Author Topic: Aussie Mustacians - asset allocation during retirement  (Read 1895 times)

omni

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Aussie Mustacians - asset allocation during retirement
« on: July 15, 2014, 07:32:43 AM »
To Aussie Mustacians, how do you intend to allocate your assets during retirement? What percentage would you allocate to ETF's (ASX200 or international?), resi real estate, or others?

I am at present set up for resi real estate, as I bought my next PPOR, with my current PPOR becoming an IP at some stage. It will be negative geared initially, but I think there will be cap gains so makes sense to hold for now. After a 'paid off' house (cash in offset account), I am thinking along the lines of:

1) 40% resi real estate
2) 30% ASX200 ETF (probably SPDR ASX200, already have some in super on ASX300)
3) 25-30% international shares (probably an ETF, undecided)
4) 0-5% cash

I like resi real estate and ASX200 ETF because this is where I live, so if the economy booms or inflation occurs, then real estate and ASX200 ETF should correlate well to that. The downside of resi real estate though is how low yields are compared to interest.

0-5% cash for some liquidity (roughly speaking, 1-2 years of withdrawal depending on what happens to the portfolio). Not really necessary because I will have a paid off house, with cash in the offset account against the loan.

25% international shares for some diversification.

What do you guys think? Am I missing something from a diversification, tax, or another perspective?

omni

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Re: Aussie Mustacians - asset allocation during retirement
« Reply #1 on: July 18, 2014, 06:12:37 PM »
Bump for day time in Australia :D

Leisured

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Re: Aussie Mustacians - asset allocation during retirement
« Reply #2 on: July 19, 2014, 02:12:57 AM »
There is a topic on 'Investor Alley' about reallocation. I do not know how to make a link.

This_Is_My_Username

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« Reply #3 on: July 19, 2014, 03:00:54 AM »
Quote
I am at present set up for resi real estate, as I bought my next PPOR, with my current PPOR becoming an IP at some stage. It will be negative geared initially, but I think there will be cap gains so makes sense to hold for now. After a 'paid off' house (cash in offset account), I am thinking along the lines of:

1) 40% resi real estate
2) 30% ASX200 ETF (probably SPDR ASX200, already have some in super on ASX300)
3) 25-30% international shares (probably an ETF, undecided)
4) 0-5% cash

If you have two houses, your next investment should definitely be shares, because your asset allocation is currently 100% residential property. (yes, you super has shares, but you are aiming for FIRE, right?)

You are also very concentrated in the two locations.  What if bogans move in next door? 

So, I disagree with (1) further investment is real estate, because your asset allocation is a bit skewed at the moment.

omni

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Re: Aussie Mustacians - asset allocation during retirement
« Reply #4 on: July 19, 2014, 06:48:17 PM »
Fair point regarding real estate. The trouble (good thing?) about buying the asx200 though is the big 4 banks make up 30% of the index, and they have a good exposure to real estate too, but 70% beats 0% :) . Will work on my trust set up for interactive brokers.

marty998

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Re: Aussie Mustacians - asset allocation during retirement
« Reply #5 on: July 20, 2014, 01:24:45 AM »
err...it's closer to 40% than 30%.

About international shares, make sure you currency hedge. The $A has a habit of being a very volatile currency. You would have done well unhedged in the last 2 years, but there have been certain times where you would have done very badly indeed.

Over the last 15 years returns from international shares have been pretty close to zero because of currency movements.

omni

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Re: Aussie Mustacians - asset allocation during retirement
« Reply #6 on: July 20, 2014, 03:02:45 AM »
Once we add the rest of the banks I guess it could be closer to 40, or perhaps I am using outdated data.

With international shares, do you just go into index ETFs or outrights?