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Asset Allocation Question
Old 04-25-2006, 10:28 AM   #1
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Asset Allocation Question

Conventional wisdom or the so called experts say that you should have your age as a percentage of your portfolio in fixed income, bonds, C/Ds, etc. and the balance in equities. Just wonder how many people actually follow this principle ? Me, age 55, and have only 40% of portfolio in the fixed income side of the portfolio. The other 60% spread pretty much evenly across three index funds and an energy and asian growth fund. What say you ?

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Re: Asset Allocation Question
Old 04-25-2006, 10:49 AM   #2
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Re: Asset Allocation Question

I'd say the age rule is too conservative.

I'm at age 52 with a 59/41 split. Current plan is to decrease stocks by 1% each year. So I guess that would put me at (Age - 11) in bonds/cash.

Of course it depends on other things too.
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Re: Asset Allocation Question
Old 04-25-2006, 11:44 AM   #3
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Re: Asset Allocation Question

I don't subscribe to such an age formulaic rule.* I prefer to keep 10 years of future income needs in fixed income securities.* Of course, this presumes you are able to estimate future income needs.* I use Quicken to track all our accounts, checking, credit cards, portfolio, and so forth, and that gives us a pretty good idea of our income/expenses by category.

At 70 and after 14 years of retirement, our asset allocation is 55% equities (Vanguard total stock market and total international funds), 10% REIT fund, 35% fixed income securities (Vanguard intermediate-, short-term, and TIPS funds).* Given my family's proclivity for living to 100 and beyonds, I plan for at least another 30 years.* I worry more about inflation than temporary variation in asset value.

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