[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: 2478
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
Posts: 272
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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".
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