Speaking with my advisor during our last quarterly phone call, he complained that I should be back in the market, rather than settling for over 5% (which is compounding, because I very rarely touch the principle, or the gains, as I’ve cut back on expenses) and that I wasn’t keeping up with inflation.
I replied that real inflation, on real life items, is nearer to 18% and then asked him how many of his clients were earning over 18%. His reply, after a moment of silence; “None. That is a very high risk investment scenario. Nobody that I know of is earning over 18%, or anywhere near that”. Naturally, his firm wants him to sell certain investments for the firm to profit, but this isn’t my issue.
As a retiree, this is not the season of life for such high stake risks and NONE of the other clients are willing to take these risks.
My solution to that is being spread out in over 40 mutual funds of different asset classes. About 25% of them are in bonds/treasury/money market asset classes. The other 75% of them are in equity asset classes.
Having your equity assets spread around in 30 asset classes mitigates the risk. Having 25% in bond asset classes gives you 6 years of annual withdrawals (assuming a 4% withdrawal strategy) in case the entire stock market goes down (the few times that happens) so you won't have to withdraw from the equities mutual funds while they're down. Basically, when you do your annual (or quarterly, or monthly) withdrawal, you log into your portfolio and withdraw from whatever mutual fund has the highest balance (sell high). Even in a market downturn, there's almost always an equity mutual fund that's high if you're spread out among many asset classes.
By being in 75% equities instead of 50% equities, your portfolio grows faster (enough to keep up with inflation?, depends on which years). By being spread out among 40 asset classes (30 in equities), you always have something that's up.
Your financial advisor is clearly a dangerous fool—time to fire them now.