Author Topic: Asset Allocation  (Read 2886 times)

AgileTurtle

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Asset Allocation
« on: November 04, 2014, 12:46:38 PM »
Do you figure out your own asset allocation or subscribe to a methodology that someone else created? If someone elses does anyone know a good objective source comparing methodologies and strategies of allocation?

Thanks

Beric01

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Re: Asset Allocation
« Reply #1 on: November 04, 2014, 01:32:45 PM »
The biggest thing Mustachians need is equity exposure, and lots of it, as for many of us our investments will need to last 50-60 years. The debate here is exactly how much to allocate towards equities.

I'm a fan of the 80% stocks/20% bonds portfolio as it gives you bond to rebalance into. I've seen seen a lot of studies suggesting 80/20 offers greatly reduced volatility from 100% stocks, while very little reduced long-term performance. But opinions may vary.

wtjbatman

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Re: Asset Allocation
« Reply #2 on: November 04, 2014, 03:10:44 PM »
I certainly didn't invent the 100% stock AA, but it fits my risk profile and investment horizon, so that's how I invest. I want maximum return over 30+ years and arguably a 100% stock portfolio does that.

Opinions may vary (may... hah), but for maximum long term return, Beric's 80/20 portfolio is about as conservative as you would want to get. Bogleheads is a good source for research into different AA's.

themagicman

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Re: Asset Allocation
« Reply #3 on: November 04, 2014, 03:25:05 PM »
Bogleheads is a good source for research into different AA's.

+1 for bogleheads!

I am currently 100% stock because I feel that I still have a while and am willing to take risks. When I get a couple of years out of retirement I might throw a little more in bonds. As far as how to stock is allocated. I am a big believe in index funds. Personal I am in 100% vanguard total world fund. This fund owns almost every company in the world based on the size of the company. It is also completely unbiased to what country will do the best in the next 30 years.

AgileTurtle

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Re: Asset Allocation
« Reply #4 on: November 05, 2014, 12:23:58 PM »
Thanks
bogleheads is the worst laid out site since 1997

Icecreamarsenal

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Re: Asset Allocation
« Reply #5 on: November 05, 2014, 03:39:37 PM »
Layout is poor but it gets the job done. No frills.
I like the "your age in bonds" from Malkiel. That being said, I'm 33 with 25 total bond, 5 REIT, and the rest stocks with a 50/50 local/international split in equities. My 401k doesn't offer a total stock market fund with a reasonable fee, so I'm in an sp500 index. Not sure if that's an adequate substitute...

ijingle

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Re: Asset Allocation
« Reply #6 on: November 05, 2014, 06:22:14 PM »
I don't know what the fuck I'm doing. So my asset allocation is arbitrary, informed by others, but ultimately based on on my age, time, goals, risk tolerance. I don't know if it's "correct" but I just set it and then rebalance to it over time.

Icecreamarsenal

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Re: Asset Allocation
« Reply #7 on: November 05, 2014, 09:55:47 PM »

I don't know what the fuck I'm doing. So my asset allocation is arbitrary, informed by others, but ultimately based on on my age, time, goals, risk tolerance. I don't know if it's "correct" but I just set it and then rebalance to it over time.

Sure you do, it just doesn't feel like it yet. Read it all enough times and you'll get the terminology glued; can't be fluent without the words.
It's not arbitrary, it's informed on x and based on y.

pbkmaine

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Re: Asset Allocation
« Reply #8 on: November 05, 2014, 11:55:02 PM »
Most of the investment companies have asset allocation tools on their websites, generally Morningstar/Ibbotson, which is basically the industry standard.   Building an asset allocation along the efficient frontier is more of an art than a science. Unless you place constraints on asset classes you get really weird mixes. Use the tools and let them worry about constraints. I use Vanguard's.


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