modeling options for early retirement

[kcowan]

I am in the close is good enough camp. My equity allocation is currently 33% but it will be growing as I load up during the bottom. When will that be?

 

[Nords]

I am in the close is good enough camp. My equity allocation is currently 33% but it will be growing as I load up during the bottom. When will that be?

LOL will tell us in a special edition of his market-timing newsletter...

I have high hopes for a low Aug-Sep.

 

[LOL!]

I am in the close is good enough camp. My equity allocation is currently 33% but it will be growing as I load up during the bottom. When will that be?

You may have missed it.

Portfolio has already recovered back to the March-April highs. I even bought some Higgs Bosons recently which I expect to sell for huge profit once folks figure out how important they really are.

 

[Nords]

I even bought some Higgs Bosons recently which I expect to sell for huge profit once folks figure out how important they really are.

I sure hope you can prove that it was a legit purchase.

I've heard that CERN's LHC staff has been looking high & low for them ever since they turned up missing during inventory, and if you happen to have the [-]dr[/-]ones they seek then they're gonna be seriously pissed off...

 

[RetireAbroadAt35]

AA matters when you're talking about the difference between a portfolio of 100% stocks and another portfolio of 100% cash.

That's a good point. I suppose I came off a bit brash / hyperbolic. What I really meant was "AA doesn't really matter as long as the allocation isn't extreme. Whether it's 20/80 or 80/20, I'm not going to get excited."

Low-yielding cash accounts: You are falling prey to the phenomenon known as "chasing yield". Asset allocation means using cash to dampen your portfolio volatility and to have an emergency fund. You should not give a crap what yield that cash is earning-- that's not its purpose.

I hear what you're saying but in this case my real issue isn't chasing yield it is not using the cash for the right purpose. It was sitting there out of pure negligence.

A year ago that cash was sitting there, neglected, because I didn't know what I was going to do with it. Down payment? Education? Travel?

Now I want to whittle it down to two years of living expenses ($40k) and put the rest to work getting me closer to ER. That's reasonable yes?

Instead you should be looking forward to being able to use some of that cash when stocks are on sale

I touched on this in an earlier post. I have no idea when stocks are on sale or not and I certainly can't predict when it will happen. Rather than letting it sit in the hopes that I notice a downturn and then act on it, I'd like to buy & forget. In the past I spread my purchases out ($500 a week went into an index fund) to deal with price volatility.

Considering I have $60k to invest today, do I buy now or wait for a sale (risky) or set up some auto investments to run over the next 6 months or so?

And nobody thinks the OP's international is a bit high? (it's just a question.)

I personally have no opinion on this but I can say that I modeled it after the bogleheads wiki: Lazy Portfolios - Bogleheads

 

[Nords]

What I really meant was "AA doesn't really matter as long as the allocation isn't extreme. Whether it's 20/80 or 80/20, I'm not going to get excited."

Yep.

Now I want to whittle it down to two years of living expenses ($40k) and put the rest to work getting me closer to ER. That's reasonable yes?

Yep.

I touched on this in an earlier post. I have no idea when stocks are on sale or not and I certainly can't predict when it will happen. Rather than letting it sit in the hopes that I notice a downturn and then act on it, I'd like to buy & forget. In the past I spread my purchases out ($500 a week went into an index fund) to deal with price volatility.
Considering I have $60k to invest today, do I buy now or wait for a sale (risky) or set up some auto investments to run over the next 6 months or so?

You have two main choices with a third option, and you should choose the one where you're more likely to follow through.

You seem to favor the buy/hold/set/forget model, so you'd probably be happiest with dollar-cost-averaging over the next six months. Set up six monthly purchases and don't worry about the markets.

If you wanted to seek value then you'd wait until your chosen ETFs/funds dropped below their long-term averages during a nasty recession. You'd invest your stash through one or two buys when you guess the prices are near a bottom. The problem with that is spending several years waiting while second-guessing yourself, especially if the economy happens to be starting into a multi-year bull market.

A third choice is to make six monthly purchases. But rather than buying the same amount every month, instead use value averaging: buy enough each month to bring that asset's allocation back in line with the rest of the portfolio. The theory is that you'll buy more the month after that asset goes down, and less the month after that asset goes up. But it's more monitoring and effort.

I personally have no opinion on this but I can say that I modeled it after the bogleheads wiki: Lazy Portfolios - Bogleheads

Well, again, the key to choosing your portfolio is finding one that lets you sleep at night. If you don't particularly care which one seems "best" then just choose one that makes you happy. It doesn't particularly matter whether it's too high in international equities or [-]triple-leveraged inverse-indexed beever-cheeze futures[/-] other assets. If it seems "good enough" then you can stop the analysis paralysis (which frequently happens during asset allocation discussions), put your plan in motion, and go live your life.

Personally I think any asset allocation smaller than 15% is a waste of time & effort. (Decimal points are a waste of time & effort too.) If you can't build a portfolio with just six blocks then you need to redesign the portfolio. I also think that rebalancing for anything less than five percentage points of change is also a waste of time & effort, although some investors find value in the discipline of annual rebalancing.

There are many roads to ER, but they all get there.

One last time: the two most important aspects of the investment plan are setting it in motion and sticking to it.