I'll Show You Mine If You Show Me Yours

Well, Mikey, finding time would mean trouble for me.
Take today for example. I was very busy all day and
don't feel like I accomplished much. Plus, as you can see, my investments (except for real estate) require
almost no attention at all. I think it's my "Type A"
genes. I not only never get done, I can never see
the end. I am hardwired to fret over projects and chores
undone, and then to add to my to-do list.
It's a curse.

John Galt

It is interesting to me how many of you invest almost solely in mutual funds of various sorts. Even at Vanguard cost levels it would probably be cheaper for many to do their own stock picking, at least in US stocks and bonds. 0.2% of $1.5 mil is still $3000. Cheap if you had to buy a manager, but expensive compared to the Wall St. Journal online and whatever else you might need to do your own management. *And then you have more control with regard to realization of capital gains, offsetting losses, etc.

Another way to look at it is that at a generous 4% SWR, that 0.2% rock bottom cost is still 5% of your allowable draw.

Management *takes some time, but judging by the number of posts that many of us make, it doesn't seem that finding time would be much trouble.

Mikey

Mikey,

Been there done that! - I am a lousy stock picker! - Guess what - Most pros are too! Why should I think I can beat the index funds, if the pros can't?

I take it you have not read the 4 pillars of investing?

[Jane]

Management *takes some time, but judging by the number of posts that many of us make, it doesn't seem that finding time would be much trouble.

Mikey

Yeah I guess we are a bunch of slackers!

My portfolio is still small and thus I think it is better for me to invest in index funds and low cost, no load mutual funds for the sake of diversification. Also, I am not yet confident of my stock picking ability (I do have a hypothetical stock portfolio that I followed to see how much I may have lost/made).

When my portfolio is bigger, I probably would dabble in stocks.

Jane

Hi Jane! Tracking a "phantom" portfolio to see
how much you might have "lost/made" ?? That's a little scary. I suggest you buy a dog or join a bowling league.

John Galt

[Bob_Smith]

Here's where I am as of 6/30/2004:

STOCKS - 34%
80% Vang TSM
20% Vang International Growth

BONDS - 52%
69% - TIPS (all individual bonds - no mutual funds)
16% - Penfed CDs (consider these a proxy for bonds)
15% - Vang ST Corp

CASH - 14%

This doesn't count cash I have set aside to buy a house (soon) that will be worth more than my present house, nor does it count funds set aside for my youngest to attend college the next four years - I consider that money spent. My target allocation for stocks is 40%, so I do plan to rebalance. I also plan to add a small dose of REITs. That will bring my cash balance down.

[gayl]

Mikey,

Been there done that! - I am a lousy stock picker! - Guess what - Most pros are too! Why should I think I can beat the index funds, if the pros can't?

I take it you have not read the 4 pillars of investing?

Lousy stock picker as charged! That's why I did not retire at 50 ... had to wait to 52. Recently I thought about doing more than the general acct & indexing... yet at yesterday's bond presentation, they were touting returns of 2-3%! Can't think of a single reason to give up 5.5% guaranteed to get 2-3%. At a recent stock diversification presentation (Schwab), they were touting returns less than their index fund. Indexing also diversifies the IRA w/o actually having to pick the stocks ... and yes, I give up 0.58% in fees. But then, I seem to be unmotivated in doing more.

[Nords]

The retirement portfolio--
3% in MM & 1-year CD (two years' expenses)
35% Tweedy, Browne Global Value (TBGVX)
30% Berkshire Hathaway "B" shares (BRK.B or BRK/B)
22% S&P 600/Barra Small-cap Value ETF (IJS)
9% Dow Jones Select Dividends ETF (DVY)
1% in a smattering of small-cap growth and the govt Thrift Savings Plan.

The 12-year-old's college portfolio--
55% Berkshire Hathaway (but what a great purchase price)
32% Tweedy, Browne
13% EE bonds.

[Trace]

Age 35 (still working)

401K:

S&P 500 Index: 38%
Mid-Cap Index: 13%
Small-Cap Index: 7%
MSCI EAFE Index: 7%
Bond Fund (Interest/Principal Guaranteed: Pays 5.35%): 35%

Roth IRA:

Total Stock Market Index Fund: 55%
REIT Index Fund: 10%
Short Term Corporate Bond Fund: 35%

529 Plans:

60% Total Stock Market Index Fund
40% Total Bond Market Index Fund

[Whakamole]

Age: 33

Cash: 38%
US Bonds: 14%
US Stock: 23%
Foreign Stock: 9%
Foreign Bonds: 2%
Gold: 4%
Commodities: 6%
REIT: 2%
Energy: 2%

[gindie]

Age: 45 (hope to retire @ 55)

My 401K

15% *Dodge and Cox Stock
15% *Vanguard PRIMECAP

15% *T. Rowe Price Mid-Cap Growth
15% *T. Rowe Price Mid-Cap Value

10% *Vanguard Explorer
10% *Longleaf Partners Small Cap

10% *PIMCO Total Return
10% *Vanguard Short Term Bond Index

Wife's (soon-to-be) Rollover IRA:

15% *Fidelity Contrafund
15% *Sound Shore

10% *Meridian Growth
10% *Weitz Value

10% *Buffalo Small Cap
10% *Fidelity Low-Priced Stock

10% *Fidelity Diversified International

10% *PIMCO Total Return
10% *Fidelity Short Term Bond

[cute fuzzy bunny]

All funds are vanguard, net expense ~.25%

Overall 45%/50%/5% stock/bond/cash

Stocks: 72% US, 28% foreign
Bonds: 95% US, 5% foreign/emerging; 50% short, 50% interm, all medium/high quality

Taxable fund:

35/65/5

5% Europe index
5% Pacific/japan index
60% Wellesley income (60% interm bond, 40% large cap val)
30% Short term corporate bond

IRA (wont be used for 20 years):

100/0/0

15% Healthcare
15% Emerging market
5% International explorer
50% REIT
15% Small cap value

[Michael]

I'm currently 65% equity, over weight in small cap, value, and international relative to the S&P.

[Zipper]

Equities 63.9%(Canada 26.1%, U.S. 19.7%, Global 16.7%). Canadian Fixed Income 37.5%. House and vehicles ('91 Acclaim, '03 Impala) paid for. I ER'd in 1997 and Mrs.Zipper still works at 55. I'll be 61 in October, draw 5% of whatever the portfolio value is each year, and receive Canada Pension Plan benefits (indexed). Will receive Old Age Security(indexed) at 65, and Mrs. Zipper follows with her CPP and OAS at 60 and 65. I do odd jobs, handyman specials, and short distance driving for about $1000/mo. mad money.

[WilliamG]

Thanks for the thread. I'm always interested in how folks in retirement allocate their portfolios. Our current target (which we are close to) is 55/40/5 stock, bonds and cash. All mutual funds are Vanguard:

5% REIT Index
10% Total International Index
4% Small Cap Index
4% Small Cap Value Index
16% Value Index
16% Total Stock Market Index

15% Intermediate Bond (GNMA and IT Corp)
25% Short Bond (15% ST Corp,8% IBonds, 2% TNote)

5% Cash (Money Market, TBills)

Trying to use William Bernstein's asset classes, but have been a little timid as also try not to stray too far from overall market allocation. I like to look at Morningstar's xray tool which produces a 9 cell style box for you (value,blend,growth horizontal and large, mid, small vertical). Last time I looked at Total Stock Market Index it's box was:
24 24 23
07 06 07
03 03 03

Composite box for the equities in our portfolio:
30 19 12
15 06 04
07 04 03

Still a little value and small tilt.....

Regards, Bill

[wabmester]

I assume most of us initially came to this site to use FIREcalc, which suggests that 75% equities is close to optimal for long-term safe withdrawl.

Interestingly, relatively few of us have that much stock. *We have lots of bears here, especially those who are in retirement.

Some stats (20 data points):

average stocks = 55.8%, range =0 to 97%
average bonds = 26.8%, range = 0 to 52%
average real estate = 4.7%, range = 0 to 50%
average cash = 12.2%, range = 0 to 90%
average "other" = <1%

I had to make some assumptions since not everybody gave a clear-cut answer, but the above should be pretty close.

As expected, Nords and John Galt are the outliers *

Hey Wabmester.......excellent post. Just to reconfirm that I
don't argue with the projections vis-a-vis equities,
it's just that I don't think in the "long term" except in terms of "survivability". Not mine, just my money.

John Galt

Stocks/Bonds/Cash -- 49/33/17

Stocks 49.20%
Large Cap (>5B) 67.20%
Mid Cap (1-5B) 14.70%
Small Cap (<1B) 12.23%
International 5.87%

Bonds 32.92%
Short 44.25%
Intermediate55.56%
Long 0.19%

REIT 0.68%

Cash (saving for a house) 17.20%

[cute fuzzy bunny]

Hah...looks like I'm one of the bond fatties.

You can call me Bond...

My allocation to bonds makes sense for me though. I have fairly low and predictable expenses, dont want or need a lot of risk/volatility, and dont like current equity pricing.

Quite a turnabout from my investment history. I never owned a bond or any other fixed instrument except for two balanced funds I held in 2002/2003. Up until then it had all been mostly US growth. My primary trades were QQQ's bought on any dips and sold a week or two later. Which worked great until mid 2000 when I tried picking some up at nasdaq 3000 and then 2000 and rode them down to <1200 before riding them back up to 2000 and then dumping. The source of those 'capital losses' I'm dragging around that will fortunately make me tax free for at least a few more years...

It was weird for me having read all the traditional investing books as I was learning to invest back in the late 80's and early 90's. It became quickly apparent that such investing wasnt working at the time and the place to be was the high tech stock rocket ships.

How times change. I guess picking up on macroscopic investment trends and being able to take advantage of them, without getting burned when they're no longer trends, can be interesting.

For my IRA though, which is 20 year out, its largely "shoot the moon" with all equities, mostly very volatile, with half it it in REITS acting almost like a high yield bond anchor with capital price appreciation built in.

I assume most of us initially came to this site to use FIREcalc, which suggests that 75% equities is close to optimal for long-term safe withdrawl.

Wab,

Not sure where you got this 75% number. I remember fooling with this a while back and thought that around 40-60% Stocks was optimal.

Could be wrong though!

[cute fuzzy bunny]

Yeah, we went over it pretty good. My recollection was that 60 was about perfect. 50 gave you a little less return with a little less volatility and 70 gave you a little more of both. Less than 20% stock is counterproductive over long periods as you get much lower returns without any benefit in reduced volatility, and over 80 is equally insane.

75 would be fine if you're early in the accumulation phase, or for an IRA or 401k that you wont be tapping for a verrrry long time.