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Asset Allocation 

Asset Allocation can best be described as creating an investment mix that can potentially help you meet your retirement planning goals. At Houston Retirement Income Planners, we take into account all investment possibilities you qualify for in creating an Asset Allocation that can suite your investment risk profile, while still getting you where you want to be financially by the time you retire. 

The Old Asset Allocation Model basically consisted of stocks, bonds, and cash. The New Asset Allocation Model that we employ consists of stocks, fixed income, alternative investments, life insurance (yes, life insurance...see a further explanation under the 'You Don't Know Life Insurance' tab). 

For a number of years, institutions, pension funds, and endowments have utilized a broader allocation model to help them further diversify and better meet their long term investment performance goals. Today, virtually all of those alternative investments are available to not just accredited investors, but virtually all investors in some form. That's why we feel at Houston Retirement Income Planners Alternative Investments may have a place in your Asset Allocation Model. 

New Asset Allocation Model


Alternative Investments include: 

  • Non-Listed REITS 
  • BDCs (Business Development Cos.) 
  • Oil & Gas Partnerships 

My New Asset Allocation Model is shown in the pie chart above, but it's just a general starting place. A specific Asset Allocation Model will be developed for you based on your risk tolerance, current market conditions, and time until retirement, or your income needs to fund your current retirement. 

The 4 basic slices of the New Asset Allocation Model include: 

1) Fixed Income: I have elected to change term 'Bond' in the Old Asset Allocation Model to 'Fixed Income'. This is done to take advantage of the category 'Preferred Stocks' which act more like bonds than stocks. (See the 'Preferred Stock' tab of my website.) 

2) Alternative Investments: Alternative investments include Non-Listed REITS, Real Estate LLCs, Business Development Companies, and Oil & Gas Partnerships. Because Alternative Investments are illiquid for a period of time, they can provide stability to a portfolio, bypassing the normal daily volatility of the stock market. Alternative Investments offer the possibility for current income and future growth. 

3) Stocks: Stocks are publicly traded businesses that are typically listed on exchanges and typically have daily liquidity. This area might even include some companies that have recently come public in the last 3 years.

4) Life Insurance: Perhaps this is the first time you have seen Life Insurance as a slice of the Asset Allocation Model pie.

1 This chart is provided for illustrative purposes only and is not indicative of any specific investment. Asset Allocation cannot eliminate the risk of fluctuating prices and uncertain returns. Past performance is no guarantee of future results. Actual results will vary. Investing in Alternative Investments involve specific risks which are greater than those associated with traditional investments, and may only be offered to investors who meet specific suitability standards, including net worth. Alternative Investments are not suitable for all investors and are intended for experienced and sophisticated investors who are willing to bear the high economic risks of the investment, which can include: Loss of all or substantial portions of investment; lack of liquidity; volatility of returns; restrictions on transfer; lack of diversification and higher risk due to concentration in an asset class; absence of pricing or valuation; delays in tax reporting; higher fees and less regulation than other investments; and in some cases, unproven or inexperienced managers. No offer of any interest in any products will be made in any jurisdiction in which the offer, solicitation or sale is not authorized, or to any person to whom it is unlawful to make such offer, solicitation or sale. 

2 U.S. Treasuries are backed by the full faith and credit of the U.S. government. 

3 Mortgages that carry the full faith and credit guaranty of the United States government. 4 Includes municipal bonds that are (1) federal income tax free, and (2) insured by policies underwritten by private insurers guaranteeing municipal bonds in the event of default.

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