Asset allocation calculator

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Ron Scott
Posts: 1090
Joined: Tue Apr 05, 2016 5:38 am

Re: Asset allocation calculator

Post by Ron Scott » Sun Sep 23, 2018 9:24 pm

VA_Investor wrote:
Sun Sep 23, 2018 9:14 pm
Ron Scott wrote:
Thu Sep 20, 2018 6:18 pm
Using 80 or so years of US market data to predict the next 30 or more years' market performance is statistically and logically flawed. There is not enough data for modern statistical tools to function properly and believing those 80 years either cause or will predict future returns completely ignores the possibility that some other event(s) will upset any short-term pattern and result in meaningfully lower or higher returns. WE DO NOT KNOW what will happen and using those old data does not educate us about the future.
Thanks Ron, appreciate the additional feedback. What do you recommend using in planning models to predict portfolio returns based on a certain asset allocation?
Plan for a low return environment and be happy if returns are better.

I plan for 0% real returns, and adjust annually.Lately I've been very happy. The next decade or so...who knows?

Anyone who believes he's got a crystal ball (backed with historical data or marketing hype from a brokerage) should be ignored IMO. Truth be told there are no experts at all in the prediction game.
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

Indianrock
Posts: 71
Joined: Sat Jan 02, 2010 12:40 pm

Re: Asset allocation calculator

Post by Indianrock » Thu Dec 06, 2018 7:39 am

I'm looking for a calculator that takes inputs of amount /fund ticker ( such as csv file inputs for portfolioVisualizer) and gives me asset allocation in a tabular format -- not pie charts where I have to add things up as in portfolioVisualizer.

Input something like this:
VTTVX,500000
VTWNX,36000
VMMXX,100000

And get something like:
Stocks: 50%
Bonds/Fixed Income: 30%
Cash: 20%
If I was king: once a stock is purchased, you hold it for 30 days.

averagedude
Posts: 352
Joined: Sun May 13, 2018 3:41 pm

Re: Asset allocation calculator

Post by averagedude » Thu Dec 06, 2018 8:09 am

I think basing your asset allocation on need or want is flawed thinking. If i need or want the return that 100% equities did in the past, what happens when i lose 50% of my money. If it really worked this way, all financial planners would recommend 100% stocks to everyone. If you are aggressive and have a high risk tolerance like you say you do, just subtract your age by 120 and put that number in stocks.

retiredjg
Posts: 34373
Joined: Thu Jan 10, 2008 12:56 pm

Re: Asset allocation calculator

Post by retiredjg » Thu Dec 06, 2018 8:25 am

It is supposed to be based on need, willingness, and ability. And willingness is not only a desire for the higher returns, it includes being able to see your money disappear for a few years without caring very much.

It is a system of checks and balances. For example, one could have need, but no ability (not enough time to recover from a significant bear market). Or one could have no need and great willingness (what would be the point?) And so on.

I think the Wiki discussion on "risk" probably explains it better.

User avatar
onthecusp
Posts: 511
Joined: Mon Aug 29, 2016 3:25 pm

Re: Asset allocation calculator

Post by onthecusp » Thu Dec 06, 2018 5:08 pm

Ron Scott wrote:
Sun Sep 23, 2018 9:24 pm
VA_Investor wrote:
Sun Sep 23, 2018 9:14 pm
Ron Scott wrote:
Thu Sep 20, 2018 6:18 pm
Using 80 or so years of US market data to predict the next 30 or more years' market performance is statistically and logically flawed. There is not enough data for modern statistical tools to function properly and believing those 80 years either cause or will predict future returns completely ignores the possibility that some other event(s) will upset any short-term pattern and result in meaningfully lower or higher returns. WE DO NOT KNOW what will happen and using those old data does not educate us about the future.
Thanks Ron, appreciate the additional feedback. What do you recommend using in planning models to predict portfolio returns based on a certain asset allocation?
Plan for a low return environment and be happy if returns are better.

I plan for 0% real returns, and adjust annually.Lately I've been very happy. The next decade or so...who knows?

Anyone who believes he's got a crystal ball (backed with historical data or marketing hype from a brokerage) should be ignored IMO. Truth be told there are no experts at all in the prediction game.
Anything can happen in this world sure.

While planning for 0% real (which I find pessimistic but acknowledge might be optimistic) what would one use for an asset allocation?
100% TIPS meets that plan with minimum risk right?

Would you apply a more typical 60/40 portfolio? But on what basis?

User avatar
ruralavalon
Posts: 14250
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Asset allocation calculator

Post by ruralavalon » Thu Dec 06, 2018 5:28 pm

onthecusp wrote:
Thu Dec 06, 2018 5:08 pm
Ron Scott wrote:
Sun Sep 23, 2018 9:24 pm
VA_Investor wrote:
Sun Sep 23, 2018 9:14 pm
Ron Scott wrote:
Thu Sep 20, 2018 6:18 pm
Using 80 or so years of US market data to predict the next 30 or more years' market performance is statistically and logically flawed. There is not enough data for modern statistical tools to function properly and believing those 80 years either cause or will predict future returns completely ignores the possibility that some other event(s) will upset any short-term pattern and result in meaningfully lower or higher returns. WE DO NOT KNOW what will happen and using those old data does not educate us about the future.
Thanks Ron, appreciate the additional feedback. What do you recommend using in planning models to predict portfolio returns based on a certain asset allocation?
Plan for a low return environment and be happy if returns are better.

I plan for 0% real returns, and adjust annually.Lately I've been very happy. The next decade or so...who knows?

Anyone who believes he's got a crystal ball (backed with historical data or marketing hype from a brokerage) should be ignored IMO. Truth be told there are no experts at all in the prediction game.
Anything can happen in this world sure.

While planning for 0% real (which I find pessimistic but acknowledge might be optimistic) what would one use for an asset allocation?
100% TIPS meets that plan with minimum risk right?

Would you apply a more typical 60/40 portfolio? But on what basis?
In my opinion the classic 60/40 asset allocation can be reasonable for many people in most situations. It has been labelled the “ideal asset allocation” for long-term investors, or the “center of gravity” on a risk and return spectrum.

Here are two good articles on the 60/40 stock/bond allocation by Peter Bernstein, Bloomberg Personal Finance (2002) , "The 60/40 Solution", and by Rick Ferri, etf.com (2/25/15), "Wisdom Of 60/40 Portfolios Timeless"".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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