The Right Allocation Model

This writing on when to change investment models is from 2011, but still holds some timeless wisdom.  Brent


As April 2011 ended, the Dow Jones Industrial Average (DJIA) closed at 12,810.  While not at the 14,000 high near the end of 2007, the DJIA is almost double the 6500 low from March of 2009.  Back in 2008 and 2009 we were all understandably concerned about the future of stock investing and many considered decreasing the amount invested in stocks, if not eliminating them all together.  We encouraged clients to hang on (if emotionally able) and to not sell stock at such a low point.  That seems a lot easier to say and do now then it was back in the midst of the fear and painful loss.  We certainly didn’t have a crystal ball to know exactly when or where the market would turn, but following the simple, yet truthful, thought: add to stock when the market is low, reduce stock when the market is high.  In hindsight, adding to stock and making your portfolio more aggressive anywhere near the end of 2008 or beginning of 2009 would have been a great move. 

Now that the market has moved higher though, this may be the time to consider lowering the risk of your account to a more conservative model if you are nearing a time frame that a change would be appropriate.  I am including here a general guideline:

Seasons of Life

Stock Percent

Bond Percent

T&W Model

15+ years until retirment




5 – 15 years until retirement




0 – 5 years until retirement




Mid – Late retiement years





This time table is just a guideline as temperment and other factors may increae or decrease the appropriate risk model.  If you are not sure, the Risk Tolerance Test on our website can help confirm:

We believe that no one knows for sure where the market and economy are headed.  If your season of life has you near a point of changing to a more conservative model, now may be a good time to consider.  (Certainly better than 2008 or 2009)  If you want to talk this over, please give us a call or email.