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Need answers on asset allocation
Old 08-10-2009, 08:19 PM   #1
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Need answers on asset allocation

Have 401K valued at near $700,000. About 60% equities ($420,000) and 40% cash/bonds $280,000).

I am 51 years old. Following traditional wisdom using the 110-120 rule, I should have about 31-41% of my portfolio in cash or bonds. My question is... if you subscribe to this method of asset allocation, should I also be including my cash balance pension in the equation? this has a value of $290,000. So should I really be saying I have a portfolio of $990,000 with $570,000 in cash/bonds.... If yes, then I am seriously over weighted in cash.

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Old 08-10-2009, 08:33 PM   #2
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Originally Posted by jdehaan View Post
...should I also be including my cash balance pension in the equation? .... If yes, then I am seriously over weighted in cash.
In my opinion, yes, and yes you are.

Since opinions vary, others will be along shortly to disagree.

Numbers is hard.

Retired in 2005 at age 58, no pension

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Old 08-10-2009, 08:39 PM   #3
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I think you should consider the cash value of your pension as part of your bond allocation, yes.
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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Old 08-10-2009, 10:21 PM   #4
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Well, yeah, sort of. I have a COLAd pension but our AA is still something like 60/40 but we will start withdrawals in 2010 so I don't want to go too far into equities. This relatively conservative position helped in the last year (18% loss) and AFAIK anything from 80/20 to 20/80 have somewhat similar risk/return. So how much you want is up to you as long as you don't go 100% in either direction.
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