Author Topic: Is my current asset allocation too international?  (Read 1462 times)

webguy

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Is my current asset allocation too international?
« on: January 26, 2018, 11:59:18 AM »
Hey guys,

Looking for some feedback on my current AA. I started investing in 2012 with mostly US stocks, but then slowly added in international stocks over the past few years. In recent years I've had a high income and felt that US stocks were overvalued and so, while I didn't sell any US stocks, I put most of my newer contributions into international stocks which has led to them being a large part of my portfolio.

Investments
International Stocks:  $600,000 (37%)
US Stocks:  $480,000 (30%)
REITs:  $134,000 (9%)
Bonds:  $155,000 (9%)
Cash:  $235,000 (15%)
Total:  ~$1.6M

Bank
$40,000 (checking 0%)
$200,000 (savings - earning 1.35%)

Home
Mortgage balance: $495,000 (rate: 3.75%)
Home worth: ~$650,000

I have a lot of cash, and part of the reason is that I run my own business which has its risks - although to be honest those risks have lessened as the company is growing. I'm also contemplating putting a chunk of the money in the bank towards the mortgage in the near future, but haven't decided yet. I also made the classic mistake of holding some cash in the investment account to "buy in on a correction" which hasn't really happened.  I've slowly been putting money into the market. Just put another $30k in today.

My goal is more so to preserve my wealth and not necessarily to grow my investments aggressively. I enjoy running my own business but want the investments to be there if I decide in a few years that I'm done, so I guess I'm looking to build a portfolio which has moderate growth with some downside protection built in.  If anyone has any suggestions I'd love to hear them!

Thanks!
« Last Edit: January 26, 2018, 12:10:27 PM by webguy »

webguy

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Re: Is my current asset allocation too international?
« Reply #1 on: January 26, 2018, 01:52:05 PM »
I guess a second part of my question would be, where would you allocate new money?  Pay down the mortgage, add to investments, something else?  Looking for opinions or things I should consider when making this decision.

Thanks!

VoteCthulu

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Re: Is my current asset allocation too international?
« Reply #2 on: January 26, 2018, 02:13:04 PM »
Vanguard suggests 30-50% of your stocks be international, so I'd probably bring the US stocks up to at least the same as the international.

I think $475k is a lot to hold in cash. I would designate a separate account for the cash it takes to run the business and then invest the rest according to your IPS.
« Last Edit: January 26, 2018, 10:41:44 PM by VoteCthulu »

harvestbook

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Re: Is my current asset allocation too international?
« Reply #3 on: January 26, 2018, 07:07:03 PM »
I'd rather pay off mortgage than buy more bonds. Otherwise I'd be close to 50/50 US and international, because even if US is overvalued right now (which we don't know for sure), it might not be when we reach that future point at which you sell some.

Retire-Canada

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Re: Is my current asset allocation too international?
« Reply #4 on: January 26, 2018, 09:18:20 PM »
Pay down the mortgage,

No chance. I'd keep that low interest mortgage to full term. I'd add any new money to your investments in accordance with your AA.

webguy

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Re: Is my current asset allocation too international?
« Reply #5 on: January 29, 2018, 12:04:15 PM »
Thanks for the feedback guys.  I understand that common advice is to hold more US stocks, but is there actually any problem with holding more international stocks? What's the logic for rebalancing to have more in US?

Retire-Canada

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Re: Is my current asset allocation too international?
« Reply #6 on: January 29, 2018, 12:45:30 PM »
Thanks for the feedback guys.  I understand that common advice is to hold more US stocks, but is there actually any problem with holding more international stocks? What's the logic for rebalancing to have more in US?

Your ratios in the OP of US to International are not unreasonable to me.