What is your AA, given your age? and, Why?

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blacktupelo
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Re: What is your AA, given your age? and, Why?

Post by blacktupelo » Sat Apr 07, 2018 4:22 pm

At 34/66, age 70. Market volatility teasing us and making it hard to get to desired 30/70 allocation. Only reason to take risk with stocks is inflation and longevity. 50/50 USA/International stock funds. Bonds in Vanguard short term index and intermediate term index bond funds.
Larry

Cash is King
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Re: What is your AA, given your age? and, Why?

Post by Cash is King » Sat Apr 07, 2018 4:32 pm

Hello,
A long time lurker but only my second post. I turn 58 this month. Our AA is 100% equities with no intention of changing AA. We own one index fund through a 401k and the rest is individual stocks.

We don't do any tax harvesting or rebalancing. I'm not a fan of either.

I think it's important to understand what you own.
Last edited by Cash is King on Sat Apr 07, 2018 5:10 pm, edited 1 time in total.

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GerryL
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Re: What is your AA, given your age? and, Why?

Post by GerryL » Sat Apr 07, 2018 4:34 pm

livesoft wrote:
Sat Apr 07, 2018 10:48 am
I am in my sixties. My AA is about 60/40 because

1. That seems to work. I really like making money when the stock market goes up and don't mind losing too much money when it goes down.

2. It doesn't really matter than much.

3. It's been that way ft or awhile and will be that way for the rest of my life. That is, no gliding.

4. There are many convenient funds with similar asset allocation of 60/40 that can be used as benchmarks for comparing my DIY portfolio to.

Despite all that is written about AA, in the end it just doesn't matter once in the range of 40:60 to 70:30.
Yeah. This is pretty much what I was going to write.
I'll add that I consider myself now to be financially independent. I have a basic 4-fund portfolio in retirement accounts and the VG Balanced Index in taxable.

MindTheGAAP
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Re: What is your AA, given your age? and, Why?

Post by MindTheGAAP » Sat Apr 07, 2018 4:49 pm

We are 30 and have an AA of 90:10 right now. 55:45 split between US and Int'l with tilts towards small for both and EM for Int'l. Balance is about $200k right now and trying to decide if we got with balance-based adjustments or if we go for age-based glide. At "only" $200k it feels like it would minimal difference if we were 90:10 or 80:20 in a 2008-like crash.
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute" - William Feather

Hillview
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Re: What is your AA, given your age? and, Why?

Post by Hillview » Sat Apr 07, 2018 4:50 pm

Ages her 47/ him 57
Per IPS
We are currently focused on (aggressive) growth. We feel that there is sufficient time before retirement (11+ years) that we can successfully ride out market ups and downs.

Asset Allocation (AA) 75% stocks (allocated 80/20 in total stock market and international stock market, respectively) and 25% bonds. There is 10% in cash which I don't count in AA.

We will review AA annually and increase bond 1% annually (eg allocation in 2019 will be 74% stocks and 26% bonds and so on) until 2025.
Should our total assets hit $Xm before 2025 we will move (immediately) to a 60 stock/40 bond split.
Last edited by Hillview on Sat Apr 07, 2018 4:58 pm, edited 2 times in total.

montanagirl
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Re: What is your AA, given your age? and, Why?

Post by montanagirl » Sat Apr 07, 2018 4:53 pm

I am 69 and at 50/50. I like the stabilizing facet of bonds but like a little upside pop once in awhile too. I wish there was a fund like that.

The "bond" part includes about 3% in money market to get me to social security next year. So there's that. :beer

Tal-
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Re: What is your AA, given your age? and, Why?

Post by Tal- » Sat Apr 07, 2018 5:05 pm

Ben Mathew wrote:
Sat Apr 07, 2018 12:40 pm
I'm 41, wife is 43. Our allocation is 100% stocks : 0% bonds. We've stuck to that allocation since we started saving seriously in 2006. We plan to stick with it till we die. Our reasons for doing so:

- Stocks will almost certainly outperform bonds by a huge margin over horizons longer than 30 years. Small differences in expected returns compound to massive differences in expected value over a lifetime.

- We save enough that even if our portfolio drops by half, we'll have what we need to live on. The excess, if any, goes to the kids and charities after we die. So, the way I look at it, we're not taking the risk on stocks. The kids and charities are, and they can handle it! :happy

- Crash of '08 didn't cause us to panic and pull out, so we have confidence in our ability to stay calm and do nothing in a downturn.

- I very much dislike inflation risk. Unless short term or indexed to inflation, the value of bonds can be wiped out by inflation. I don't like the idea that a rotating cast of government officials will decide whether inflation should be 2% or 5% (or 10%!) over the next 30 years, and that my portfolio can be wiped out by their decisions. May be a black swan thing for me. I am less afraid of the diversified business risks of a diversified stock index.
Really great post explaining why an abnormal AA is the right allocation for them.
Debt is to personal finance as a knife is to cooking.

invst65
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Re: What is your AA, given your age? and, Why?

Post by invst65 » Sat Apr 07, 2018 5:13 pm

Retired at age 69 but wife is age 52 and still working.

20% cash (mostly T-Bills), 20% gold (bullion and paper), 20% Long Term USG Bonds with duration >20 yrs, 20% Small cap value stocks, 20% Large blend stocks

That's a portfolio called the "Golden Butterfly" which is a variant of the Permanent Portfolio with a larger stock allocation split into two sectors.

Why? This is a conservative all-weather portfolio with a decent historical rate of return and very low volatility. Helps me sleep at night.
Last edited by invst65 on Sat Apr 07, 2018 5:17 pm, edited 4 times in total.

Lynx310650
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Re: What is your AA, given your age? and, Why?

Post by Lynx310650 » Sat Apr 07, 2018 5:13 pm

Mid to late 30s, 50/50.

We are and always have been on the risk adverse side. We like the simple math. And we plan on sticking to a simple 50/50 until death instead of gliding down further.

Dandy
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Re: What is your AA, given your age? and, Why?

Post by Dandy » Sat Apr 07, 2018 6:00 pm

Just turned 70 and have a 43/57 allocation. I am fortunate to have a high income floor in retirement and ample (I hope) assets. I never was an aggressive investor - tops I was 55/45. After 2008-9 drop I decided that even that was unnecessarily high given that I was just retired and wanted to collect SS at age 70 in 2018. So, my focus was more on asset preservation than growth.

I have 2/3 of my fixed income essentially in FDIC products/short term bond funds. While having a relatively moderate allocation during my accumulation years I did save at a 15% or higher rate and lived below my means. Those were major factors in helping me have a comfortable retirement.

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Re: What is your AA, given your age? and, Why?

Post by michaeljc70 » Sat Apr 07, 2018 6:05 pm

Age 47. AA 75/25. Going to 70/30 for retirement hopefully in next 2-5 years. Why? Because if you have 25x expenses and 30% in FI, that means you have 7.5 years of expenses in FI to withstand a downturn (assuming no other income) without selling any stocks. And I tend to not be risk averse.

Bmac
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Re: What is your AA, given your age? and, Why?

Post by Bmac » Sat Apr 07, 2018 6:14 pm

Cash is King wrote:
Sat Apr 07, 2018 4:32 pm
Hello,
A long time lurker but only my second post. I turn 58 this month. Our AA is 100% equities with no intention of changing AA. We own one index fund through a 401k and the rest is individual stocks.

We don't do any tax harvesting or rebalancing. I'm not a fan of either.

I think it's important to understand what you own.
No quarrel with your choice of asset allocation, but perhaps a name change? “Equities are King?” :wink:

Bmac
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Re: What is your AA, given your age? and, Why?

Post by Bmac » Sat Apr 07, 2018 6:22 pm

54 and 51. Looking to retire in 3-4 years. Have been mostly 75/25 over last 15+ years, but have been gliding to a more conservative asset allocation the last couple of years and now more like 65 equity/30 bond/5 cash with a plan to enter retirement with at least 3 year’s of expenses in cash to mitigate sequence of return risk (roughly 60/30/10). “If you’ve won the game...”

Cash is King
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Re: What is your AA, given your age? and, Why?

Post by Cash is King » Sat Apr 07, 2018 6:25 pm

Unread post by Bmac » Sat Apr 07, 2018 6:14 pm

Cash is King wrote: ↑Sat Apr 07, 2018 4:32 pm
Hello,
A long time lurker but only my second post. I turn 58 this month. Our AA is 100% equities with no intention of changing AA. We own one index fund through a 401k and the rest is individual stocks.

We don't do any tax harvesting or rebalancing. I'm not a fan of either.

I think it's important to understand what you own.
No quarrel with your choice of asset allocation, but perhaps a name change? “Equities are King?” :wink:

Good suggestion. :D The equities generate a nice cash flow!

invst65
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Re: What is your AA, given your age? and, Why?

Post by invst65 » Sat Apr 07, 2018 6:30 pm

Cash is King wrote:
Sat Apr 07, 2018 6:25 pm
Good suggestion. :D The equities generate a nice cash flow!
Until they don't.

michaeljc70
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Re: What is your AA, given your age? and, Why?

Post by michaeljc70 » Sat Apr 07, 2018 6:32 pm

Cash is King wrote:
Sat Apr 07, 2018 6:25 pm
Unread post by Bmac » Sat Apr 07, 2018 6:14 pm

Cash is King wrote: ↑Sat Apr 07, 2018 4:32 pm
Hello,
A long time lurker but only my second post. I turn 58 this month. Our AA is 100% equities with no intention of changing AA. We own one index fund through a 401k and the rest is individual stocks.

We don't do any tax harvesting or rebalancing. I'm not a fan of either.

I think it's important to understand what you own.
No quarrel with your choice of asset allocation, but perhaps a name change? “Equities are King?” :wink:

Good suggestion. :D The equities generate a nice cash flow!
I am not sure I get the "not a fan" of tax loss harvesting. You don't like saving on taxes?

ny_rn
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Re: What is your AA, given your age? and, Why?

Post by ny_rn » Sat Apr 07, 2018 6:42 pm

I am 33-years old with a asset allocation of 100/0. Total US stock market spread across 403(b), Roth IRA and taxable account. Why? I like simplicity. I’ll add bonds when I can no longer sleep at night. Although, I do have a pension that is not counted at this time in my asset allocation. I follow the thinking of JL Collins.

I do not glide and do not use 120-age.

Cash is King
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Re: What is your AA, given your age? and, Why?

Post by Cash is King » Sat Apr 07, 2018 6:48 pm

by invst65 » Sat Apr 07, 2018 6:30 pm

Cash is King wrote: ↑Sat Apr 07, 2018 6:25 pm
Good suggestion. :D The equities generate a nice cash flow!
Until they don't.

Anything is possible! IMHO, the probability is low that we would experience any negative action regarding cash flow.

Cash is King
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Re: What is your AA, given your age? and, Why?

Post by Cash is King » Sat Apr 07, 2018 6:50 pm

Post by michaeljc70 » Sat Apr 07, 2018 6:32 pm

Cash is King wrote: ↑Sat Apr 07, 2018 6:25 pm
Unread post by Bmac » Sat Apr 07, 2018 6:14 pm

Cash is King wrote: ↑Sat Apr 07, 2018 4:32 pm
Hello,
A long time lurker but only my second post. I turn 58 this month. Our AA is 100% equities with no intention of changing AA. We own one index fund through a 401k and the rest is individual stocks.

We don't do any tax harvesting or rebalancing. I'm not a fan of either.

I think it's important to understand what you own.
No quarrel with your choice of asset allocation, but perhaps a name change? “Equities are King?” :wink:

Good suggestion. :D The equities generate a nice cash flow!
I am not sure I get the "not a fan" of tax loss harvesting. You don't like saving on taxes?

Sure. Do you have to do tax loss harvesting to save on taxes?

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Phineas J. Whoopee
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Re: What is your AA, given your age? and, Why?

Post by Phineas J. Whoopee » Sat Apr 07, 2018 6:53 pm

This is what I did, and why. A couple of years later I answered some questions about it.

For the record, I think an age-based asset allocation will be far more practical for most investors.

PJW

michaeljc70
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Re: What is your AA, given your age? and, Why?

Post by michaeljc70 » Sat Apr 07, 2018 6:55 pm

Cash is King wrote:
Sat Apr 07, 2018 6:50 pm
Post by michaeljc70 » Sat Apr 07, 2018 6:32 pm

Cash is King wrote: ↑Sat Apr 07, 2018 6:25 pm
Unread post by Bmac » Sat Apr 07, 2018 6:14 pm

Cash is King wrote: ↑Sat Apr 07, 2018 4:32 pm
Hello,
A long time lurker but only my second post. I turn 58 this month. Our AA is 100% equities with no intention of changing AA. We own one index fund through a 401k and the rest is individual stocks.

We don't do any tax harvesting or rebalancing. I'm not a fan of either.

I think it's important to understand what you own.
No quarrel with your choice of asset allocation, but perhaps a name change? “Equities are King?” :wink:

Good suggestion. :D The equities generate a nice cash flow!
I am not sure I get the "not a fan" of tax loss harvesting. You don't like saving on taxes?

Sure. Do you have to do tax loss harvesting to save on taxes?
That sounds like a diversion. Like if you can legally claim 3 deductions you say I claimed 2 so I am saving on taxes (and ignoring the 3rd). What is the downside to TLH?

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cfs
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Re: What is your AA, given your age? and, Why?

Post by cfs » Sat Apr 07, 2018 6:56 pm

Member of the Active Retired Force
One hundred percent invested
Thanks for reading / cfs
~ Member of the Active Retired Force since 2014 ~

invst65
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Re: What is your AA, given your age? and, Why?

Post by invst65 » Sat Apr 07, 2018 6:59 pm

Cash is King wrote:
Sat Apr 07, 2018 6:48 pm
by invst65 » Sat Apr 07, 2018 6:30 pm

Cash is King wrote: ↑Sat Apr 07, 2018 6:25 pm
Good suggestion. :D The equities generate a nice cash flow!
Until they don't.

Anything is possible! IMHO, the probability is low that we would experience any negative action regarding cash flow.
I don't evangelize about my all-weather portfolio because we are all dealing with probabilities and making bets on the future and we could all be wrong or right, unless we have a crystal ball. Only time will tell.

Growing up on a chicken farm I just remember the old saying about not putting all your eggs in the same basket. And my depression era parents never invested a single penny in stocks. So at 40% stocks, I'm really sticking my neck out based on their experience.

MnD
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Re: What is your AA, given your age? and, Why?

Post by MnD » Sat Apr 07, 2018 7:05 pm

1) 70/30, age 55, retirement in 5-8 months, global market cap on equity, mostly stable value and some active global bond fund on fixed income.
2) Will maintain 70/30 for life.
3) Haven't followed any age-based glidepath and don't plan on it. Bounced around between 65/35 to 80/20 over the last 3 decades.
Why? I like making money with money. We have one pension coming up, one maxed out and one above average claim on social security, no debt, low other mandatory expenses, so no worries.

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Re: What is your AA, given your age? and, Why?

Post by Outafter20 » Sat Apr 07, 2018 7:11 pm

1.) I am 45, wife is 50.

2.) We are 70/30 (no international) and plan on going down to 60/40 and stay there permanently when I retire in 2 years.

3.) Pension will more than cover our monthly expenses.

4.) No mortgage on our house in HCOL area. Plan on moving to LCOL area when our daughter finishes high school in 4 years. We currently have a decent size 529 account for her college expenses.

Cash is King
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Re: What is your AA, given your age? and, Why?

Post by Cash is King » Sat Apr 07, 2018 7:36 pm

by michaeljc70 » Sat Apr 07, 2018 6:55 pm

Cash is King wrote: ↑Sat Apr 07, 2018 6:50 pm
Post by michaeljc70 » Sat Apr 07, 2018 6:32 pm

Cash is King wrote: ↑Sat Apr 07, 2018 6:25 pm
Unread post by Bmac » Sat Apr 07, 2018 6:14 pm

Cash is King wrote: ↑Sat Apr 07, 2018 4:32 pm
Hello,
A long time lurker but only my second post. I turn 58 this month. Our AA is 100% equities with no intention of changing AA. We own one index fund through a 401k and the rest is individual stocks.

We don't do any tax harvesting or rebalancing. I'm not a fan of either.

I think it's important to understand what you own.
No quarrel with your choice of asset allocation, but perhaps a name change? “Equities are King?” :wink:

Good suggestion. :D The equities generate a nice cash flow!
I am not sure I get the "not a fan" of tax loss harvesting. You don't like saving on taxes?

Sure. Do you have to do tax loss harvesting to save on taxes?
That sounds like a diversion. Like if you can legally claim 3 deductions you say I claimed 2 so I am saving on taxes (and ignoring the 3rd). What is the downside to TLH?

First, I'm not saying that TLH is wrong for you or others. It's not something that benefits me based on my strategy.
To answer your question. TLH does generate a current tax savings but it also reduces the cost basis of the equity/investment which could create a potential gain in the future that would offset any benefit.

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TinkerPDX
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Re: What is your AA, given your age? and, Why?

Post by TinkerPDX » Sat Apr 07, 2018 7:37 pm

Bond % = Average age of me and spouse (to the day, constantly updating in my ss) - 10. Currently about 34, so we're at about 34-66 bonds/equity. 50/50 US/ex-US within equity.

This is ours mostly because you've got to pick something, I think (/hope) we're risk-tolerant enough to sleep with it when shit hits the fan, and it steers towards more conservative as we move toward FI goals so I could theoretically leave it as-is (dynamically adjusting) until we hit the magic number.

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Re: What is your AA, given your age? and, Why?

Post by RadAudit » Sat Apr 07, 2018 7:59 pm

I'm 71

AA is 50 / 50, Stocks are split 60 / 40 domestic / international, Bonds are split 70 / 30 domestic / international. The sub-set allocation follows, roughly, the VG Retirement Income allocation as I recall. The overall allocation was arrived at over several decades as I found out over successive trials that my risk tolerance wasn't as great as I initially thought it was.

Additionally, my portfolio, given the current allocation, seems to be able to throw off enough money for another 30 years to help fund my retirement at a level I targeted (when added to SS and a small pension) and have a little left over.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The Calvary isn't coming, kids. You are on your own.

gator15
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Re: What is your AA, given your age? and, Why?

Post by gator15 » Sat Apr 07, 2018 8:27 pm

Late 30's. 95% stocks/5% bonds. It's been tough to stay with this asset allocation as the market has taken these big swings over the last couple of months. Think I will stick with this allocation for the time being because I'm eligible for a pension in 6 years.

zwzhang
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Re: What is your AA, given your age? and, Why?

Post by zwzhang » Sat Apr 07, 2018 8:36 pm

52 years old, DW is 46. 3 years to retire.
Global market-cap stock/Domestic bonds/Cash: 40/55/5.
We used to be 60/40 until end of last year.

40/60 will let us sleep well at night. And we will keep it that way for ever. :D

Edit: We are Canadians.

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Toons
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Re: What is your AA, given your age? and, Why?

Post by Toons » Sat Apr 07, 2018 8:39 pm

Age 67
70/30 Equity/Bond
Why?
Growth and Income.
: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

ValueInvestor99
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Re: What is your AA, given your age? and, Why?

Post by ValueInvestor99 » Sat Apr 07, 2018 9:00 pm

In our mid 70's.
10% real estate.
90% stocks.

Our pensions and SS meet our expenses.

Frank Grimes
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Re: What is your AA, given your age? and, Why?

Post by Frank Grimes » Sat Apr 07, 2018 9:23 pm

Random Walker wrote:
Sat Apr 07, 2018 4:12 pm
Frank Grimes wrote:
Sat Apr 07, 2018 2:10 pm
Early 30s. Currently 80/20. Why? It's a fairly aggressive blend, but not as much as we could be given our ages. I feel like we're ahead of the game with regard to our current balance and savings levels and don't need to take a ton of risk in order to get to our number.

Planning to glide it down to around 75/25 at 35 to 40, 70/30 at 40-45, 65/35 at 45-50 and 60/40 at 50+. No specific reason for the increments other than I think it'll be good discipline to draw down the stock % over time instead of waking up at age 55 and having to unload a ton of stocks to get a conservative mix.

Edit: Also I think doing it gradually will let me rebalance solely through new purchases, instead of having to sell stuff. So that'll minimize cap gains.
I’m 55 and just took the tax hit you’re talking about :-) and it could potentially be a good idea at some point for you. If, as you get older, you find there has been a period of extra substantial market generosity, take the profits with the associated tax hit, and be happy that you taken risk off the table when there were big profits to take. Payimg the tax on gains is way better than no longer having the gains. I like the idea of starting with a glidepath in mind, then sort of opportunistically modifying in stepwise fashion over time as the market gyrates and the investor gets more clear on needs versus wants. William Bernstein mentions taking action near retirement right near the end of his short ebook on lifecycle investing.

Dave
Thanks for the thoughts. I'm not locked to my planned glidepath, just figured it'd be a good way to ease into our eventual retirement allocation while sticking to "buy and hold." I've only been doing this a short time but any rebalancing in taxable I've had to do so far is through purchases instead of sales.

However, we can quickly rebalance via our tax advantaged accounts with like three mouse clicks and no tax consequences. So yeah...we can be flexible if we decide to stay aggressive for longer.

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Re: What is your AA, given your age? and, Why?

Post by thx1138 » Sat Apr 07, 2018 9:24 pm

Early 40s. Was 100/0 until mid-30s. Have glided to notionally 75/25 as of now and not likely to change that for a long time. I say notionally because that ratio applies to our “normal” accounts which are about 80% of our investments. The other 20% is stock in the company I work for which is an S-Corp making it a bit hard to characterize (10% dividend typically) though clearly it is much more an equity than an bond by any measure! So including that our overall AA is more like 80/20.

House is paid off. Have a kid that will need to go to college in a bit more than a decade. Both of us work, fairly stable as based in government sector stuff. Hope to be retired around 55. Could probably retire now if we threw less money at kid’s education and moved LCOL.

Not really planning age based AA. Likely going to stay near 75/25 for the duration or maybe 70/30 when actually retired. Will defer SS of course which will be a substantial floor based on our dual income salary history. Might eventually annuitize a bit depending on what annuity market is like in our 70s.

umk
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Re: What is your AA, given your age? and, Why?

Post by umk » Sat Apr 07, 2018 9:27 pm

Age 50 AA is 90:10 Technically, I am in 100% equity, but the 10% is in short term and intermediate term bonds as educational expenses.
I have absolutely no problem having high percentage in equity as long as I have cash coming in and ready to be deployed.

Small Law Survivor
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Re: What is your AA, given your age? and, Why?

Post by Small Law Survivor » Sat Apr 07, 2018 9:50 pm

Age 67, allocation 50/40/10. No plans to change that for the foreseeable future.

diy60
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Re: What is your AA, given your age? and, Why?

Post by diy60 » Sat Apr 07, 2018 10:57 pm

early 60s, retired
target 60/40, with a 5% band (currently bumping the upper end)
plan to keep the target AA indefinitely

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Dale_G
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Re: What is your AA, given your age? and, Why?

Post by Dale_G » Sat Apr 07, 2018 11:02 pm

80 years old. When I retired in 2001 (the month after 9/11 didn't seem like a particularly auspicious time) I was at 55% equities / 45% bonds. I maintained that allocation until about 3 years ago when I decided to cap bonds at a very comfortable level and let equities run. I am now at 72% equities, 27.5% bonds and 0.5% cash. I think I will stick with the bond cap until (or if) I get to 80% equities, then I'll stick with that.

I have some confidence that even a 50/50 allocation will have positive real returns over the next 10 years. But I have no confidence that the market will deliver 3%-5% real returns as long as more and more investors continue to put money into the market expecting those returns. If everyone invests in the markets, where do the returns come from?

Dale
Volatility is my friend

hmw
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Re: What is your AA, given your age? and, Why?

Post by hmw » Sat Apr 07, 2018 11:12 pm

Wife and I are both 43. We are at 85/15.

confusedinvestor
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Re: What is your AA, given your age? and, Why?

Post by confusedinvestor » Sun Apr 08, 2018 12:15 am

Ditto, Wife and I are both 43. We were 85/15 until today. We are gliding back to 78/22 (120 - Age in Stocks), as our "need" to take risk decreased with concerns on human capital (our jobs, continue to keep jobs and health issues)

May I ask how you came up with 85/15 ?
hmw wrote:
Sat Apr 07, 2018 11:12 pm
Wife and I are both 43. We are at 85/15.

confusedinvestor
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Re: What is your AA, given your age? and, Why?

Post by confusedinvestor » Sun Apr 08, 2018 12:28 am

Thank you Livesoft.

Per my IPS, I'm 120-Age (120-42 = 78) in Stocks toady but will glide -1% to Stock every year until we reach 60:40 at age 60, unless a major life event happens, despite market conditions. But honestly, I dont know what I'd do if 2008 happens every single year starting 2019 to 2029 for 10 years.

livesoft wrote:
Sat Apr 07, 2018 10:48 am
I am in my sixties. My AA is about 60/40 because

1. That seems to work. I really like making money when the stock market goes up and don't mind losing too much money when it goes down.

2. It doesn't really matter than much.

3. It's been that way ft or awhile and will be that way for the rest of my life. That is, no gliding.

4. There are many convenient funds with similar asset allocation of 60/40 that can be used as benchmarks for comparing my DIY portfolio to.

Despite all that is written about AA, in the end it just doesn't matter once in the range of 40:60 to 70:30.

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Re: What is your AA, given your age? and, Why?

Post by confusedinvestor » Sun Apr 08, 2018 12:36 am

Dave,

Which book is that? 4 Pillers of Investing ?
Frank Grimes wrote:
Sat Apr 07, 2018 9:23 pm

William Bernstein mentions taking action near retirement right near the end of his short ebook on lifecycle investing.

Dave

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Re: What is your AA, given your age? and, Why?nab

Post by digarei » Sun Apr 08, 2018 1:11 am

confusedinvestor wrote:
Sat Apr 07, 2018 9:41 am
Folks,
1. Without quantifying your need/ability/willing to take risk and/or goals, what is your AA (Stock:Bond), given your age? and why?

Well, I try not to give my age...

I had a portfolio AA of 100% equities for about 10 years (when they weren’t producing), then added bonds a few years before FI / Retirement. When I retired a little more than 2 years ago, I was close to 90/10. (Age 59 But keep it to yourself!) A few months later I decided to back off a little. My current AA is an unadjusted 80/20 and I expect that’s where it will stay.

My IPS states,

“80% invested in stocks forever”

So, I reckon I have no choice. :wink:



2. How do you glide your AA as you approach financial independence (not retirement) ?

No glidepath. Nothing gradual about my investment experience: I was benched for most of the game, then woke up just before running off a cliff. “Wile - E - Coyote, super genius”

In the last leg of the race, I was focused on solvency and saving like a mad man.

And you? Are you gliding?



3. How does Vanguard/Fidelity/(everyone) typically follow "Target Retirement Year Composite Index" AA/glide which is 120 - Age in Stock ?

Love to get some theoretical inputs.

I bet that “everyone” doesn’t. If I had adopted this rule, I’d probably still be working.
Not saying that following a rule of thumb is a bad idea... but history and circumstance puts us in such different places. Try it on. It’s a reasonable number for many.

Connect with Bogleheads in Northern California! Click the link under my user info/avatar.

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Re: What is your AA, given your age? and, Why?

Post by VAslim16 » Sun Apr 08, 2018 2:01 am

I'm 39 and at 70/30 if I include my emergency fund... 80/20 if not. I will probably stay in that range for the next 5 or 6 years... never going below 70% stocks... and then reevaluate when I'm 45. For stocks I'm 50/50 and although I'm not sure it's the best ratio I think the smart move is to stick with it so I will.

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Re: What is your AA, given your age? and, Why?

Post by Random Walker » Sun Apr 08, 2018 9:11 am

Confusedinvestor,
William Bernstein wrote a series of 3very short books; they are only available as ebooks. The series is called Investing For Adults. The books presuppose knowledge of all the BH principles espoused in 4 Pillars. They are

Skating Where The Puck Was: The Correlation Game In A Flat World
The Ages Of The Investor: A Critical Look At Life Cycle Investing
Deep Risk: How History Informs Portfolio Design

The subject I’m talking about is near the very end of the Life Cycle book. He says late middle age, Pre retirement is the most difficult to manage, so he saves it for last. If you read that or any of the books, let me know what you think.

Dave

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Re: What is your AA, given your age? and, Why?

Post by rgs92 » Sun Apr 08, 2018 9:26 am

I'm surprised at the high stock allocations in this thread. If I use Firecalc, there seems to be a happy medium of about 60/40 stocks/bonds.
Isn't this the efficient frontier idea?

Maybe if you have enough in pensions or other income to deal with it it's OK, but I'm seeing older folks who need to draw income (or will soon) with 80%+ stock allocations.

Is this recency bias, meaning a focus on the big rally from the financial crisis 10 years ago?

I was at a get-together about 6 months ago with many people in their 40's saying confidently that they were in 100% stocks and I was thinking this was like the 1990s tech bubble all over again. (Or Partying like it was 1999...)

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Re: What is your AA, given your age? and, Why?

Post by Broken Man 1999 » Sun Apr 08, 2018 9:46 am

Wife and I turn 65 in June (her) and July (me) of this year.

I shoot for a 50/50 balance of stocks and bonds, and a small allocation to "near cash" (currently 3.2% in Vanguard Federal Money Market) to allow a couple of years withdrawals without touching stocks or bond holdings.

The AA used lets us sleep well at night, so we are not tempted to stray from/fiddle with our portfolio. Perhaps most important there are many academic studies that suggest our AA gives us a very good chance of enjoying retirement without running out of money, assuming appropriate withdrawals.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

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Re: What is your AA, given your age? and, Why?

Post by Jon H » Sun Apr 08, 2018 10:07 am

Not willing right now. I see a lot of bearish signs so I don’t like this market beyond May. I made an error and bought some last week. I’ll be selling on the upswings I f there are any. Hopefully there will be some positive bumps during early earnings season.

Age 53. At 45:35:20. Going to all cash. I’ll take the 1.5% gain over a 20% or more loss and reinvest in quarters or so on the dips.
Consider gain and loss, but never be greedy and everything will be alright (fortune cookie)

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Re: What is your AA, given your age? and, Why?

Post by JW-Retired » Sun Apr 08, 2018 10:10 am

Wife and I are in our 70's with a target AA= 60/40 forevermore. We sell stocks to re-balance if/when equities get up to 65, never on the downside. (They got down to a hair below 50 in 08/09.) We don't sell bonds to re-balance, only sell them as a proportional share of our RMDs.

Why?..... It's very easy to do, we have enough bonds so that worst case it's still plenty safe for us, and our heirs should be OK too.
JW
Retired at Last

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Re: What is your AA, given your age? and, Why?

Post by Clever_Username » Sun Apr 08, 2018 10:33 am

Phineas J. Whoopee wrote:
Sat Apr 07, 2018 6:53 pm
This is what I did, and why. A couple of years later I answered some questions about it.

For the record, I think an age-based asset allocation will be far more practical for most investors.

PJW
I really like your plan. I read it yesterday and sought it out this morning to read again.

I have been debating what to do about asset allocation for a bit, since I stuck at 70/30 in part due to lack of a better plan. I'm mid-30s, so this isn't super far from many heuristics for age-based allocation. I believe it is very likely that I will pass 25X expected in-retirement expenses (not merely passing the point where projected growth passes that) while still working and wanting to work, and I think your plan might work for me. Since you're well ahead of me, I will keep an eye out for your future thoughts on it.

At the very least, this makes my reevaluation of 70/30 feel a lot less urgent as I let this sink in. Thanks for posting it, both originally and in this thread.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_

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