Your Opinion Please [Asset Allocation]

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poppa23
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Your Opinion Please [Asset Allocation]

Post by poppa23 » Mon Nov 04, 2019 11:13 pm

im too much in fixed income. Im shifting more to equities but still majority in fixed. my equities are majority total stock with 1/3 vanguard div growth.a financial buddy of mine suggested that i should fill in equity allocation with mid cap, small and foreign breaking it down to 58 lg cap 22 mid cap 16 percent small cap and balance forn.(yes small foreign allocation for now) is that slice and dice too much . is total stock just the easier play and the other is unnecessary....for fixed im fine with individ muni bonds, total bond market intermed term invest and short term bond fund....your thoughts on the equity portion and whether slice and dice will make any difference or not enough to deal with it..

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nedsaid
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Re: Your Opinion Please

Post by nedsaid » Mon Nov 04, 2019 11:17 pm

How old are you? That is a big factor when deciding upon asset allocation.
A fool and his money are good for business.

Topic Author
poppa23
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Re: Your Opinion Please

Post by poppa23 » Mon Nov 04, 2019 11:22 pm

im 60 and my allocation is very conservative as ive done well so im not taking much in the way of risk. im more in a cap preservation mode with clipping coupons being my excitement..but for the equities im posing the question...

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Peter Foley
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Re: Your Opinion Please

Post by Peter Foley » Mon Nov 04, 2019 11:36 pm

Total stock market is the easier play and the rest is unnecessary.

Some recommend being in the range of 25% to 75% equities with the balance in bonds. Others promote the range of 40% to 60% equities with the balance in bonds.

If you do not have much ability to take risk (little guaranteed income in retirement) I would recommend being on the more conservative end.

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RickBoglehead
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Re: Your Opinion Please

Post by RickBoglehead » Mon Nov 04, 2019 11:36 pm

You should NOT listen to your buddy. You have been on this forum for years, and have $15 million. viewtopic.php?f=1&t=281162&p=4551807#p4551807

Why change now?
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

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poppa23
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Re: Your Opinion Please

Post by poppa23 » Mon Nov 04, 2019 11:50 pm

yes i have been on the forum for years and dont need to take the risk but there are plenty of people who have been on this forum for long periods of time who are going to take a look and still make sure that what your doing works well for you...this is why i ask the question as im reading quite a bit now which talks about further diversification than merely total stock market, and index bubble etc...

msk
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Re: Your Opinion Please

Post by msk » Tue Nov 05, 2019 12:25 am

I always view fixed income as lending my money to some unknown dude for x% interest. For some years now that x% has been close to zero in real terms. Not attractive to me. Then there is the utility of money. Let's view all $ in real terms. A $ to you at age 60 has less utility than a $ to you at age 40. At a younger age you had more needs and wants. By the time you get to your 70s the utility of that $ drops even lower. Hence with $15 million NW you are approaching an age where it becomes more attractive to give away your surplus wealth to those who have greater utility for the extra $ and who are important to you. This can be charities and or potential heirs. Once you are handing over those surplus $ in large quantities, you start questioning the concept of having "enough". Hence in my 75th year I am 100% stocks even though I am quite comfortable living on just my COLA pension. I have taken care of my charitable inclinations a few years ago by giving a substantial endowment to my alma mater (funding ongoing bursaries and fellowships) and currently I am withdrawing 3.5% per annum to gift to my heirs. I have warned my giftees that if the stock market tanks then their monthly gifts may also tank... The OP's age 60 and NW is approaching the age of giving rather than consuming for oneself. IMHO. The ephemeral security of fixed income becomes ever more questionable when your "giving" stage in life becomes activated. NB this is a contrarian view to the one pushing for more fixed income exposure as one ages. $15 million at age 90 is not being invested for one's own needs/wants as $15 million at age 50. The longer you live, the more pleasure you get from gifting that $ than from consumption. The more pleasure you get from gifting, the more $ you wish you had to gift :sharebeer

retired@50
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Re: Your Opinion Please

Post by retired@50 » Tue Nov 05, 2019 12:39 am

poppa23 wrote:
Mon Nov 04, 2019 11:50 pm
yes i have been on the forum for years and dont need to take the risk but there are plenty of people who have been on this forum for long periods of time who are going to take a look and still make sure that what your doing works well for you...this is why i ask the question as im reading quite a bit now which talks about further diversification than merely total stock market, and index bubble etc...
I'm not sure what you've been reading, but I'd knock it off if I were you. The 3-fund portfolio is as diversified as you can get, unless you want to add in international bonds. I think any sector or specific market bets are just that, they're bets, on a portion of what you already own. This doesn't add diversification, it adds risk. I'd focus on family, friends, charity, etc.

Regards,

Grt2bOutdoors
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Re: Your Opinion Please

Post by Grt2bOutdoors » Tue Nov 05, 2019 12:55 am

poppa23 wrote:
Mon Nov 04, 2019 11:50 pm
yes i have been on the forum for years and dont need to take the risk but there are plenty of people who have been on this forum for long periods of time who are going to take a look and still make sure that what your doing works well for you...this is why i ask the question as im reading quite a bit now which talks about further diversification than merely total stock market, and index bubble etc...
Index bubble? And how would slicing and dicing protect you if you truly believe there is such a bubble? Separate the components of total stock market, what do you have? Large cap, mid cap, small cap. You are plenty diversified with one fund, increasing concentration in other asset classes could expose you to more risk not necessarily returns. This would contradict your IPS which says “I’m content to clip coupons, I don’t need to keep playing the game”.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Dottie57
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Re: Your Opinion Please

Post by Dottie57 » Tue Nov 05, 2019 6:00 am

Grt2bOutdoors wrote:
Tue Nov 05, 2019 12:55 am
poppa23 wrote:
Mon Nov 04, 2019 11:50 pm
yes i have been on the forum for years and dont need to take the risk but there are plenty of people who have been on this forum for long periods of time who are going to take a look and still make sure that what your doing works well for you...this is why i ask the question as im reading quite a bit now which talks about further diversification than merely total stock market, and index bubble etc...
Index bubble? And how would slicing and dicing protect you if you truly believe there is such a bubble? Separate the components of total stock market, what do you have? Large cap, mid cap, small cap. You are plenty diversified with one fund, increasing concentration in other asset classes could expose you to more risk not necessarily returns. This would contradict your IPS which says “I’m content to clip coupons, I don’t need to keep playing the game”.
This.

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RickBoglehead
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Re: Your Opinion Please

Post by RickBoglehead » Tue Nov 05, 2019 9:06 am

retired@50 wrote:
Tue Nov 05, 2019 12:39 am
poppa23 wrote:
Mon Nov 04, 2019 11:50 pm
yes i have been on the forum for years and dont need to take the risk but there are plenty of people who have been on this forum for long periods of time who are going to take a look and still make sure that what your doing works well for you...this is why i ask the question as im reading quite a bit now which talks about further diversification than merely total stock market, and index bubble etc...
I'm not sure what you've been reading, but I'd knock it off if I were you. The 3-fund portfolio is as diversified as you can get, unless you want to add in international bonds. I think any sector or specific market bets are just that, they're bets, on a portion of what you already own. This doesn't add diversification, it adds risk. I'd focus on family, friends, charity, etc.

Regards,
This ^^^

STOP READING. STOP LISTENING TO BUDDIES.

The internet, including forums, is full of "experts". Everyone's got an opinion. Few can backup their opinions with facts that bear out. That golf buddy who says "My broker has beaten the market for the last ten years" is often clueless that fees have killed his return.

Leave well enough alone, keep clipping coupons, and enjoy life.

That's my opinion. :D
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

Rockyleo123
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Re: Your Opinion Please [Asset Allocation]

Post by Rockyleo123 » Tue Nov 05, 2019 10:50 am

Read, Guide to the Three-Fund Portfolio by Wiley.

Topic Author
poppa23
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Re: Your Opinion Please [Asset Allocation]

Post by poppa23 » Tue Nov 05, 2019 3:05 pm

ok i get it sometimes you can think a bit too much...... sometimes you need to check yourself..

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nedsaid
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Re: Your Opinion Please

Post by nedsaid » Fri Nov 08, 2019 6:30 am

poppa23 wrote:
Mon Nov 04, 2019 11:22 pm
im 60 and my allocation is very conservative as ive done well so im not taking much in the way of risk. im more in a cap preservation mode with clipping coupons being my excitement..but for the equities im posing the question...
Last I looked at the Total Market Fund, distribution is 76% Large Caps, 18% Mid Caps, and 6% Small Caps. My personal target is 60% Large Cap/40% Mid/Small Caps, right now I am at 32% Mid/Small Caps vs. market weighting of 24%. I also like a Value tilt.

I am age 60 as you are. Pretty much the asset allocation experts would say that as part of the program of reducing risk as you age, the proportion of your stocks in the Large and Mega Cap stocks should increase. Big picture, less stocks as you get older and of those remaining stocks a bigger portion in the Large and Mega Caps.

As for myself, I don't consider myself "old" yet, I still want tilts towards Value and towards the smaller Mid/Small/Micro Cap stocks. Hard to say what the best mix of all of this is, lots of opinions out there. I can only tell you what I am doing personally.
A fool and his money are good for business.

nigel_ht
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Re: Your Opinion Please

Post by nigel_ht » Fri Nov 08, 2019 7:21 am

RickBoglehead wrote:
Mon Nov 04, 2019 11:36 pm
You should NOT listen to your buddy. You have been on this forum for years, and have $15 million. viewtopic.php?f=1&t=281162&p=4551807#p4551807

Why change now?
With 15MM...unless you have a yen for building multigenerational wealth at the UHNW level of 30MM, have a family office, etc...yah, why change now? Especially given a couple more decades you’ll get there anyhow.

It’s an interesting question at your level of wealth and it’s not a question of AA but is it worth it to you to try turn your current wealth into an enduring one for your great grandkids...from what you wrote the odds are your kids are financially sound and could get onboard with this new family venture.

If you’re going to read any books I’d suggest “ Wealth: Grow It and Protect It” by Stuart Lucas. It’s fluffy on the financials but it’s an interesting read about becoming “old money”.

I’ve created a modest little family LLC modeled loosely on the Walton Family LLC...my kids are much younger, my wealth far far lower than yours but from little things hopefully bigger things can grow.

Heck, there are only so many coupons you can clip and if want to do something new...

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