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I am 41 years old and single. I plan on retiring in four to five years if I can double my portfolio from $225,000 to $450,000. I used the "Rule of 72" to estimate the return needed to double my portfolio within the five-year time frame. I believe my list of stocks and mutual funds should bring an annual return of at least 15%. What do you think? My plan is to retire in my mid-40s and continue my successful amateur golf career. I plan to play in various tournaments and possibly try for the Senior Tour Qualifying School when I turn 50. I will need an income of about $2,300 a month in retirement. I also have $75,000 invested in an IRA rollover account, I own my home and I will qualify for Social Security payments in my 60s. -- R.H.


An investment professional isn't a psychic or a priest. I can't see into the future, and I won't bless your very aggressive portfolio.

Yes, you can expect an aggressive portfolio to outperform the overall market over time. The more aggressive the portfolio, the longer the planning horizon should be to permit a recovery from any downturns or selloffs that may cause short-term drops in the portfolio's valuation.

Yet your planning horizon is only five years. You want your money to double in five years -- who doesn't? But the risk level you assume to achieve that return also increases the probability you


make your goal.

The bull market celebrated its 10th birthday last week (Oct. 11) with a major selloff. In planning to live off your investment returns, you shouldn't count on the portfolio having above-average performance.

Before we go further, let's explain to readers how you arrived at your 15% goal. The Rule of 72 says you can take an expected rate of return and divide it into 72 to determine how long it will take to double your money. If you expect to earn 10% on your portfolio, it will take approximately 7.2 years to double your money (72 divided by 10).

You divided 72 by your investment horizon (five years) to see what return was needed to double your money in that period. The Rule of 72 provided you with an estimate of 14.4%. The actual required annual return is 14.87%.

Over the past decade, three closely watched benchmarks, the

Dow Jones Industrial Average

, the

S&P 500

index and the

Nasdaq Composite Index

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, have produced average annual returns of 16.2%, 16.9% and 26.3%, respectively.

But this year (through Oct. 13), they have returned -11.35%, -6.47% and -18.5%, respectively. Counting on your portfolio -- or any portfolio -- to average 15% annual returns over the next five years is very optimistic.

Another thing to consider when living off your portfolio's returns is that you need to allow for the way inflation affects your purchasing power. If inflation averages 3% over the next four years, it will take $2,588 a month or $31,064 annually to meet your living expenses four years from now. Owning your home could mitigate inflation's influence on your spending, but don't count on it.

Turning now to some of your investments, you've got two recent mutual fund start-ups,

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Schwab Health Care Focus and


RS Aggressive Growth, that have experienced managers but are too new to have much of a track record. It's hard to say whether they'll provide the 15% return you're looking for.

You also have a recent IPO,


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, that is still in a lock-up period for insiders holding shares. It's common for these restricted shares to push the stock lower when the restriction is lifted six months after the IPO.

Something else to consider: More than 10% of your portfolio is in cash, probably earning between 5.5% to 6.5%. That's not bad compared to how the overall market's doing this year, but isn't helping you reach your goal of a 15% return.

Your heaviest sector plays are technology, energy and financials. Technology has had its problems this year, and while the energy and financial sectors have performed well lately, you shouldn't expect that leadership to continue indefinitely. The year-to-date performance of the portfolio holdings is remarkable when compared to the market averages. With the exception of


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, even your positions with negative year-to-date performances are down less than 10%.

Still, for you to meet your goal, you're going to have to continue making sector plays, rotating your investments to follow the market's momentum. By actively trading your portfolio, you also will be recognizing gains, making the portfolio less tax efficient. That raises the bar for reaching your goal because the money paid in taxes will no longer be working for you.

Besides, successfully executing a sector rotation strategy is a very difficult task to accomplish as an individual investor. If I haven't dissuaded you from this approach, you should consider using mutual funds that employ this approach for up to one quarter of your holdings.

Try to realize your personal goals without putting so much pressure on your portfolio's performance. You'll end up better off in both areas over the long run.

Send In Your Portfolio

If you would like to submit your portfolio for a makeover, send it to Give us enough details -- dollar values or percentages -- so we can determine how your assets are allocated. Also tell us a little about yourself and your investing goals, and let us know how we can contact you if we have further questions. Though we'll only use your initials publicly, please include your full name so we can verify your identity. Unfortunately, we cannot guarantee your portfolio will be selected for a makeover, nor can we promise to respond individually to everyone who submits a portfolio.

Dr. Don Taylor has been an investment professional for nearly 15 years, most recently as the treasurer for a nonprofit organization where he managed more than $300 million in assets. He is a chartered financial analyst, holds a Ph.D. in finance and has taught investment and personal finance courses at the University of Wisconsin and at Florida Atlantic University. At the time of publication, Dr. Don held Enron convertible notes, though holdings can change at any time. Don's Portfolio Rx aims to provide general investing information. Under no circumstances does the information in this column represent a recommendation to buy or sell. Dr. Don welcomes your inquiries and feedback at