Building A Portfolio For Retirement

The WSJ's editorial this morning was very positive on private market assets in 401k's. What's actually happening with retirement plans, and what are the risks/trade-offs to know? Last August, the President signed an executive order pushing government agencies to "democratize" alternatives. That opened the door for private assets like private equity, private credit, real estate, and crypto in 401k retirement plans. Last week, the Department of Labor published proposed regulation that brings this one step closer to reality. Why does this matter? 1️⃣ Alternatives have historically earned higher returns. Over the past 20 years, private equity has annualized ~14% vs. ~10% for public equities. 2️⃣ Low correlation to stocks & bonds can reduce portfolio volatility over time. Real estate, for example, has been used in retirement plans for decades to smoothen returns. 3️⃣ Access to more opportunities. Public markets are getting more concentrated and expensive — there are fewer public companies today than in the 1990s, and some of the most exciting companies may stay private for a long time (or forever). But there are real trade-offs: ⚠️ Alternatives are illiquid. You can't sell a portfolio of properties in a matter of days. It takes careful planning to maximize returns. ⚠️ Private assets are complex. They require specialized diligence and research. There is a big gap between the top performing managers and the bottom-performing managers. ⚠️ Some alternatives, like gold or crypto, can be highly volatile and probably shouldn't make up a large share of your portfolio. In many ways, retirement plans might actually be the ideal home for alternatives. For long term illiquid assets, the investment timeline matches well. People naturally avoid dipping into their 401k's until retirement because of the withdrawal penalty. Most public and private pension plans use alternatives today. So how do you manage the trade-offs for everyday investors? ✅ Target Date Funds (or "Glide Path" strategies) — these shift the burden of planning and research onto the asset manager, so individuals can "set it and forget it." You decide when you plan to retire and what your risk tolerance is, and the fund invests in a mix of stocks, bonds, and alternatives targeting your goals. ✅ Modest allocations to alternatives: enough to move the needle on better returns and lower volatility, but not so much that illiquidity becomes a challenge. ✅ Investor education. Incredibly, there are still savers who are not availing of 401k matches and maximizing their contributions. The opportunity set is getting larger, so we have a lot to do to make sure investors know what tools they have and how to use them. Lots happening in this space — I plan to put out a video and more content as things evolve! 🎬 👇 Follow the Guide to Alternatives for more on private markets, alternatives, and retirement investing. #alternatives #markets #401k #retirement #privatemarkets #investing

You make seven figures from real estate… But you have no real financial strategy. The Problem: Most real estate professionals operate with scattered tactics. → LLCs here. → A trust there. → Maybe a SEP IRA. → No integration. No cohesion. No plan. Each piece solves a sliver of the puzzle. But the entire picture is unclear. The Myth: You think your CPA is handling everything. → But your CPA files taxes. → They don’t build strategies. → They aren’t looking 10–20 years ahead. You’re playing checkers when the IRS plays chess. The Truth: A comprehensive financial plan is the missing piece. → One that merges your income streams, entity structure, and investments. → One that maps cash flow, passive income, tax mitigation, and legacy. For example: → Do you know how to offset capital gains using depreciation and trusts? → Are you layering in charitable planning to reduce AGI? → Have you optimized your entity structure to split income across tax brackets? If you’re unsure about any of those, you’re leaving serious money on the table

Chart of the week: Build a retirement income portfolio based on ability and willingness to take risk. It's one of the most frequent questions I'm asked... How should I investment my portfolio earmarked for retirement just prior to or during retirement? It comes up all the time, but particularly during times of market or economic stress when uncertainty about the performance of stocks rises. Stocks are still critical in a retirement portfolio, for most investors. But so are more stable investments, in our view, including cash, short-term reserves/investments, and bonds. You could use a general 60 percent stock, 40% bonds and cash "guideline." Or you could personalize your approach. I suggest the latter. The question to ask is... How much money may I need soon, from your investments? This requires creating either an assessment of how much you've been spending, or how much you plan to spend, as well as accounting for other potential income sources such as Social Security, annuity, pension, part-time work, or other sources. 1️⃣ Once you've done this calculation, considering set aside a year of what you'll need over and above those sources of income from your portfolio into cash investments such as a yield-bearing money market account. Spend from this account. 2️⃣ Then, multiple the amount by somewhere between 2 and 4, depending on your tolerance for investment risk. Keep that amount, equal roughly to 2-4 years of withdrawals, in steady investments to provide liquidity (meaning not just the ability to sell the investment, but do it at a price that's not highly dependent on the economy or market) and stability to whether a bear market and/or fund spending if needed from the portfolio. 3️⃣ Last, create and invest a long-term portfolio that includes stocks and bonds based on your risk tolerance and time horizon. This provides growth potential and funds future spending. Consider an example... What if you plan to withdraw about 5% from your portfolio next year and spend about the same amount per year in the next 2-3 years without much change in your income sources? Working backward, using the personalized steps above, this brings you close to a "traditional" 60/40 stock/bonds & cash portfolio used as a rule of thumb for retirement. But on your terms, based on your needs. The chart below provides an illustration. If you need help, as always complete a personalized plan and work with a professional retirement planner and advisor. #retirementportfolio #financialplanning #risktolerance #riskcapacity

Two people retire on the same day with the same corpus. One runs out of money. The other is fine. Same average return. What went wrong? Meet Rahul and Rohit. Both are 47. Both spent 17 years saving diligently. Both retire with 2 crore rupees. Both invest in equity mutual funds that deliver an average of 9% per year over the next 25 years. Both withdraw money every year to fund the same lifestyle. By 72, Rahul has a healthy corpus still growing. Rohit ran out of money at 64. Same discipline. Same corpus. Same average return. Completely different lives. The only difference was the order in which their returns arrived. Rahul got lucky. His first five years in retirement saw strong markets. His corpus grew even as he was withdrawing from it. By the time bad years hit, his base was large enough to absorb the damage. Rohit was not lucky. His first five years saw two sharp market downturns. Every month he withdrew money to pay for groceries, rent, and his parents' medical bills, he was selling units at low prices. His corpus never recovered that lost ground. When the good years finally came, there was not enough left to benefit from them. This is called Sequence of Returns Risk. It is one of the most underappreciated risks in FIRE planning. Two retirees can earn exactly the same average return over 25 years and end up with dramatically different outcomes. What matters is not just how much return you earn, but when those returns arrive. The consequences can be particularly severe in India because many retirees do not have a guaranteed pension or social security income floor, and Indian FIRE investors often have fewer alternative retirement income sources. During a market downturn, withdrawals still need to happen. Every rupee withdrawn after a sharp fall is a rupee that no longer participates in the recovery. The fix is not to avoid equity. It is to build a buffer. Two to three years of living expenses in liquid, low-risk instruments such as high-quality debt funds, short-term fixed deposits, or cash equivalents. When markets fall in your early retirement years, you draw from the buffer instead of selling equity at a loss. You give your corpus time to recover. Most people spend years calculating their FIRE number. Far fewer spend time calculating how they will survive their first bear market. Both plans matter. I write about #artificialintelligence | #technology | #startups | #mentoring | #leadership | #financialindependence   PS: All views are personal

The recently passed "One Big Beautiful Bill" (OBBB) introduces substantial tax benefits, creating valuable opportunities for family offices and real estate investors focused on preserving and growing wealth. Understanding and acting on these changes can significantly improve your investment strategy and offer lasting financial advantages: • Permanent 20% QBI Deduction: Provides long-term tax savings for pass-through entities, increasing profitability and investment potential. • Permanent 100% Bonus Depreciation: Enables immediate deductions on property improvements and tangible assets, significantly improving cash flow. • Increased Estate and Gift Tax Exemption: Exemption limits have increased to $15 million per individual ($30 million per couple), simplifying the transfer of generational wealth. • Expanded SALT Deduction: The limit for State and Local Tax (SALT) deductions, including property and income taxes, rises from $10,000 to $40,000 starting in 2025. Full benefits apply only to individuals with modified adjusted gross income (MAGI) below $500,000 (or $600,000 for joint filers). Above those levels, the deduction gradually phases out, ultimately reverting to $10,000 once income reaches approximately $600,000. • Enhanced Affordable Housing Incentives: A 12% increase in Low Income Housing Tax Credits makes affordable housing investments more financially attractive. Investors can achieve stronger yields while contributing to community development and meeting ESG objectives. These provisions offer more than incremental tax savings. They create strategic financial opportunities for real estate investment and wealth transfer planning. Are you prepared to take full advantage of these new tax opportunities? Now is an ideal time to review your investment and estate strategies. Taking action today can secure financial benefits for years to come.

𝐁𝐑𝐄𝐀𝐊𝐈𝐍𝐆: 𝐖𝐡𝐲 𝟔𝟎/𝟒𝟎 𝐏𝐨𝐫𝐭𝐟𝐨𝐥𝐢𝐨𝐬 𝐀𝐫𝐞 𝐁𝐫𝐞𝐚𝐤𝐢𝐧𝐠 — 𝐚𝐧𝐝 𝐖𝐡𝐚𝐭’𝐬 𝐑𝐞𝐩𝐥𝐚𝐜𝐢𝐧𝐠 𝐓𝐡𝐞𝐦 The old 60/40 playbook isn’t working anymore. Fixed income and equities are now correlated... Liquidity can vanish overnight... And institutions are quietly rewriting the rules of diversification. Enter the 50-30-20 Portfolio 50% public markets. 30% fixed income. 20% alternatives. But it’s not just about the math — it’s about behavioral design, liquidity sequencing, and building resilience into portfolios that can survive 2008s, 2020s… and what’s next. In this episode of How I Invest, Alfred Lee, CFA, CMT, DMS Lee (Deputy CIO at Q Wealth Partners) breaks down how top asset managers are rebuilding portfolio construction from the ground up — and why “illiquidity” might actually be your edge. We discuss: • The rise of private credit, CTAs, and discretionary macro • Why ETFs struggle to capture real alpha today • Behavioral finance lessons from managing $30B+ • How advisors can go independent without losing institutional rigor It’s one of the most practical masterclasses on modern asset allocation you’ll hear this year. #PortfolioConstruction #Alternatives #Investing #BehavioralFinance #WealthManagement Link to Podcast in Comments Below 👇

Retironomics™: Why Everything You Know About Retirement Math Is Breaking The 4% rule. 60/40 portfolios. Social Security at 67. These retirement "certainties" are crumbling faster than a 2008 mortgage-backed security. Here's what changed: 👉 With the top 10% now controlling 49.2% of consumer spending (highest since 1989) 👉 Middle-class families facing daily economic pressures, traditional retirement models built on historical assumptions face unprecedented stress tests Your retirement calculator may assume 1980s economics in a 2025 world. The old math said: Save 10%, retire at 65, withdraw 4% annually. Simple. The new reality? More complex: • Inflation running at 2.7% means your "safe" 4% withdrawal barely keeps pace • Healthcare costs rising significantly faster than general inflation • Life expectancy pushing 90 for healthy 65-year-olds • Interest rates that may stay higher, longer But here's what the doom-and-gloomers miss: The game changed, but you can still win. Smart money is adapting: → Dynamic withdrawal strategies (not fixed 4%) → Barbell portfolios (safety + growth, skip the middle) → Roth conversions while tax rates are historically reasonable → Healthcare bridge strategies before Medicare The biggest shift? Retirement isn't binary anymore. It's a spectrum. Part-time consulting, passion projects that pay, strategic Social Security timing. These aren't backup plans. They're the new playbook. Your parents' retirement math assumed steady jobs, pensions, and predictable markets. Your retirement requires flexibility, multiple income streams, and strategies that adapt as fast as Fed policy. The math isn't broken. It's evolving. And those who evolve with it will thrive. What retirement "rule" are you rethinking?

💬 "My property is my pension"...how many times have those of us working in finance heard this and groaned? In my latest Ask the Expert column for City AM I tackle a question I hear more and more often: how do you convert bricks and mortar into a sustainable retirement income? Property can play an important role in long-term wealth, but relying on it exclusively comes with trade-offs around liquidity, tax, and diversification. In this piece, I explore the key considerations, common pitfalls, and practical options for making that transition, including: 🏘️ How to phase property sales 💰 How to be as tax efficient as possible 💷 The many rules around how much you can contribute to a pension If you’re thinking about how your assets will support you in retirement, it’s worth understanding the full picture. You can read the full column here: https://lnkd.in/e--7A_D4 #PersonalFinance #Pensions #Investing #Property #RetirementPlanning

Where should you put your money for maximum returns? A lot of people will say equity. But I will suggest: Real Estate. Here's why: 🛡️ Level of Risk - Real Estate: Offers remarkably stable, long-term growth with rare significant crashes. Even during downturns, people always need housing, creating a floor beneath your investment that few other assets provide. - Equity: Highly volatile and unpredictable, with the possibility of sudden, substantial losses due to market crashes and external factors. The emotional rollercoaster can lead to poor decision-making. ⏱️ Short-Term Returns - Real Estate: Grows steadily but typically takes longer to show significant returns. But in the Bay Area, property values have consistently outperformed many other investments. - Equity: Can deliver impressive quick gains, benefiting from market upswings and short-term opportunities. However, timing these perfectly remains notoriously difficult. 💰 Passive Income - Real Estate: Generates steady rental income with the potential for regular increases, creating a reliable passive income stream that can sustain you through retirement. - Equity: Provides no guaranteed passive income, requiring active monitoring and risking losses from market fluctuations. Dividend stocks offer some income, but rarely enough to replace a salary. 🌊 Liquidity - Real Estate: Less liquid than stocks, making short-term gains harder to access. However, with tools like HELOCs and cash-out refinances, you can tap equity without selling. - Equity: Provides higher liquidity and the potential for quick profits, allowing investors to capitalize on market upswings or access cash quickly when needed. 👪 Generational Wealth - Real Estate: Creates lasting legacies through tangible assets that can be passed down, providing both financial security and emotional connections across generations. - Equity: Can build substantial wealth through dividends and capital gains when approached with discipline and diversification. However, many families struggle to maintain investment discipline across generations. 🧠 Expertise Required - Real Estate: Needs some expertise upfront but later earns passive income and grows in value with comparatively little ongoing effort. A trusted advisor (like yours truly) can significantly reduce the learning curve. - Equity: Requires continuous expertise, research, and emotional control, as market swings can lead to stress and impulsive decisions that erode returns. Verdict? The most successful wealth-builders I know strategically incorporate both. Real estate provides the stability, tax advantages & passive income that create a solid foundation, while equity investments offer growth opportunities & liquidity. The combination of appreciation, rental income, tax advantages & leverage creates a wealth-building machine that's hard to match. What's your experience with these investment classes? #wealthbuilding #investment #realestate #financialfreedom #realestate

Will taxes kill your retirement plans? Will your retirement corpus last..... These are important questions many of us face. A client of mine, who had planned his retirement meticulously, recently posed them to me. My client, a well-educated and financially prudent private banker, retired at 65, a year ago. He had estimated his expenses at ₹2,50,000 per month(from this corpus,He had other sources of income as well) and accounted for 6% annual inflation. With ₹5 crore as his retirement corpus, we crafted a portfolio of equity and debt to yield 9% CAGR pre-tax. The plan was solid—his SWP (Systematic Withdrawal Plan) was inflation-adjusted by 6% annually, and we calculated for a maximum life span of 85 years. At the time, Long-Term Capital Gains (LTCG) tax was 10%, leaving him with a post-tax return of around 8.1%. This ensured his corpus would last 20 years and 2 months, precisely until the age of 85—perfect timing! But then, the Budget changed everything. LTCG tax increased to 12.5%, a 25% hike. This reduced his post-tax return to 7.87%, and the corpus was now projected to last 19 years and 8 months—4 months short of his target. The worst-case scenario? LTCG could rise to 20%, leaving him with a 7.2% post-tax return. In that case, his savings would last only 18 years and 5 months, falling 1.5 years short of his life expectancy. We increased the risk in his portfolio’s final bucket slightly, though this involves some market timing, which isn’t ideal. But for you, someone in your 30s or 40s, what steps should you take? 1. Calculate post-tax returns based on 20% LTCG and adjust your retirement projections accordingly. 2. Insure adequately—Ensure your health insurance covers medical inflation (currently 14% in India) by increasing coverage by 30% every 5 years. 3. Follow the 110-age rule for equity allocation. For instance, if you're 40, 70% of your portfolio should be in equity to counter inflation. 4. Divide your equity into core (80%) and satellite (20%) portfolios. Take calculated risks with the satellite portion. 5. Rebalance your portfolio every two years or if your asset allocation shifts by more than 10%. For example, if your equity-debt split moves from 70:30 to 77:23 during a bull run, consider shifting some gains into debt. 6. Adjust your risk as you age—By retirement, focus on more flexible, broad-market funds rather than small caps or thematic funds. Are you building your retirement corpus or looking to deploy it? Reach out to Rochak Bakshi,CFP®️ #retirement #finance