Surfs Up in Central America....AA questions

[Surfs_Up]

Hello All,
I just wanted to give everyone an update on where Ive landed....also have a few questions on pimping my portfolio. I FIREd about three years ago when I was 39. Since then I have been traveling, learning spanish, surfing, and loving life in Mexico, Brazil, Costa Rica, and Panama.

My current AA is the following:

30% Vanguard Total Stock Market Index (IRA)
18% Vanguard Total International Index (IRA)
11% Vanguard Small Market Index (IRA)

26% Vanguard Wellington (non sheltered)
15% Vanguard Total Stock Market ETF (non sheltered)



So the bond portion of my portfolio is in Wellington and is a little less than 10%. I also own a condo outright and about 17 acres of ocean view investment land in Panama.


Few questions:
1) What do you think of my asset allocation?
2) How should I view the investment land in my portfolio....similar to a REIT?
3) What are your thoughts on the mix of sheltered versus non sheltered assets?


All the best,
Surfs up

 

[Sam]

Forget about asset allocation! ;-)

I'm much more interested in your adventures in the past 3 years! Do write when you have some free time. Wait a minute, you always have free time, right?

 

[modhatter]

I second that. Where are you now? If you tell us, we'll tell you........

 

[Nords]

Hey, welcome back, Surfs_Up. Man, it must be about three server changes and two software mods since your last post. Glad to see you're not sweating the ER lifestyle!

1) What do you think of my asset allocation?

There are many ways to do this, so how's it been working since the last time you asked the question? If you were going to change it, what would you want to see as a different result? More interest income, more dividends, more cap gains?

2) How should I view the investment land in my portfolio....similar to a REIT?

Again it depends on what you plan to do with it-- a future surf camp? Family compound? Natural resource? Hedge against a falling dollar? Cap gains from appreciation, or dividends in the form of rental income? If you had the chance to buy it all over again, would you do so? Or is it so highly appreciated that it's better to sell? I'd be a little nervous about the property-tax rates in a country looking to dig a deeper/wider ditch.

You ought to PM Arif; maybe the two of you could work out a project.

3) What are your thoughts on the mix of sheltered versus non sheltered assets?

Do you mean IRAs vs taxable accounts? Do you anticipate the opportunity to have earned income to put into an IRA?

It's a little early to tell since you're still about 25+ years from RMD, but will you be in a higher or lower tax bracket when you have to take distributions? In a higher bracket (especially if it'd tax your Social Security) the conventional wisdom is to convert to a Roth IRA now while your taxes are lower.

I'm having a difficult time seeing why there'd be a need to mess with anything here...

 

[Arif]

I also own a condo outright and about 17 acres of ocean view investment land in Panama.

Surfs_up,
I moved to Panama at the end of 2005 when I was 32. If you're still in the area shoot me a PM. I live outside PC but plan to move close to Coronado when the house is finished.

 

[pedorrero]

Hi! I admire (envy?) you. I too have dreamed of retiring to Latin America...I hablo espanol pretty well, and even lived down there when very young. I'm not quite the investment genius you may be (most of my money is locked up in family trusts). Overall your investment mix sounds good, but my criticism:

1. Appears few or no inflation hedges. You might want 5% or 10% in gold coin or bullion as a "chaos hedge." If you don't want physical metal, consider one of the ETFs. I used to use CEF which was a fine way to do this in an IRA....!

2. Holding land for speculation is fine, but you are way concentrated. I read here: all of your R.E. is in Panama. What % of your total assets? If fairly small, OK. But if your goal is diversification, perhaps you should consider a US based REIT, or at least split it up.

 

[Surfs_Up]

Sam and Modhatter,
Yeah I need to get around to writing and taking more photos....free time, whats that?...my schedule is booked solid with surfing, swimming, reading, sex, going to the movies, traveling, blending fresh fruit smoothies, learning spanish, and learning to cook.

Im now living in the Chiriqui area of Panama. Year round living in boardshorts, flip flops and Tshirts....close to the highlands too if you want cooler weather.

Surf

 

[Surfs_Up]

Hey Nords,
Thanks for the note and the welcome back. All has been working out great since I started ER.

1) For the AA. I was wondering if folks thought my international or small allocation were too high? Or is the small allocation even needed....I also like simplicity and have been thinking of a switching to a Vanguard Target Retirement fund for the bulk of my portfolio....I like the idea of auto re-balance.

2) Not sure what Im going to do with the investment land yet...mainly looking toward capital appreciation from this over a 5-10 year period. I have thought about doing a surf camp but so far I have written it off as being too much like work. To tell you the truth, if I had to do it over I don't know if I would buy the land again.....many risks with buying raw foreign land.

3) Yes, I was referring to IRAs versus taxable versus. Good point, I need to look more into Roth conversions.

Surf

 

[Surfs_Up]

Arif,
Sounds like a good plan. Ill send you a PM and hope we can meet for an ice cold beer Panama.

Surf

 

[Surfs_Up]

Pedorrero,
Im far from an investment genius here....many people here are far more savvy than I regarding investments.

1) Ive never been a gold guy....but the investment land and condo should be good inflation hedges?....along with a high stock allocation.

2) My investment land and condo together are less then 15% of my total portfolio.....so Im comfortable with these.

Surf

 

[LOL!]

I think the best place to request personal asset allocation advice is on the free Vanguard diehards forum: Bogleheads :: View Forum - Investing and Personal Finance

The folks there wrote the books on asset allocation. Check it out.

 

[Surfs_Up]

LOL,
Thanks for the info and the link. Ill check it out.

Surf

 

[Surfs_Up]

Help! Im trying to use the quote feature and I forgot how to use it. Ill write more about life in Panama soon.

 

[Surfs_Up]

Living in Panama

After spending a few years traveling around Costa Rica, Mexico, Nicaragua, Brazil and Panama....Ive decided to make Panama my home base for the past 18 months. Why Panama? For me it was a combination of warm tropical weather and surf, spanish speaking, easy access to the US, land investment opportunities, affordable medical, and a simple lifestyle. Oh and there are many cinnamon skinned beauties in Panama I eat a tremendous amount of whole foods and Panama has incredible fruits, vegetables, and seafood at affordable prices.

I also get a tax exoneration on my new condo, so I'll pay (no) property taxes for 15 years....in theory. I would guesstimate that you could live a similar simple lifestyle in Chiriqui Panama for 40-60% of the USA cost.

For me, the US has too many drawbacks to consider living there for now....maybe when they solve the health care and liability issues Ill consider the US again? I agree with Paul Terhorst's comments in his recent interview on the Kaderlis website : "We love visiting the U.S., such a dynamic economy, we always have a great time. But the U.S. presents special problems for us, because of crazy medical care costs and an even crazier tort system. From the point of view of financial security the U.S. amounts to the most dangerous place on earth. Thus, for my peace of mind, I generally try to live outside of the U.S"

Surf