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Old 09-22-2022, 09:19 AM   #21
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Originally Posted by MarieIG View Post
A rose by any other name . . .
This ..

Asset allocation is a way to inform the level of risk in a portfolio. By withdrawing and segregating future expenses you automatically reduce the overall risk of the remaining portfolio, so even when equity allocation rises from 30% to 35%, the risk profile may not have changed at all. What matters it the total, overall risk you face.

Early into my retirement I kept some funds separate (future budgets and some select one time large expenses) but found it was too much work to be constantly reconciling and now just look at one total.
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Old 09-22-2022, 09:28 AM   #22
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That is more or less what I was thinking.

I guess the confusion might be due to apples versus oranges thinking.

When you say you have a 60/30/10 equity/bond/cash allocation, that is more for the purpose of the retirement calculator.

When I was thinking about splitting my cash into "expenses" and "investment", maybe the cash I plan to invest might be better thought of as the not-yet-deployed portion of the equity allocation.
Ah then no. If you have cash that is earmarked as "potential investment" then for your allocation, it's still cash. Allocations make calculators factor out expected growth and risk - and side-table-cash is still cash in that scenario. If you eventually move it from cash to equities, the then AA changes again. But cash is cash when it comes to calculators. They don't care about intra-cash buckets.
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Old 09-22-2022, 09:36 AM   #23
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Thanks for taking the time to post all the interesting responses.

Taking everything into account, I decided to restore my spreadsheet from the day before and continue with the way I have been tracking things for years.

It is indeed just semantics and what tipped me to going back was that it seemed better to keep my percentages using the same calculation method for the purpose of comparing to past time periods.

I will still have to factor in the need to take living expenses out of the cash allocation, but should be able to do that on an ad hoc basis.

Thanks again for taking the time to respond.
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