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What is an Equity Glide Path?

WR Anderson & Co. https://www.wranderson.com/ (281) 974-1965 When deciding on asset allocation for a retirement portfolio, investors often begin by analyzing the most optimal equity glide path. An equity glide path refers to the projected changes in asset allocation throughout retirement. A declining equity glide path is where you gradually reduce your portfolio’s exposure to the volatility of stocks and increase your allocation to bonds. A static equity glide path is where you stay with a specific allocation, such as 60/40 stocks to bonds, and annually rebalance your portfolio to keep that allocation. A rising, or inverse, equity glide path is the opposite of a declining glide path. The portfolio starts out conservative with less exposure to stocks and becomes more aggressive as retirement continues. The objective of a rising glide path is to reduce volatility in the early years of retirement when the portfolio is largest and at risk of losing the most wealth in a market drop. While investors can’t foresee what market or economic conditions they’ll encounter upon retirement, analyzing glide path is one tool for determining asset allocation. To learn more about retirement portfolio allocation, give us a call or stop by our website today.    • What is an Equity Glide Path?