Glide Path

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Definition of 'Glide Path'

A glide path is a financial plan that helps investors gradually reduce their risk as they approach retirement. It is designed to help investors preserve their capital while still generating income.

There are a few different ways to create a glide path. One common method is to gradually increase the allocation of your portfolio to bonds as you get closer to retirement. This is because bonds are less volatile than stocks, so they can help to protect your portfolio from losses during market downturns.

Another method is to use a target-date fund. These funds are designed to automatically adjust their asset allocation as you get closer to retirement. This means that you don't have to worry about rebalancing your portfolio yourself.

No matter which method you choose, it is important to start planning for your retirement well in advance. This will give you time to make adjustments to your portfolio as needed and ensure that you have a comfortable retirement.

Here are some additional tips for creating a glide path:

* Start by assessing your current financial situation and goals. How much money do you have saved? What do you want to do in retirement?
* Once you know your goals, you can start to develop a glide path. Consider your risk tolerance and how much volatility you are comfortable with.
* Be sure to review your glide path regularly and make adjustments as needed. Your circumstances may change over time, so it is important to make sure that your plan is still on track.

A glide path can be a valuable tool for helping you reach your retirement goals. By taking the time to create a plan and sticking to it, you can increase your chances of having a comfortable and secure retirement.

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