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How To Define Your Investment Strategy

Investment Strategy Based On Life Expectancy

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David Petersen, a leader in the field of financial planning for people with a life-challenging condition, created the following strategy for people living with a shortened life expectancy. Keep in mind that statistical projections do not predict what will happen to you or any other individual.

Life Expectancy of 5 years or more

  • Invest like a person of your age with no health condition, except less speculatively and with more of a focus on liquidity.
  • Avoid complicated investments because you need to be able to change strategies quickly.
  • A conservative guideline is that the percentage of stock in a person's portfolio should equal 100 minus your age. For a more aggressive guideline, subtract your age from 110 and then multiply that figure by 1.25

Life Expectancy of 2 - 5 years

  • A combination of growth strategy and income strategy is appropriate.
  • Consider the extent to which you may need to access principal to meet your needs.
  • Do not focus on the short term. It is advisable to prepare for the possibility that you may live much longer than your current life expectancy.

Life Expectancy of 2 years or less

  • Maximize available cash in case you need it, particularly if your assets are limited.
  • Adopt an income strategy that maximizes liquidity and minimizes risk.
  • If you have resources that you will not need to live on, you may want to pursue a growth strategy to increase the dollar value of those assets.

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Life Expectancy

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