses you incur on high-risk assets. Then, as you get older, you should move money into more conservative assets. it will help protect you against risks when you have less time to get your money back.

As you enter retirement itself, you should be moving your assets in a generally conservative direction. This reflects the fact that you have no intention of working again, so you will need to offset any loss in portfolio with future earnings and Social Security.

This is generally a sound strategy. The two most common low-risk assets for a retirement account are:

Bonds are debt securities of companies or sometimes municipal governments. They generate a return based on the interest payments made by the borrowing entity. Most bonds tend to be relatively safe investment products, since large institutions usually pay their debts (and have assets to recover if they don’t).

Certificates of deposit are low-risk, low-return products offered by banks. You make a deposit with the bank and agree not to withdraw it for a minimum period. In return, they pay you a higher than normal interest rate.

Bonds and CDs are considered low risk assets. Bonds give you a better return but retain some element of risk, while CDs give you a fairly low return but with about as little risk as possible.

In fact, CDs are even lower risk than just holding your money in cash, because they typically pay interest rates that keep your money somewhat inflation-ary. (Although at the time of writing this is not the case due to high rates of inflation.)

For most retirees, investment advisors recommend low-risk asset allocations around the following proportions:

  • 65 to 70 years old: 40% – 50% of your portfolio

  • Age 70 – 75: 50% – 60% of your portfolio

  • 75 and over: 60% to 70% of your portfolio, with a focus on cash-like products like certificates of deposit

3. Plan your growth based on your spending needs

Retirement Asset Allocation: 2022 Smart Asset Guide

Retirement Asset Allocation: 2022 Smart Asset Guide

The most important test when deciding on the asset allocation of your retirement portfolio is how it will generate money versus how you plan to spend money.

Many retirement advisors recommend planning to replace about 75% of your income in retirement. In other words, if you currently earn and live on $100,000 a year, you should expect to need $75,000 a year in retirement. This gives you a number to test your retirement account.

When planning your portfolio’s asset allocation, how close do you get to that number? (Although remember that your retirement account does not have to replace everything of your income. Social Security will most likely contribute at least something to your retirement income.)

In an ideal scenario, your portfolio can reach the “replacement rate”. This means that your portfolio grows as quickly as you take money out of it. In theory, if you can reach the replacement rate with your money, you can live on your retirement savings indefinitely without ever dipping into your capital. However, that requires a fairly generous nest egg, and for most retirees that’s probably out of reach.

Either way, your portfolio will need an element of growth. If you have just retired, you will hopefully have many years of good health ahead of you. Twenty or thirty years is simply too long for your entire portfolio to languish on low-growth certificates of deposit, especially since many retirees will have to live off that account almost as long as they live. will have built.

Generally speaking, the two most recommended asset classes for growth-oriented portfolios are:

By shares, we mean the shares of individual companies that you own. These can be some of the most volatile assets in the market, which is both a good thing and a bad thing when it comes to returns.

Funds can include a wide range of options. Generally speaking, you will invest in mutual funds or ETFs. Some investors may seek aggressive, high-growth funds that seek to outperform the market as a whole. However, most investors will put their money in a standard index fund, usually indexed to the S&P 500.

The more money you keep in stocks, index funds and growth-oriented funds, the more your portfolio can grow during your retirement.

Although, again, this entirely depends on your individual needs, many retirement advisors recommend higher growth assets around the following proportions:

  • 65 to 70 years old: 50% to 60% of your portfolio

  • Age 70 – 75: 40% to 50% of your portfolio, with fewer individual stocks and more funds to mitigate certain risks

  • 75 and over: 30% to 40% of your portfolio, with as few individual stocks as possible and generally closer to 30% for most investors

While this is often a successful asset allocation, again build it according to your personal needs. Specifically, if you find that you can generate returns at or near your personal replacement rate with a more conservative portfolio, that’s usually wise. Your goal is to meet your financial needs with as little risk as possible.

Conclusion

The asset allocation in your portfolio doesn’t stop once you retire. You want a conservative portfolio overall in retirement, but with more growth-oriented assets in your 60s and early 70s.

Investment advice for retirement

  • A Financial Advisor can help you implement a financial plan for your retirement. SmartAsset’s free tool connects you with up to three financial advisors who serve your area, and you can interview your advisors for free to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, start now.

  • In addition to your pension or retirement plan, here are five additional ways to get a guaranteed retirement income.

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Mayor Ed Gainey creates bridge asset management program https://hydracarina.org/mayor-ed-gainey-creates-bridge-asset-management-program/ Thu, 05 May 2022 22:18:00 +0000 https://hydracarina.org/mayor-ed-gainey-creates-bridge-asset-management-program/

PITTSBURGH (KDKA) — Later this month, National Infrastructure Week will be recognized across the country.

Here in Pittsburgh, Mayor Ed Gainey is off to a good start by drawing attention to critical infrastructure needs. On Thursday, he announced the creation of a comprehensive bridge asset management program.

This program will assign one person the responsibility of leading a team to improve the safety and integrity of the city’s bridges. They will also be responsible for allocating funds for repairs.

Gainey said the person should provide a report on the current conditions and safety of the city’s bridges by October. Then the planning begins.

The mayor said the planning and design process is underway for a full rehabilitation of the Swindell Bridge, which has drawn heavy criticism from drivers due to potholes and exposed bars.

Gainey said city and PennDOT crews inspected the bridge on Wednesday. There will be another inspection later this month. He said that as soon as the inspector thinks the bridge is not safe, it will be closed.