Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 01-13-2013, 12:33 PM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
braumeister's Avatar
 
Join Date: Feb 2010
Location: Northern Kentucky
Posts: 8,582
42% and likely to stay about that for a while.
__________________

__________________
braumeister is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-13-2013, 01:10 PM   #22
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
I think OP may have a restrictive definition of portfolio. I really don't know what my net worth is, it is basically my invested assets (= portfolio) plus my condo + any other RE owned. If I owned contractual assets like annuities I am not sure how I would handle it.

But once a month I get a picture of my invested assets, which the way I look at it is identical with saying "my portfolio", and includes bank accounts, CDs, treasury securities and Savings Bonds, any other fixed income, plus stocks, royalty trusts, MLPs or any other tradeable assets that I own for income or to be sold (hopefully!) at a profit.

On this basis, straight up (cash zero maturity) is 20% of invested assets, and I have another 14% which is fixed income securities funds of duration <= 1 year.

Ha
__________________

__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 01-13-2013, 01:17 PM   #23
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,076
40% of net worth is allocated to stocks. (We rent, and don't own any property)
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 01-13-2013, 01:18 PM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,256
Quote:
Originally Posted by Steven View Post
So my question is not what percentage of your "portfolio" is in stocks, but rather, what the percentage of your "net worth" is invested in stocks or stock funds ?
I assume your distinction between 'portfolio' and 'net worth' would be other non-portfolio assets (home equity being #1 for most). But then, maybe you should include the 'phantom' net worth of pensions, SS, etc? Non-COLA will be worth ~ 1/2 that of a COLA pension/SS.


Quote:
Some of us are risk averse and keep money in CD's or money markets and are not entirely invested in the market. Am I in the minority on this ?
As I've said before, I don't think that keeping a large % of money in CD's or money markets is 'risk averse' at all. In fact, it has historically been just the opposite. Do some FIRECALC runs with 90% fixed and some with 25% fixed, and see how much higher the risk is that you FAIL with a high % of fixed.

How can increased failures be seen as less risky? Less volatile, yes, but less risky? Not historically.

So I will turn it around and say, yes, I think you are in the minority. Most of us choose not to expose ourselves to the level of risk you are taking on.

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 01-13-2013, 01:19 PM   #25
Dryer sheet aficionado
 
Join Date: Dec 2010
Posts: 28
I guess I need to get some courage.
I'm only 3.5% stocks and 4% bonds.
__________________
Steven is offline   Reply With Quote
Old 01-13-2013, 01:31 PM   #26
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by ERD50 View Post
How can increased failures be seen as less risky? Less volatile, yes, but less risky? Not historically.

-ERD50
In the context of portfolio risk and return, volatility is risk. Your definition of risk includes return, plus some soft factors. "I am risk averse" essentially means I do not want to see my portfolio values jumping around very much from day to day or even year to year, and we all will know what is being said.

I think this definition works well, and the broader definition you advocate would lead nowhere except to arguments. For example, some firmly believe that we are locked in deflation, and therefore that it is worth no cost to build in inflation protection, if that is even possible to do. Even though as investors this broader definition may in many contexts, but not others, be more important to our success.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 01-13-2013, 01:32 PM   #27
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,388
Quote:
Originally Posted by ERD50 View Post
As I've said before, I don't think that keeping a large % of money in CD's or money markets is 'risk averse' at all. In fact, it has historically been just the opposite. Do some FIRECALC runs with 90% fixed and some with 25% fixed, and see how much higher the risk is that you FAIL with a high % of fixed.

How can increased failures be seen as less risky? Less volatile, yes, but less risky? Not historically.

So I will turn it around and say, yes, I think you are in the minority. Most of us choose not to expose ourselves to the level of risk you are taking on.

-ERD50
What helps the "risk averse" people is that inflation effect tends to build up slowly, and hopefully gives them time to recognize that gradual loss and to make corrections. In my view, it is still better than jumping into a highly volatile asset class without understanding it, and losing it all in a matter of a few months. Or they could get in at the wrong moment, then bail out in the next minor correction.
__________________
NW-Bound is offline   Reply With Quote
Old 01-13-2013, 01:42 PM   #28
Thinks s/he gets paid by the post
Major Tom's Avatar
 
Join Date: Nov 2009
Location: SF East Bay
Posts: 3,128
I don't own any property, so nearly all my net worth is in my investment portfolio. Of that, about 60% is in equity funds.
__________________
ER, for all intents and purposes. Part-time income <5% of annual expenditure.
Major Tom is offline   Reply With Quote
Old 01-13-2013, 02:10 PM   #29
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Leaving aside home equity (which I track but do not include in portfolio percentages), I am ~60% equity, ~35% cash and fixed income (including junk bonds), and 5% other (merger arbitrage).
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 01-13-2013, 02:18 PM   #30
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,256
Quote:
Originally Posted by haha View Post
Quote:
Originally Posted by ERD50 View Post
How can increased failures be seen as less risky? Less volatile, yes, but less risky? Not historically.
-ERD50
In the context of portfolio risk and return, volatility is risk. Your definition of risk includes return, plus some soft factors. "I am risk averse" essentially means I do not want to see my portfolio values jumping around very much from day to day or even year to year, and we all will know what is being said.

I think this definition works well, and the broader definition you advocate would lead nowhere except to arguments. For example, some firmly believe that we are locked in deflation, and therefore that it is worth no cost to build in inflation protection, if that is even possible to do. Even though as investors this broader definition may in many contexts, but not others, be more important to our success.

Ha
Well, there are lots of ways to look at it. But it seems to me there is no getting around the fact that FIRECALC shows that a portfolio with a high % of fixed income resulted in a much higher % of failures, historically.

Now there is a psychological component - if one is going to bail on stocks at their low, that volatility danger is magnified. But for me, that is a separate issue from the 'pure' results. But if one feels they need a low-volatility investment to prevent them from bailing, I think they are well served by recognizing what that has meant historically. They will need to start with a much larger portfolio to get to a high success rate, compared to the default 75% equity portfolio that FIRECALC uses.

The 'funny' thing is - once you start with a such a large portfolio, the volatility from stocks also gets buffered such that the lows are not as low (in absolute terms). It all seems rather moot. A rising tide lifts all boats.

All based on history of course, but what else can we do? I'm guessing that the worst of the future will at least 'rhyme' with the worst of the past.

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 01-13-2013, 02:27 PM   #31
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by ERD50 View Post
Well, there are lots of ways to look at it. But it seems to me there is no getting around the fact that FIRECALC shows that a portfolio with a high % of fixed income resulted in a much higher % of failures, historically.
You'll get no argument from me. It's just that I don't believe that FIRECAL runs have anything to do with the term risk aversion, as this term is used, and which is pretty well defined in every introductory investments class for at least the last 50 years as volatility. Redefine it as success rate on FIRECALC runs and I would guess that few would go along with you.

You know this as well as I do.
Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 01-13-2013, 02:35 PM   #32
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,256
Quote:
Originally Posted by haha View Post
You'll get not argumant from me. It's just that I don't believe that FIRECAL runs have anything to do with the term risk aversion, which is pretty well defined in every introductory investments class for at least the last 50 years as volatilty. Redefine it as success rate on FIRECALC runs and I would guess that few would go along with you.

You know this as well as I do, so I'll sign off here.

Ha
OK, so maybe I'm not using the traditional financial definition of 'risk'.

But to me, in the context of FIRE, the 'risk' of running out of money is the 'risk' that is important to me (and I would think any FIRED person). A low volatility path that historically leads to failure does not look more attractive to me than a higher volatility one that succeeds.

But that is enough - take care.

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 01-13-2013, 02:38 PM   #33
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,614
Equities: 80+% of portfolio. I-Bonds and ST Corp bonds: 10%. Cash: 10%. I'm nearing full (early) retirement, but have a long time horizon and a pension that meets our "no-kidding" baseline spending needs.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 01-13-2013, 03:06 PM   #34
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,408
equites 3% right now, cash 10% and various bond and income generating funds 87%, some of which act more like conservativeo stock funds.

we do have a partnership in a family real estate business which is about 600-700k our share in value but i dont count that in the totals above. we get a yearly income from it.
__________________
mathjak107 is offline   Reply With Quote
Old 01-13-2013, 03:18 PM   #35
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,862
Equities are currently about 75% of our net worth.
__________________
Animorph is offline   Reply With Quote
Old 01-13-2013, 04:54 PM   #36
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,823
I am 64 and completely retired, and so my planned asset allocation now includes only 45% equities. (It was 100% equities during the first part of the accumulation phase, and that was gradually reduced as I got older and especially when I put my retirement AA in place).

If I include house, car, and pension in my net worth, then the percentage equities is roughly 30%.

I'm puzzled as to what possible use a number like this could have. For example, I plan to stay in my modest home here in the South. If I lived in some gawdawful expensive location where a similar home would cost 10 times as much, my risk tolerance would remain the same. Therefore my portfolio asset allocation would remain 45% even if I planned to live in that home forever. Yet my percent net worth devoted to equities would shift from 30% to 16%.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Old 01-13-2013, 04:56 PM   #37
Recycles dryer sheets
 
Join Date: Jan 2007
Posts: 398
Age 53, plan to ER this year.

70% of net worth is in equities, when net worth is defined as the investment portfolio (with cash and cash equivalents making up a significant fraction of the fixed 30%).

60% of net worth is in equities, when net worth is defined as the investment portfolio plus home equity.

40% of net worth is in equities, when net worth is defined as the investment portfolio, home equity, pending pension, expected SS, and misc (since the pension is an annuity, the 60% it has in equities is not counted as part of my equity allocation).
__________________
Shawn is offline   Reply With Quote
Old 01-13-2013, 05:25 PM   #38
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
mickeyd's Avatar
 
Join Date: Apr 2004
Location: South Texas~29N/98W
Posts: 5,880
I don't track my NW but my guess is that if my home was included in my AA I would probably sit at around 50/50.
__________________
Part-Owner of Texas

Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx

In dire need of: faster horses, younger woman, older whiskey, more money.
mickeyd is offline   Reply With Quote
Old 01-13-2013, 05:33 PM   #39
Recycles dryer sheets
 
Join Date: Mar 2012
Posts: 102
46% of my net worth is in stocks (global allocation). That would be 54% of my portfolio less real estate.
__________________
tdv2 is offline   Reply With Quote
Old 01-13-2013, 06:07 PM   #40
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Posts: 1,647
24% net worth not in the market sitting in cash or CD's (4 % to 5%). Thought we were going to buy a 2nd home but we have not done that yet.

31% net worth in the market (at a broker). Of this 31% is in equities, 51% Bond funds and 17% cash. (waiting for the market to come down :-)

14% in House

28% Family Business that yearly generates approximately 6% of current net worth in K1 income (income generating and not stagnant).
__________________

__________________
sheehs1 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Whats the ratio of your net worth to your taxable income nun FIRE and Money 60 02-12-2012 08:19 AM
What should my net worth be ? Delawaredave5 FIRE and Money 24 11-17-2011 07:44 PM
Net Worth of Whites Now 20 Times Minorities Retire Soon FIRE and Money 10 07-29-2011 02:35 PM

 

 
All times are GMT -6. The time now is 09:34 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.