Alternative assets or stick with three fund?

[diffusate]

Considering some alternative investments, advice appreciated!

Basic stats: we are basically FIREd, but working part time anyway so have extra money rolling in. Not sure how long we will keep that up before quitting though. $1,650k invested, asset allocation is about 60% VTI, 20% VXUS, and 20% BND. Current annual spend is about 55k. As long as we keep working, we will have an extra few thousand a month extra to invest, possibly more. Not talking about more than 5% of the portfolio.

Now that we've hit our number, it's feels unnecessary to shovel more money into our standard asset allocation. If anything, we are more interested in additional layers of "insurance" in case the market turns south. Maybe that's just more VTI, but open to other options.

Not a fan of crypto, and not convinced it wouldn't crash alongside a general economic downturn. Real estate seems like it's also more or less in the same boat.

Gold? Some kind of options strategy? Pick some individual stocks? Art? A big pile of beans?

[JJ-]

I've been finding more and more value in both the portfoliocharts and portfoliovisualizer websites. The portfoliocharts website lets you easily compare several portfolios against each other, 3 fund portfolio included I think.

I'm still in accumulation so 100% equities, but expect to start transitioning to one of these portfolios in 3-5 years or so for the same reason you mention, diversification to hedge against drop in stocks.

[FLBiker]

I'm in a very similar situation (at our FI number of $1.3M, I'm still working FT for a year, DW is PT).  We're also basically in a 3 fund portfolio (more int equity than you and less bond).

If anything, I've been tending towards simplicity in recent years.  We used to do a bit of peer to peer lending, but I've gotten out of that.  We use to have 5% in REIT, but I've gotten out of that.  We used to have a sliver in precious metals and mining (via a mutual fund) but I've gotten out of that.

For us, now, I think the change will be to increase our cash holding -- we recently moved to Canada, so our expenses are here, but all of our investments are in USD.  Thus, I'd like to have a cash cushion to both moderate swings in the exchange rate AND in the market.  We're both earning CAD right now, so it isn't a priority, but as we work less I think I'd like to have a cash cushion in CAD that (along with our PT earnings) would cover ~2 years.  And we might also have a separate cash cushion in USD that we could leverage in times when the exchange rate was particularly good.  Basically, I'm thinking that instead of being 90/10 stocks/bonds, we'd be more like 80/10/10 with the last 10 being cash.  It depends how much were working, though.  If our part-time work is close to covering our expenses (which it likely would be) I don't know that I'd bother with much additional cash.

I'm not interested in gold or crypto (I may just be dumb, but they don't have any inherent value to me).  I am going to be picking some individual stocks, but that's because I have Canadian money to invest and individual stocks avoid PFIC requirements.  Otherwise, I wouldn't.  I wouldn't "invest" in things like art / cars / baseball cards.  Beans is tempting -- honestly.  I think getting good at gardening, DIY, building community relationships is probably the best kind of diversification.

[Visitation]

DW and I reached FI a while ago.  She RE'd but I am still working.  We purchased land as an alternate investment.  It had standing hardwoods on about 80 percent of it and we enrolled in a 5 year selective logging program.  We pull about $1k / acre every 5 years.   We kinda got lucky and were approached about leasing our property for gas rights.  We pull $15K / year from that as well and have been receiving that for over 15 years.  Their looking at permitting a well down the road that we'll be included on and that will just be icing on the cake and allow me to RE comfortably as well.

While land with mineral rights are hard to come by now, you can buy farmland or CRP and make a decent return.

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[MustacheAndaHalf]

@diffusate - If you have BND in taxable, a tax-exempt bond fund like VTEB (Vanguard Tax-Exempt Bond ETF) might make more tax sense.  But with a standard 3 fund portfolio and 3.3% withdrawal rate, you're doing great.

If you split your VXUS (0.08% fee) into 3 parts VEA (0.05%) and 1 part VWO (0.10%), you could save 0.0175%/year.  Which after 50 years, would still make less than a 1% difference.  Hope that reinforces your desire for simplicity.

@FLBiker - It might be worth creating your own thread in Canada Tax Discussion.  Although it's nominally a tax sub-forum, Canada specific investing is also discussed.
https://forum.mrmoneymustache.com/canada-tax-discussion/

[FLBiker]

@FLBiker - It might be worth creating your own thread in Canada Tax Discussion.  Although it's nominally a tax sub-forum, Canada specific investing is also discussed.
https://forum.mrmoneymustache.com/canada-tax-discussion/

Thanks, I'll do that!  Last week, I transitioned to a different employment arrangement so I can now move around some 403bs (and potentially a 457b).  I've been intending to post a full portfolio review once I start to dig into that, and I think you're right that bringing some questions on withdrawal / post-FI investment strategy to the Canada tax forum would be helpful.

[AccidentalMiser]

My alternative investments are 5% crypto (BTC and ETH, at 500/week) and 10% gold.

We also have two rental properties but they will likely be sold, vacated or converted into short-term rentals upon retirement (I hate being a landlord).

I also like TIPS more than most bonds at this point although I don't have any of either.  When rates start back up, most bonds will be return-free risk in my opinion.