Time Horizon for Your Assets

This is part 1 of 8 blogs on what today's smart investors need to know in order to create sustainable wealth for you and your family.

Many people simply underestimate the length of time that a portfolio is needed to carry them through their life. A person can work hard all his earnings years and then end up running out of money in his/her retirement years. The National Institutes of Health have shown that someone born in 1952 had a life expectancy of 68.6 years at birth. By 2006, that figure has risen to 77.9 years. My mom is 87 years old and according to the US Total Population Life Table 2007, she is expected to live to 93!

This trend towards longer life spans will only continue with rapid advances in health care and nutrition. There is no question that we will most likely live much longer than our parents and grandparents.

A Time Horizon should be thought of as the amount of time that your assets need to be working for you and generating the cash flow needed for your lifestyle. This will vary from investor to investor. For example, some people want their assets to last only for their lifetime and their spouse as well. Other investors have a strong desire to leave a legacy for their kids, in addition to meeting their own cash flow needs and some investors want all of the above as well as a vacation home, interesting vacations etc....

Bottom line: Don't put your retirement at risk by planning for too short a time horizon.