The Level3 Withdrawal Strategy to Maximize Your Long-Term Wealth

Since in the AAII we have become fond of this new trading strategy that has been dubbed Level 3, I submit for your reading this weekend Article #35 of the AII Top 40 that has been revisited these past couple of months. This article from November 2017 not only sums up the whole Level 3 approach but focuses specifically on the most important aspect of investing -- withdrawal strategy to maximize return.  Enjoy the article and enjoy the beautiful weekend.

June 7, 2019 » View Online For the AAII Journal’s 40th anniversary, we are celebrating by sharing 40 influential investment education articles from our past. These from-the-vault, hand-curated articles are of value because each one imparts a timeless investment process or lesson.

TOP40: Article 35

The Level3 Withdrawal Strategy to Maximize Your Long-Term Wealth In talking with individual investors over the last 20-plus years, I’ve found that one of the most difficult tasks for those nearing retirement or who are already retired is balancing the need for continued portfolio growth and short-term retirement funding needs. For a long time, the suggested portfolio allocation for retirees was to go extremely conservative by investing heavily in low-risk assets such as bonds. However, with life expectancies rising, going too conservative in retirement can lead to an income shortfall. To overcome this and other issues investors face in retirement, AAII founder Jim Cloonan wrote the book “Investing at Level3: Higher Returns With Minimal Risk for the Long-Term Investor.” In it, Cloonan summarizes many of the key investing concepts he has observed since he founded AAII 40 years ago. In “Investing at Level3,” Cloonan outlines a practical framework uniquely suited for individual investors to help them overcome short-term emotional decisions that undermine long-term performance. The article The Level3 Withdrawal Strategy to Maximize Your Long-Term Wealth offers a clear summary of the Level3 approach. Specifically, the article covers: How the needs of individual investors are different from institutions (mutual funds, pension funds, etc.) and, thus, they are unburdened from the restrictions faced by institutions A new definition of risk that is more practical for individual investors How individual investors should differentiate between short- and long-term investments A retirement withdrawal strategy that maximizes your long-term return potential while also offering a short-term defensive allocation One of the many benefits of the Level3 withdrawal strategy is giving investors well-defined rules to follow to avoid making emotionally driven decisions, especially during a market downturn. Overall, the purpose of the Level3 withdrawal strategy is to protect the assets you will need in the short term from market downturns. The article The Level3 Withdrawal Strategy to Maximize Your Long-Term Wealth offers many useful suggestions for those looking to maximize their retirement wealth while offering short-term protection from a market downturn. Stay tuned: My next email highlights an AAII Journal article by the legendary James O’Shaughnessy updating his “What Works” research and resulting stock-picking strategy. Read the full article now — The Level3 Withdrawal Strategy to Maximize Your Long-Term Wealth