What is your stock allocation in terms of your age, and why?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
User avatar
Topic Author
tc101
Posts: 3362
Joined: Tue Feb 20, 2007 3:18 pm
Location: Atlanta - Retired in 2004 at age 54

What is your stock allocation in terms of your age, and why?

Post by tc101 »

My allocation is (110-age) in stocks, or to put it another way (age-10) in fixed income. I am 58 so my allocation is 52% stocks, 48% bonds. I am a retired software developer but may continue to take on some part time projects.

With the recent decline in stock prices I am way out of balance and will be rebalancing into stocks in December.

This is what I wrote in my financial plan last December when stocks were high: "I have no need to take any risk now. OTOH I enjoy seeing my money grow and there is always the risk of inflation or something unforeseen, so I am not going to go all bonds."

I am rethinking that now. I may change the allocation to 105 - age in stocks, or even 100 - age. I want to think about it for several months though. I don't want to make a hasty change based on emotion. I really don't need to take the risk of anything more than my age in stocks though. OTOH, if the stock market rebounds big time in the next 10 years it would be fun to be a rich old man because I kept a high allocation in stocks.
User avatar
Topic Author
tc101
Posts: 3362
Joined: Tue Feb 20, 2007 3:18 pm
Location: Atlanta - Retired in 2004 at age 54

Post by tc101 »

The only two factors I considered in my allocation plan a year ago were stock/bond and USA/international. I felt those were the really important decisions and all the other stuff was much less important. My stock allocation was 55/45 but that has also changed with the recent rise in the dollar and sharper fall in international markets. I am also rethinking that allocation but again don't want to do anything hasty that is based on emotion.
guest42
Posts: 487
Joined: Sat Aug 09, 2008 11:33 am

Post by guest42 »

My age is 53. I am medically unable to work, and my medical lifespan is statistically projected to be another 17 years. Any and all sources of income are unreliable (could disappear on a moments notice - not picking up anything for sure, for another 9 years - age 62, early SS).

Thus my asset allocation was formed first by putting a base of 10 years (of expected expenses, allowing for 4% inflation) in FDIC insured CD's in place. This permits me a 40% equity allocation (which has fallen to 32%) --- and this equity allocation really can't be rebalanced, without eroding that 10 year base of CD's (which is my solid footing). Maybe I can rebalance some, as I grow older, and age 62 becomes closer, or as various income streams prove more reliable. Only time will answer this, but for sure, rebalancing is on hold for the next 4 months, minimum.

Within the equity allocation (85% indexed funds or ETF's - 15% Balanced fund);
35% Hard Assets
10% US Large Cap
30% Wilshire 4500
25% International (split between International, and a pure Emerging market position)

Linda-room42
chaz
Posts: 13604
Joined: Tue Feb 27, 2007 2:44 pm

Post by chaz »

tc101, Each investor has to determine his/her allocation based on comfort level. Do not try to time the market though it would be nice if you could retire as a rich guy.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page
User avatar
cflannagan
Posts: 956
Joined: Sun Oct 21, 2007 11:44 am
Location: Working Remotely

Post by cflannagan »

120-my age (I am 37), and since that gives me 83% equitiies, I decide to cap it at 80% (don't want to go lower than 20% bonds). Once I turn 40, the 120-age rule will take over.

I use 120-age because my portfolio is pretty small (sub-6-figures) and I feel the need to have to take on more risk (have more growth potential) in my funds.
User avatar
nisiprius
Advisory Board
Posts: 42202
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Post by nisiprius »

90 - age.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
User avatar
ajtanner04
Posts: 38
Joined: Sun Aug 12, 2007 2:30 pm
Location: The Great Northwest

Post by ajtanner04 »

I'm 27 and my current allocation is 90/10. I chose this based on the amount of fluctuation I'm comfortable with, however, and not based on my age. I think the formulaic approach is a bit too mechanical and ignores the behavioral aspects of investing.

Its critical that a person choose an asset allocation that balances what fluctuations they can endure balanced with what return they need.

I will admit that those various formula's are a good starting point, however. I also like the Merriman tables that show historic fluctuations of various asset ratios.
chaz
Posts: 13604
Joined: Tue Feb 27, 2007 2:44 pm

Post by chaz »

130 - my age.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page
caklim00
Posts: 2284
Joined: Mon May 26, 2008 10:09 am

Post by caklim00 »

120 - Age
PatrickS
Posts: 51
Joined: Sat Feb 24, 2007 6:38 pm
Location: San Diego

Post by PatrickS »

I'm 70/30 equities/bonds and will remain so (unless I go higher on equities if the market continues far enough down). I'm 49 and have no plan for a specific retirement date. I have a number rather than date in mind for when I will take much of the equities off the table, but if I had that number now, I still wouldn't retire yet. My contingency plan in case I never do reach that number is to simply settle for what my portfolio can provide at the point where I retire.

I'm financially capable of retiring now with a 3% withdrawal rate. The lifestyle that we could enjoy (or not!) with that income level doesn't interest me, so I'll continue to take more risk until I reach what I want or retire on what's left.
unclemick
Posts: 1318
Joined: Tue Feb 20, 2007 10:18 am
Location: greater Kansas City

Post by unclemick »

I've decided I'm like Anthony Quinn in the movie - the name of which escapes me - I plan on living forever soooo - I've been close to the 60/40ish 'policy portfolio for the last 15 years of retirement.

Now at age 65 - 40% of income(on average) is defined pension and Social Security substituting for for some fixed - 60% is 4% SWR or less ala The Trinity Study.

Or 3%(aka SEC yield in hard times) and 5% variable in regular/good times.

heh heh heh - 8) hand grenade wise - 3% is the Norwegian widow(aka portfolio yield) and 5% varible I got off the Vanguard website. Target 2015 cause I'm an optimist on aging. :wink:
User avatar
Sammy_M
Posts: 1896
Joined: Sun Nov 25, 2007 8:30 am

Post by Sammy_M »

110 minus age.
AlwaysaQ
Posts: 600
Joined: Fri Apr 13, 2007 7:37 am

Post by AlwaysaQ »

76 - age though I plan to add some equities since I did a TLH on 9/18.

edited to add that I no longer can do simple arithmetic.
Last edited by AlwaysaQ on Sun Oct 19, 2008 4:52 pm, edited 1 time in total.
User avatar
Teetlebaum
Posts: 457
Joined: Tue Apr 10, 2007 4:27 pm

Post by Teetlebaum »

112-age, even though I'm 54 and 120 sounds about right.
norm
Posts: 594
Joined: Mon Feb 19, 2007 7:10 pm

Post by norm »

I am now 55/45 stock/bonds. When I hit 70 next month I will probably go 50/50.
User avatar
mas
Posts: 1461
Joined: Tue Feb 20, 2007 12:54 pm

Post by mas »

5 / sqrt(age)
User avatar
AzRunner
Posts: 999
Joined: Mon Feb 19, 2007 6:18 pm
Location: Phoenix

Post by AzRunner »

I'm 58 and my goal was to keep equities between 40-45%. I'm now below that and have been slowly rebalancing back to equities. OTOH I plan on keeping a minimum of 15 years in fixed income, so if equities fall far enough, I may leave off on the rebalancing. There is no sense being a slave to a rebalancing plan and have it risk your financial solvency in retirement.

Like tc101 I would prefer to have more money than less but I also like the idea of a large fixed income cushion so I don't have to needlessly worry about market conditions that we now see can crop up.

Norm
User avatar
lucky7
Posts: 358
Joined: Tue Mar 13, 2007 5:51 pm

Am 52 y.o.

Post by lucky7 »

Am 52 y.o and was over 80% equities. Why? Because I'm an idiot.

Bob
Last edited by lucky7 on Mon Oct 20, 2008 12:55 pm, edited 1 time in total.
Scotty, beam me up.
User avatar
Dale_G
Posts: 3386
Joined: Tue Feb 20, 2007 5:43 pm
Location: Central Florida - on the grown up side of 83

Post by Dale_G »

Now 121-age. Next year I'll be 122-age. Hint, I have been 50/50 for some time and intend to stay that way for a while.

As time goes on, and I expect less future need for funds, I plan to increase my equity allocation.

Dale
Volatility is my friend
User avatar
Dale_G
Posts: 3386
Joined: Tue Feb 20, 2007 5:43 pm
Location: Central Florida - on the grown up side of 83

Post by Dale_G »

Oops, The why part.

50/50 is very comfortable. I have no need to take any equity risk. The 50% equity risk I take is for the benefit of heirs and charities.

Dale
Volatility is my friend
victork
Posts: 107
Joined: Fri Jul 25, 2008 2:26 pm

Post by victork »

I'm hanging in at 50/50 stocks/bonds.
Since I'm 65, that would look like 115 - age = 50.

But that's not my logic. I'm comfortable with the interest and dividends from about half the portfolio, (and social security) and can leave the rest alone for a while. I'm spending about 2% of the portfolio.

So I can take the risk, and hope to be a philanthropist in later life. Or regret my rash optimism.

Vic

As Kierkegaard wrote:
Life can only be understood backwards; but it must be lived forwards.
User avatar
Sunny Sarkar
Posts: 2431
Joined: Fri Mar 02, 2007 1:02 am
Location: Flower Mound, TX
Contact:

Post by Sunny Sarkar »

We're in our mid-30s.

Until purchasing our home a few months ago, our AA was 60/40 including home downpayment.

Since that short term need was met, our AA is now 70/30.
User avatar
greg24
Posts: 3941
Joined: Tue Feb 20, 2007 10:34 am

Post by greg24 »

I guess I would be 106 minus age. I am 36 with a 70/30.

But that is not how I determined it. I have the stomach for 100% equities. This downturn has not bothered me at all, really.

But I decided to heed the warnings of not going over 80/20. I feel that I am a saver and don't have the <B>need</B> to reach my retirement goals. I realized that stocks are not guaranteed to outpace bonds, even in the long run. I also threw in some tactical asset allocation due to what I believe were relatively high valuations in the market.

So I decided on 70/30. This has served me well. If anything, I have to fight the urge to go to 80/20 now that valuations are more reasonable. But I need to remind myself that I don't have the <B>need</B> to go more aggressive. I will reach my retirement goals just fine. No need to take on the risk.
User avatar
Sunny Sarkar
Posts: 2431
Joined: Fri Mar 02, 2007 1:02 am
Location: Flower Mound, TX
Contact:

Post by Sunny Sarkar »

mas wrote:5 / sqrt(age)
"Perhaps we're over-mathematizing all this" - Jack Bogle

:)
User avatar
greg24
Posts: 3941
Joined: Tue Feb 20, 2007 10:34 am

Post by greg24 »

Btw, I would like to point out that everything I know about investing and stated in the previous post, I learned on the Diehards board. I started reading in 1999, when I was 26. I was one of the lucky few to find it early. It has served me very well.

Thank you to all the long time contributors, and the new ones too!
User avatar
Coyote22
Posts: 38
Joined: Tue Jan 22, 2008 9:49 pm
Location: Houston

Post by Coyote22 »

100 minus my age.
adave
Posts: 281
Joined: Thu Sep 13, 2007 7:17 pm
Location: Houston

Post by adave »

I am 100% cash.

When I jump back into the market, planning something pretty conservative - like 60/40 or 50/50.

If anything, the silver lining for me with this crash is that is really tested my "risk tolerance" and I figured out it is pretty low.
Post Reply