[Editor's Note: This is an article I wrote for ACEP NOW on how to select the right level of investment risk to reach your retirement goals. This is difficult for many investors and a worthy subject for discussion.]
Q. How Risky Should I Be With My Portfolio?
I don’t like watching the value of my investments going up and down—it feels like I’m in a casino sometimes. How much risk should I be taking with my portfolio?
A. The more investors learn about investing, the more they realize it’s all about risk management—and the risks you face matter far more than the past or projected returns of the investment. In the words of Will Rogers, “I am not so much concerned with the return on my capital as I am with the return of my capital.”
However, it’s also important to not take on too little investment risk, as one of the most significant risks an investor faces is shortfall, or running out of money in retirement. The lower returns available on lower-risk investments may not allow your money to grow fast enough for your needs. There’s a reasonable range of risk for an investor to appropriately take, but there are far too many investors whose portfolios fall outside of that range.
Risk vs Reward
The amount of investing risk you take should be directly related to your need and ability to take risk. Most investors have a significant need to take on risk, but there are some who do not. For example, an investor with a $10 million portfolio who needs only $100,000 a year from it can eliminate almost all significant risk from the portfolio and still meet goals. Most investors, however, aren’t nearly as fortunate. An investor with a $1 million portfolio who hopes to spend that same $100,000 per year needs to not only continue to add to the portfolio but also to take significant risk with it.
Risk Tolerance
Likewise, it’s critical to not exceed your risk tolerance. If you don’t have the emotional and financial ability to withstand a 50 percent drop in your assets (and few do), a 100 percent stock portfolio probably isn’t for you because once every 30 to 50 years or so, the assets of stock investors take a 50 percent haircut.
Save More Money
One of the best ways to lower the amount of risk you need to take is to save more money. Saving more of your income now has a double positive effect on your portfolio: Not only does it grow faster but the amount of income it needs to provide you to maintain your pre-retirement lifestyle is also lowered.
Consider an investor who makes $200,000 per year and is saving 20 percent of gross income in hopes of retiring on an income of $160,000 per year, including $30,000 per year of Social Security benefits. Using a 4 percent inflation-adjusted spending rate in retirement, that investor needs to work and save for 33 years prior to retirement. If instead, an investor planned on saving 40 percent of gross income and planed to live on $120,000 per year, including a $20,000 Social Security benefit, the investor now only needs to work and save for 19 years, which equals more than a decade of extra time in retirement.
Inflation Danger of Low-Volatility Low-Return Investments
Many investors prefer to invest in very safe but low-returning investments like CDs, bonds, savings accounts, and insurance-based products such as whole life insurance. These investments appear to be safe because the returns aren’t volatile like those of higher-returning investments such as stocks and real estate. In reality, though, they can be even more dangerous.
Perhaps an investor’s greatest opponent is inflation. Even inflation of just 2 to 3 percent a year presents a formidable threshold to investments that yield only 1 to 2 percent a year. Nobody likes to see their investments drop dramatically in value, but the alternative is to be forced to spend less than you would have otherwise in retirement or face running out of money if you live long enough. Investors who prefer low-volatility investments have likely never run the numbers to really understand what their investment preference means.
For example, consider an investor who wants a portfolio to provide 50 percent of pre-retirement income but who achieves an investment return that only matches inflation (0 percent real) and wants a 25-year career. That investor will need a savings rate of 50 percent of gross income for each of those 25 years to reach their retirement goal. Very few doctors are willing to save that much of their income. Alternatively, the investor can work for 40 years while saving 31 percent of income. A more risk-tolerant investor who achieves a return that beats inflation by 5 percent, on the other hand, would need to save only 25 percent of income for 25 years, or 10 percent of income for 40 years, to have the same retirement spending level. The bottom line is that almost all investors need to take on a significant amount of risk in order to meet their financial goals.
What Is A Reasonable Amount of Risk?
Phil DeMuth, PhD, managing director at Conservative Wealth Management, LLC, has said,
Even if risk tolerance existed and could be measured accurately, why would it be an important factor when considering how to invest? You should invest in the way that has the greatest prospect to fulfill your investment goals. That might mean taking more or less risk than you would prefer. If you are a sensitive soul who can brook no paper losses, the solution is to get a grip, not to invest ‘safely’ if that locks in running out of money when you are old.
There are many investing “products” (most of them insurance-based) that are marketed as reducing the risk in investing. However, these same products are also likely to reduce the return so much that a typical investor cannot afford to have any significant chunk of a portfolio in them. Financial theorist William Bernstein, MD, said, “There are no free volatility-reducing lunches that will inexpensively reduce your portfolio risk, and there is no risk fairy to insure the risky parts of your portfolio on the cheap. Yes, there are people who—and vehicles that—will do this for you, but they will cost you a pretty penny.”
While the general adage that higher risk equals a higher return is true, you should be aware that you won’t be compensated for taking some risks. A risk that can be diversified away is, by its very definition, uncompensated risk. An example of this is investing in a single stock or even a handful of stocks. Since you can easily buy all of the publicly traded stocks in the world using low-cost index funds, you won’t be paid an additional risk premium for investing in a single stock—even if that stock is Apple.
A novice investor may ask, “What’s a reasonable amount of risk to take in a standard portfolio of low-cost, broadly diversified stock and bond index funds?” Many decades ago Warren Buffett’s mentor, Benjamin Graham, recommended never holding more than 75 percent or less than 25 percent of your portfolio in stocks, with the remainder in bonds. I think that wisdom still holds true today, and you should have a very good reason to go outside that recommendation. If you do decide to leave the relatively safe confines of the publicly traded markets for your investments, limiting risk should be of the utmost importance in evaluating a prospective investment.
Owning stocks, bonds, and real estate isn’t gambling. You’re loaning money to or owning small pieces of real profit-generating enterprises, some of the largest and most successful that the world has ever seen. Make sure the amount of risk you’re taking on isn’t too much, or too little, to reach your goals.
How did you determine how much investment risk to take? Has that changed over the years? How and why? Comment below!
Excellent article. I especially liked Benjamin Graham’s quote recommending between 25% and 75% stocks. The current bull market has made some investors believe that they can take more investing risk than they can actually handle.
Recency bias means the hundred percent stocks crowd is gaining traction again. People that don’t know their risk tolerance are just asking for problems. I’m invested 70 percent in the market currently. That’s adjusted down from 80 five years ago. The reason being I have a lot more to lose now and I want to give myself a higher percentage as a psychological anchor to ensure I hold the course in the next recession.
While I’d say thats true, and maybe people dont understand the details, but they maybe avoiding a good amount of risk by pure luck. Bonds are at least very simple to determine your long term return from, and where they were in the fall bonds had a negative real long term return and lots of capital loss risk which was simply the pulling forward of all returns to today. Usually this type of scenario doesnt last too long fortunately.
That manifested itself in the last couple months, and we may be entering a period of cyclical inflation finally which will further inhibit bonds, but at the same time start to make them more attractive with better long term returns as the issues keeping rates down have not dissipated.
Bonds are great for volatility smoothing and increasing risk adjusted returns, but I totally get why some people are avoiding them (as I am outside of munis which have same issues). Sometimes though, they can represent the portion of risk in your account as well and this is where they were last summer and fall.
I would venture its much more likely that a doctor is in too risk averse an allocation for their age as most people do, too averse—>too risky—>too averse again.
Of course pure dumb luck runs out the moment the regime change does and helps them not at all get what is going on currently.
Remember, though, so long as you hold your bond funds for the duration of the fund you will not lose money, at least in nominal terms, in a rising interest rate environment. And, of course, you don’t own bonds for returns – you own stocks for that. You own bonds to smooth the ride so you don’t make the “big mistake” of selling stocks in a crash.
This is actually not true whatsoever in a bond fund, bond funds are not the same as holding individual bonds. Funds have essentially a perpetual duration due to their constantly staggered durations over long periods. I think many people hold the view that they are basically the same and assume they are not at risk of actual losses when they are if say rates went up consistently over time. Luckily, thats not highly likely so its still more of a theoretical risk, however, its important people understand the difference in the idea of bonds as a diversification and principal protection and separate that from how they actually implement bonds which is via a fund. Its subtle but significant.
Even in an actual bond understanding that your long term return is less than 2% with a significant risk to capital loss that could result in the total long term holding period being at a loss depending when you buy is very important. If you had bought a 30 y bond before the election near the current all time lows, your whole durations of gains evaporated in a week via capital loss. The bond curve is not linear and as it gets asymptotic toward the ends small changes have drastic impacts.
I dont think keeping you from selling should be the main reason you own bonds, they are for volatility smoothing and not having near and intermediate need money at risk during a draw down so it can make it through that time while you still have consistent cash flow.
That may result in you not selling and same end, but really not selling at the worst time is a psychological, understanding, and emotional thing. This last fall, bonds became very high risk for little reward. If there doesnt exist this point at some time you would have to explain why all the sudden you wouldnt purchase a -1% bond, or even a -10% bond. They would have the same type of diversification benefit as an asset class, etc….Even bonds can become risky. They have eased off of that lately.
The volatility smoothing properties of bonds is what helps an investor to stay the course and not sell in a crash, so I would argue certainly is the main reason for holding bonds. Of course, there are other reasons, as you say, such as liquidity needs during retirement when the market is down, but avoiding the “big mistake” is surely the most important reason for holding bonds. If you don’t need the volatility reducing properties of bonds (which most people do, even if many think they do not at this point in the long bull market), then you probably don’t need any bonds (or cash), at least in the accumulation phase.
I don’t think that is correct. Bond funds are simply collections of individual bonds, so how can expect them to behave differently. If you own a collection of individual bonds, would you expect them to behave differently, in aggregate, to a bond fund, which is a collection of individual bonds?
I agree that in a period of rising interest rates, each time another interest increase occurs, the price of a bond fund falls, so that you won’t get that money back for the duration at that point (as the duration of the fund is constantly resetting), but if you consider the money you put into the fund the day you bought it, you will still get that money back at the duration on the day that you bought the fund.
Like I said mainly theoretical, but if you were to have redemptions of the fund that resulted in selling of the underlying bonds, it locks in those losses for those investors that continue to hold. You are allowing someone else to impact your overall return unfortunately. So yes, they would behave differently because you’re allowing other people to influence their behavior as opposed to a personal sort of fund where you are the only person effecting any changes. In a bad version of the scenario it wouldnt be good overall. Not saying this is a highly likely scenario, its just good to understand the differences when assuming a certain risk profile for an asset class.
Also, as that occurs and also the rolling in of new bonds it can impact the income of the overall fund and can even go down. So that would be opposite of the individual case where your coupon rate does not change, it can in a fund.
Otoh, the higher bonds go the safer they get from this standpoint. I think they are a much better deal now than they were last summer/fall.
There are also benefits to having other investors in the fund with you- more liquidity, ability to spread costs over many people, ability to hire a professional manager for very little etc.
Your 30 year bond bought just before the election…..sure, the price of the bond fell such that you had a paper loss of a duration, but if you kept the bond for it’s duration, collecting the coupons each year, you would get your money back, and if you kept it to term, you’d get back your principle to go with your 30 years of coupons.
Non stock market investments and inflation risk are not necessarily correlated. You can do things like a cd latter or invest in inflation protected securities as part of that portion of your portfolio. Investing in them exclusively would be foolish as your return would be too low. However based on what I’ve been hearing lately (and the market shifting to all time highs) I’d venture that hundred percent stocks is just as common as hundred percent bonds at the moment. Both are a bad move for the average investor.
I am currently a 100 percent in the market with additionally money going into student loan payoff (so actual allocation of extra money is 70% market and 30% low interest student loans). I am young and plan to work another 15 to 25 years so I figure I can ride a few dips in the market.
When I have paid off my student debt or turn 40 (whichever happens later) I will start allocating more funds to bonds, likely ramping it up every 5 years. I write a post regarding the debt cs investing you can check out on my site if interested.
I definitely think reallocating towards bonds as we near retirement is important.
I like the way Nick Murray puts it – you either have the discomfort of price fluctuations when you are young and have income from your job, or the discomfort of running out of money when you are old and no longer have an income from your job.
I don’t want to be snarky–I’ve already gotten into trouble here once for that–yikes!
But as someone who’s been through at least three big stock market declines–the Oct ’87 one, the dot com one, and then the recent great recession one–it’s hard to know how you’ll really emotionally react until you’ve experienced the real thing.
Also, I’m finding that as I age, my risk tolerance goes down. (The first two declines mentioned above seemed mostly like opportunities to me, for example… the last decline? Not so fun.)
It wasn’t that much trouble. You just had to write a guest post for penance. 🙂
🙂
Shouldn’t “While the general adage that higher risk equals a higher return is true” be “potential” higher reward
reward=return from original quote
I think I hedged enough with “general” but if you want to hedge even more, you can throw potential in too.
“The amount of risk you take should be directly related to your need and ability to take risk.”
This blog is primarily aimed at practicing doctors, those with above average intelligence and those who expect to retire with net worth well above average. Given the context, this article is excellent. There are, however, additional considerations that are relevant for those who are at or near retirement and for those who may not be bound for such high net worth.
In addition to need and ability to take risk, there is a third widely expressed factor, willingness to take risk. Willingness is simply the behavioral aspect of investing that applies to all of us (can I sleep at night with this amount of risk). For those typical readers of this blog, ignoring willingness as a major factor makes sense. As WCI suggests, developing a reasonable financial analysis is most essential, no need to be cowardly. If the market experiences a very serious setback, don’t worry, steel up, you have plenty of time to realign and recover. For anyone with a short time frame, or who does not reasonably foresee a future of HNW, consideration of your personal “willingness” becomes very important. Michael Kitces suggests assessing the financial and behavioral separately and allowing whichever aspect of risk tolerance is lower to control the decision.
Once you reach retirement, a new importance to these factors takes over. Now there is no ability to realign and recover, so the financial aspects take on a new dimension. Now the retiree is asking “how bad could it be”, and how worried should I be. Both financial and behavioral become relevant and important. At a net worth of 10m, both aspects should be relatively simple to deal with, but at lower levels they may be extremely important.
can you afford to lose 25-50% of your aseets in retirement and not affect lifestyle
Most docs will never see 10M
Maybe 5, but most docs are financially illiterate
It might be fair to say that very few investor’s know their risk tolerance at all with little forethought into their stock/bond split. Perhaps most would do well to take the advice of those who came before even if they don’t like watching their accounts drop dramatically every 10 years or so. In training I thought something terrible was going to happen every time I stapled the renal artery, but when an attending who has done it 500 times tells you it’s OK you do it anyway. If everything I read suggests a high stock ratio early on, I’ll just have to do my best to understand and trust.
Great analogy. I agree we cannot know since we will not be in that real state at the time. I do know that it is perfectly normal to have drops of 20-30% every X number of years and even 50% hopefully much less often, and hope that knowledge has prepared my brain to try to tell me “you had to know this was coming, big deal”.
So I am way heavy stocks since I am young, but do have some munis in taxable. I know the risks, and certainly hope I dont do anything terrible in the moment, but we will see since it hasnt happened yet.
I question the “smoothing” idea somewhat. We talk as if being 50% in bonds will make a large market drop palatable. The person who is 50% in bonds, while working, is risk averse. They are going to wet themselves if the market drops 50%, because their own worth dropped 25%.
I suspect those people will still succumb to selling at the bottom, which is the behavior that is trying to be avoided by being heavily into bonds.
Appreciate the info on this site but I think people should be careful about (1) equating bonds to bond funds and (2) considering bonds as considerably less risky investments than stocks right now.
(1) A bond fund is not going to behave like a bond in some important ways. A good rule of thumb is that if the interest rates rise, the bond fund will decrease in value by the average duration of the bond fund x the % rise in interest rates. So if IR rise by 1% (100bp), the bond fund with average duration of 5 years will drop by ~5% (with some modifiers). This will be important for point 2. A bond, if held to maturity, will retain its principle (par value) and will give regular interest payments regardless of what interest rates do. If the bond is sold prior to maturity, it may lose value if interest rates rise (but if you turn around and reinvest that into a similar quality new bond now at higher coupon, you will pretty much break even). In fact, I think a bond fund will behave more like a dividend paying stock whose capital gain(loss) will be dependent upon IR. Also, I would be careful hyping “liquidity” of a bond fund. If you are investing in high grade (i.e. treasuries), these will be very liquid. By contrast, some bond funds are at a high risk of liquidity mismatches that will further put your principle at risk.
(2) Bonds are risky investments right now. We are are interest rates that are historically low (even with the recent uptick over the last 1-2 months). These are historically low not just compared to the 1980s but, some would argue, compared, to 5000 years of civilization. The governments/CB are doing everything in their power to keep these IR as low as possible but when the market decides that enough is enough, the interest rates will rise, and likely by 100s-1000 of basis points. Hence, being in any long duration bond fund will be (almost) as bad as being in equities. If I am going to be in a bond fund for the long term, I would pick one with short ~1 year duration.
As for the article/post, I appreciate/commend the author on the view points commend the info/effort presented in general on this site. There is definitely things that I learn overall on this site. But in this post/article, I disagree on several points and maybe its because I have a much bleaker view of the general outlook for the current economic state and where to put my money. Either way time will tell. Furthermore, I still struggled with how the author defined risk. Is risk more akin to volatiliy (i.e. equities being more volitile than bonds (over the last 20-30y)) or was it more permanent loss of capital. I took it to mean either/or based on how the term risk was used within the text. But, to me, volatility and permanent capital loss are two separate things. I have no issues with volatility and think it can be a good thing but I do have a major issue with permanent capital loss. Overall, thanks for making me think about these issues.
While I obviously agree people should learn more about the actual differences between bonds and bond funds, issues like duration and convexity, and think bonds were very risky for no real reward lately….I wouldnt go betting on anything other than some cyclical increase in rates but not even to highs we have seen before.
In funds both capital losses and income losses can occur. Granted those might be special circumstances, but its definitely possible and it doesnt seem that most people understand that. Nor the fact you are not guaranteed to get your principal back if you held the fund to its average duration and just cashed out after that time. Once you account for inflation and real return bonds have not really ever done much overall, stocks havent been so great either, so they need to have a defined role in your portfolio that makes sense and there should be points where they dont make sense.
Ppl here act as if they would hold a bond just to keep some constant allocation, but in reality I dont think thats true. Would you stay 50/50, 60/40 if rates were -2%, how about -10%. I think its obvious there would be a point no one would allocate to them, so it makes sense to think about your bonds from a convexity standpoint and realize when you’re actually taking a lot of risk for zero upside.
The overall global issues causing it have not changed at all. Even when you look historically rates have been on a downtrend for centuries and there was an outside the norm blip post WW2, which obviously was a very special set of circumstances both demographically and geopolitically.
On the other hand, if rates reach -2% or -10% then stocks (and everything else) are likely in freefall to make those interest rates emerge. If the choice is -2% or -X%, where X looks an awful lot like 100, bond allocations do not necessarily go to 0. At that point, bonds become an insurance product: Sure I’m guaranteeing a loss, but at least I know what that loss is.
A long, low growth period would not be good for anybody’s portfolios. But skimming a couple hundred basis points over inflation is better than 20 years of stock volatility with no actual returns, if it comes to that. And a guaranteed, low loss could be preferable to an unknown loss under the right conditions. We saw it with treasuries in 2007, and it could absolutely happen again.
I agree with you that the next stock market dive (which I would not be surprised if it happens in the near future) may lead to new monetary and fiscal stimulus that could indeed include negative rates in the US. However, why does someone have to be in bonds in a negative rate environment. I would put a large position on precious metals and other hard assets maybe even real estate. I think a negative rate environment may be one of the few times gold becomes a yielding asset. Or just hoard cash (note the recent efforts to ban cash by some).
But, in my opinion, negative interest rates are not the answer and are a vicious/elitist response to the natural business cycle. It will hurt retirees and pensioners, enforce wealth inequality, put financial institutions at risk, etc. Negative interest rates have never occurred in humanity until recently (Japan, Germany etc), are unnatural and reek of manipulation to preserve the wealth of some. I will get off my soapbox now.
I agree that when the market really drops next (which I would not be surprised to see happen in the near future) the monetary and fiscal stimulus to rescue this will likely be unprecedented and may include neg interest rates in the US. But, why are you required to be in bonds during that time. I would probably take a larger portion in hard assets including precious metals. In fact, I would argue that in a neg interest rate environment, gold becomes a yielding asset. Furthermore, in the case of a negative interest rate environment, at what point does putting money in an asset class (i.e. bonds) that you know is going to lose money (albeit less than equities) go from an act of investing to a perverse form of taxation?
And, in my opinion, negative interest rates are a vicious attempt by the some to eliminate the business cycle and preserve the wealth of a few. In my opinion, it hurts retirees and savers, it promotes wealth inequality and is unnatural and has never occurred in civilization with the exception of recent unreal times (i.e. Japan, Germany, Swiss etc). I will get off my soap box now.
I would not be in bonds in such an environment. Cash would be relatively gaining a lot due to deflation and be worth much more and have basically zero downside since there would be no inflation to worry about.
The point was just that there should be a point where you assess risk/reward in the specific current environment.
Valuedoc, I disagree that an individual bond behaves differently to a bond fund. Yes, with an individual bond, if interest rates rise, you won’t see the drop in price as it is not marked to market as a bond fund is, and you will get your principle back at term, but will have suffered the opportunity cost of not receiving the higher coupons as bonds are rolled over at higher interest rates in a bond fund. See myth #5 in this article.
http://www.wsj.com/articles/SB10001424052702303636404579395543442224618
With regard to long duration bond funds, bonds with terms longer than about 10 years carry more risk than reward, and I think intermediate term bond funds give you the best trade off between interest rate and reinvestment risk for the long term investor, regardless of interest rate environment .
Remember buying bonds in a cyclically rising inflation/rate environment is one of the better times to be buying bonds, as yields increase and yes prices drop. Rates are not as dangerous as inflation is to bonds, and that seems somewhat paltry even if it ticks up.
You’re correct your monthly coupon will add to your overall total return as it adds a compounding effect whereas individual bond is simple.
If rates do indeed rise and we have a couple more step increases I will start scaling into bonds as they start to become skewed higher on the risk/reward ratio towards reward.
At any rate (bond puns!), long term bond returns are lower for this next time period than the last generations and you have to adjust your plans accordingly is all.
I agree there is a difference between shallow risk (volatility) and deep risk (permanent loss of capital). Unfortunately, it can be tough to explain all that and still cover anything else in a 1000 word article.
I disagree that bonds are “risky investments” right now. Even in our current interest rate environment, a high quality short to intermediate term bond is pretty darn safe, both with regards to shallow and deep risk, particularly when compared with equities, real estate, and other asset classes. Just because they might be slightly riskier at some times than others, I wouldn’t ever really throw them in with “risky investments.” Too much of a generalism.
Grant,
Individual bonds are continually priced to market. You just don’t realize any loss with rising interest rates if you don’t sell and hold to maturity. Individual bonds give you an expected coupon payment and return of principle that you can plan on for your individual needs. The “dividends” and capital return of bond funds will be variable based on interest rate environment. But beauty is in the eye of the beholder. Disagree about opportunity costs or what point 5 calls a “cash drag”. For an individual bond, you get an interest payment in cash that you can do whatever you want with, what opportunity are you losing? Many of the sources for that article were (bond) fund managers probably trying sooth investors in order to stem the outflows from their funds during that time.
Overall, I guess we disagree on risks in bonds/bond funds. We will see what happens in the coming years. For me as a contrarian, I’m not so sure that bonds (depending on the duration) aren’t so risky.
Valuedoc, I guess opportunity cost isn’t the right word in this context. What I meant is that when interest rates rise, with an individual bond you are stuck with the lower coupon, whereas with a bond fund, you get the higher interest rate as maturing bonds are rolled over at higher rates, along with a drop in price of the bond fund. The point being, it all comes out in the wash – individual bonds are not better or safer than bond funds in a rising interest rate environment. They are the same once you get to the duration of the bond or bond fund.
Probably should also account for the costs that occurs with the selling/buying associated with those bond funds in order to obtain bonds with higher coupons, albeit small. I agree that in most cases the differences between bonds and bond funds are likely small/negligible. But, bonds and bond funds do behave differently and, in general, differences tend to become pronounced when the system is stressed. At the end of the day, beauty is in the eye of the beholder. I just prefer the predictability of individual bonds (only treasuries) if I have the choice. Personally, I don’t like bonds or bond funds right now and think the risks are understated for both. But that is just me.
Well stated. Very minor differences. The real issue most people should be weighing is slightly more expense for the convenience of having it in a fund rather than worrying about what happens in a stress situation where both investments may be the best ones you have!
Good article on an important topic.
Most of us overestimate our ability to withstand volatility. I have the good fortune to have survived 1987, 2000, and 2008. I definitely had an emotional reaction to each decline. There will be more to come. How will you react?
Another thought around this topic is Pre-FI vs. Post-FI. Some get more aggressive since they could lose and be ok. Others are more conservative since they don’t want to go back to before FI. I’m somewhere in the middle I guess with a 40:40:20 allocation (stocks/bonds/other).