What does your FIRE asset allocation look like (in percentages)?

[Unionville]

I'm curious about how other people have decided to allocate their assets in order to live off of them.  Are you just following the standard "retirement plan" for someone who is 65?  Or do you have a different plan? As for me, I met with a Vanguard representative and he did an analysis on my assets and suggested putting about 60% in bond funds and 40% in stocks if I'm going to live off the money.  At first I thought that seemed extremely conservative.  Overall my return for 2014 was 7%, which seemed low, but then I looked at the S&P return, and it did the same. I guess I want to trust them because they suggested I rebalance right before the surprise crash 2007-8.  Turned out the crash didn't really affect my portfolio very much.

[Financial.Velociraptor]

I'm almost entirely in high yield dividend paying stocks.  I keep a few thousand in junk silver coins around in case of zombie apocalypse.  And I keep about 20% of my portfolio dedicated to buy/write options strategies to let me continue to grow my capital above and beyond my lifestyle burn rate.  As I accumulate more capital that way, I rotate down out of my high yield stocks into a growing pile of municipal bonds.  I like NIO best as it yields over 5% tax free and is a bundle of mostly short duration bonds that will be resistant to rising interest rates and will likewise roll over to higher yield bonds during a period of rising rates.

This is basically "do as I say and not as I do" type of advice.  Safety is important in FIRE and I jumped early before I was truly ready because I am an impatient raptor.  I hope to get to at least 40% munis.

[Eric]

Overall my return for 2014 was 7%, which seemed low, but then I looked at the S&P return, and it did the same.

FYI -- the S&P returned 13.69% in 2014. (including dividends)

That doesn't really mean that your return was "low", since you're heavy in bonds, but the S&P had another nice year.

[Unionville]

Overall my return for 2014 was 7%, which seemed low, but then I looked at the S&P return, and it did the same.

FYI -- the S&P returned 13.69% in 2014. (including dividends)

That doesn't really mean that your return was "low", since you're heavy in bonds, but the S&P had another nice year.

oops--I meant the DOW.  I was using that measure to not feel so bad :)

[Financial.Velociraptor]

...I like NIO best...

I thought this was important enough to recommend NIO on my blog.  Thanks for the idea, meteor.  Content has to come from somewhere...

[arebelspy]

Overall my return for 2014 was 7%, which seemed low, but then I looked at the S&P return, and it did the same.

FYI -- the S&P returned 13.69% in 2014. (including dividends)

That doesn't really mean that your return was "low", since you're heavy in bonds, but the S&P had another nice year.

oops--I meant the DOW.  I was using that measure to not feel so bad :)

You probably shouldn't use either of those as benchmarks, to feel better or otherwise.  :)

This is a good post about comparing yourself to benchmark returns:
http://www.joshuakennon.com/thoughts-stock-market-benchmarks-update-5-year-investment-returns/

Given your goals and allocation is different than those indices, comparing yourself to them seems (a bit) silly.  :)

[Unionville]

I like NIO best as it yields over 5% tax free and is a bundle of mostly short duration bonds that will be resistant to rising interest rates and will likewise roll over to higher yield bonds during a period of rising rates.

What does NIO stand for?

[Financial.Velociraptor]

Nuveen Municipal Opportunity Fund, Inc. (NIO), currently yielding about 5.9% and trading over 8% below NAV...

[RetiredAt63]

I am a traditional not-very-early retiree.  Most of my income is pension (mostly defined-benefit, not very well indexed).  Some is dividends from mutual funds and REITs.   Some is RRIF (not a lot, most of my pension room was used by my RSP=pension at work so a small RRSP).  My pension is calculated so that when the CPP comes in at age 65, the pension goes down by the same amount.  This is not unfair in that the premiums were always calculated based on this payout.  At 65 there will also be a small chunk of OAS.  Happily there is enough coming in that I am not eligible for GIS.

Basically the pensions and RRIF pay basics, the rest is gravy - mostly lately it went to lawyers, now it will go to deferred house maintenance and some fun/travel. 

Just as a comment, my mind boggles when I see some of the salaries mentioned on here.  My best year was about $80,000 and most years were well below that.  I also had a spendy DH.  My living costs are way less than when we were together.  Also, as an older retiree I no longer have any child expenses - DD is fully on her own now financially.

[Financial.Velociraptor]

Just as a comment, my mind boggles when I see some of the salaries mentioned on here.  My best year was about $80,000 and most years were well below that.

Totally agree.  I topped out at 88k (ok, I had a 15% bonus target too...) and FIREd two months after I turned 40.  There is a pension worth a little over 15k but I can't touch a penny until 55.  A fifth of my LNW is in IRA from old 401k that I won't touch until 62.5 and I still live pretty well.  I have friends earning over six figures who will probably never retire.  The Lizard King does not grok.

[Bardo]

I'm planning on retiring in a little over a year and I just finished asset rebalancing.  I'm at 33% bonds, 5% cash, and 62% equities.  A chunk of the bond money is is low risk short-duration funds that will fund part of my retirement house purchase.  I realize that by traditional rules this is still high for equities, but given the interest rate environment in today's world there's more risk in bonds that was traditionally the case. 

[Jon_Snow]

I am pretty much 100% stocks...I can afford to be this aggressive because I have a Biological Income Fund that generates in excess of 100k annually. Once this fund "retires" I will dial down my exposure to risk significanlty.

[retired?]

45 year old.

Had used some target date funds, mixed with total stock market sort of funds.  I am in the process of moving all or near all to stocks.  90% U.S. 10% International.  The horizon is too long to worry about dips.

Cash - 15%.......will reduce to a year of expenses.  Mostly left over from sale of previous, more expensive house.
College accounts - 7%.........won't generate income later, but part of my net worth calc.
Retirement - 48%......nearly all can be placed in stocks, much already is....small amount of bonds, at most 5% out of the 48%.
Main Home - 13%
Rental Home - 4%
Stock not in retirement accts - 10%...........half individual stocks, half a vanguard acct.
Loan to relative - 2%

Lost a percent due to rounding.  This is probably not the sort of detail you wanted, but mostly stocks and real estate.  I have considered private investments on the order of 1-2% (i.e. contacts that are developing their own ventures) and the person-to-person loan sites MMM has mentioned.

[retired?]

I'm planning on retiring in a little over a year and I just finished asset rebalancing.  I'm at 33% bonds, 5% cash, and 62% equities.  A chunk of the bond money is is low risk short-duration funds that will fund part of my retirement house purchase.  I realize that by traditional rules this is still high for equities, but given the interest rate environment in today's world there's more risk in bonds that was traditionally the case.

Not sure of your age, Bardo, but I'd argue this 62% equities could be light.  Agree with risk in bonds, especially if you cannot control the turn over.  The old rule of thumb (can be debated whether good or not) of having 100-age in stocks has been, by some, adjusted to 120-age in stocks.

I recall reading not too long ago that the allocation in the target date funds was much higher in stocks at the retirement age than people had thought.  The "news" was that they were more risky than people had thought.  But, the counterpoint was that one may still have quite a while to live.

I don't have a single horizon for expenses, but if I had to choose a single number, my horizon is 15 years.  That stocks have historically been very safe over that horizon is why I am comfortable with keeping a certain amount of cash and all fund-invested $$ in stocks.

[Bardo]

I'm planning on retiring in a little over a year and I just finished asset rebalancing.  I'm at 33% bonds, 5% cash, and 62% equities.  A chunk of the bond money is is low risk short-duration funds that will fund part of my retirement house purchase.  I realize that by traditional rules this is still high for equities, but given the interest rate environment in today's world there's more risk in bonds that was traditionally the case.

Not sure of your age, Bardo, but I'd argue this 62% equities could be light.  Agree with risk in bonds, especially if you cannot control the turn over.  The old rule of thumb (can be debated whether good or not) of having 100-age in stocks has been, by some, adjusted to 120-age in stocks.

I recall reading not too long ago that the allocation in the target date funds was much higher in stocks at the retirement age than people had thought.  The "news" was that they were more risky than people had thought.  But, the counterpoint was that one may still have quite a while to live.

I don't have a single horizon for expenses, but if I had to choose a single number, my horizon is 15 years.  That stocks have historically been very safe over that horizon is why I am comfortable with keeping a certain amount of cash and all fund-invested $$ in stocks.

57, so I'm not far off from the 120-age target.  That said, at this point I don't have any plans to roll down the equity percentage over the next few years.

[Louisville]

I've got a while until FIRE. Actually, it will be FIR65, not FIRE. Anyway, on the day when it doesn't matter any more whether I get a paycheck, I plan to be 66% stock, 30% bond, and 4% cash/TIPS.

[MsRichLife]

I'm 37. DH has FIREd already. I'll finish up at the end of the year most likely.

Our asset allocation is a work in progress. We are slowly transitioning from aggressive accumulation to more diversification. I've been selling properties intermittently over the last few years, but still very heavy on property at the moment. We might sell another property in the next few years if the market continues to look strong.

Current allocation:

Property 56%
Superannuation 30% (Mix of asset classes)
Cash + Fixed interest  11%
Bonds <1%
Gold 2%
Australian Equities 1%
International Equities <1%

It's funny to see such small percentages against those last 4 lines. I've been spending a lot of time and money buying into the market in the last couple of months, but it's still just a drop in the bucket compared to the rest of my portfolio.

[FFA]

Nice to see another Aussie using words like "superannuation" and a huge chunk of property :)
Here's mine using same categories as MsRichLife:

Property 55%
Superannuation 12% (Mix of asset classes)
Cash + Fixed interest  18%
Bonds 0%
Gold 0%
Australian Equities 10%
International Equities 5%

The above excludes my own home (in which case property would become even further overweight!), because that's the way I always calculate my net worth. Although I did note MMM's most recent blog post says to include your own home in net worth. My preference is still to leave it out as it's not generating any retirement income.

This AA is also a work in progress, with plans to sell property and add much super in the coming years.

[bigalsmith101]

The above excludes my own home (in which case property would become even further overweight!), because that's the way I always calculate my net worth. Although I did note MMM's most recent blog post says to include your own home in net worth. My preference is still to leave it out as it's not generating any retirement income.

It may not be "generating" any retirement income, but it is drastically reducing your cost of living when it is paid off, correct? Your house is essentially returning a rate equal to the annualized cost of renting/buying something similar, divided by the value of the asset.

Not a bad reason to include your home in your net worth calculations.

[FFA]

The above excludes my own home (in which case property would become even further overweight!), because that's the way I always calculate my net worth. Although I did note MMM's most recent blog post says to include your own home in net worth. My preference is still to leave it out as it's not generating any retirement income.

It may not be "generating" any retirement income, but it is drastically reducing your cost of living when it is paid off, correct? Your house is essentially returning a rate equal to the annualized cost of renting/buying something similar, divided by the value of the asset.

Not a bad reason to include your home in your net worth calculations.

Yeah in my mind there's no right or wrong, it's just a definition and that can depend on the context too.

If the purpose/context is a FIRE calculation for retirement income, then the way I do it is to look at net worth multiplied by a percentage yield return (safe withdrawal rate if you prefer) and see if this will be adequate to cover my spending costs. In this calculation, I do not include my home in my net worth. But equally I do not include any hypothetical rent payment to myself either, as part of the annual spending cost. To me this makes sense. If I add my home in net worth and multiple by 4% (or whatever SWR you fancy) and use this as a basis for retirement income, I will end up having a big shortfall in reality as the home component of my net worth is not going to generate 4%. Another valid approach can be to include your home value in net worth AND include a hypothetical rent in annual spending (but these basically cancel out such that your own home does not really impact the retirement number calc. anyway). Hope this reasoning makes sense.

If the context is an accounting/personal balance sheet, then by all means include your home and all assets in net worth. 

I was assuming most people on here (myself included) are primarily focused on FIRE and retirement economics and that's why I expected the former context/approach (leaving own home out of net worth) is generally the more applicable one.

[rathga]

I am around:

6% cash
9% P2P loans
18% Home equity
32% Rentals equity
7% Equity Funds (UK ISA)
25% Equity Funds (UK Pension Plans)

The funds are purely capital accumulating for later time.  Live off income coming from P2P loans and rentals.  Spare money put into ISA as it is tax free income and will become more important later.

[Exflyboy]

We have just discovered our annual col of living is about $24k.. lets call it $28k

Our stash is about 52 times that number ($1475,000).. i.e the WR is less than 2%.

On top of that in 7 years pensions of about $42k kick in.

in addition we currently have a bout $15k in rent, plus the Wife is working for another 18 months,... Oh and I have a pt job.

The stash is almost 95% stocks, 5% cash.. might move that to an 80/15/5 stock/bond/cash at some point.

Frank

[RootofGood]

Here is our asset allocation, nearly 100% equities:



That doesn't include around 1-2 years of cash expense sitting in a short term bond and money market accounts (currently $40k, or around 2 years expenses factoring in $10k in taxable dividends each year).  I don't really consider the short term/cash as an "investment allocation" since it's on it's way out the door in the form of spending.  But it'll certainly provide a cash buffer if the market tanks tomorrow.  The cash/short term bonds = 3% of our total portfolio. 

[Dr. Doom]

70/30 stock bond split which I will stay with in R.  I chose this allocation because I'm still relatively young and there are a lot of years to cover between now and any whiff of SS -- and SS will be lower than it is now.  Perhaps 30% lower.  Taken together, these things (years + lower SS payout) means I will be relying on some growth to power me through a lot of years.  While I admire those who say they're 100% in stocks (because: Math says it's the ideal allocation assuming you don't give a ** about volatility) I prefer to be more diversified. 

So I wanted to find a midpoint between having decent growth and lesser balance swings.  We'll see how it goes.  The most important thing to do is to make a firm, rational decision and stick to it through both bull and bear markets so that you actually realize the expected results over time.

I don't count home equity. 

[cazaubon]

At 49, I may be a bit conservative, but I am more worried about return of capital than return on capital at this point - I don't want to have to sell stocks during a crash or have my ER derailed.  So I am at 50/50.  Once I start receiving social security I will let the equities drift up a bit.

[DoNorth]

6 months out from FIRE, but we have 100% equities; all tax deferred or tax free; about 65% US, 35% international; spread over multiple asset classes and sectors and all very low expense (TSP/Vanguard). 

I'm 36 and receive a $60K/year inflation adjusted military/VA pension and my wife has steady self employment work so the risk is more than acceptable since we technically never should have to access any of the funds for normal living expenses.