mathjak107
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Jul 27, 2005
- Messages
- 6,210
Lucia's approach is not any different than most traditional allocation techniques. Cash, Bonds, Stock. Near term money for 5+ years in short-term instruments (safe).
I have not read his books so I cannot comments on some of the proposed micro-mechanics of replenishing the buckets. But based on his slide-show at his site. The main feature that is a little different is that he does not rebalance/diversify the stock investment until about 14 years. He lets the bond investment ride for 7 years then moves to cash.
I have read some articles that indicate that longer rebalancing periods more efficient (taxes and let the stock value grow).
Does Lucia describe how he works the stock cashout in year 14. The Demo kinda indicates that it happens at one time. Of course, there are a number of implications. Moving that amount of money might tigger AMT, plus year 14 might be the time a big stock market correction occurs. Does he talk about this in his book?
the video is oversimplified ,ray dosnt recommend you wait until buckets are empty to refill
the buckets are refilled gradually thru the years the markets are up......
the strategy is very different from just say a 60/40 hodge podge. buckets can have dedicated portfolios just for that time frame with well defined amounts . until you have tried it you cant imagine how nice and easy it is to implement and use.
rebalancing is mostley just within that bucket, so if emerging markets funds have had a long healthy run and you wanted that to be a certain % of your stock bucket then maybe you will sell the excess and buy more small cap or whatever fell below the % you wanted it to be.
Last edited: