A portfolio recommendation for a 45-year-old professor in Germany planning to retire at 68, developed around the household’s pension income, private healthcare costs and slightly risk-averse profile.
The assignment was to construct a retirement portfolio for a private client. The recommendation combines global equities, euro-denominated bonds, infrastructure and gold, with equity exposure reduced as retirement approaches.
Married with two children, a non-working spouse and an owned home. No portfolio liquidity is expected before retirement, and the client has a strong understanding of financial markets.
At retirement, annual income needs are projected at €73,157. Net statutory pension income covers €46,155, leaving the balance to be funded by the investment portfolio.
The recommended starting allocation combines 50% equities, 40% euro bonds and 10% gold. The equity allocation provides long-term growth, while bonds and gold support diversification and capital preservation.
| Portfolio holding | Role | Allocation | Amount |
|---|---|---|---|
| iShares Core MSCI World UCITS ETF | Global equity growth | 40% | €100,000 |
| iShares Global Infrastructure UCITS ETF | Real-asset equity exposure | 10% | €25,000 |
| iShares Core Euro Government Bond UCITS ETF | Stability and EUR duration | 20% | €50,000 |
| iShares Core Euro Corporate Bond UCITS ETF | Investment-grade income | 20% | €50,000 |
| Invesco Physical Gold ETC | Inflation and crisis diversification | 10% | €25,000 |
The broader opportunity set includes global and emerging-market equities, listed property and infrastructure, euro bonds, inflation-linked exposure and gold. The recommended portfolio selects five complementary building blocks rather than simply choosing the assets with the highest historical returns.
Equity exposure falls from 50% to 30% between ages 45 and 68. Bond exposure rises from 40% to 60%, while gold remains at 10% throughout.
Global equities and infrastructure provide the main growth exposure. Euro government bonds, corporate bonds and gold broaden the return drivers within the portfolio.
Across 50,000 simulated paths over 23 years, the median portfolio reaches €1.42 million before tax. The 10th-percentile outcome is €973,167, compared with the €675,070 retirement target.
Estimated tax on investment gains reduces the median projected value from €1.42 million to €1.14 million. Under this simplified treatment, 97.2% of outcomes remain above the retirement target after tax.
Under the stagflation scenario—6% equity returns, 2% bond returns, 5% gold returns and an additional annual drag—the median retirement value falls to approximately €570,000.
The median outcome falls below the capital target, showing the impact of prolonged low real returns.
A major drawdown close to retirement can materially reduce the capital available when withdrawals begin.
A longer retirement period increases the total withdrawals required from the portfolio.
Changes to pension benefits, healthcare costs or investment taxation can affect the funding requirement.
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