Our elegant two-parameter Goal Based Investing framework (target date and downside safety net) can be used to implement a surprisingly powerful range of outcomes ranging from pre-retirement to retirement. These include:
- Saving for kids’ college: e.g. 4 annual withdrawals of a minimum of $30,000 but ideally $75,000 – starting 10 years from now
- Retirement income: e.g. 20 payments starting in 10 years of a minimum of $100,000 per year but ideally $200,000 per year (reminiscent of a Period Certain Variable Annuity)
- Principal Preservation: e.g. $50,000 today, should be no less than $50,000 in 3 years and the hope is to get it to $100,000!
Even if you choose an unrealistic upside target (e.g. $50K to $100K in 3 years with principal preservation), Optimal’s engine’s powerful and intuitive visualization control panel will show you that it’s extremely unrealistic! However, the engine strives to ensure that the downside limit (e.g. of $50K after 3 years in the Principal Preservation example above) is preserved regardless of what happens in the stock and bond markets.