85/15 too aggressive at age 35?

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hightower
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Re: 85/15 too aggressive at age 35?

Post by hightower » Thu Aug 03, 2017 8:03 pm

ancho wrote:My wife and I are both 35, and our $325k in retirement savings are currently at an 85/15 asset allocation, using the 3-fund portfolio (well, more like 87/13 at the moment due to drift).

We're heavy savers ($50-$55k/year), and live in a VHCOL area. We would love to retire early if we can, but aren't counting on anything. Speaking VERY roughly, we probably need to hit $2.5M or so in savings (in 2017 dollars) to retire, given our desired spending.

We made it through the 2007 crash without panicking and selling anything (we only had ~$60k in investments prior to the crash, but that sure felt like a lot of money to see cut in half at the tender age of 25). And we were fairly naive investors at the time, and have a whole lot more knowledge now to help us stay the course. To be honest, part of me is hoping for a downturn soon so we can do some "buying low" while we're still in the heavy accumulation phase.

Of course, a 50% market drop with our current savings would be different than what we experienced 10 years ago.

But, assuming that we will indeed stay the course through any market correction, is 85/15 too aggressive for our age and time horizon?

I realize there's no right or wrong answer to this, but would welcome some input.
When the next big bear market hits, you'll be able to answer this question for yourself:)

Dottie57
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Re: 85/15 too aggressive at age 35?

Post by Dottie57 » Thu Aug 03, 2017 9:00 pm

bligh wrote:
Dottie57 wrote:
KlangFool wrote:
Matador wrote:
KlangFool wrote:OP,

Starting Net Worth $325,000
Annual Savings $55,000
Years
Annual Return Rate 5 10 15 20
5.00% $718,701 $1,221,175 $1,862,473 $2,680,949
6.00% $744,963 $1,306,969 $2,059,060 $3,065,527
7.00% $772,120 $1,399,229 $2,278,781 $3,512,400
8.00% $800,195 $1,498,412 $2,524,321 $4,031,719
9.00% $829,212 $1,605,004 $2,798,657 $4,635,240


You can reach your goal in 15 to 20 years with 6% to 8% average return.

https://personal.vanguard.com/us/insigh ... llocations

You can reach your goal easily with 60/40 portfolio. The average return is 8.7%.

So, why are you taking an unnecessary risk?

The average return of 80/20 portfolio is 9.5%. Only 0.8% more.

You are not compensated for your additional risk. So, why are you doing this?

KlangFool
I agree OP is fine and may be taking on unnecessary risk, but ONLY 0.8% more? He's being compensated just as much as someone who chooses a fund with an ER of 0.1% over a similar fund that charges 0.9%. 0.8% is usually considered to be a lot in these parts.
Matador,

60/40 -> Worst case one-year loss ~ 30%, Average return = 8.7%
80/20 -> Worst case one-year loss ~ 40%, Average return = 9.5%

So, OP is taking on the possibility of losing 10% more in any year for the average return of 0.8% more. OP has to pray that he did not hit one of those worst years in (10%/0.8%) = 12.5 years in order to break even.

It is a lousy deal.

KlangFool
Do you have the averge return for 50/50 portfolio?
I believe he is using this site for his numbers :
https://personal.vanguard.com/us/insigh ... llocations

50/50 appears to have an average annual return of 8.3%. I would take those numbers with a grain of salt though. The current interest rates really are unprecedented. You would have to take on long term junk bonds to get 5.4% yield out of them as shown in the 100% bond portfolio.

My total portfolio at fidelity is up at about 9.5% with a 50/50 ratio. One of my main bond funds is on target for over 4%. It has highquality corporate and government bonds. It did ok during 2008-2009 too. Also about 20% in international.

basspond
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Re: 85/15 too aggressive at age 35?

Post by basspond » Thu Aug 03, 2017 9:17 pm

I commend you for staying the course. We didn't panic when black Monday hit when we where newlyweds because we were dumb, in love, and naive. We were almost 100% in and haven't looked back since. Know several people who are kicking themselves for bailing after Y2K and 2007 downturns. Just remember that past outcomes don't guarantee future decisions success.

tigermilk
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Re: 85/15 too aggressive at age 35?

Post by tigermilk » Thu Aug 03, 2017 9:46 pm

I'm 48 and still only around 93/7 plus or minus a percent. Was 100/0 until this past December. Never panicked and just kept buying. I am at 2 commas in savings and 50% higher in NW. And no debt. I'd do it all over again.

SimplicityNow
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Re: 85/15 too aggressive at age 35?

Post by SimplicityNow » Thu Aug 03, 2017 10:23 pm

I think you are too aggressive at 87/13 at your ages. You might consider a maximum of 80/20.

Although you weathered the last big market drop, you only had invested an amount basically equal to what you invest now in a single year.

Not much of a test in my mind.

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TxAg
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Re: 85/15 too aggressive at age 35?

Post by TxAg » Thu Aug 03, 2017 10:32 pm

Dottie57 wrote:
TxAg wrote:Similar age and 100/0

We sleep fine at night

I always wonder how much money those who are at 100/0 had in 2007 -2009.

I went through market problem through 2007 and nothing bothered me. But at that time I had enough accumulated, that the deep market drop terrified me. Terror was enhanced by the belief that the who system would fail.
I was single then. I had a lot less but still a nice sum given my age. If you are truly interested, PM me and I'll share.

We don't plan on retiring for another 20 years. I'm thinking 80/20 in 10 years and 60/40 10 years after that. We shall see. In the meantime, we keep saving and try not to worry about it much.

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wander
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Re: 85/15 too aggressive at age 35?

Post by wander » Thu Aug 03, 2017 10:52 pm

At 35, 85/15 is not too aggressive. At your age, my portfolio was 90/10.

chinto
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Re: 85/15 too aggressive at age 35?

Post by chinto » Thu Aug 03, 2017 11:22 pm

Heck no, at your age, except for an emergency fund, I was all in. Ride 'em cowboy...

HornedToad
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Re: 85/15 too aggressive at age 35?

Post by HornedToad » Thu Aug 03, 2017 11:55 pm

aristotelian wrote:
RRAAYY3 wrote:I am 100/0 and will continue to be because I only invest what I know I don't need in the near future ... I plan on being 100/0 until I'm 40 - then reassess depending on portfolio size

thinking 100/0 ... 80/20 ... 70/30 ... 60/40 by retirement (20-30 years from now)
That actually means you are some percentage of stock and some percentage of cash. Please be clear so that OP does not put his emergency fund in stock.
No one actually means all funds when discussing allocation. The 80/20, 100/0, etc is for investable assets. Liquid cash, emergency fund, anything that is not invested is separate since that's not a stock nor bond anyway. (Or maybe not no one but its not the convention)

OP: I'm 35 as well and 100/0. Basically it's all in retirement funds so 20+ years away. For taxable it's either in savings, cash reserve or pay down house loan.

CnC
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Re: 85/15 too aggressive at age 35?

Post by CnC » Fri Aug 04, 2017 10:42 am

KlangFool wrote:
Matador wrote:
KlangFool wrote:OP,

Starting Net Worth $325,000
Annual Savings $55,000
Years
Annual Return Rate 5 10 15 20
5.00% $718,701 $1,221,175 $1,862,473 $2,680,949
6.00% $744,963 $1,306,969 $2,059,060 $3,065,527
7.00% $772,120 $1,399,229 $2,278,781 $3,512,400
8.00% $800,195 $1,498,412 $2,524,321 $4,031,719
9.00% $829,212 $1,605,004 $2,798,657 $4,635,240


You can reach your goal in 15 to 20 years with 6% to 8% average return.

https://personal.vanguard.com/us/insigh ... llocations

You can reach your goal easily with 60/40 portfolio. The average return is 8.7%.

So, why are you taking an unnecessary risk?

The average return of 80/20 portfolio is 9.5%. Only 0.8% more.

You are not compensated for your additional risk. So, why are you doing this?

KlangFool
I agree OP is fine and may be taking on unnecessary risk, but ONLY 0.8% more? He's being compensated just as much as someone who chooses a fund with an ER of 0.1% over a similar fund that charges 0.9%. 0.8% is usually considered to be a lot in these parts.
Matador,

60/40 -> Worst case one-year loss ~ 30%, Average return = 8.7%
80/20 -> Worst case one-year loss ~ 40%, Average return = 9.5%

So, OP is taking on the possibility of losing 10% more in any year for the average return of 0.8% more. OP has to pray that he did not hit one of those worst years in (10%/0.8%) = 12.5 years in order to break even.

It is a lousy deal.

KlangFool

That is not how the math works...

The .8% takes into account the 10% greater loss. Just like the return for the market is very rarely 10.1% despite that being the average an 80/20 investment rarely only beats a 60/40 investment by .8%.

It will typically beat it by much more, but at max it may lose to it by 10% but factoring in the maximum 10% loss it still averages more .8% more.

KlangFool
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Re: 85/15 too aggressive at age 35?

Post by KlangFool » Fri Aug 04, 2017 10:50 am

CnC wrote:

That is not how the math works...

The .8% takes into account the 10% greater loss. Just like the return for the market is very rarely 10.1% despite that being the average an 80/20 investment rarely only beats a 60/40 investment by .8%.

It will typically beat it by much more, but at max it may lose to it by 10% but factoring in the maximum 10% loss it still averages more .8% more.
CnC,

That only works if you have enough time to recover before you need to sell the stock. At 85/15 and with a portfolio of 325K, OP will have to sell if he is unemployed and the recession lasts more than 1 to 2 years.

KlangFool

Spirit Rider
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Re: 85/15 too aggressive at age 35?

Post by Spirit Rider » Fri Aug 04, 2017 11:09 am

I always looked at it like this.

Age - 20 in bonds = aggressive
Age - 10 in bonds = moderate
Age in bonds = conservative

However, it probably should not be linear. So even 90:10 might not be too aggressive at ages 30 - 40. However, I am someone who thinks people starting out in their 20s should actually be more on the conservative side until they get their investing sea legs.

CnC
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Re: 85/15 too aggressive at age 35?

Post by CnC » Fri Aug 04, 2017 2:27 pm

KlangFool wrote:
CnC wrote:

That is not how the math works...

The .8% takes into account the 10% greater loss. Just like the return for the market is very rarely 10.1% despite that being the average an 80/20 investment rarely only beats a 60/40 investment by .8%.

It will typically beat it by much more, but at max it may lose to it by 10% but factoring in the maximum 10% loss it still averages more .8% more.
CnC,

That only works if you have enough time to recover before you need to sell the stock. At 85/15 and with a portfolio of 325K, OP will have to sell if he is unemployed and the recession lasts more than 1 to 2 years.

KlangFool
He is 35... Why on Earth would he sell his 401k at 35???

If he were 53 perhaps but there is no reason at all that a 35 year old who was capable of saving 325k should anticipate raiding his 401k. You forget if someone is capable of saving 325k by 35 they are smarter than the average bear.

KlangFool
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Re: 85/15 too aggressive at age 35?

Post by KlangFool » Fri Aug 04, 2017 3:55 pm

CnC wrote:
He is 35... Why on Earth would he sell his 401k at 35???

If he were 53 perhaps but there is no reason at all that a 35 year old who was capable of saving 325k should anticipate raiding his 401k. You forget if someone is capable of saving 325k by 35 they are smarter than the average bear.
CnC,

Which may not help in a major recession. I had gone through many recessions and economic crisis to know that being smart and hardworking is not necessarily good enough.

Historically, there is at least one US recession every 10 years since 1836. The last one was 2007/2009.

https://en.wikipedia.org/wiki/List_of_r ... ted_States

KlangFool

RRAAYY3
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Re: 85/15 too aggressive at age 35?

Post by RRAAYY3 » Sat Aug 05, 2017 8:54 am

To clarify, I do not literally have 100% of my money in equity ... the money I do have invested - that is 100% between total us/international

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knpstr
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Re: 85/15 too aggressive at age 35?

Post by knpstr » Sat Aug 05, 2017 9:02 am

Warren Buffett would suggest you have 90/10 so you are a little on the conservative side.

With your heavy savings, you'll get there.
:beer
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

BuyAndHoldOn
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Re: 85/15 too aggressive at age 35?

Post by BuyAndHoldOn » Sat Aug 05, 2017 10:14 am

I am a little younger than the 'OP' (not by much) - and 100% of my retirement accounts (HSAs, etc.) are in equities.

In my taxable account: I'm moving towards 60/40 equities/fixed income.

[point is] If your accessible [non-retirement] money is sufficient, you could have a higher allocation to equities and not be concerned. Isn't that obvious? :happy

[so] Maybe consider saving a little more outside of retirement accounts, depending on desired asset allocation.

aristotelian
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Re: 85/15 too aggressive at age 35?

Post by aristotelian » Sat Aug 05, 2017 11:47 am

BuyAndHoldOn wrote:I am a little younger than the 'OP' (not by much) - and 100% of my retirement accounts (HSAs, etc.) are in equities.

In my taxable account: I'm moving towards 60/40 equities/fixed income.

[point is] If your accessible [non-retirement] money is sufficient, you could have a higher allocation to equities and not be concerned. Isn't that obvious? :happy

[so] Maybe consider saving a little more outside of retirement accounts, depending on desired asset allocation.
If your bond allocation is in Total Bond Market, you would be better off doing the opposite, stock in the brokerage account and bonds in your retirement accounts. Otherwise you are being taxed on bond dividends as ordinary income.

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peterinjapan
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Re: 85/15 too aggressive at age 35?

Post by peterinjapan » Sat Aug 05, 2017 12:13 pm

I'm like 90 stocks / 10 bonds. Though I have three investment properties in San Diego which I don't really know how to count in my calculation. And I'm 49 years old.

BanquetBeer
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Re: 85/15 too aggressive at age 35?

Post by BanquetBeer » Sat Aug 05, 2017 1:12 pm

KlangFool wrote:Matador,

60/40 -> Worst case one-year loss ~ 30%, Average return = 8.7%
80/20 -> Worst case one-year loss ~ 40%, Average return = 9.5%

So, OP is taking on the possibility of losing 10% more in any year for the average return of 0.8% more. OP has to pray that he did not hit one of those worst years in (10%/0.8%) = 12.5 years in order to break even.

It is a lousy deal.

KlangFool
Why would you compare the worse year return vs the average gain? That seems internationally bias towards high bond allocation.

Average drop vs average gain or max drop vs max gain seems more equitable.

Personally I would take current allocation and figure out your future allocation at retirement. Say 85/15 vs 70/30.

Then years to retirement say 55-35=20 so you need to increase 15/20% every year, just round that. I wouldn't go backwards but it may mean a slower progression moving forward.

michaeljc70
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Re: 85/15 too aggressive at age 35?

Post by michaeljc70 » Sat Aug 05, 2017 1:27 pm

I had no fixed income until my 40s. And I plan on retiring in my early 50s. I would say if you don't plan on retiring in the next 10 years, you can go without or low levels of fixed income if you are comfortable with the risk level, especially if you can extend your retirement date in a black swan type of situation.

I am not risk averse though and plan on keeping around 70% equities/30% fixed even in retirement.

Spirit Rider
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Re: 85/15 too aggressive at age 35?

Post by Spirit Rider » Sat Aug 05, 2017 3:03 pm

BanquetBeer wrote:
KlangFool wrote:Matador,
60/40 -> Worst case one-year loss ~ 30%, Average return = 8.7%
80/20 -> Worst case one-year loss ~ 40%, Average return = 9.5%

So, OP is taking on the possibility of losing 10% more in any year for the average return of 0.8% more. OP has to pray that he did not hit one of those worst years in (10%/0.8%) = 12.5 years in order to break even.

It is a lousy deal.

KlangFool
Why would you compare the worse year return vs the average gain? That seems internationally bias towards high bond allocation.

Average drop vs average gain or max drop vs max gain seems more equitable.
Because, the two most useful metrics when determining your "need, willingness and ability" to take risk are worst case and average returns.

If your portfolio has an average drop, you are in real trouble. Max gain is not a relevant metric, because what is the negative behavioral finance action from your portfolio increasing to much?

Bacchus01
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Re: 85/15 too aggressive at age 35?

Post by Bacchus01 » Sat Aug 05, 2017 3:48 pm

SimplicityNow wrote:I think you are too aggressive at 87/13 at your ages. You might consider a maximum of 80/20.

Although you weathered the last big market drop, you only had invested an amount basically equal to what you invest now in a single year.

Not much of a test in my mind.
And I think at 35 they are too conservative.

But what matters is the OPs desire, willingness and ability to take risk.

At 43, I'm at about 95-5

Dandy
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Re: 85/15 too aggressive at age 35?

Post by Dandy » Sat Aug 05, 2017 3:56 pm

As you age and approach your "number" there is a gradual shift in the value of extra assets vs the risk of loss of assets. So, the game isn't always to maximize lifetime assets -- sometimes it is to preserve the level of assets that assures a great retirement. Always look to the dollars at risk vs just the percentage. If you have 100k in equites and the market drops 50% you are down 50,. If you have 1.5 million in equities and there is a 50% drop that is 750k. Feels a lot different especially as you get older and closer or in retirement.

If you are comfortable with a 50% drop and have enough human capital and risk tolerance then you are ok.

SimplicityNow
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Re: 85/15 too aggressive at age 35?

Post by SimplicityNow » Sun Aug 06, 2017 9:34 am

Bacchus01 wrote:
SimplicityNow wrote:I think you are too aggressive at 87/13 at your ages. You might consider a maximum of 80/20.

Although you weathered the last big market drop, you only had invested an amount basically equal to what you invest now in a single year.

Not much of a test in my mind.
And I think at 35 they are too conservative.

But what matters is the OPs desire, willingness and ability to take risk.

At 43, I'm at about 95-5
The OP asked for input and I gave mine.

I think the phrase is need, willingness and ability to take risk.

KlangFool
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Re: 85/15 too aggressive at age 35?

Post by KlangFool » Sun Aug 06, 2017 10:55 am

OP,

You can reach your number in 10 to 15 years with 60/40. But, you choose to do 85/15 instead. You are taking unnecessary risk. If you are lucky and it works out, it won't matter any how. The difference between your number and 1 million more makes little to no difference. But, if it does not work out, the difference is significant.

10+ years ago, I was 100/0. I believed that I have job security. But, Telecom bust changed all that. I lost 50% of my whole life savings at that point. I have a similar saving rate as you. I could reach my goal with 60/40 or 70/30. That mistake cost me about 5 years from FI. But, I am the lucky one. I worked enough to survive and thrive. Many of my peers were "House Poor" and 100/0. They did not make it.

Do not take unnecessary risk. The future is unknowable. It will not be sunny continuously over the 5 to 20 years.

KlangFool

Bacchus01
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Re: 85/15 too aggressive at age 35?

Post by Bacchus01 » Sun Aug 06, 2017 11:53 am

SimplicityNow wrote:
Bacchus01 wrote:
SimplicityNow wrote:I think you are too aggressive at 87/13 at your ages. You might consider a maximum of 80/20.

Although you weathered the last big market drop, you only had invested an amount basically equal to what you invest now in a single year.

Not much of a test in my mind.
And I think at 35 they are too conservative.

But what matters is the OPs desire, willingness and ability to take risk.

At 43, I'm at about 95-5
The OP asked for input and I gave mine.

I think the phrase is need, willingness and ability to take risk.
Phrase it however you want, I phrased it exactly how I meant it.

Dottie57
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Re: 85/15 too aggressive at age 35?

Post by Dottie57 » Sun Aug 06, 2017 11:59 am

Asset allocation is very personal. Age doesm't matter as mch as tolerance for risk. Go to an allocation which lets you sleep and during a down market.

Vanguard Fan 1367
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Re: 85/15 too aggressive at age 35?

Post by Vanguard Fan 1367 » Sun Aug 06, 2017 3:35 pm

KlangFool wrote:OP,

You can reach your number in 10 to 15 years with 60/40. But, you choose to do 85/15 instead. You are taking unnecessary risk. If you are lucky and it works out, it won't matter any how. The difference between your number and 1 million more makes little to no difference. But, if it does not work out, the difference is significant.

10+ years ago, I was 100/0. I believed that I have job security. But, Telecom bust changed all that. I lost 50% of my whole life savings at that point. I have a similar saving rate as you. I could reach my goal with 60/40 or 70/30. That mistake cost me about 5 years from FI. But, I am the lucky one. I worked enough to survive and thrive. Many of my peers were "House Poor" and 100/0. They did not make it.

Do not take unnecessary risk. The future is unknowable. It will not be sunny continuously over the 5 to 20 years.

KlangFool
I love the way you put it and also the way Bogle put it: We have spring, summer, fall, and winter with investing. I sure remember feeling knocked around pretty good in 2008.

emanuel_v19
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Re: 85/15 too aggressive at age 35?

Post by emanuel_v19 » Sat Aug 12, 2017 2:59 pm

I think 80/20 is a good balance of risk/return. That is my allocation now but I have read that 5% difference isn't drastically going to kill you or make you any richer..So 85/15 at that age is good but maybe consider changing at 40yrs old? Of course, depending on your particular situation..

KlangFool
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Re: 85/15 too aggressive at age 35?

Post by KlangFool » Sat Aug 12, 2017 3:27 pm

emanuel_v19 wrote:
Sat Aug 12, 2017 2:59 pm
I think 80/20 is a good balance of risk/return. That is my allocation now but I have read that 5% difference isn't drastically going to kill you or make you any richer..So 85/15 at that age is good but maybe consider changing at 40yrs old? Of course, depending on your particular situation..
emanuel_v19,

OP is 10 to 15 years from hitting his number with 60/40. So, does that change your recommendation?

KlangFool

SimplepathtoBogle
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Re: 85/15 too aggressive at age 35?

Post by SimplepathtoBogle » Sat Aug 12, 2017 4:00 pm

I don't think it's too aggressive. I'm 37 and am about 90/10 goal for now. I originally considered 100/0 but ultimately decided to put 10 % or so in bonds. Honestly, the only reason I am parking 10% in bonds is to smooth the ride a little and keep more powder dry to plug in at a discount,whenever that may be. I am not as worried about whether I will have enough to retire the way I want at 65, rather how quickly I can get to my number. The quicker I get there, the sooner I can choose to continue at the same pace, slow down, or just have a choice in what kind of work I take. A down market would probably increase my work load in my area and I have a very stable job. If that was different, my position might change. Also, when I get closer to where I want to be, I will reconsider my allocation and be more conservative. As it is, if I have to work longer, I like what I do and it's not the end of the world to work a little longer.

To me, the current bond market doesn't seem like it offers much other than a little safer parking spot. If that changes over time, it might seem like a more attractive option.

emanuel_v19
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Re: 85/15 too aggressive at age 35?

Post by emanuel_v19 » Mon Aug 14, 2017 3:05 pm

KlangFool wrote:
Sat Aug 12, 2017 3:27 pm
emanuel_v19 wrote:
Sat Aug 12, 2017 2:59 pm
I think 80/20 is a good balance of risk/return. That is my allocation now but I have read that 5% difference isn't drastically going to kill you or make you any richer..So 85/15 at that age is good but maybe consider changing at 40yrs old? Of course, depending on your particular situation..
emanuel_v19,

OP is 10 to 15 years from hitting his number with 60/40. So, does that change your recommendation?

KlangFool
It depends...

I still think 80/20, which I believe he mentioned it will be his balance from now on, is fine. Again, depends on many factors.

KlangFool
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Re: 85/15 too aggressive at age 35?

Post by KlangFool » Mon Aug 14, 2017 3:16 pm

emanuel_v19 wrote:
Mon Aug 14, 2017 3:05 pm
KlangFool wrote:
Sat Aug 12, 2017 3:27 pm
emanuel_v19 wrote:
Sat Aug 12, 2017 2:59 pm
I think 80/20 is a good balance of risk/return. That is my allocation now but I have read that 5% difference isn't drastically going to kill you or make you any richer..So 85/15 at that age is good but maybe consider changing at 40yrs old? Of course, depending on your particular situation..
emanuel_v19,

OP is 10 to 15 years from hitting his number with 60/40. So, does that change your recommendation?

KlangFool
It depends...

I still think 80/20, which I believe he mentioned it will be his balance from now on, is fine. Again, depends on many factors.
emanuel_v19,

OP is 10 to 15 years from retirement/FI. So, he is equivalent to 50 years old in term of time to retirement. Would you keep your AA at 80/20 when you are 50 years old?

No, I am not suggesting the OP to keep his AA at 80/20 or 85/15. I am suggesting that the AA should be between 70/30 to 60/40.

KlangFool

emanuel_v19
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Re: 85/15 too aggressive at age 35?

Post by emanuel_v19 » Mon Aug 14, 2017 3:19 pm

KlangFool wrote:
Mon Aug 14, 2017 3:16 pm
emanuel_v19 wrote:
Mon Aug 14, 2017 3:05 pm
KlangFool wrote:
Sat Aug 12, 2017 3:27 pm
emanuel_v19 wrote:
Sat Aug 12, 2017 2:59 pm
I think 80/20 is a good balance of risk/return. That is my allocation now but I have read that 5% difference isn't drastically going to kill you or make you any richer..So 85/15 at that age is good but maybe consider changing at 40yrs old? Of course, depending on your particular situation..
emanuel_v19,

OP is 10 to 15 years from hitting his number with 60/40. So, does that change your recommendation?

KlangFool
It depends...

I still think 80/20, which I believe he mentioned it will be his balance from now on, is fine. Again, depends on many factors.
emanuel_v19,

OP is 10 to 15 years from retirement/FI. So, he is equivalent to 50 years old in term of time to retirement. Would you keep your AA at 80/20 when you are 50 years old?

No, I am not suggesting the OP to keep his AA at 80/20 or 85/15. I am suggesting that the AA should be between 70/30 to 60/40.

KlangFool
You are right KlangFool.

bloom2708
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Re: 85/15 too aggressive at age 35?

Post by bloom2708 » Mon Aug 14, 2017 3:33 pm

In an 8 year bull market, 85/15 is a little "light" on stocks. :wink:

In a 2 or 3 or 4 year dip, 85/15 is a tish "heavy" on stocks. :wink:

The next dip will test your mettle. Then you might know. We are 60/40ish at age 46/47.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead | | Want to buy something? Watch this first: https://vimeo.com/41152287

tj218
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Re: 85/15 too aggressive at age 35?

Post by tj218 » Mon Aug 14, 2017 3:39 pm

70/30 at age 35.

I was 95/5 until last summer. Sure I've lost a little gains in the last year's market but everything I looked at seemed to indicate 70/30 - 60/40 was a very stable historically best results long-term through bear and bull markets. I went 70/30 as a way to slightly be more aggressive than a 60/40 which felt a little too conservative at 35.

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Toons
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Re: 85/15 too aggressive at age 35?

Post by Toons » Mon Aug 14, 2017 3:42 pm

I don't think so ,but
It depends on one's risk profile and how they handle declining markets,
Personally I was 90% equities until about age 60.
Then again,
I have always treated bear,declining markets as opportunity time. :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Hyperborea
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Re: 85/15 too aggressive at age 35?

Post by Hyperborea » Mon Aug 14, 2017 5:25 pm

KlangFool wrote:
Mon Aug 14, 2017 3:16 pm
[OP is 10 to 15 years from retirement/FI. So, he is equivalent to 50 years old in term of time to retirement. Would you keep your AA at 80/20 when you are 50 years old?
Heck no I wouldn't be at 80/20 at 50. At 50+ in retirement my allocation is still 90/10. With a 3% withdrawal I could go 10-ish years on dividends supplemented with the 10% in fixed income. I'm normally running on a 3.5% withdrawal. If things were really bad I could pull it in to 2.5% and stretch longer than 10 years. I was 100% from the mid 90's on until just before retirement except for a reasonable fixed amount (i.e. not a percentage of assets) as an emergency fund.

indexonlyplease
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Re: 85/15 too aggressive at age 35?

Post by indexonlyplease » Mon Aug 14, 2017 9:06 pm

I was 100% stock funds until age 50. Then I learned about AA, risk and the 3 fund portfolio. All here. So, I went 60/40. I was only all stock funds because I knew nothing about bonds and risk.

Now that I have more knowledge, I may have owned some bonds but maybe not. Lucky I never did anything in the down market years. Again, because I knew nothing. To busy working. So yes you can be risky because you are young.

I just wonder with this great run in the market how many will run to change the AA once the market changes. If it ever does. I believe many young people here had very little in the market in the old days 2007-09.

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