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Portfolios 504: The Investing Pyramid

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1.
In general, how should investors who are funding long-term goals allocate their assets?
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Start heavy with high-quality stocks, then gradually shift more into safer securities over time. A portfolio that consists entirely of cash and short-term bonds will exhibit very few fluctuations, which can provide peace of mind and may be appropriate for very short-term goals, but not for long-term goals. Over time, it will get eaten alive by a portfolio that includes a stock component.
2.
What activity forms the base of the investment pyramid?
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Setting goals. The other activities will be greatly influenced by your goal setting.
3.
Which statement is false?
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By quantifying each of your goals, you may find that it is not possible to achieve them all. But it's better to know that early on, so you can prioritize.
4.
Why does budgeting still matter after you have stopped saving for retirement?
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You may need to adjust your spending rate at times during retirement. Especially during market downturns.
5.
For saving for your long-term goals, advisors usually recommend starting out with stocks and holding them over the long term rather than switching eventually to safer investments.
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False. Advisors usually recommend shifting to safer investments over time in order to protect the wealth you have built up.