Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 09-18-2009, 10:13 PM   #21
Thinks s/he gets paid by the post
 
Join Date: Aug 2006
Posts: 1,359
At 37, I'm at 95% equities, and 5% cash.

I'll probably start buying some bonds in my mid to late 40s, as I approach FIRE.
__________________

__________________
Hamlet is offline   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 09-18-2009, 11:30 PM   #22
Administrator
Andy R's Avatar
 
Join Date: Jan 2007
Location: Dallas, Tx
Posts: 1,184
I'm 35 and have growth oriented asset allocation. I reallocated annually or, in the past year, when I dollar cost average cash back into my portfolio.

Roughly, my AA is:
40% International
10% Commodities
25% US
15% Fixed Income
10% Real Estate (REITs)
Cash is 65% Foreign Currency CDs
__________________

__________________
Lagom är bäst - Enough is as good as a feast - There is virtue in moderation
Andy R is offline   Reply With Quote
Old 09-20-2009, 07:05 PM   #23
Recycles dryer sheets
Culture's Avatar
 
Join Date: Apr 2007
Posts: 491
Domestic Large Cap -17.33%
Domestic Mid Cap - 11.27%
Domestic Small Cap - 10.23%
Domestic REIT - 1.70%
Int'l Developed - 8.36%
Int'l Developing - 3.28%
Oil and Gas E&P - 2.68%
PM Equities - 2.33%
Physical PM - 0.55%
Cash/Bonds - 42.28%

Slowly reducing cash/bonds to 35%
__________________
Culture is offline   Reply With Quote
Old 09-20-2009, 08:45 PM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
harley's Avatar
 
Join Date: May 2008
Location: Following the nice weather
Posts: 6,428
Quote:
Originally Posted by Andy R View Post
I'm 35 and have growth oriented asset allocation. I reallocated annually or, in the past year, when I dollar cost average cash back into my portfolio.

Roughly, my AA is:
40% International
10% Commodities
25% US
15% Fixed Income
10% Real Estate (REITs)
Cash is 65% Foreign Currency CDs
Andy, that's an interesting AA. I take it you aren't too thrilled with the US's prospects.

I hadn't ever really heard much about foreign currency cds. I googled them and was reading about Everbank's offerings. Just out of curiosity, do you choose the individual country's cds, or do you do the multi-currency cds? I'm assuming you are doing this for diversification/hedging, since for the most part the rates don't seem to be much better than the ones in the US. It's an interesting concept, new to me. I'll have to keep it in mind. I'd be interested in hearing what your thoughts are about this.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Will Rogers, or maybe Sam Clemens
DW and I - FIREd at 50 (7/06), living off assets
harley is offline   Reply With Quote
Old 09-20-2009, 09:12 PM   #25
Administrator
Andy R's Avatar
 
Join Date: Jan 2007
Location: Dallas, Tx
Posts: 1,184
harley, I had a few reasons for diversifying my cash. Here is the thread where I asked fellow members how. I did not know what currencies to buy so I wanted to diversify there as well, post 13 in that other thread talks about which currencies I went with (up nearly 20% at this point). low interest rates + printing huge amounts of money = weak dollar = higher commodities = inflation

My logic for the AA comes from my experience traveling abroad. I feel that emerging nations will continue to grow at a faster pace then developed nations. There is a ton of room for growth out there! I also have a long time horizon and can still sleep knowing the assets have higher standard deviation then a more domestic based AA.
__________________
Lagom är bäst - Enough is as good as a feast - There is virtue in moderation
Andy R is offline   Reply With Quote
Old 09-20-2009, 10:01 PM   #26
Thinks s/he gets paid by the post
 
Join Date: Nov 2005
Location: North of Montana
Posts: 2,753
I don't think I'll tell you mine. It just might be construed as a suggestion. I'd never suggest it to anyone. Here's the results, YMMV.
__________________
There are two kinds of people in the world: those who can extrapolate conclusions from insufficient data and ..
kumquat is offline   Reply With Quote
Old 09-20-2009, 11:29 PM   #27
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 5,677
I have a bizarrely complex spreadsheet system. But currently we are, 58% equity with:
Quote:
32% US
26% International

US is 42/33/23 large/mid/small
International is 69/22/9 large/mid/small

FI is
22% CD's, MoneyMarkets, short TIPS
27% intermediate TIPS, Ibonds from the good old days
51% short term investment grade
__________________
Lsbcal is offline   Reply With Quote
Old 09-22-2009, 09:43 AM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,018
Quote:
Originally Posted by kumquat View Post
I don't think I'll tell you mine. It just might be construed as a suggestion. I'd never suggest it to anyone. Here's the results, YMMV.
Let me guess.....mining, precious metals, China, India, Canadian banks?
__________________
Meadbh is offline   Reply With Quote
Old 09-22-2009, 03:39 PM   #29
Recycles dryer sheets
 
Join Date: Mar 2006
Posts: 247
The original poster wanted to know HOW to determine asset allocation, not what it actually is. So I'll indicate my method:

1 - read a lot of books, and made a chart of asset classes and subclasses (first stocks, bonds, cash,-- then us-large, us-value, large-intl, emerging mkts, etc.) and filled in the percentages recommended by each source, so that I could compare. Sources were:
Rational investing portfolio
Swensen at Yale
Merriman's ultimate portfolio
A few others

2 - One of my books (forgot which one, it's one of the ones recommended here) has a great chart of asset mixes of stocks/bonds from 100/0 to 0/100 in units of 10%. For each mix the chart shows over the past 50 or so years - what is the most you would have lost in a year? in 5 years? what was the biggest gain in one year? in 5 years?. (note that the chart obviously does NOT include the recent plunge - I've concluded that I'm a little too aggressively invested )

I took my risk tolerance from the chart in #2, compared it to the recommendations from chart in #1, and built my own target allocation. Then in a spreadsheet I monitor current actuals vs. target. I use conditional formatting so that when a percentage goes out of range of 5% absolute or 25% relative, the cell turns yellow and that is the trigger to rebalance.
__________________
Surfdaddy is offline   Reply With Quote
Old 09-22-2009, 04:01 PM   #30
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
Quote:
Originally Posted by easysurfer View Post
I'm curious, what do the rest of you do in determining your target asset allocation for the year? Do you play it by ear or have a set method?
During the time that both my wife were gainfully employed, we ran a 90/10-80/20 target AA, with very little in cash. BTW, our emergency fund (only used for pre-retirement) was outside our retirement portfolio's.

We're in our early 60's. I'm retired, my wife will be within the next year. Since i actually retired before the age of 60, and we've been in the market for 25+ years, we feel confident with our current ER target of 60/40. The bond (40%), also contains our substantial cash buckets, that I (and my wife will use) for ER income. DW is planning on taking early SS before mid-year, 2010. I'm delaying mine till age 70.

Using M* X-Ray against our combined portfolio view (I'm a bit more agressive, of course; she less so), it shows us currently at a 58/42, due to the downturn, but we don't rebalance (and BTW, reinvest all distributions). Any reallocations are done by selling (opposite of what we did, through new contributions, when we were both employed).

As we age, we certainly will reduce our equity holdings, but due to our family/financial situation (no future generation to worry about), and substantial cash holdings to get over market swings, we can be a bit more agressive than most would consider, for our age.

We don't re-adjust every year; in fact we went from an employment AA (90/10), to an ER AA (60/40). I can see us going 50/50 by the time we reach 70. In other words, current AA is not overly tracked, nor adjustments of our portfolio to meet the current target is done in an active manner.

Anyway, since you asked.
__________________
rescueme is offline   Reply With Quote
Old 09-22-2009, 11:17 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: 22,384
I have a dynamic asset allocation that varies from 100% equities, down to maybe 30 or 40% equities. I lump speculative bonds together with equities to determine allocation.

The reason my floor is not 0% is legacy positions that I don't want to sell. Over time this floor should creep higher.

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 09-23-2009, 06:59 AM   #32
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
I'm 48 years old

30% US equity
20% International Equity
50% Bonds/fixed

This is in Vanguard and TIAA-CREF index funds. The allocation is off with the recent rebound of equities so I'm rebalancing. I recently took 50% of the gains in my after tax accounts and used it to pay down the mortgage.
__________________
nun is offline   Reply With Quote
Old 09-23-2009, 07:14 AM   #33
Thinks s/he gets paid by the post
IndependentlyPoor's Avatar
 
Join Date: Jul 2009
Location: Austin
Posts: 1,142
I've posted this elsewhere, but...

I didn't think very much about asset allocation before the crash. It was a comfort thing... and I wasn't comfortable with much in equities at all. We went into the crash with something like 40/40/20. The 20% cash was part of the proceeds from selling our house and had been sitting in MMF for years.

The crash made me realize that we were very close to "living off the interest", so I sharpened my pencil (OK, fired up the spreadsheet) and figured out what percentage bonds it would take so that we could live entirely from interest and dividends. That worked out to 60% bonds.

I rebalanced in July (a little late) and took our cash position down to 5%, so we were 55/40/5 40/55/5. I have since sold all our foreign bonds, bringing our cash back up to 10%. I am trying to figure out how to deploy that extra 5% now.

I understand that such an equities-light allocation makes my portfolio more vulnerable to inflation, but it also allows me to face market downturns without having to worry about selling at a loss.
__________________
IndependentlyPoor is offline   Reply With Quote
Old 09-23-2009, 10:05 AM   #34
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 5,677
Quote:
Originally Posted by IndependentlyPoor View Post
...(snip)...
I rebalanced in July (a little late) and took our cash position down to 5%, so we were 55/40/5. I have since sold all our foreign bonds, bringing our cash back up to 10%. I am trying to figure out how to deploy that extra 5% now.

I understand that such an equities-light allocation makes my portfolio more vulnerable to inflation, but it also allows me to face market downturns without having to worry about selling at a loss.
IP, I don't know your age but if you have 55% equities I'd not call that equities-light. Some bonds which will probably do OK with inflation are short term bonds and TIPS. I haven't seen agreement on how inflation sensitive equities are. Probably depends on how unexpected the inflation is (sudden burst or more steady state), whether the industry can pass the inflation on to customers, whether alternative investments (like bonds) are priced better, etc.
__________________
Lsbcal is offline   Reply With Quote
Old 09-23-2009, 10:16 AM   #35
Thinks s/he gets paid by the post
IndependentlyPoor's Avatar
 
Join Date: Jul 2009
Location: Austin
Posts: 1,142
Doh! Homer Simpson moment.


We have 40/55/5. Sorry.
__________________
IndependentlyPoor is offline   Reply With Quote
Old 09-23-2009, 12:15 PM   #36
Thinks s/he gets paid by the post
 
Join Date: Nov 2005
Location: North of Montana
Posts: 2,753
Quote:
Originally Posted by Meadbh View Post
Let me guess.....mining, precious metals, China, India, Canadian banks?
No precious metals. Add some agriculture. Large equity allocation in former mega-corp.
__________________
There are two kinds of people in the world: those who can extrapolate conclusions from insufficient data and ..
kumquat is offline   Reply With Quote
Old 09-24-2009, 02:15 AM   #37
Thinks s/he gets paid by the post
kyounge1956's Avatar
 
Join Date: Sep 2008
Posts: 2,171
Before I found the "Asset Allocation Tutorial" thread, I had already run a number of scenarios in an online Monte Carlo simulator using the growth rate and standard deviation for "Below Average Risk" (because I'm pretty risk-averse). The results of the Monte Carlo looked promising, so when I did my homework on the Tutorial I picked an allocation that would be expected (based on historical data) to have that growth rate and standard deviation.

My actual allocation is still way off the target (too much stock, too few bonds), and limited choices in my tax-deferred plan at work mean it will probably stay that way until I retire.
__________________

__________________
kyounge1956 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
Assett Allocation Target Changes doxeyweb Young Dreamers 2 09-29-2008 10:20 AM
When To Make Assett Allocation Target Changes doxeyweb FIRE and Money 5 09-24-2008 06:14 PM
Best Asset Allocation for an ER RockOn FIRE and Money 21 02-11-2008 01:18 PM
Asset Allocation Help phatrabbitzz7 FIRE and Money 11 01-10-2008 03:39 PM

 

 
All times are GMT -6. The time now is 02:48 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.