The Compass Investors methodology encourages participants to always have their retirement assets positioned to be market responsive REGARDLESS OF THEIR AGE.
The Horizon Adaptive Asset Allocation™ strategy is designed to safely and consistently seek returns that are superior in any market, at any time. Therefore, our methodology removes the need to apply artificial age and risk dependencies in determining the best positioned investment holdings.
The article by Charles P. Jones and Jack W. Wilson, "Asset Allocation Decisions—Making the Choice Between Stocks and Bonds" published in the Journal of Investing (1999): p. 51–56 states, "The historical return patterns of asset classes do not support the common advice to increase bond percentages with age. Over time, the real return on bonds is not only small, but declines."
Our methodology agrees with and incorporates Jones and Wilson's findings. Other than government-mandated retirement plan withdrawal requirements, Horizon™ focuses subscribers—regardless of their age or employment status—on creating and preserving retirement income security at all times. Given the increase in life expectancy, this requires a growing and maintaining a nest egg that must replace a steady income for potentially several decades.
Retired subscribers who want part of their assets in stable value/fixed income vehicles use Horizon™ to manage the remainder of their portfolio. And your required withdrawals will make this happen automatically. This creates a more traditional looking self-managed approach where the non-fixed income component is allocated using Horizon™. For some retirees, this combination provides greater peace-of-mind as they remain aligned with their personal objectives.
If you have reached the Retirement Income Security goal—being able to live off the interest alone of your investments—then your journey may be considered complete. However, if you have not, or if perhaps you desire to improve your standard of living in retirement and be better prepared to handle any unexpected health issues that could arise, we suggest you continue on your “journey.” Our methods never change—only the amount of money you manage with it does. Since you could (if you are healthy) expect to live another 20 years or more in retirement, we believe you should always have your money working for you.
The LAST thing you would ever want is to adopt an aggressive or risky approach when building your retirement nest egg.
Horizon™ Adaptive Asset Allocation™ is the highest return and lowest risk approach because your Plan's investments will always be positioned to work with—rather than fight against—the changing tide of market and economic realities.
It is important to recognize that the Horizon™ strategy does not require you to state your risk tolerance when making investment decisions. Compass Investors focuses on the two most important elements for growing and protecting an investment portfolio:
Studies have shown that the worst thing you can do is NOTHING. Inaction will ultimately yield the lowest result and practically ensure you are taking the maximum risk for running out of money during retirement.
In summary, the Horizon strategy is not focused on "aggressive" growth; it is focused on achieving OPTIMIZED performance.
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