My own Asset Allocation vs Wellesley?

[easysurfer]

I vote for the simplicity approach too. I know for myself, if the systems gets overcomplicated I run the chance of just giving up and losing interest. Similar to if my exercise routine or budget tracking gets too cumbersome..then there's a tendancy to say.."forget it, I've got better things to do with my time..."

The beauty of keeping allocations simple, such as only a few index funds is then one mostly needs to focus on percentage allocations instead of all the other details.

 

[clifp]

The question is: Where are we in the cycle? I think we have been in a cyclical bear market since 2000. It hasn't fully played out.

Looking at history is good, but picking the correct reference point to begin is key.

The next 10 years may be like none we have experienced in our lifetimes. The debt issue has not fully played out. Although, the recent focus has been on Europe, the USA is in worse shape when you factor in the state's debt issues.
USA National Debt + USA National Budget Deficit + States' Debt + States' Budget Deficits = Crisis with limited or no solution

Cash Flow needs over the next 10 years should guide your investments - allow for inflation, and increase in taxes.

I think one of the problems problems for us younger boomers is that we entered adult hood in the 1980s and the period of 1980-2000 was one of the least turbulent in the last 100 years. This relative tranquility may very well have resulted in a very good period for stocks and bonds. The 1980s had low inflation, big increases in productivity due to computers, no major wars, generally improving social situation (e.g. lower crime, teenage pregnancy, drug use, better race relations etc.) . Really only the 1920 and the 1950 were similar and the good times really only lasted for 10 years.

I think it is very hard to pick the right reference point, I do think the financial crisis of the last few years had some long term ramifications which aren't close to being resolved. Still I am cautiously optimistic that it won't be as bad as 2000-2010 or 1929-39

 

[Earl E Retyre]

The more comments on this thread, the cloudier things become, and the less certain I am on what to do.

 

[clifp]

The more comments on this thread, the cloudier things become, and the less certain I am on what to do.

That is actually a very good thing. The forum is much more useful in telling people what NOT to do than what to do. Simply put there is a general consensus on money management mistakes e.g have all of your 75% assets in your companies stock, don't buy an variable annuity for your IRA, and don't pay a commission based financial adviser. When you get to trying to predict the future among reasonable investment, all of our crystal balls are cloudy.

When you get to the point on the forum where you ask a question a get a wide range of opinion and almost no one is saying NO DON"T DO THAT, you can be reasonably confident that all of choices are a pretty similar.

If you asked me if I was willing to risk a large sum of money to wager that my suggestion of 3 index funds plus a couple of the funds, is better over the next 30 years, than your 16 funds, or simply sticking all of your money in Wellesley I won't take that bet.

I'd probably take bet that is is better off than sticking 100% of your money in Munis or Gold, and certainly take the bet that it is better than spending 1%/year for a financial adviser.

Pick whatever makes you the most comfortable and you feel is the easiest. Then sleep well knowing that you didn't do anything stupid with your hard earned money.

Buffett's Rule 1 is Don't Lose Money. Now why I can't tell you that any of these AA won't lose money over the next few years, I feel very confident they won't over the next 10 or 20 years.

 

[LOL!]

Take your money, go to one of a handful of places, and say "Here's my money. Tell me what to do."

Places:

Vanguard
Portfolio Solutions
Evanson Asset Management
Asset Builder

Full disclosure: I have not used any of their advisory nor planning services.

 

[REWahoo]

That is actually a very good thing. The forum is much more useful in telling people what NOT to do than what to do. Simply put there is a general consensus on money management mistakes e.g have all of your 75% assets in your companies stock, don't buy an variable annuity for your IRA, and don't pay a commission based financial adviser. When you get to trying to predict the future among reasonable investment, all of our crystal balls are cloudy.

When you get to the point on the forum where you ask a question a get a wide range of opinion and almost no one is saying NO DON"T DO THAT, you can be reasonably confident that all of choices are a pretty similar.

If you asked me if I was willing to risk a large sum of money to wager that my suggestion of 3 index funds plus a couple of the funds, is better over the next 30 years, than your 16 funds, or simply sticking all of your money in Wellesley I won't take that bet.

I'd probably take bet that is is better off than sticking 100% of your money in Munis or Gold, and certainly take the bet that is better than spending 1%/year for a financial adviser.

Pick whatever makes you the most comfortable and you feel is the easiest. The sleep well knowing that you didn't do anything stupid with your hard earned money.

Buffett's Rule 1 is Don't Lose Money. Now why I can't tell you that any of these AA won't lose money over the next few years, I feel very confident they won't over the next 10 or 20 years.

Well said.

I'm going to bookmark this post to use as a future reference for posters seeking "the" asset allocation.

 

[Rich_by_the_Bay]

I can see your point, REWahoo. That is what makes this investment stuff so difficult. If I assume the past decade is not representative of what the future will hold then I could be pessimistic and assume it will be worse or I can be optimistic and assume it will be better. Obviously, no one really knows.

It's a big relief when you give up trying to beat the market, and are just as happy simply matching it.

Regarding Wellesley, it is a fine fund and I was in it in my accumulation stage. Now that I am approaching the decumulation stage, I prefer funds that are more clearly stocks, bonds, or cash. That way I can withdraw from the desired asset class without having to figure out how much of each dollar withdrawn was stocks v cash, etc. (as you do with balanced funds).

Another great place for Wellesley is for those who live off dividends. I just don't plan to draw down that way, though many do so successfully.

Just some food for thought. The only "right" approach is what's right for you. Just keep your stocks:bonds in the proper allocations with a rebalancing every few years.

 

[audreyh1]

The more comments on this thread, the cloudier things become, and the less certain I am on what to do.

Well, I think you're getting some good consensus, like:

Try to set up your asset allocation with just 3 well-diversified funds.

Audrey

 

[Earl E Retyre]

thanks

Thanks again, everyone. I feel much more educated ... less confident ... but more educated.

It will be interesting to look back at this thread many years from now.

 

[dex]

I think it is very hard to pick the right reference point, I do think the financial crisis of the last few years had some long term ramifications which aren't close to being resolved.

Agree with that - something will collapse..

Still I am cautiously optimistic that it won't be as bad as 2000-2010 or 1929-39

I think it will be worse than 2000 - 10.
It will fell like and we will hear it is as bad as '29-39 - the social environment is radically different. I think there will be a Republican President (and possibly a republican controlled congress) when it does happen.

 

[Dawg52]

Thanks again, everyone. I feel much more educated ... less confident ... but more educated.

.

Agree with that - something will collapse..




I think it will be worse than 2000 - 10.
It will fell like and we will hear it is as bad as '29-39 - the social environment is radically different. I think there will be a Republican President (and possibly a republican controlled congress) when it does happen.

The only thing I'm confident of is I plan to have plenty of med's on hand.