Author Topic: Looking for a custom portfolio calculator  (Read 3220 times)

Grateful Stache

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Looking for a custom portfolio calculator
« on: February 09, 2014, 09:19:31 AM »
Hi!

I'm sure there is a perfectly simple answer to this, BUT:

I'm trying to tailor a Bernstein sample portfolio to my own custom percentages. For instance, in his sample portfolio he suggests the following allocations:

39% Total US
3% REIT
12% Foreign Developed
6% Emerging Markets
40% Bonds

I'm trying to alter this by using a 15-20% bond allocation, but use the same ratios for the other assets. Clearly I'm no math genius, but is there a good calculator anyone has found to change these numbers for your own custom portfolio?

I did my due-diligence by searching first, so please pardon my ignorance if a simple answer exists.

Cheers and thanks.
« Last Edit: February 09, 2014, 12:06:36 PM by Grateful Stache »

Justin234

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Re: Looking for a custom portfolio calculator
« Reply #1 on: February 09, 2014, 04:54:11 PM »
I'm trying to alter this by using a 15-20% bond allocation, but use the same ratios for the other assets.

Maybe I am misunderstanding your question but... It all has to add up to 100% so you can't lower the bond allocation without increasing something else. You'd have to decide whether you want the extra 20-25% to go to stocks, REITS, etc. first.

letro

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Re: Looking for a custom portfolio calculator
« Reply #2 on: February 09, 2014, 05:14:02 PM »
Think of this as a 100 dollar portfolio

US  39 X (80/60) is 52
Reit   3 X (80/60) is 4
Foreign 12 X (80/60) is 16
EM 6 X (80/60) is 8
bonds set at 20 all add up to 100
Keep Smiling letro

letro

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Re: Looking for a custom portfolio calculator
« Reply #3 on: February 09, 2014, 05:25:36 PM »
Better calculator

Grateful Stache

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Re: Looking for a custom portfolio calculator
« Reply #4 on: February 09, 2014, 05:57:45 PM »
Better calculator

Letro, thank you!

I didn't know if there were any off-the-shelf versions, but your custom version is awesome!

I may have a few advanced degrees, but I was never any good at 'rithmetic.

Cheers, thanks and keep smiling. 

letro

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Re: Looking for a custom portfolio calculator
« Reply #5 on: February 09, 2014, 06:09:24 PM »

Bill Bernstein Teaches Portfolio Building

In his recent book, Bernstein details how the average investor can construct a smart investing portfolio.
By Nanette Byrnes | Posted: 09-24-10 | 08:31 AM | Email Article
In his new book, The Investor's Manifesto, William J. Bernstein makes a strong case not just for the idea of portfolio investing, but the fact of it. Any one of us, with a modest amount of effort, can build a good portfolio, Bernstein argues.  Then he proves it.
Bernstein is not your typical individual investor. A PhD and formerly practicing neurologist, he has a wild passion for investing, and an appetite for dot matrix diagrams that can be a bit intimidating.  A bestselling author of four previous books on investing and economic history, in this tome the good doctor set out to write something accessible to the masses. He's achieved his goal.


Chapter 3 is proof.  That's where he offers a practical blueprint for building a smart portfolio that's logical and practical in equal doses.


Though simple, Bernstein argues even his most plain vanilla concoction will match or beat the overwhelming majority of professional investors in the decade to come. It's well worth the short time investment to read Bernstein's full explanation, but here is a taste of the steps he takes to build a diversified portfolio:


1. Allocate to bonds a portion of your portfolio equal to your age. If you are 30, put 30% in bonds. If 40, put 40%. (This presumes average risk tolerance, and should be adjusted according to your own temperament.)


Step 1


Let's presume you are 40


Split your holdings int 60% equities, 40% bonds.


Step 2


Then take the 60% that's in equities and split that into into foreign and US stocks. Again, the right balance depends on your outlook, but 70% US, 30% Foreign will work for a lot of people.


Simple Portfolio:



60% Equities --> 42% Total US Stock Market + 18% Total Foreign Market


40% Bonds


You could stop there, but it wouldn't hurt to take


Step 3


Add a few more asset classes including REITs for Real Estate exposure (no more than 10%)  and split foreign into developed and emerging markets.


Simple Portfolio 2:



42% Total US Stock Market --> 39% Total US Stock Market + 3% REITs


18% Foreign Market --> 12% Foreign Developed Markets + 6% Emerging Markets


40% Bonds


For investors with enough money to spread across more asset classes ($250,000 plus), and a tolerance for complexity, Bernstein takes


Step 4


Further split out a set amount for "value" stocks and small company stocks for a pie of the following 12 slices:


Portfolio



39% Total US Market --> 10% US Large Market + 9% US Small Market + 10% US Large Value+ 10% US Small Value


3% REITs


12% Foreign Developed Markets --> 3% Foreign Developed Large Market + 3% Foreign Developed Small Market + 3% Foreign Developed Large Value + 3% Foreign Developed Small Value


6% Emerging Markets --> 3% Emerging Markets Large Market + 3% Emerging Markets Large Value


40% Bonds


These are "most definitely not hard-and-fast recommendations", Bernstein writes. But they do show that something that seems challenging to do, can be pretty simply broken out into steps that are easy to follow and understand.


In a later chapter of the book, Bernstein outlines a good number of specific low-cost mutual funds that can be used to build a portfolio. And though he's skeptical about some aspects of Exchange Traded Funds, he even includes a few ETFs.


Bernstein starts his chapter on portfolios with a description of the fate of Japanese investors nearing retirement in 1989.  With all the recent speculation that the US may (or may not) be on the road to emulating Japan, his cautionary tale becomes all the more powerful.


Between 1969 and 1989 $1 invested in Japanese stocks rose to $57.23 in value. In the two decades since, $1 invested shrank to 60 cents.


The lesson Bernstein's hoping to teach is that no one should put all their money in Japanese equities. Or US equities.


Or Treasury bonds. The average 65-year-old man today will live until almost 82, he notes. If he gets to 82,  he's likely to live to 89. In fact 95 isn't impossible with medicine improving as it has. But an all-Treasury retirement portfolio won't get him further than about 12.5 years if he spends 5% of it a year and inflation averages 3%.


That is the best way to end up exactly where you don't want to be: without enough savings over the long term.


Grateful Stache

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Re: Looking for a custom portfolio calculator
« Reply #6 on: February 09, 2014, 06:31:07 PM »
Yes, I have a lot of respect for Bernstein. I appreciate his prudence as well as his detailed explanations of why he does things. I was never able to figure out how to alter the proportions of the portfolios though. I even looked at recipe calculators!

« Last Edit: February 09, 2014, 06:34:09 PM by Grateful Stache »

Justin234

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Re: Looking for a custom portfolio calculator
« Reply #7 on: February 10, 2014, 11:10:45 AM »
(sorry I totally missed the point of the question, OP; I guess I should have re-read or listened to my instincts... :)