Retire with confidence: How tactical investing can boost your portfolio


Risk tolerance, time horizon, and asset allocation are important considerations as you near retirement. These factors have been relevant throughout your life but take on increased significance now. Tactical asset allocation, in particular, plays a vital role in boosting your assets before you retire in a few years. Retire with confidence.

A Different Take on Risk Tolerance and Time Horizon

As your time horizon shrinks rapidly while you progress towards your retirement, your risk tolerance lowers accordingly. These two factors dictate not only your plans for each asset you own, but also your portfolio in general. Use risk tolerance and time horizon as principal factors to readdress your portfolio because it’s time to tip the balance.

Many financial advisors recommend gradually shifting to a more conservative, less risky portfolio as you near retirement.

Leverage Tactical Asset Allocation

It’s time to ramp up percentages of income-generating assets and lessen the number of growth-inducing ones.

Let’s say you have five years to retirement; income assets can be enhanced during this time horizon by assessing short term investment opportunities and tactically investing heavily in assets that are sure to be influenced by macro- and microeconomic factors during your time horizon.

Now is also the time to reassess which of your growth assets you should retain beyond retirement. Retirement will ideally afford you more time to enjoy life’s pleasures, so you’ll want to make sure you’re set up to afford them. Choosing only a couple of your best growth investments allows you to do just that. This move also frees more space for more income investments and more tactical asset allocation to make the most of the time horizon you have remaining.

Going from strategic to tactical is a shift of long term planning to short term thinking – what economic or financial factors during your time horizon would affect which assets? Invest more heavily in them while you still have time. Free up more long term assets to focus on the short term time horizon and rebalance your portfolio after retirement. If the generated return of each tactical allocation increases by a few double digit percentages, you’ll have a more prosperous retirement to look forward to.

Gearing Up for the Tactical Shift

Tactical asset allocation requires a semi-active approach – especially when your time horizon starts to dwindle. A passive style of strategic portfolio management protects itself from excited market shifts by gaining justifiable long-term returns instead of tolerating more risk, which might result in more loss a decade or two down the line.

When shifting to an active style of portfolio management during the short time horizon you may experience closer towards retirement, changing your passive, strategic mind set may prove more taxing than you imagined.

Even for successful professionals, the notion of finality that retirement brings can be daunting. You wind up second guessing if you have enough in your portfolio, if you’ve done enough in your investment strategy, and if you need to do more. Tactical asset allocation is a savvy move if you want to make the most of your assets just before retirement, and best of all, it requires only a change of mind set and investing patterns that doesn’t change your personal overarching style – it merely speeds it up to counteract the shortened time horizon.

If you have any questions or would like to discuss your investment strategy further, please don’t hesitate to reach out to me for a consultation. Together, we can create a personal plan that’s tailored to your unique financial situation and goals. Check out our retirement resources.