[Belgium] 50/50 asset allocation if investment goal is unclear?

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Topic Author
dustytown
Posts: 21
Joined: Sun Feb 22, 2015 5:57 am

[Belgium] 50/50 asset allocation if investment goal is unclear?

Post by dustytown »

The question I continue to struggle with is: which asset allocation is right for me if I do not know what my investment goal is.
I have been moving back and forth between 30-70, 40-60, 50-50, 60-40, 70-30; changing it every few months .. based on absolutely nothing.
It's embarrassing.

Currently I'm back to a 50-50 asset allocation (50% Vanguard FTSE All-World High Dividend Yield & 50% cash) for lack of a better idea.

I live in Belgium; early 40s; in a middle-management job; started saving too late in life, but at least steadily saving 20% since a few years, divorced but seeing someone new; no children, nieces or nephews; explicitly not saving for retirement (that is already covered well through separate generous defined benefit plans+ additional pension savings plans); renting a place, not planning to buy a home again any time soon (maybe never again, maybe again in 5 or 10 years? who knows?).

Other than the aforementioned pension plans (mid to high six-figures), I don't have many assets.
I have no debt; got at least 12 months of expenses stored in a separate savings account; and I have a savings/investment portfolio of just over 230k EUR. That is all I have readily accessible to me today.

Maybe it is because I grew up poor, but I am conservative with my asset allocation. Boglehead logic seems to dictate that if you no longer need to save for retirement, you could as well go for (at least) 100% stock allocation to grow those funds. But I could never do that. Even if I did not panic in 2009 or in 2020, I think we got lucky we never had to wait 10 years for a recovery. Alternatively, I also could never tolerate a 100% cash or bonds allocation. Inflation would eat away at my hard-earned assets. So for now it's 115k EUR in stocks and 115k EUR in cash.

I think I prefer capital preservation over capital growth. But even there I am not sure. Maybe if I would end up buying a new home again in 10 years time, will I not regret not having invested more aggressively so I could then buy a nicer/bigger home than I did the past 2 times when I bought a house? I simply do not know.

Any thoughts? :sharebeer
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galeno
Posts: 2484
Joined: Fri Dec 21, 2007 12:06 pm

Re: [Belgium] 50/50 asset allocation if investment goal is unclear?

Post by galeno »

Europeans invest 30/70. Americans 70/30. 50/50 is a nice middle ground.

In 1985 we held 80/20. In 2006 we went to 60/40. 6 years ago we went 50% VWRD + 45% AGGG + 5% CASH.

Two suggestions:

1. Stay at 50/50. No more changes!

2. Your allocation should be 50% VWRD* + 50% AGGG**. Sell the high dividend equity ETF and buy the bond ETF.

*counted in your favorite currency
**counted and hedged in your favorite currency.
KISS & STC.
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tre3sori
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Re: [Belgium] 50/50 asset allocation if investment goal is unclear?

Post by tre3sori »

You could also go with Vanguard LifeStrategy® 60% Equity UCITS ETF. It will stay the course for you.
Belgian Key Investor Information Documents (KIIDs) for this fund and for Vanguard FTSE All-World UCITS ETF/Vanguard Global Aggregate Bond UCITS ETF can be found here:
https://global.vanguard.com/portal/site ... /documents
Let every man divide his money into three parts, and invest a third in land, a third in business, a third let him keep by him in reserve. Talmud | 35% Real Estate, 45% Stocks, 15% Bonds, 4% Gold, 1% Cash
Valuethinker
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Joined: Fri May 11, 2007 11:07 am

Re: [Belgium] 50/50 asset allocation if investment goal is unclear?

Post by Valuethinker »

dustytown wrote: Wed Jan 12, 2022 9:13 pm

I think I prefer capital preservation over capital growth. But even there I am not sure. Maybe if I would end up buying a new home again in 10 years time, will I not regret not having invested more aggressively so I could then buy a nicer/bigger home than I did the past 2 times when I bought a house? I simply do not know.

Any thoughts? :sharebeer
One thing to consider is inflation. In the long run real estate should beat inflation (however given European demographics this is not a certainty). Stocks should also beat inflation in the long run.

Cash and bonds right now? No.

50-50 is not a bad allocation or even 60-40 (stocks - bonds & cash)
Topic Author
dustytown
Posts: 21
Joined: Sun Feb 22, 2015 5:57 am

Re: [Belgium] 50/50 asset allocation if investment goal is unclear?

Post by dustytown »

tre3sori wrote: Fri Jan 14, 2022 3:46 am You could also go with Vanguard LifeStrategy® 60% Equity UCITS ETF. It will stay the course for you.
Belgian Key Investor Information Documents (KIIDs) for this fund and for Vanguard FTSE All-World UCITS ETF/Vanguard Global Aggregate Bond UCITS ETF can be found here:
https://global.vanguard.com/portal/site ... /documents
That would indeed be brilliant. I had a look right away but unfortunately my broker (keytradebank) does not seem to offer a way to buy such Vanguard LifeStrategy ETF. :(
I had a look for the various ISIN numbers for the different flavours of the Vanguard LifeStrategy fund (e.g. IE00BMVB5Q68), but alas : not available/found.
Locating random 100% equity or 100% bond Vanguard ETF's is successful, just not these multi-asset ETF's.

Just a hunch but maybe that is because of the horrible Belgian tax-law that states that the equity part of such a fund has no capital gains tax, but the bond part of such a fund has a 30% capital gains tax. I guess they cannot calculate it and for that reason don't offer such mixed-asset ETF's ?
Laurizas
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Location: Lithuania

Re: [Belgium] 50/50 asset allocation if investment goal is unclear?

Post by Laurizas »

dustytown wrote: Fri Jan 14, 2022 9:32 am I guess they cannot calculate it and for that reason don't offer such mixed-asset ETF's ?
I know nothing how funds calculate taxes in Belgium, but do not think it would hard to calculate separately, just more clicks on PC I guess.
Stork
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Location: EU

Re: [Belgium] 50/50 asset allocation if investment goal is unclear?

Post by Stork »

Valuethinker wrote: Fri Jan 14, 2022 8:36 am ...
One thing to consider is inflation. In the long run real estate should beat inflation (however given European demographics this is not a certainty). Stocks should also beat inflation in the long run.
...
I think that in the long run, real estate should _follow incomes_. Housing costs tend to be limited by what people can afford. The problems with that are
- sometimes the long run is decades
- it may apply nationally but not where you happened to buy (Liverpool/London, Detroit/SF, ...)

To quote Keynes, "in the long run we are all dead".
HKexpat
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Re: [Belgium] 50/50 asset allocation if investment goal is unclear?

Post by HKexpat »

dustytown wrote: Wed Jan 12, 2022 9:13 pm got at least 12 months of expenses stored in a separate savings account [...] So for now it's 115k EUR in stocks and 115k EUR in cash.
Are the 12 months in cash in addition to 115k EUR in cash? If so, your asset allocation is more conservative than you think it is. Money in a savings account is just as much part of your portfolio as money in other accounts.
deikel
Posts: 1268
Joined: Sat Jan 25, 2014 7:13 pm

Re: [Belgium] 50/50 asset allocation if investment goal is unclear?

Post by deikel »

The question is what is this money for ?

If it is not for retirement, then it has probably a shorter investment horizon (you need to/want to access it earlier). Even if you do not know what for exactly, it sounds like you want it to be there now, just in case ?

In that case and if the horizon is shorter then 5-10 years, this money should not be invested at all. If the time horizon is longer, you should be invested, but more conservatively - so your 50/50 does make sense in that case.

Since you went back and forth with it - what was the reason to go more aggressive or dial it back ? Think about those reasons. It seems you are more happy with it being 50/50, so stay with that.

In general, Europeans have a larger cash cushion and a more conservative outlook on investing. Boglehead philosophy does include the 'stop playing when you won the game'. Since your retirement seems to be secured otherwise, this is extra money you don't need to play with to make it, so stop being too aggressive and do what feels right so you can sleep at night and not pull out when it gets tough again - when Putin invades Ukraine for example.
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.
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