What is YOUR bond/equity ratio compared to your age/horizon?

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What is your current equity/bonds ratio versus your age/horizon?

I do my age plus 10 in bonds.
17
29%
I am higher than my age plus 10 in bonds.
21
36%
I am higher than my age plus 10 in bonds.
21
36%
 
Total votes: 59

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Peter Foley
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Post by Peter Foley » Sun Mar 13, 2011 9:28 am

I'm 60, my wife is 55. We do her age in bonds. We are within a year or two of retirement.

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Sheepdog
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Post by Sheepdog » Sun Mar 13, 2011 9:44 am

Now closing in on 78 with stocks at 22%.. I changed to"my age in bonds" (plus MM) in the 66 to 68 period. Prior to that, from age 50 to 66, I was closer to my age minus 15 in bonds.
Jim
Just because it isn't your fault doesn't mean it isn't your responsibility....Josh Reid Jones

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SpringMan
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Post by SpringMan » Sun Mar 13, 2011 9:54 am

We are both 63 and have roughly 53% in bond funds (age-10).
Best Wishes, SpringMan

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Tyrobi
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Post by Tyrobi » Sun Mar 13, 2011 10:07 am

We roughly follow age in bond. I'm 31 and my wife is 29. Our allocation is 70/30.
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fundtalk
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Post by fundtalk » Sun Mar 13, 2011 10:13 am

42 yo
40 percent bonds

Vanguard target retirement 2030 has about 18 percent in bonds, so compared to an age appropriate target retirement fund I'm conservative. ( it looks like target 2030 had a 50 percent drawdown in the last bear market...way too much for me!)

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MooseDad
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Re: What is YOUR bond/equity ratio compared to your age/hori

Post by MooseDad » Sun Mar 13, 2011 10:14 am

abudanadam wrote: 1. What about keeping VGTR2045, but adding Total Bond Market Index Fund to have the desired stock/bond ratio?

2. Keep VGTR2045 but also add a combination of other fine funds, like Target Date Income, Wellesley Income Fund, etc. Just make sure that the final mix provides the desired asset allocation.

What Bogleheads think about such strategy? Would it be inferior to just switching to VGTR2025?
I think this is a good strategy for increasing the bond allocation using a target fund. The recommendation here is usually to pick the target fund that has the bond allocation you want, but I think this ignores the "glide path" part of the target funds. Target 2025 is 26.5% bonds now, but it goes to 50/50 in just 15 years, and turns into Target Income in 20 years, probably sooner than you'd like if you plan to retire in 2045. You can keep the added Total Bond Index in tax-advantaged space and tweak it as necessary as you get older.

Of course, you could also just split the target fund into its three component funds and adjust the allocation at will, but this doesn't get you the constant rebalancing hands-off approach you get from the target funds.

Sconie
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Post by Sconie » Sun Mar 13, 2011 10:15 am

I'm 62 and my wife is 56----we're 60% equities and 40% bonds. My fear is not so much the volatility of equities as it is the destruction of wealth through inflation and the policies of an irresponsible federal government.

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MooseDad
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Post by MooseDad » Sun Mar 13, 2011 10:18 am

Age 54, 51/45/4 stocks/bonds/cash

Semi-retired (still working one or two days a week) plan to be fully retired at age 60.

cliff
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Lower bonds with pension?

Post by cliff » Sun Mar 13, 2011 10:18 am

61 - retired - at 62 will take SS and fully cover expenses with pension. Ratio is 65 equities to 35 bonds. Can't one count on a defined pension in essence as a bond and subsequently lower percentage of bonds required?

HAZEL
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What is you bond/equity ratio

Post by HAZEL » Sun Mar 13, 2011 10:59 am

Husband 70, wife 60, ave. age 65. We use 40% stock, 60% bond for all accounts except Roth. Roth is our self-insurance for possible nursing home costs, or for heirs. We might use Roth for other needs. but not likely. Roth is 20% of 7 figure portfolio. Stock 60%, Bond 40%.

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anthau
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Post by anthau » Sun Mar 13, 2011 11:36 am

Age 39. Equities 70%; TBM 20%; TIPS 5%; BB-B rated junk 5%. (At 5% of allocation, I'm pretty sure it's not worth fretting much over whether the junk is more bond or equity like.)
Best, | | Anth

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LadyGeek
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Re: What is YOUR bond/equity ratio compared to your age/hori

Post by LadyGeek » Sun Mar 13, 2011 11:45 am

EmptyWallet wrote:
LadyGeek wrote:
EmptyWallet wrote:I'm all in VGTR2045. I'm having serious thoughts of going all in VGTR2025, which would make me 75/25 equities/bonds.
EmptyWallet is setting the asset allocation based on his/her level of acceptable risk, and then working backwards to find the target date retirement fund that matches. It's explained in the wiki: Vanguard Target Retirement Funds (see Choosing a Target Retirement Fund)
Post #1 is showing acronyms, not the ticker symbols - confusing. VGTR2045 is VTIVX, VGTR2025 is VTTVX, as shown here: Vanguard Target Retirement FundsWiki article link: Asset Allocation
I can't tell if you're asking me a question, or explaining what I'm doing to another person....but I'm all about getting help! :D
It's a bit of both. New investors would think that VGTR2045 and VGTR2025 are the ticker symbols. Can you modify post #1 like this: VGTR2045 (2045 TR fund, ticker VTIVX) VGTR2025 (2025 TR fund, ticker VTTVX)?

Help to new investors: The poll is asking about a "rule of thumb". It's a very good starting point, but may not be appropriate in all situations.
Morgan wrote:4. Write a portfolio report. You write many reports for other people like employers, you might as well write one for yourself, no? Or is your life not worth the time and analysis? This is also called the IPS or Investment Portfolio Statement I think.
Wiki article link: Investment Policy Statement

If the Investment Policy Statement is too complicated, skim down to the bottom and look at the investing plan. The point is to get something in writing and to follow it. Two things to do, you need both.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

slowmoney
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20%

Post by slowmoney » Sun Mar 13, 2011 5:38 pm

I like the 20 Bonds / 80 Equities portfolio.

David Swensen wrote in his book "Unconventional Success" Part One,
...Diversification requires that individual asset-class allocations rise to a level sufficient to have an impact on the portfolio, with each asset-class accounting for at least 5 to 10 percent of assets. Diversification further requires that no individual asset class dominate the portfolio, with each asset class amounting to no more than 25 to 30 percent of assets.
Trust me, I have tried the 100% equity allocation. Basically, it didn't work for me.

1. When your total investable assets experience a paper loss of over 50%, very weird things begin to your investor psychology. Even though, I more than gritted my teeth and managed to "stay the course" and buy in 02/2009, I do not want to repeat that negative experience again.

2. Swensen wrote, (in the Overview),
....Harry Markowitz called diversification one of the economic world's rare "free lunches". By diversifying, investors gain risk reduction without return diminution.
3. I have 25+ years left on my investment horizon.
Information is more valuable sold than used. - Fischer Black (1938-1995)

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EmptyWallet
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Re: What is YOUR bond/equity ratio compared to your age/hori

Post by EmptyWallet » Sun Mar 13, 2011 11:00 pm

LadyGeek wrote:
EmptyWallet wrote:
LadyGeek wrote:
EmptyWallet wrote:I'm all in VGTR2045. I'm having serious thoughts of going all in VGTR2025, which would make me 75/25 equities/bonds.
EmptyWallet is setting the asset allocation based on his/her level of acceptable risk, and then working backwards to find the target date retirement fund that matches. It's explained in the wiki: Vanguard Target Retirement Funds (see Choosing a Target Retirement Fund)
Post #1 is showing acronyms, not the ticker symbols - confusing. VGTR2045 is VTIVX, VGTR2025 is VTTVX, as shown here: Vanguard Target Retirement FundsWiki article link: Asset Allocation
I can't tell if you're asking me a question, or explaining what I'm doing to another person....but I'm all about getting help! :D
It's a bit of both. New investors would think that VGTR2045 and VGTR2025 are the ticker symbols. Can you modify post #1 like this: VGTR2045 (2045 TR fund, ticker VTIVX) VGTR2025 (2025 TR fund, ticker VTTVX)?

Help to new investors: The poll is asking about a "rule of thumb". It's a very good starting point, but may not be appropriate in all situations.
Morgan wrote:4. Write a portfolio report. You write many reports for other people like employers, you might as well write one for yourself, no? Or is your life not worth the time and analysis? This is also called the IPS or Investment Portfolio Statement I think.
Wiki article link: Investment Policy Statement

If the Investment Policy Statement is too complicated, skim down to the bottom and look at the investing plan. The point is to get something in writing and to follow it. Two things to do, you need both.
Done!

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Scott S
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Post by Scott S » Mon Mar 14, 2011 12:07 am

I'm 30, and 80/20.

Which works out to age-10, but it's not so much to do with following a particular rule. I aimed for 90/10 when I joined Bogleheads and started investing in earnest. Over the last year or so, I started to think that 80/20 was more reasonable from a "freakout prevention" standpoint now that I have more saved up. Ultimately, I'm considering age-in-bonds as a good policy I could stick with for the long term.

(Note that I haven't been doing massive rebalances on a whim. My portfolio is still at a size where new contributions have a healthy effect on the overall AA.)

- Scott
My Plan: (Age-10)% in bonds until I reach age 60, 50/50 thereafter. Equity split: 50/50 US/Int'l, Bond split: 50/50 TBM/TIPS.

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EmptyWallet
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Post by EmptyWallet » Mon Mar 14, 2011 1:04 am

Morgan wrote:
Scott S wrote:I'm 30, and 80/20.

Which works out to age-10, but it's not so much to do with following a particular rule. I aimed for 90/10 when I joined Bogleheads and started investing in earnest. Over the last year or so, I started to think that 80/20 was more reasonable from a "freakout prevention" standpoint now that I have more saved up. Ultimately, I'm considering age-in-bonds as a good policy I could stick with for the long term.

(Note that I haven't been doing massive rebalances on a whim. My portfolio is still at a size where new contributions have a healthy effect on the overall AA.)

- Scott
That's the way to have it for as long as you possibly can manage it, no point in incurring costs when you can make up the difference using fresh cash. It is interesting, but the small investor has a fine collection of edges to use in building their portfolio initially, as opposed to the problems of very big investors, who experience market impact difficulties amongst others.

Of course, this runs completely counter to the traditional idea that only the 'Big Boys' can make money in the markets. That idea was always the lazy way out.
You're saying his 90/10 was the way to have it as long as he can stand it? That's where I'm at now, and we're about the same age. LOL, my name is Scott as well.

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Scott S
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Post by Scott S » Mon Mar 14, 2011 1:36 am

Morgan wrote:
EmptyWallet wrote:
Morgan wrote:
Scott S wrote:I'm 30, and 80/20.

Which works out to age-10, but it's not so much to do with following a particular rule. I aimed for 90/10 when I joined Bogleheads and started investing in earnest. Over the last year or so, I started to think that 80/20 was more reasonable from a "freakout prevention" standpoint now that I have more saved up. Ultimately, I'm considering age-in-bonds as a good policy I could stick with for the long term.

(Note that I haven't been doing massive rebalances on a whim. My portfolio is still at a size where new contributions have a healthy effect on the overall AA.)

- Scott
That's the way to have it for as long as you possibly can manage it, no point in incurring costs when you can make up the difference using fresh cash. It is interesting, but the small investor has a fine collection of edges to use in building their portfolio initially, as opposed to the problems of very big investors, who experience market impact difficulties amongst others.

Of course, this runs completely counter to the traditional idea that only the 'Big Boys' can make money in the markets. That idea was always the lazy way out.
You're saying his 90/10 was the way to have it as long as he can stand it? That's where I'm at now, and we're about the same age. LOL, my name is Scott as well.
Hello Scott, no, I wasn't referring to his asset allocation. I was talking about him using his income/salary to balance between the different percentages of his desired asset allocation i.e. rebalancing. Once he's big enough, he won't be able to use his salary to this effect, and he'll have to pay transaction fees and taxes each time he rebalances.
Tangentially, my original plan *was* to keep to a 90/10 ratio indefinitely since my increased savings rate was making the bond portion grow pretty fast, but I decided against that. :wink:

- Scott
My Plan: (Age-10)% in bonds until I reach age 60, 50/50 thereafter. Equity split: 50/50 US/Int'l, Bond split: 50/50 TBM/TIPS.

Dandy
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Post by Dandy » Mon Mar 14, 2011 7:07 am

Age 63 have 44% equities. The rest is in bonds and cash. I don't make much of fuss about bonds vs cash (currently about 46% and 10%). I look at cash as very, very short term bonds. To me the % to focus on is your equities. That is where most of the risk is. I know this is obvious.

So, I checked age -10

jmbkb4
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Post by jmbkb4 » Mon Mar 14, 2011 11:03 am

I'm 30. 25 years to retirement.

100 equities.

nimo956
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Post by nimo956 » Mon Mar 14, 2011 11:25 am

I'm 24, and am at 75/25 equities/bonds. Since I only started investing 2 years ago, I don't really know what my risk tolerance is. Therefore, I think it is better to err on the conservative side, rather than something really aggressive like 90/10. This would soften the blow of a major downturn and make me less likely to abandon my plan in the middle of a "crisis."
50% VTI / 50% VXUS

Miskatonic
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Post by Miskatonic » Mon Mar 14, 2011 11:57 am

Age 46
80%/20% Equity/Bonds

My plan is to hold this ratio until I deem it's time to enter the glide path to retirement. Probably a 10 year transition.

I was amazed to learn my recently deceased father, whom I considered "conservative" in all things, held a nearly 100% equity portfolio!

He did hold a number of Vanguard mutual funds and big positions on a couple of blue chips. Very risky but it somehow worked for him. Wish I could ask him how he knew to do what he did it in the last 25 years of his life.

Sriracha
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Post by Sriracha » Mon Mar 14, 2011 2:55 pm

Mid 40s.
65/35.
Don't reach for yield.

kirent
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Post by kirent » Mon Mar 14, 2011 3:13 pm

I think you would see the poll flipped upside down if you asked this in 2008. People always feel that they are very risk tolerant during what is perceived as a bullish market but suddenly become risk adverse during a bearish market. :roll:
Disclaimer: I am not a financial or legal expert and all information I provide is given for entertainment purposes only, at your own risk and with no guarantees of accuracy.

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DocHolliday
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Post by DocHolliday » Mon Mar 14, 2011 3:32 pm

I am 42 years old. Wife is 40.

We are approximately 65/35 stocks to bonds. We do not rebalance religously or exactly. We will likely remain at that approximate ratio for the next 5 years. After that, we will go a little more conservative at 60/40. Retirement is about 20 years away.

We keep our purchasing part of the investing flexible. When stocks were cheap a few years ago at the beginning of the recession, we were purchasing 100% stocks in our 401Ks for months. It made sense to do that as part of the rebalancing and so that we could buy as many stocks as possible while they were on sale.

norm
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Post by norm » Mon Mar 14, 2011 3:32 pm

Age 72 and retired. My income is from Social Security & pensions.

My portfolio is 49% equities/46% bonds/5% cash.

Based on my portfolio plus emergency funds/discretionary spending funds:
34% equities/34% bonds/32% cash.

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DaleMaley
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Post by DaleMaley » Mon Mar 14, 2011 6:08 pm

I am always on the lookout for actual asset allocation data. Here is a previous posting I did using March 2007 poll data from the old Diehards site:
I am always curious to see the asset allocations used by real people.....and how the risk level varies by age group.

I used 3 data sources to construct the chart below:

1. Poll results from the old Diehards site on asset allocation versus age. These are the many blue diamonds with a green linear regression line.

2. Survey of actual Vanguard investors from the book Wealth of Experience: Real Investors on What Works and What Doesn't by Andrew Clarke. These are the 3 red triangles.

3. Survey of TIAA-CREF members (teachers, university personnel, various other non-profits) in 1996 from the Zvi Bodie paper titled Personal Investing: Advice, Theory, and Evidence from a Survey of TIAA-CREF Participants. These are the 4 orange circles.

Image
I added the actual AA data from the Vanguard 2009 report on their DC plan members (which is 2008 AA data from Figure 45):

Image

The linear regression line which fits the 2007 Diehards data says % stocks = 114 - Age.

It looks like the 2008 Vanguard DC Plan data shows the same general trend of reducing your stock allocation as you age.
Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. – Warren Buffett

21236
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Post by 21236 » Mon Mar 14, 2011 8:16 pm

Miskatonic wrote: I was amazed to learn my recently deceased father, whom I considered "conservative" in all things, held a nearly 100% equity portfolio!
I can relate to this, my parents are in their 70's and are nearly 100% equity. Guess I need to buy them some books to read!

We are average age of 51 and have 41 bonds/59 equity.

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Rob5TCP
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Post by Rob5TCP » Mon Mar 14, 2011 8:34 pm

My Age is 52

60% + percent in fixed income, bonds, CD's, TIPS, I Bonds.

30% equity

10% in real estate (investment and REIT)

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EmptyWallet
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Post by EmptyWallet » Mon Mar 14, 2011 10:04 pm

nimo956 wrote:I'm 24, and am at 75/25 equities/bonds. Since I only started investing 2 years ago, I don't really know what my risk tolerance is. Therefore, I think it is better to err on the conservative side, rather than something really aggressive like 90/10. This would soften the blow of a major downturn and make me less likely to abandon my plan in the middle of a "crisis."
I honestly think this is what I might do, and I like the reasoning behind it.

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grabiner
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Still among the most aggressive

Post by grabiner » Wed Mar 16, 2011 8:49 pm

I am now 43, 90% equity, with the risk of 100% equity as I am a serious slice-and-dicer.
Wiki David Grabiner

Steve K
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Post by Steve K » Wed Mar 16, 2011 8:59 pm

Age 50

60% bonds

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