What Percentage in Portfolio would you do

[street]

Thanks again for the insight and your thoughts on what you would do. Even if I left it for the next 25 years at high risk doesn't mean I will have more. I do hope my way of thinking does work because I would like this money to grow for a cause and purpose.

 

[Car-Guy]

That's my take. If you truly "don't need it" you can put it all on black at the roulette wheel and it doesn't matter.

In my experience, the only way to win at Roulette is to put it all on #37. YMMV

 

[Car-Guy]

Would you feel comfortable leaving ratio at 80/20 in your late years of life if you really don't need it to live on?

Yes or even 100% with my surplus. I don't invest in stocks with my base (bucket 1), only my surplus (bucket 2).

 

[scrabbler1]

I have 2 different AAs, one for my IRA and the other for my taxable account. In the IRA, which I won't have unfettered access to for another 6 years, I have a greater % in stocks than in my taxable account which I use today to cover my expenses. I also rebalance more in the IRA although I have been gradually reducing its stock % as I age. I am at 53/47 in favor of bonds after a few years at 50/50. The taxable account I did some recent rebalancing to capture some of the market's gains and to generate a little more income. It is at 62/38 in favor of bonds now.

 

[target2019]

Thanks again for the insight and your thoughts on what you would do. Even if I left it for the next 25 years at high risk doesn't mean I will have more. I do hope my way of thinking does work because I would like this money to grow for a cause and purpose.

I've found reading about how endowments invest to be thought provoking. This article describes Yale, and the discussion below is also fine.

http://www.financialsamurai.com/a-l...-allocation-of-massive-university-endowments/

 

[street]

target2019 >>> that is a very good read. I saved it to study it some more for there is a lot of information there take in. Thank you

 

[ejman]

With the special circumstance of having a son who is a disabled veteran, I've decided that a 50/50 allocation will probably serve best. I don't need to try to swing for the fences but it is a concern to leave a legacy.

 

[Sunset]

We have a high percentage (100%) in stocks but also have a very large pension which covers most of our basic needs. I have a very high risk tolerance with a fairly large portfolio. I have concluded that I am high in equities mostly for the benefit of my daughter and any grandkids as well as protecting against inflation since the pension is not Cola'ed. Been retired 10 years and this has worked out very well so far.

+1
We are high as well probably about 90%, although no big pension, we have a large cash cushion.
This was not really planned. At at this time, I don't see bond funds doing well over the next 10 years but am trying to get more bond exposure without interest rate risk.

If one has a large enough stash, then riding the 100% stock volatility is fine as long as dividends generate enough to scrape by on during lean years.

 

[Sunset]

I am a market timer who practices "Tactical Asset Allocation". I try to fight fear to go to higher stock AA after the market tumbles, and to fight greed with a lower stock AA when the market gets to high evaluation. As I cannot be 100% sure, I never go 100% stock, nor under 50%. I am currently at 60%.

This is a good idea, because I've been afraid of timing the market.

 

[RobLJ]

This is a good idea, because I've been afraid of timing the market.

I gather OP doesn't need the money referenced for his/her own retirement.
1) On one hand, then investing in equities doesn't seem much of an issue.
2) On the other (economist's hand), when her/his legacies will draw, how frequently, and at what rate is very much a determining factor. The longer the time frame and the less of a % draw, the higher the % allocation to equities.
The shorter the time frame and the higher the % draw is likely, then the equity allocation needs to be reconsidered.

There are multiple legacies mentioned here, so I'm over-simplifying. Prioritizing who you want to help and how would perhaps help simplify the problem--somewhat.
I'm afraid I haven't helped.

 

[jzajzz]

Thanks again for the insight and your thoughts on what you would do. Even if I left it for the next 25 years at high risk doesn't mean I will have more. I do hope my way of thinking does work because I would like this money to grow for a cause and purpose.

is the purpose of the money to leave a legacy ?

 

[street]

is the purpose of the money to leave a legacy ?

Yes >>> how would you continue?

 

[Danmar]

+1


If one has a large enough stash, then riding the 100% stock volatility is fine as long as dividends generate enough to scrape by on during lean years.

Agree. This is basically what we have done since retiring 10 years ago. Just spending divs. Will gradually liquidate small amounts of equities starting this year.

 

[pb4uski]

...Would you feel comfortable leaving ratio at 80/20 in your late years of life if you really don't need it to live on?

Absolutely. If I don't need it to live on then it would be for our kids and an 80/20 portfolio would be fine for a 28 year old and a 33 year old... even if we didn't have heirs and it was for charity I would be comfortable with 8/20 because in the long run the charities would get more and be able to do more good.

 

[razztazz]

Yes, there is more volatility , but the volatility is the price one pays for substantially higher investment returns over time.

No. Volatility is the bigger bet you place for the expectation of higher returns.

"Over time"? What time? How much time?

 

[jollystomper]

Since I am not yet retired but close, I am currently at 40/37/23 AA primarily to see how actual spending/expenses go during the beginning of retirement. I have enough in cash to cover planned withdrawals to supplement my pension until SS hits, as I don't want to be forced to sell equities in a down market. If it turns out our spending is less than expected, I'll look at moving back towards a higher AA.

 

[NW-Bound]

I am a market timer who practices "Tactical Asset Allocation". I try to fight fear to go to higher stock AA after the market tumbles, and to fight greed with a lower stock AA when the market gets to high evaluation. As I cannot be 100% sure, I never go 100% stock, nor under 50%. I am currently at 60%.

This is a good idea, because I've been afraid of timing the market.

What I meant to say is that I try to raise stock AA after the market has crashed, and to lower it after several years of a bull run and the P/E is high as it is now. If I were clairvoyant and could call the top and bottom exactly, I would bounce between 100% and 0% stock, and had more money than my frugal self knows how to spend.

As I do not really know, and only guess with some uncertainty about the market direction, I am never completely out or in. I have gone as low as 20% cash, and as high as 65% cash. The rest is in stocks, as I never had more than 5-7% in bonds.

 

[target2019]

target2019 >>> that is a very good read. I saved it to study it some more for there is a lot of information there take in. Thank you

Yes, not as simple as I would like. I find reading about this model thought-provoking, but realize I don't have total access to the investments in their basket.

This article just popped up on my radar. It proposes the 3-fund Bogle model, for various reasons, over the endowment thing. It sure is simple.

 

[marko]

target2019 >>> that is a very good read. I saved it to study it some more for there is a lot of information there take in. Thank you

Slightly off subject, but the article mentions Realtyshares.com Does anyone have any insight into this group? Legit? Risky?

 

[FreeBear]

I've always been a believer in equities, and while working held virtually no bonds.

Since retiring 4 years ago, I've held a larger bond/cash position, knowing I'm not maximizing returns.

I decided to dial risk down, preferring comfort in riding out a major downturn with less loss, to the minimal extra pleasure/lifestyle enhancements/legacy building I'd derive from incremental gains.

I mean, even if I'd been all equities the last four years it's not like I'd have my own private jet. A new car, an extra vacation, some xtra $ for my kid, ok. But I'm pretty much stuck/satisfied with the lifestyle I've earned thru my work years no matter what returns my portfolio achieves now.

+1 Exactly!

Loved equities when w*rking! Somehow rode out the 2000's at 80% or more equities. My j*b was endangered in 2009 due to internal politics, but I toughed in out in equities, in part because I was afraid to sell low. Of course, it market has roared back since 2009 and I FIRE'd

Through 2014 and 2015 we trimmed back to 50% equities and held about 2 year's expenses in cash, for the first time ever. FI normally hate "lazy" money, but now I just want to sleep better. Got lucky selling stocks near the top of the market (at the time).

As for spending, we're running around 4% WR, planning to pull down to 3% in several years. We've been cutting expenses on stuff that doesn't add value (cable tv, overpriced "expense account" restaurants, expensive toys-we have enough of those). Just seems like a natural thing to do, and no regrets. Perhaps we would spend more on vacations, but we can never agree on where to spend. Our lifestyle is more modest than when w*rking, but we're more happy with it! We've been FIRE'd only 2 years, so perhaps we're still settling in and just de-stressing from decades of w*rk.

 

[rayinpenn]

It's 1989 and you are retired with a majority of your money in the market bam the financial crisis hits your 401k becomes a 201k. Most will panic, sell, swear off equities and jump into fixed income. Some will continue to get their somewhat reduced dividends and ride out the storm. In time the highly diversified equity holder portfolio grows and grows...

We are living longer, fixed returns are nearly negative and there is someone screaming about crash proof retirements every Saturday. For me an equity rich allocation makes sense.

 

[target2019]

Yes, not as simple as I would like. I find reading about this model thought-provoking, but realize I don't have total access to the investments in their basket.

This article just popped up on my radar. It proposes the 3-fund Bogle model, for various reasons, over the endowment thing. It sure is simple.

Forgot the link! My apologies.

http://www.marketwatch.com/story/a-...e-bogle-model-beats-the-yale-model-2017-02-06

 

[FREE866]

No. Volatility is the bigger bet you place for the expectation of higher returns.

"Over time"? What time? How much time?

Your post is confusing to me.

What do you mean by "no"?

Equities generate a substantially higher return than bonds and cash.
Since 1926 stocks annual return is ~10% and that INCLUDES all bear markets. Corporate Bonds are like 6% and treasuries a little over 5%.
It's not a smooth ride though, hence my statement that the volatility is the part of that process. 10 and 20 year rolling returns mostly ( if not always) provide greater returns for stocks over any other asset class as well.