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Asset Allocation: Super Savers
Old 03-30-2019, 05:59 PM   #1
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Asset Allocation: Super Savers

Questions and thoughts... Being a super saver (someone who saves 50+ percentage of their income) should they have a more of a conservative asset allocation than someone who only saves 15% of income.
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Old 03-30-2019, 08:06 PM   #2
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My take is that equity exposure depends on time frame and risk tolerance, not your saving rate.
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Old 03-30-2019, 08:27 PM   #3
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In reality, people who have a lot more saved and invested than they plan to need can be more conservative (not needing as much growth) OR more aggressive (more able to endure significant losses), so it depends also on their own comfort zone and their estate planning goals.
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Old 03-30-2019, 08:40 PM   #4
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Questions and thoughts... Being a super saver (someone who saves 50+ percentage of their income) should they have a more of a conservative asset allocation than someone who only saves 15% of income.

as a super saver , would tilting your investment focus ( current buying ) towards the current 'best deal ' be a better option ,

asset allocation implies some diversity , and assuming you aren't near retirement yet , the opportunities should level out by the time you have retired

in my case all those nice interest-bearing securities bought between 2011 and 2015 have matured ( or redeemed ) and there are only low quality replacements available , so i am more inclined to buy extra ( listed ) property trusts than extra shares with the excess cash ( since bank interest is low ).

so what about being more opportunistic ( without taking excessive risks ) and changing any buying bias as value arrives , in each asset class

a 50% saving rate implies you shouldn't need to sell-down your investments in a financial emergency ( like a 10% saver might be pressured into ) ... just invest less that year( s) .
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Old 03-31-2019, 04:47 AM   #5
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My take is that equity exposure depends on time frame and risk tolerance, not your saving rate.
Agreed!

If someone has 10+ years then being quite aggressive in terms of equity exposure makes sense to me regardless of how how much you save.

Saving more just means you might reach your “magic number” goal sooner, meaning earlier retirement.

As you approach your goal, you can start to switch to a more conservative allocation in preparation for retirement.
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Old 03-31-2019, 06:59 AM   #6
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Agreed!

If someone has 10+ years then being quite aggressive in terms of equity exposure makes sense to me regardless of how how much you save.

Saving more just means you might reach your “magic number” goal sooner, meaning earlier retirement,

As you approach your goal, you can start to switch to a more conservative allocation in preparation for retirement.
Yup - I completely agree that the purpose of being a super-saver is to get to retirement as quickly as possible. Beyond that, however, once you retire it's up to you whether you want to be more conservative or stick with a desired AA with a lot of equity. A lot of that is wrapped up in your need and willingness to take risk coupled with the actual withdrawal method you choose and whether you intend to leave a legacy. There is no "one size fits all" answer to this.
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Asset Allocation: Super Savers
Old 03-31-2019, 07:48 AM   #7
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Asset Allocation: Super Savers

To reinforce the save more to get to retirement quicker, I always like to look at a graph. Here’s one from gocrackercurry:

IMG_3226.JPG

And a link to the article: https://www.gocurrycracker.com/10-years-and-a-day/

Edited to fix image.
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