Simple Retirement AA. Opinions please?

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monicafaye
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Location: San Antonio, TX

Simple Retirement AA. Opinions please?

Post by monicafaye »

33% VBR (Small Cap Value)
67% BND (Total Bond Market)


I did a backtest of this portfolio covering the 1972-2008 time period. The average Return was 10.29%, Standard Deviation was 8.93%, and the CAGR was 9.94%. The worst loss was -7.19% in 2008 and the best gain was 26.42% in 1982. Someone may want to recheck my calculations just to double check since I'm new at this.

This portfolio seems to have less downside risk, which is important for retirees. Yes I know past returns are no guarantee of future returns. I'm just curious about opinions from others. Thanks so much. Happy Memorial Day weekend!
Last edited by monicafaye on Sat May 29, 2010 1:17 pm, edited 1 time in total.
livesoft
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Post by livesoft »

VB is small cap index
VBR is small cap value

which did you use?
livesoft
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Post by livesoft »

I'm curious if you invested during the recent market drops in May. It seems from your previous posts that you were waiting for just such a drop. The market is about where it was back around the second week of February.
Topic Author
monicafaye
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Location: San Antonio, TX

Post by monicafaye »

Oops, left off the R in VBR. Thanks
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retiredjg
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Post by retiredjg »

I think putting all of your stocks in one asset class is about the same as all your eggs in one basket. Interesting concept, but not for me.
Topic Author
monicafaye
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Simple Retirement AA. Opinions please?

Post by monicafaye »

Unfortunately, I invested most of it before the market drop. But I will stay the course.
livesoft
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Re: Simple Retirement AA. Opinions please?

Post by livesoft »

monicafaye wrote:Unfortunately, I invested most of it before the market drop. But I will stay the course.
But you put 40% into BND, right? So that has had a positive return.

You have a chance to rebalance now.
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Quasimodo
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Post by Quasimodo »

Hi Monica;

Were you using this backtest website?

http://assetplay.net/financial-tools/backtest.html

I tried running an allocation of 76% intermediate treasury bonds and 8% each small cap value, emerging markets and commodities and that engine came up with a 10.26% avg return with only two losing years (worst was '94 with a 3.52% loss) and the best year was +24.6%.

Those results would probably be easier to live with because of less downside risk, but going forward it might not work out the way we anticipate. For example, I'm not really sure what "commodities" means to this allocation plan.

I would prefer treasury bonds to total bond market because you get the occasional boost in price from flights to safety.

Good luck!

John
Many wealthy people are little more than janitors of their possessions. | | Frank Lloyd Wright, architect (1867-1959)
Topic Author
monicafaye
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Joined: Thu Mar 18, 2010 8:39 am
Location: San Antonio, TX

Re: Simple Retirement AA. Opinions please?

Post by monicafaye »

livesoft wrote:
monicafaye wrote:Unfortunately, I invested most of it before the market drop. But I will stay the course.
But you put 40% into BND, right? So that has had a positive return.

You have a chance to rebalance now.
Yes I did put 40% in BND. Should I rebalance now or at end-of-year?
Topic Author
monicafaye
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Location: San Antonio, TX

Post by monicafaye »

Quasimodo wrote:Hi Monica;

Were you using this backtest website?

http://assetplay.net/financial-tools/backtest.html

I tried running an allocation of 76% intermediate treasury bonds and 8% each small cap value, emerging markets and commodities and that engine came up with a 10.26% avg return with only two losing years (worst was '94 with a 3.52% loss) and the best year was +24.6%.

Those results would probably be easier to live with because of less downside risk, but going forward it might not work out the way we anticipate. For example, I'm not really sure what "commodities" means to this allocation plan.

I would prefer treasury bonds to total bond market because you get the occasional boost in price from flights to safety.

Good luck!

John
Yes, that is the website I used.
livesoft
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Post by livesoft »

Rebalance when you are out of your range, so that might be if BND is more than 45% of your current holdings or less than 35% of your current holdings.
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