Author Topic: What is your asset allocation?  (Read 19308 times)

GGNoob

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What is your asset allocation?
« on: October 23, 2014, 09:03:21 AM »
For those willing to share, I figure this could be fun to see what everyones target AA is along with their age.

I'm 27 (wife is 26) and we are 100% stocks with 70% US and 30% international:
35% VTI (Total US Stock Market)
35% VXF (US Extended Market)
15% VXUS (Total International Stock Market)
15% VSS (All-World Ex-US Small-Cap)

All our retirement accounts have Vanguard funds so this AA is duplicated as much as possible in each account. As you can see, I'm tilted towards small and mid-cap companies. I'm considering adding additional exposure to REITs and Emerging markets with VNQ and VWO. If I do, I'll direct future contributions to those funds until they are where I want them.

Louisville

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Re: What is your asset allocation?
« Reply #1 on: October 23, 2014, 09:48:33 AM »
The TRP funds (T Rowe Price, my 401k provider) are contained within TRP's 2035 target retirement fund. I have them exploded out. The V codes are Vanguard funds in Roths and rollovers. Some may be duplicated because I am balancing across lots of accounts.  I just rebalanced, so my actual percents are close to my target percents.

Category/Fund         % of Total   Target %
US Large         19.06      18.95
TRP Equity Index 500      
TRP Growth Stock      
TRP Real Assets      
VFIAX      
VFINX      
US Large Value         18.66      18.95
TRP Value      
VVIAX      
VVIAX      
US Small         9.32      9.47
TRP Mid-Cap Growth      
TRP New Horizons      
TRP Small-Cap Stock      
VSMAX      
US Small Value         9.89      9.47
TRP Mid-Cap Value      
TRP Small-Cap Value      
VSIAX      
Foreign Large         11.42      11.58
TRP International Stock      
TRP Overseas Stock      
VTMGX      
Foreign Large Value      11.38      11.58
TRP Interntl Growth & Income      
VTRIX      
Foreign Small         9.19      9.47
VFSVX      
VFSVX      
Emerging Markets      5.25      5.27
TRP Emerging Markets Stock      
VEIEX      
REIT            5.82      5.26
VGSLX      
      

      
Bond            15.17      16.34
TRP Inflation Focused Bond      
TRP International Bond      
TRP High Yield      
TRP New Income      
VBTLX      
VBTLX
Note that I don't have bonds allocated out by subcategories. It's just what the TRP parent fund offers, plus total US bond market.      

And for fun, here is my allocation glide path.  Note I'm not FIREing, although I plan to change to something outside of an office building around age 58. As my stock allocation decreases, I don't change the sub-allocation within stocks. I hit my most conservative allocation around the time I plan to start drawing down.

Year   Stock%   Cash%   Bond%            Age
2014   83.66000   0.00000   16.34000   47
2015   82.67889   0.00000   17.32111   48
2016   81.69778   0.00000   18.30222   49
2017   80.71667   1.00000   18.28333   50
2018   79.73556   1.20000   19.06444   51
2019   78.75444   1.40000   19.84556   52
2020   77.77333   1.60000   20.62667   53
2021   76.79222   1.80000   21.40778   54
2022   75.81111   2.00000   22.18889   55
2023   74.83000   2.20000   22.97000   56
2024   73.84889   2.40000   23.75111   57
2025   72.86778   2.60000   24.53222   58
2026   71.88667   2.80000   25.31333   59
2027   70.90556   3.00000   26.09444   60
2028   69.92444   3.20000   26.87556   61
2029   68.94333   3.40000   27.65667   62
2030   67.96222   3.60000   28.43778   63
2031   66.98111   3.80000   29.21889   64
2032   66.00000   4.00000   30.00000   65
2033   66.00000   4.00000   30.00000   66
2034   66.00000   4.00000   30.00000   67
2035   66.00000   4.00000   30.00000   68
2036   66.00000   4.00000   30.00000   69
2037   66.00000   4.00000   30.00000   70
... and so on forever...

Read William Bernstein's "The Intelligent Asset Allocator". Or as my wife calls it, "The Intelligent Ass Locator".

Anybody want to kick a hole or two in this plan? I'd love to hear it.
« Last Edit: October 23, 2014, 09:50:35 AM by Louisville »

GGNoob

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Re: What is your asset allocation?
« Reply #2 on: October 23, 2014, 10:22:03 AM »
Anybody want to kick a hole or two in this plan? I'd love to hear it.

Looks like a very solid and detailed plan! I like the small and value tilt. You also have a little extra exposure to REITs and Emerging Markets, which is what I'm looking to add. I've considered some value funds too, but I'm not sure how many different funds I want to use.

Where did you come up with the asset allocations? It's just interesting to see there are no even percentages until age 65.

Louisville

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Re: What is your asset allocation?
« Reply #3 on: October 23, 2014, 11:44:56 AM »
The percentages on the glide path aren't even numbers until the end because each year I'm changing the stock allocation just the right fraction to land at 66% at age 65.

As far as the percentages on the stock sub-allocations, well, they're part "efficient frontier" (William Bernstien), part convenience, and part gut feeling.

Here's a warning about a portfolio like mine - it's a bitch to rebalance if you have multiple accounts - we have two Roths, three rollovers, and a 401k. And it probably won't get much better results than something simpler, like a Vanguard Target Retirement Fund. In fact, it may do worse. But, I just like doing it. Yay spreadsheets.

In an hypothetical efficient market, value and small shouldn't get better returns. But, the data shows that they do, over long periods. Bernstein acknowledges this but I don't know if he's ever come up with an explanation. Maybe modern portfolio theory is wrong and markets aren't efficient.

Thegoblinchief

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Re: What is your asset allocation?
« Reply #4 on: October 23, 2014, 12:34:01 PM »
Age 30.

100% stocks except for cash on the sidelines for emergencies, dedicated savings, and deciding whether to invest or pre-pay a debt.

Roughly 75/25 US/international, with the US mostly in total market funds, slightly weighted towards mid/small caps.

Beric01

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Re: What is your asset allocation?
« Reply #5 on: October 23, 2014, 12:52:55 PM »
Age 24.

All in Vanguard funds across my 401(k), Roth IRA and taxable account. 80/20 allocation. Here's my allocation as of this morning:

VBTIX (Vanguard Total Bond Market Index Inst) - 20.3%
VGTSX (Vanguard Total Intl Stock Index Invest) - 28.4%
VTSAX (Vanguard Total Stock Mkt Idx Adm) - 51.3%

I'm a little heavy in international stock right now thanks to maxing my 401(k) out early this year. Will get that fixed once I do my Roth IRA contribution for 2015. Unfortunately VTSAX is NOT available in my 401(k), so I have it all in my Roth IRA + taxable. I love that I get access to VBTIX in my 401(k), but I'm a bit annoyed that VGTSX is the best share class my 401(k) offers (why not at least VTIAX - I have over $10K in it by myself!) - I'm talking to my HR department about this.
« Last Edit: October 23, 2014, 12:56:01 PM by Beric01 »

Philociraptor

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Re: What is your asset allocation?
« Reply #6 on: October 23, 2014, 01:04:40 PM »
Age 25, looks like I'm 75/25 stocks/bonds, 70/30 US/Intl on stock.

I don't control the bond portion, it's in my work 401(k) and we don't choose where it goes.

Target AA is 56% US Stock, 24% Intl Stock, 20% Bond.

Grateful Stache

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Re: What is your asset allocation?
« Reply #7 on: October 24, 2014, 05:44:45 AM »
Boy, do I love talking about asset allocation!

30%   Total US (VTI)   
10%   Mid Value   (VOE)   
10%   Small value (VBR)      
10%   REIT (VNQ)         
20%   International Developed (VEA)      
10%   International Small Cap (SCZ)   
10%   Emerging Markets (VWO)

Mid-30's. 

I should also point out that my employer keeps about 10% of my retirement fund in a bond fund that I can't touch. I also keep an emergency fund. Therefore, my AA appears to be super-aggressive, but there is a small safety net.
« Last Edit: October 24, 2014, 05:57:37 AM by Grateful Stache »

GGNoob

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Re: What is your asset allocation?
« Reply #8 on: October 24, 2014, 06:56:00 AM »
That's 2 people in a row that can't touch there bond allocation. I've never heard that before. Very interesting!

hodedofome

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Re: What is your asset allocation?
« Reply #9 on: October 24, 2014, 08:10:22 AM »
Age 34 - Retirement accounts are currently 100% US stocks but I'm tactical about it (not normal I know). One month it could be 100% bonds, the next 100% stocks. Had the market not bounced, my system would have said to switch to bonds at the next rebalance date. I rebalance monthly.

Trading account is 1/3rd Nasdaq 100 ETF, 1/3rd S&P 500 ETF, 1/3rd 30-Year Treasury ETF. It's rebalanced monthly as well.

IRA accounts currently hold VTI, 401k is with American Funds and I have it in RNGEX - New Economy Fund (about the closest I could find to VTI).

Dodge

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Re: What is your asset allocation?
« Reply #10 on: October 24, 2014, 10:53:15 AM »
I am also 100% stocks. If you don't count my cash, or my emergency fund, or the CD's, or the real-estate, or the small bond fund gifted to me...

Just kidding!

56% US Stock, 24% Intl Stock, 20% Bond.

sobezen

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Re: What is your asset allocation?
« Reply #11 on: October 24, 2014, 11:29:30 AM »
Age 34 - Retirement accounts are currently 100% US stocks but I'm tactical about it (not normal I know). One month it could be 100% bonds, the next 100% stocks. Had the market not bounced, my system would have said to switch to bonds at the next rebalance date. I rebalance monthly.

Trading account is 1/3rd Nasdaq 100 ETF, 1/3rd S&P 500 ETF, 1/3rd 30-Year Treasury ETF. It's rebalanced monthly as well.

IRA accounts currently hold VTI, 401k is with American Funds and I have it in RNGEX - New Economy Fund (about the closest I could find to VTI).

@ hodedofome: I am curious have you tracked your portfolios performance over a long period? Tracking without monthly re-balancing and using monthly re-balancing? Wondering has the monthly re-balancing created significant returns or something else. Thank you for sharing.

GGNoob

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Re: What is your asset allocation?
« Reply #12 on: October 24, 2014, 11:30:15 AM »
Are we on the right track and can you offer any suggestions? Apologies for the long post and highjacking the thread's original purpose.

You'll probably want to start a new thread with this information. Maybe keep this information in this thread...
Quote
Currently between Vanguard and 401k:
77.53% US Equity
12.24% International
7.75% Alternative
1.46% Bonds

...then move everything to a new one. Then we can discuss everything in more detail.

BarkyardBQ

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Re: What is your asset allocation?
« Reply #13 on: October 24, 2014, 11:30:53 AM »
will do.

GGNoob

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Re: What is your asset allocation?
« Reply #14 on: October 24, 2014, 11:38:37 AM »
I am also 100% stocks. If you don't count my cash, or my emergency fund, or the CD's, or the real-estate, or the small bond fund gifted to me...

Just kidding!

56% US Stock, 24% Intl Stock, 20% Bond.

Very funny...but also true. It really is all how you look at it!

My wife and I are actually like 1% bonds right now because we keep an amount equal to our HSA reimbursable expenses in Vanguard's Total Bond Market. But our target stock/bond allocation for retirement is 100% stocks.

Le Barbu

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Re: What is your asset allocation?
« Reply #15 on: October 24, 2014, 02:03:04 PM »
I am from Canada so it´s a bit more complicated

33% ZCN (Canadian stock market)
32% VTI
5% VBR
30% VXUS

Not bad at all !

Grateful Stache

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Re: What is your asset allocation?
« Reply #16 on: October 24, 2014, 06:04:13 PM »
That's 2 people in a row that can't touch there bond allocation. I've never heard that before. Very interesting!
Mine is a bond fund that is suppose to turn into a pension if you stay long enough. If not, you can cash it out. It's a pretty sweet deal, actually.
« Last Edit: October 24, 2014, 06:06:04 PM by Grateful Stache »

Left

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Re: What is your asset allocation?
« Reply #17 on: October 24, 2014, 06:25:32 PM »
I'm 28, 90% stocks (90% VTI, 10% VNQ) and 10% BLV
I'm trying to hit 80/20 but with blv as my bond allocation instead of the BND etf.

Yes, I know I don't have international, but I don't mind that. Once I hit my 20% bond portion, I'll fix up my stocks portion. But it's done pretty well for me so far
« Last Edit: October 24, 2014, 06:28:17 PM by eyem »

SpareChange

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Re: What is your asset allocation?
« Reply #18 on: October 25, 2014, 02:31:40 PM »
Two weeks from turning 40. 60/40 stocks/bonds. 60/40 domestic/int'l stocks. I use VIIIX/VXF and VEU for stocks. A TBM fund and IEI for bonds.

wtjbatman

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Re: What is your asset allocation?
« Reply #19 on: October 25, 2014, 05:35:09 PM »
Just turned 31, I'm 100% stocks. I'm seeking maximum return, and bonds are a drag on that return. The research shows it, I'm not going to link any sources :)

thedayisbrave

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Re: What is your asset allocation?
« Reply #20 on: October 25, 2014, 05:41:45 PM »
I'm 24 and 90%/10% equities/fixed income with 30% of equities in international and a 10% equity tilt in REITs. 

GlassStash

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Re: What is your asset allocation?
« Reply #21 on: October 25, 2014, 08:22:44 PM »

Just turned 31, I'm 100% stocks. I'm seeking maximum return, and bonds are a drag on that return. The research shows it, I'm not going to link any sources :)

There's actually contrary research that shows more mixed allocations which allow for rebalancing can/have outperformed 100% equity allocations. I'm not going to link sources

wtjbatman

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Re: What is your asset allocation?
« Reply #22 on: October 25, 2014, 08:49:14 PM »

Just turned 31, I'm 100% stocks. I'm seeking maximum return, and bonds are a drag on that return. The research shows it, I'm not going to link any sources :)

There's actually contrary research that shows more mixed allocations which allow for rebalancing can/have outperformed 100% equity allocations. I'm not going to link sources

I feel like my posts are being targeted. Did I offend you somewhere along the line, bruh? ;)


GGNoob

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Re: What is your asset allocation?
« Reply #23 on: October 26, 2014, 09:12:26 AM »
Just turned 31, I'm 100% stocks. I'm seeking maximum return, and bonds are a drag on that return. The research shows it, I'm not going to link any sources :)

Mind sharing your stock allocation?

Guizmo

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Re: What is your asset allocation?
« Reply #24 on: October 26, 2014, 09:54:27 AM »
in my roth ira, i am 100% Total Market Index. Ideally I will be 75/25 US/International, starting next year when I can add more to my roth.

in my 457/401k I am in a target fund that is 99% US Equities. I'll stay with that until I am ready to leave the job.

GlassStash

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What is your asset allocation?
« Reply #25 on: October 26, 2014, 10:47:11 AM »

Just turned 31, I'm 100% stocks. I'm seeking maximum return, and bonds are a drag on that return. The research shows it, I'm not going to link any sources :)

There's actually contrary research that shows more mixed allocations which allow for rebalancing can/have outperformed 100% equity allocations. I'm not going to link sources

I feel like my posts are being targeted. Did I offend you somewhere along the line, bruh? ;)

Ha no, your posts just happened to be the most recent when I was browsing last night.

My allocation is 100% in VASGX, which consists of the following:

Vanguard Total Stock Market Index Fund Investor Shares 56.4%
Vanguard Total International Stock Index Fund Investor Shares 23.5%
Vanguard Total Bond Market II Index Fund Investor Shares 16.0%
Vanguard Total International Bond Index Fund 4.1%

I may buy these funds individually in the future and rebalance myself, but life is crazy atm and I'm in lazy investor mode.
« Last Edit: October 26, 2014, 10:53:57 AM by GlassStash »

Le Barbu

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Re: What is your asset allocation?
« Reply #26 on: October 26, 2014, 07:45:03 PM »
In some short periods (25 years or less) especialy in high volatility, a mix could outpeform. Otherwise, bonds are a drag. Just to feel safer, it may worth

wtjbatman

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Re: What is your asset allocation?
« Reply #27 on: October 26, 2014, 10:00:02 PM »
Just turned 31, I'm 100% stocks. I'm seeking maximum return, and bonds are a drag on that return. The research shows it, I'm not going to link any sources :)

Mind sharing your stock allocation?

75% U.S., 15% International (half emerging markets/half developed), 10% REIT

Slight small cap and value tilt on the U.S. stocks.

mostlyeels

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Re: What is your asset allocation?
« Reply #28 on: October 27, 2014, 04:02:13 AM »
I'm 42, with 66/34 stocks and bonds, and roughly 50/50 split between Australian and rest-of-the-world equities (mostly individual companies, with a little VTS and VEU creeping in there).  My target allocation is more like 60/40 stocks and bonds, so I'm trying to rebalance using new money as I go.

Louisville

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Re: What is your asset allocation?
« Reply #29 on: October 27, 2014, 10:37:41 AM »
I'm 42, with 66/34 stocks and bonds, and roughly 50/50 split between Australian and rest-of-the-world equities (mostly individual companies, with a little VTS and VEU creeping in there).  My target allocation is more like 60/40 stocks and bonds, so I'm trying to rebalance using new money as I go.
What's you time horizon? That is, when do you plan to begin drawing your nest egg down?

mostlyeels

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Re: What is your asset allocation?
« Reply #30 on: October 27, 2014, 02:47:20 PM »
I'm 42, with 66/34 stocks and bonds, and roughly 50/50 split between Australian and rest-of-the-world equities (mostly individual companies, with a little VTS and VEU creeping in there).  My target allocation is more like 60/40 stocks and bonds, so I'm trying to rebalance using new money as I go.
What's you time horizon? That is, when do you plan to begin drawing your nest egg down?

About two years from now, all going to plan.

Mr. Frugalwoods

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Re: What is your asset allocation?
« Reply #31 on: October 27, 2014, 06:53:03 PM »
Currently we're sitting at

  • 10% Cash (this is including emergency fund and normal checking account)
  • 10% Bonds (FSITX)
  • 15% Foreign Equities (FSGDX)
  • 65% Total Market (FSTVX)

This is spread out across our 401ks and taxable accounts (bonds in the 401k, of course).

MsRichLife

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Re: What is your asset allocation?
« Reply #32 on: October 27, 2014, 07:17:56 PM »
I know I'm going to be a total outlier on this one.

At this moment our asset allocation (not including superannuation or pension) is:

51% Property
16% Fixed Interest
32% Cash (awaiting investment after sale of property)
1% Gold

wuming79

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Re: What is your asset allocation?
« Reply #33 on: October 28, 2014, 04:10:01 AM »
Hi,

I started out fund investing with the following allocation

Bonds 25%
Gold 25%
Equity 25%
Emerging 25%

Now it is...
Bonds 30%
Gold 13%
Equity 30%
Emerging   27%

Bond, Equity and Emerging market funds have not reached the minimum units to be sellable (Total investment is only 20k) so I can't re-balance with the profits yet. Should I pump money into gold funds at this point of time to re-balance my portfolio?


wtjbatman

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Re: What is your asset allocation?
« Reply #34 on: October 28, 2014, 07:11:36 AM »
Now it is...
Bonds 30%
Gold 13%
Equity 30%
Emerging   27%

Bond, Equity and Emerging market funds have not reached the minimum units to be sellable (Total investment is only 20k) so I can't re-balance with the profits yet. Should I pump money into gold funds at this point of time to re-balance my portfolio?

I hate to give you the cop-out answer, but that's up to you. My advice: If you've decided that you believe in the (sorta-permanent portfolio?) and that's the method you want to invest to achieve your goals (FIRE, or whatever), then stick with it. So yes, put money in gold to rebalance so you are closer to your desired AA. On the other hand, if you're having second thoughts, maybe it would be better for you to look at a more traditional stock/bond asset allocation? Sounds like you might need to develop an IPS to help you out in the future.

okonumiyaki

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Re: What is your asset allocation?
« Reply #35 on: October 28, 2014, 07:38:43 AM »
20% Asia Pacific bonds (via a bond ETF)
5% asia ex Japan
10% Europe
65% HK tracker funds

Company pension (that I can't change) is 20% bonds, rest intl equity

TomTX

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Re: What is your asset allocation?
« Reply #36 on: October 28, 2014, 11:36:10 AM »
Hi,

I started out fund investing with the following allocation

Bonds 25%
Gold 25%
Equity 25%
Emerging 25%

Now it is...
Bonds 30%
Gold 13%
Equity 30%
Emerging   27%

Bond, Equity and Emerging market funds have not reached the minimum units to be sellable (Total investment is only 20k) so I can't re-balance with the profits yet. Should I pump money into gold funds at this point of time to re-balance my portfolio?

First,  gold is a poor investment. Gold produces nothing and over the long term has poor returns. Gold is usually speculation.

Second, I think you are overdiversified. I would just pick a low cost stock index fund and stick with it until you have $50k, then maybe think of getting a second fund. Overdiversification is a distraction and leaves you more open to the second biggest pitfall of the individual investor: market timing, leading to buying high and selling low.

NP

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Re: What is your asset allocation?
« Reply #37 on: October 28, 2014, 03:28:52 PM »
Should I pump money into gold funds at this point of time to re-balance my portfolio?

First you need to decide what asset allocation you actually want. If you would really like to stay with your original plan, then yes, it's logical that you should pump new money into the gold funds.

However, I'd take a step back and consider whether your plan is optimal in your situation. As it's been pointed out, gold is very risky and could be called speculation if you hold it expecting high returns, although it could act as a useful diversifier. If you feel strongly about precious metals, you should consider funds of mining company shares, at least those produce income unlike gold.

Four funds split between only 20k does seem a bit unusual but in general I wouldn't call a mere four funds overdiversified. If I were you, I would start educating myself on asset allocation, study the topic patiently for quite a while and then reevaluate my plan. You'll probably come to the conclusion that you don't need to sell anything, except perhaps the gold, just contribute new money according to your revised goals. Until then, your safest bet in my opinion is to put new money into what you called 'Equity', which I suppose means US or developed markets equities.

sol

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Re: What is your asset allocation?
« Reply #38 on: October 28, 2014, 04:06:00 PM »
My partner and I are almost 40.  I actually didn't know our asset allocation very precisely because it is spread out over so many different accounts.

Adding it all up was pretty surprising.  76% equities, 6% bonds, 18% cash and near-cash equivalents like treasuries.  That last number is much higher than I thought it would be, mostly due to her very conservative AA.  I'll speak to her about it, because it pains me to see tens of thousands of dollars only earning 1%.

Radagast

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Re: What is your asset allocation?
« Reply #39 on: October 28, 2014, 11:45:04 PM »
First,  gold is a poor investment. Gold produces nothing and over the long term has poor returns. Gold is usually speculation.

Second, I think you are overdiversified. I would just pick a low cost stock index fund and stick with it until you have $50k, then maybe think of getting a second fund. Overdiversification is a distraction and leaves you more open to the second biggest pitfall of the individual investor: market timing, leading to buying high and selling low.
By itself, gold has returns similar to cash and volatility similar to stocks. But equal portions of gold and long term bonds can drastically cut stock losses with little impact on compounded return. See a comparison of 100% stocks with 80% stocks and 10% each gold and long term bonds here (plus a "3-Fund" portfolio) :http://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&endYear=2013&initialAmount=10000&portfolio3=Custom&portfolio2=Custom&portfolio1=Bogleheads+Three+Funds&TotalStockMarket2=100&TotalStockMarket3=80&Gold3=10&TotalStockMarket1=50&mode=2&TotalBond1=20&LongTermBond3=10&IntlStockMarket1=30&annualAdjustment=10000&s=y&startYear=1972&annualOperation=0.

Notice that adding 10% gold and bonds improved returns vs. 100% stocks, while cutting the biggest loss from 41% to 27%. Not bad! But note that if you dollar cost average stocks are better again. That example right there is how I learned the effectiveness of dollar cost averaging for volatile assets. The gold and long term bonds would be preferable if you were withdrawing or not adding though. The Permanent Portfolio is a little odd, but in my opinion most people could learn from it.

Seems like "over"diversification would be a good thing to me, provided you had a plan in place to deal with it.

Radagast

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Re: What is your asset allocation?
« Reply #40 on: October 29, 2014, 12:00:14 AM »
I'm thinking:
1/6 US Large Value
1/6 US Small Value
1/6 International Small
1/6 Emerging Markets
1/6 Long Term Bonds (25 years-ish)
1/6 Gold

Rebalanced individually when they reach double or half their targets. My own "permanent portfolio" which people can throw rocks at from all sides.
I've started putting it together, but won't have all the pieces for several months. Plus, the reality is that I have far more in real estate, which is too hard to add up for this thread.

NP

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Re: What is your asset allocation?
« Reply #41 on: October 29, 2014, 05:01:12 PM »
If I died or became incapacitated, this is how my wife would consolidate the assets unless she learns quite a lot about investing:
  • Until ten years from retirement:
    80% stocks equally split between:
    • VTV (large value)
    • VBR (small value)
    • VEU (ex-US)
    • VSS (ex-US small cap)
    • VWO (emerging markets)
    20% bonds equally split between BND (total bond) and BNDX (total international bond).
    If she believed she was at great risk of having to make emergency withdrawals before retirement, she would decrease the percentage of stocks.
     
  • Starting from ten years before retirement, the percentage of stocks would be gradually decreased to reach 40% by the time she retires, and the bond allocation would be changed so it's equally split between BND, BNDX and VTIP (short-term inflaction-protected).
     
  • Five to ten years after retirement she could start slowly increasing the percentage of stocks again if she is comfortable with it.
Investments would be rebalanced once annually, or if there's a sudden large cash inflow. If at any point she felt she couldn't follow this relatively simple plan for any reason, all assets would be switched to an appropriate target retirement fund preferably at Vanguard.
« Last Edit: October 29, 2014, 06:53:49 PM by NP »

Dodge

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Re: What is your asset allocation?
« Reply #42 on: October 29, 2014, 05:55:09 PM »
First,  gold is a poor investment. Gold produces nothing and over the long term has poor returns. Gold is usually speculation.

Second, I think you are overdiversified. I would just pick a low cost stock index fund and stick with it until you have $50k, then maybe think of getting a second fund. Overdiversification is a distraction and leaves you more open to the second biggest pitfall of the individual investor: market timing, leading to buying high and selling low.
By itself, gold has returns similar to cash and volatility similar to stocks. But equal portions of gold and long term bonds can drastically cut stock losses with little impact on compounded return. See a comparison of 100% stocks with 80% stocks and 10% each gold and long term bonds here (plus a "3-Fund" portfolio) :http://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&endYear=2013&initialAmount=10000&portfolio3=Custom&portfolio2=Custom&portfolio1=Bogleheads+Three+Funds&TotalStockMarket2=100&TotalStockMarket3=80&Gold3=10&TotalStockMarket1=50&mode=2&TotalBond1=20&LongTermBond3=10&IntlStockMarket1=30&annualAdjustment=10000&s=y&startYear=1972&annualOperation=0.

Notice that adding 10% gold and bonds improved returns vs. 100% stocks, while cutting the biggest loss from 41% to 27%. Not bad! But note that if you dollar cost average stocks are better again. That example right there is how I learned the effectiveness of dollar cost averaging for volatile assets. The gold and long term bonds would be preferable if you were withdrawing or not adding though. The Permanent Portfolio is a little odd, but in my opinion most people could learn from it.

Seems like "over"diversification would be a good thing to me, provided you had a plan in place to deal with it.

Thanks for the site, I love it!

I'd caution against using it as a tool to fine-tune your slice and dice asset allocation, however.  It only has 40 years of data, and only shows you one result at a time.  For example, I choose a random year, 1980, as the starting point, and your 80/10/10 portfolio was a full 25% lower than the 100% stock portfolio, and 7% lower than the Bogleheads portfolio.

This is definitely a useful site to determine how well your chosen asset allocation would have fared vs something like 100% stocks, or 60 total stocks and 40 total bonds.  But don't use it as a tool to choose your asset allocation, you'll just be cherry picking.

Radagast

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Re: What is your asset allocation?
« Reply #43 on: October 29, 2014, 07:52:47 PM »
No fine-tuning or cherry picking going on here (to the best of my ability), But I have probably been overly reliant on Portfolio Visualizer because it has lots of options and pretty-looking results. Any suggestions for alternatives?
Nor am I necessarily suggesting 80/10/10 stocks/long bonds/gold. I have done a lot more research for my personal plan, and am still investigating. This is an example only ;).

To avoid cherry picking I used the Monte Carlo simulation for 4% withdrawal over 50 years. It confirmed an 86% chance of success for 80/10/10 S/LB/G, and only a 77% chance for 100% total stock market. Now it is still based on the same data and who knows what happens under the hood, but this removes some bias.
http://www.portfoliovisualizer.com/monte-carlo-simulation?s=y&lifeExpectancyModel=0&volatility=12.0&allocation1=80&allocation2=10&allocation3=10&allocation4=0&yearlyPercentage=4.0&inflationAdjusted=true&currentAge=70&meanReturn=7.0&yearlyWithdrawal=40000&initialAmount=1000000&distribution=1&simulationModel=2&annualOperation=2&years=50&asset4=TotalBond&asset3=Gold&asset2=LongTermBond&asset1=TotalStockMarket

The average of ten runs each on cFIREsim monte carlo simulator (much cruder) gave the same basic result: 80/10/10 S/LB/G had a 94% chance of success, while 100% stocks had only a 79% chance after 50 years with other settings default.
http://www.cfiresim.com/input.php

Back to Portfolio Visualizer to give some recent data that illustrate the point I was trying to make. In almost all periods gold, long term bonds, and stocks have negative to little correlation. This means that one or even two will almost always protect against a droop in the third. That could be very useful.
http://www.portfoliovisualizer.com/asset-correlations?s=y&symbols=gld%2Cblv%2CVTI&endDate=10%2F29%2F2014&numTradingDays=120



Terrestrial

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Re: What is your asset allocation?
« Reply #44 on: October 30, 2014, 08:54:00 AM »
30 years old, merging all my acct types together (brokerage/IRA's/401k) it would break out roughly something like this:

Index Funds - 56%
Individual stocks (9 of them relatively equal weight...2-3% of total portfolio each) - ~23%
Employer stock - 8% (see below)
Bonds - 9%
Cash - ~4% (this is recent savings/bonus money that has yet to be put into the market but will be in relatively short order).

Have other cash that is for emergency savings/short term purchase needs, unfortunately earning almost nothing, but I don't include it in my allocation (not investments)


EDIT: Edited to reflect that I forgot about my company stock.  It's not publicly traded (employee held company), and I get stock grants every year, more stock the higher you get. 

Not to hijack the thread but question for others who may have similar situations:   I get these grants as part of my total compensation (I don't have to buy the stock), but it's becoming a sizable portion of my portfolio, and I can't start divesting it until either I leave the company/retire, or turn 50, a long ways off.  I am 100% vested in all my shares.  What adjustments if any should I make to the rest of my portfolio to account for this?  It's not exactly a 'problem' since its free money but I don't really care to have so much invested in any one company, let alone the one I work for.  At the same time I don't want to totally exclude it from planning because it is starting to become a sizable amount of money that will be an asset to draw on.
« Last Edit: October 30, 2014, 09:11:23 AM by Terrestrial »

sol

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Re: What is your asset allocation?
« Reply #45 on: October 30, 2014, 09:36:24 AM »
What adjustments if any should I make to the rest of my portfolio to account for this?

There are two schools of thought here.  One says that your company stock is a significant portion of your equities exposure so the rest of your portfolio should be heavier on bonds or REITs or whatever else you want to have, to keep your asset allocation the way you want it.  The other says that your company stock is pure speculative bonus and you should ignore it, build your AA the way you want it, and if the stock every cashes consider it a windfall.