Today I plan on doing my once a year rebalance of my accounts and as every year, I try and spend a little time doing some research, looking at what others are doing, and of course, second guessing my strategy which often results in analysis/paralysis. None the less, as always, hoping to pick up some nuggets of wisdom from some of you that might help me make some appropriate changes. Yes, I know multiple factors go into everyone's AA and it is very personal, but always interested to hear about the better mouse traps out there.
Quick & dirty... I'm still making good $$ and packing away as my first designed potential RE date is in about 3 - 4 yrs when I am 55. There is a reasonable chance I will chicken out and potentially work in some capacity a few yrs beyond, but that would be due to OMY syndrome or just not "feeling it". I'm a 1099 guy and don't hate my work so that is not a driver to hang it up, but like the idea of having the option.
I was pretty aggressive until about 2 yrs ago when I ratchetted down by AA to effectively 70/30. More specifically, my 70 is broken down 45 Large/15 Small/8 Intl Large/2 Emerging Mkt and my 30 is in Intermediate Bonds & cash. If I add my Other category (real estate/3rd party business investment), you could argue my AA is really 65/28/7 of which 65% is in tax differed accts, 28% taxable accts, and 7% other (would all go into taxable if sold). While my Other category is more speculative, I view the investments as effectively a blend of my stock/bond portion risk for internal reasons (Real Estate is my business, if I sold an investment I would plow it back into my AA). I will have no pension (other than SS I am conservatively not counting on), so my nut must generate my RE income. My thought is to maybe go to 60/40 when I do RE, but not sure.
Questions...
- Other than FIREcalc, I have used some of the historical AA model returns to help guide me on future performance and volatility and thus land me on an AA that "feels right". I know there is allot of talk about future returns being much less going forward than the past, but how did you reconcile your AA in the last 3 - 5 yrs of the accumulation phase and then what did you determine your AA strategy to be once retired?
- I'm not an individual stock buyer and try to subscribe to the KISS method, but think I have way too many ETFs/mutual funds... currently 15. Most are low cost investments and some are in my taxable accts and would create a tax event which is why I have not sold them yet. What do you think the optimal number of ETFs/Mutual Funds would be?
- I go round and round with my specific allocation of international (10%) as I have heard the arguments that by investing in larger US companies, you often have enough international exposure. Thoughts?
- While still in accumulation, my focus has been pure return based and trying to be tax efficient in my brokerage accts. I suspect I will determine my final AA/draw down strategy once I retire, but I suspect with no pension, I will keep the same strategy perhaps collecting dividends/interest vs reinvesting them, and then supplementing my income needs with selling (ideally LTCG) certain securities. I have lofty RE spending goals which will bump me into higher tax brackets, so employing certain tax strategies will play into my plans. I know some of you create dividend type portfolios, but how are those of you without any pensions/working spouses adjusting your AA or draw down approaches once retired?
Thanks in advance!
Quick & dirty... I'm still making good $$ and packing away as my first designed potential RE date is in about 3 - 4 yrs when I am 55. There is a reasonable chance I will chicken out and potentially work in some capacity a few yrs beyond, but that would be due to OMY syndrome or just not "feeling it". I'm a 1099 guy and don't hate my work so that is not a driver to hang it up, but like the idea of having the option.
I was pretty aggressive until about 2 yrs ago when I ratchetted down by AA to effectively 70/30. More specifically, my 70 is broken down 45 Large/15 Small/8 Intl Large/2 Emerging Mkt and my 30 is in Intermediate Bonds & cash. If I add my Other category (real estate/3rd party business investment), you could argue my AA is really 65/28/7 of which 65% is in tax differed accts, 28% taxable accts, and 7% other (would all go into taxable if sold). While my Other category is more speculative, I view the investments as effectively a blend of my stock/bond portion risk for internal reasons (Real Estate is my business, if I sold an investment I would plow it back into my AA). I will have no pension (other than SS I am conservatively not counting on), so my nut must generate my RE income. My thought is to maybe go to 60/40 when I do RE, but not sure.
Questions...
- Other than FIREcalc, I have used some of the historical AA model returns to help guide me on future performance and volatility and thus land me on an AA that "feels right". I know there is allot of talk about future returns being much less going forward than the past, but how did you reconcile your AA in the last 3 - 5 yrs of the accumulation phase and then what did you determine your AA strategy to be once retired?
- I'm not an individual stock buyer and try to subscribe to the KISS method, but think I have way too many ETFs/mutual funds... currently 15. Most are low cost investments and some are in my taxable accts and would create a tax event which is why I have not sold them yet. What do you think the optimal number of ETFs/Mutual Funds would be?
- I go round and round with my specific allocation of international (10%) as I have heard the arguments that by investing in larger US companies, you often have enough international exposure. Thoughts?
- While still in accumulation, my focus has been pure return based and trying to be tax efficient in my brokerage accts. I suspect I will determine my final AA/draw down strategy once I retire, but I suspect with no pension, I will keep the same strategy perhaps collecting dividends/interest vs reinvesting them, and then supplementing my income needs with selling (ideally LTCG) certain securities. I have lofty RE spending goals which will bump me into higher tax brackets, so employing certain tax strategies will play into my plans. I know some of you create dividend type portfolios, but how are those of you without any pensions/working spouses adjusting your AA or draw down approaches once retired?
Thanks in advance!