midareff wrote:Avoiding allocations such as 5.7% is at the core. Lets suppose for this exmple you have a portfolio of $525K ... divided am,ong asset classes. Having a total allocation of 105% might be lots neater than asset classes allocated at 10.5%, 17.75% or such to get to a total of 100% for AA purposes..
bertilak wrote:midareff wrote:Avoiding allocations such as 5.7% is at the core. Lets suppose for this exmple you have a portfolio of $525K ... divided am,ong asset classes. Having a total allocation of 105% might be lots neater than asset classes allocated at 10.5%, 17.75% or such to get to a total of 100% for AA purposes..
But why would you allocate (target) something to 10.5%? Are you allocations so precise that 10% vs 10.5% makes a difference in your planning? Would you rebalance if the actual went down from 10.5% to 10%?
Still trying to understand. I guess I'm missing something. Maybe someone will jump in with a real answer for you!
Aptenodytes wrote:I still have no idea what you are doing but it sounds like you are satisfied.
midareff wrote:If you adjust those individual asset allocations upwards your total will be larger than 100% .. How do you handle that? By decimalizing and reducing all AA %'s or just as simply allowing the total to exceed 100%????
bertilak wrote:midareff wrote:If you adjust those individual asset allocations upwards your total will be larger than 100% .. How do you handle that? By decimalizing and reducing all AA %'s or just as simply allowing the total to exceed 100%????
My confusion is, I think, that I don't see how you can ever add up individual percents and get a total greater than 100% so I don't even see a situation that needs to be "handled!"
Let me put out a scenario and you can tell me where it diverges from what you are doing ...
- Initial conditions: Target Asset Allocation is 55% equities and 45% FI. The total is 100%. This is pretty much by definition.
The actual $ amounts are:
- Some time in the future, your equities have gained but your FI is unchanged (just a simplifying assumption). The actual $ amounts are now
Equities: $60K <== This changed(In my world I round things out so my spreadsheet would show 57% and 43%. That approximation is way more precise than it needs to be.)
The actual percent allocations are now:
Christine_NM wrote:In my spreadsheet I use values (number of shares, NAV) that result in fractional allocations. But I format the % cells to not show any decimal places so the whole thing looks a lot cleaner. You seem to be doing some predictive things, but any calculation using the cell containing an allocation % will use the cell's (double-precision?) floating point value, not the displayed value. So you can use the cell that displays a rounded value and it will be just as precise as a cell that displays a couple of decimal places.
Hope this helps, but also hope you already know this. I too don't see the arithmetic problem. Looks like just a formatting nonissue, but I'm probably missing something about your spreadsheet.
Are you predicting next year's portfolio growth (say for example 5%) and then tracking progress against the hoped-for 105% final outcome?
No, I am predicting next year's dividend distributions (from) taxable based on current M* SEC and M* last 12 month dividend distribution. It is (presently) forecast to match IRS needs and is set to electronically pay quarterly.
Maybe it's much more than 5% if you are including new money being invested with each paycheck. Sounds a lot like what's called value averaging. If this is the case, maybe you could Google around for how people keep track of that.
midareff wrote:than 100% to simplify asset tracking and avoid using decimal AA percentages? Perhaps 105% in a S&D portfolio however, when assets are counted up by the $$ the equities/FI allocation comes out as intended. Anyone?
Users browsing this forum: Google [Bot] and 20 guests