Ahh, the house is quiet again. We had a wonderful Easter weekend. Hunted eggs, decorated eggs, smoked a big ham and ate it while arguing with family. All is right in the world. But best of all the lower trails are opening up and I got out for my first mountain bike ride of the season. Fresh air, sunshine and BC loam. So fabulous. And it sharpened my focus on FIRE. I want to ride every day!
As far as asset allocation there are lots of rules of thumb, but it's something you just have to get comfortable with on your own. Bogleheads (the US version of Finiki) has a good section on asset allocation here:
Note especially the link to a 7 part series by Larry Swedroe on asset allocation: https://www.bogleheads.org/wiki/Asset_allocation#cite_note-11
If you do choose a portfolio with a high % of equities you have to PROMISE you won't panic and sell if there is a bear market or crash.
Thanks GreatLaker. I read the articles and understand better how asset allocation is based on ability, willingness and need to take risk.
Ability - moderate - I am in a cyclical industry and located in a small town. There is no ability to pick up work with the competitor next door. Currently the industry is in a slump and I am working 3 days a week. This is actually wonderful, I am really enjoying it but wish it was of my own choosing.
Willingness - high for me, moderate for husband - risk equals reward. I have good savings, good earning potential and a high tolerance for market swings. I didn't lose any sleep over the 2008 crash, just kept making my biweekly contributions happy in the knowledge that I was buying low.
Need - moderate - I understand his concept of decreasing marginal utility of money once you have enough. I would like to retire and ride my bike everyday and do not yet have the funds to do that, so in that sense I still have a need to take some risk.
So after that reading, as well as taking the Asset Allocation quiz in the Real Retirement book, I would choose an 80% equity portfolio. But to keep peace in the household (which is also a key component in quality of life) I will set our plan at 75% equity. FIREcalc shows less than a percent difference in probability between the two portfolios.
I need to find a good balanced index fund to set up for biweekly contributions, with the intent to transfer the money to ETFs when sizable enough to warrant the trading fees. GreatLaker suggested TD Balanced Index Fund (TDB965) but I can not buy it on InvestorLine. The Canadian Couch Potatoe site recommends TD e-series funds, but alas, I also can not buy those on InvestorLine. Any suggestions? And if I did not have this fabulous forum, how would I go about picking a good one on my own?
Just set automatic transfer/contribution and leave it in cash until you have >5k$ to buy ETF!
OK. Sounds good. I'll keep it simple and keep my biweekly savings in cash until they are sufficient to warrant buying ETFs.
So what I am looking at for a plan is:
25% Bonds - ZAG BMO Aggregate Bond Index ETF
25% Canadian Equity - VCN Vanguard FTSE Canada All Cap Index ETF
50% International Equity - XAW ishares Core MSCI All Country World ex Canada Index ETF
Look familiar? It is essentially the CCP Assertive portfolio. Any recommendations to use different funds? I notice several of you stick with Vanguard funds. Any benefit to doing so, or just personal preference?
Meeting with Financial Advisor on Friday. T - 2 days!