Question

whats a good investment portfolio for someone who is in their 50's, inherited $1million, wants to retire in 20 years. Isn't much into risk. Please tell me what portfolio investment would be good and why.

Answer 1

Time horizon of investment

The time horizon is relatively long, with 20 years until retirement

Risk tolerance

The risk tolerance is low to below average, as the question says that the person isn't much into risk.

Ability to take risk

The ability to take risk is below average, as this inheritance is meant to fund retirement.

Therefore, a portfolio with below average risk is suggested.

A suggested portfolio allocation would be :

• 40% Government bonds
• 40% Corporate bonds
• 20% Large cap equities

Bonds have low risk compared to equities. As the person is not much into risk, most of the portfolio is invested in bonds. A low proportion (20%) is invested in equities to boost the overall portfolio returns over the 20-year period.

This portfolio allocation meets the objectives of low risk and funding the person's retirement.