briang_g wrote:From my point of view, I am ultra conservative and in my mid 40’s. Although it goes against the conventional wisdom, I wont be able to sleep at night with most of my assets in the Market. My thought process (however flawed), is that I can live (and sleep at night) with the almost 100% certainty that my captial will be depreciated due to inflation, but I cant live (or sleep), with the knowledge that my entire portfolio might lose half its value (2008) and never make it up (at some point, 10 years from now, 50 years from now, the economy will shrink, and we wont be able to make the money back. That what I think at least, but what do I know?)
On the other hand, I want to have SOME assets in the market, and I want to handle those assets using the Bogleman philosophy.
You are conducting what most people call basic "risk tolerance." You're basically saying that you can't stomach 100% stocks, or even 100% stocks/bonds. This is fine and totally normal - especially since you qualify yourself as "ultra-conservative."
If you were to ask me personally what I think you should do given what you've stated above, I would recommend you consider
(perhaps as a starting point) a relatively even split between stocks, bonds, and cash. So if you had, say, $100,000, you'd have:
- $35,000 in the either the Total US Stock Market Index or the Total World Stock Market Index (I'd pick the latter)
- $35,000 in the Total US Bond Market Index
- $30,000 in I-Bonds/CDs/Short-Term Treasuries.
With this allocation you are neither all-in, nor all-out, and re-balancing will be simple. BUT, this is just my opinion, it is up to you to decide how much risk you can take with any given asset. Many people here will lump the latter two asset classes into one, thereby giving you a 35/65 split between stocks/non-stocks and this is a rather conservative allocation for someone in their mid-40s. Common Boglehead wisdom would advocated the opposite really, something along the lines of 60/40 stocks/bonds - perhaps in a nicely diversified Vanguard Life Strategy Fund. But at this point you'd need to consider where your assets are located, tax-shelters, etc... and that's a whole new set of questions.
"An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return." | - Benjamin Graham, The Intelligent Investor