Asset allocation

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Sairam
Posts: 16
Joined: Tue Feb 11, 2020 10:24 pm

Asset allocation

Post by Sairam » Fri Feb 14, 2020 11:34 am

Hi,

I am planning on doing asset allocation with 70% stocks and 30% bonds. When doing rebalancing, the question I have is does the money in CD's /savings account be placed as part of bonds % or leave it out of asset allocation.

Thanks.

tenkuky
Posts: 1030
Joined: Sun Dec 14, 2014 4:28 pm

Re: Asset allocation

Post by tenkuky » Fri Feb 14, 2020 11:44 am

You either consider cash equivalents part of "fixed income" or consider it in your emergency fund and separate from asset allocation for retirement purposes.
People on this board have different views based on circumstances.
I consider my cash/CD as EF and not AA for retirement.

bloom2708
Posts: 7214
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Asset allocation

Post by bloom2708 » Fri Feb 14, 2020 11:45 am

I would exclude any Emergency Fund cash and any near term spending. Say you are going to pay cash for a car in 2 months. I wouldn't count that. Or take a trip this summer and you have $10k set aside.

Count all other cash, CD, bonds as part of the "bond" side.
"People want confirmation, not advice" Unknown | "We are here to provoke thoughtfulness, not agree with you" Unknown | Four words: Whole food, plant based

sycamore
Posts: 244
Joined: Tue May 08, 2018 12:06 pm

Re: Asset allocation

Post by sycamore » Fri Feb 14, 2020 12:55 pm

bloom2708 wrote:
Fri Feb 14, 2020 11:45 am
I would exclude any Emergency Fund cash and any near term spending. Say you are going to pay cash for a car in 2 months. I wouldn't count that. Or take a trip this summer and you have $10k set aside.

Count all other cash, CD, bonds as part of the "bond" side.
^^ that is what I do, too.

Money intended for expenses are not included in my retirement portfolio AA, regardless of whether that money is in CDs, savings, checking, T-bills, I-Bonds, under the mattress, in a coin jar, or wherever.

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