Another asset allocation question

[mathjak107]

don’t forget the blue chip graveyard is filled with companies that kept paying dividends right in to the grave .

so dividend payouts have little link to earnings .most companies don’t cut or suspend until losses are severe or to late in the game to help.


These payouts are just amounts the board votes on profits or not.

i owned a reit that was paying a nice dividend using the money it was supposed to be buying properties with as well as loans .

it ended up being killer to all those who bought for the dividend .


you would have to understand how to interpret a quarterly report to understand the dividends were coming from other sources then profits as there was a foot note that reflected that if you understood what the terms used meant , which i did not .

you have stocks paying out despite heavy losses all the time.

so never confuse the fact a dividend is paid with profitability.

they are simply a withdrawal of your invested dollars .

no different then the same dollars coming out of a portfolio of non payers.

we just hope to bounce back in value from appreciation.

some like ge , gm , kodak , polaroid , citi bank , the list goes on and on , never do…

 

[target2019]

This is basically my opinion/understanding of facts. pb4uski just sits on the other end of the spectrum in his choices than me. I'm still 100% safe at my current WDR (that I expect to grow over time with a fair amount of volatility: back to that ending portfolio balance). I'm still (barely) in my 40s so I have a long horizion and inflation is my biggest risk and IMO equities are the best hedge against that risk. The cash I hold is more for tax management/liquidity than for AA purposes.

As I've mentioned before, one thing that makes me feel comfortable with almost all equities is that my current WDR is slightly less than the earnings yield on the market. So I'm basically spending the earnings of the companies I own and not touching principle. If valuations change in the market (higher discount rate/risk premium driven by forces other than the earnings of the underlying companies) then that yield would go up as the divisor in the pricing increased so as my portfolio value went down and my WDR went up so would the earnings yield. There could be a big economic collapse that destroys earnings but that would impact almost anyone not in 100 "safe" investments as well as me. One lesson I took away from COVID is how fast the market can recover from a catastrophic event and Firecalc figures in all those long recoveries that have happened historically. Kind of the way I mentally view it at this time.

After all my blabbing, I think the take away is that there is no right or wrong answer but a lot of justifiably right AA depending on what variable you want to try to optimize.

You've found out what type of investor you are. I look good in my 60/40 too.

 

[mrfeh]

We are both 58. AA is 60/40, and plan to keep it there forever.

 

[racy]

71 and 69. 50/50 allocation comprised mainly of Wellesley and LifeStrategy Moderate Growth. This gives us Total Stock Market, Wellesley large value stocks and international/emerging stocks on the equity side. The fixed income side is made up of Wellesley corporate bonds, Total Market Bonds and International bonds. In addition to our SS we take the dividends, as needed, from Wellesley for expenses.

 

[MichaelB]

I’m 70. We have a small pension from Social Security and our portfolio. Allocation is 50/50. The fixed income is a combination of bond ladder and short (2 years) to medium (5-7 years) maturity, with around 5% cash.

We withdraw our planned budget for the year, which has been less than 4% for a decade, and add any unusually large one time expenses, such as an upcoming remodeling.

 

[cyber888]

Retired last year at 59.5 years old.
Asset allocation is about 53% Stocks
& 47% Fixed Assets/Cash earning 4.35% - 5.25%

Once we get SS when I hit 62, the asset allocation will be closer to 60% Stocks 40% Fixed Income and Cash. Maybe 59% - 41%.

 

[swakyaby]

When I retired at 57, my asset allocation was 60:40. Now, at age 63, my stock portion has crept up to 69%, thanks to the bull market. I haven’t rebalanced, although I think it would be prudent. Having a HNW probably makes me willing to take on more risk. If I had needed to budget more tightly, I’m sure that rebalancing to 60:40 would take a higher priority.

 

[socca]

I'm currently at 36/64. I'm considering bumping up the equity portion, but not sure by how much. My inclination is toward a "have fun but sleep soundly" portfolio. When equities are booming, it's fun to watch the account value climb. When equities are crashing, I can pay attention to the income generated by the bonds and feel reasonably secure. It's a win-win scenario.