Posted: 5/18/2013 2:06:51 PM EDT
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I'm curious to know how others are allocating their money.
I've been playing what I'll call 'catch up'.....I'm 41 and know I have plenty of years left (planning to work until well into my 60's)....at the same time I don't feel that I've invested enough to this point so I've been very aggressive with my allocation. There are the rules of thumb, like the 100 minus your age and the result is the percent of stock for your overall allocation. Then there are the traditional bond/stock models like these...Vanguard models... While I've been keeping the % of bonds fairly low, I do hedge all my 'paper' investments with PM's....but given the insane growth in the last 6 months, I'm starting to think its time to diversify a bit more. I still like stock funds, and I think over the long haul (20-30 years) that there will be a lot more growth to come (because I still believe in America). But....over the short term (next 6 months) is there any good reason to move money into a mother vehicle? Or even cash? A lot of folks are saying that bonds are peaked and will absolutely dive soon...others believe stocks will correct massively and bonds will only suffer minor fluctuation. I tend to think the whole system is linked intrinsically and the two move together at a slow pace. If you are willing to offer, what percent of bonds are your holding and how old are you? Curious to know if its the 'conservative' approach, or is it just as risky in the grand scheme of things? |
I gathered up all my cash and started my serious investing at the beginning of this year (it was good timing, in hindsight). My fantasy portfolio on investopedia reflects my portfolio in real life. Although, I have a lot more money in my fantasy portfolio for now. That will change in a few years, though. I don't own any bonds, just stocks and ETFs. I did own some bonds at one point, but the returns were low, and as a young man, it wasn't worth it for me to hold onto something that did not deliver. I am holding REIT (real estate investment trusts) stocks such as AGNC and NLY, which pay out 16% and 12% respectfully in annual dividends. Those two stocks involve some risk, but the returns are high, and I bought them for less than book value. I also own some MO (Altira Group tobacco) in my real-life portfolio. Being in the military and seeing how >50% of servicemembers smoke made me want to invest in that. I used to own some government bonds that my uncle bought for us every Christmas. I think they were EZ Saver bonds. Those didn't really generate any profit worth speaking of. My uncle would have been better off giving us each a silver dollar every year, or some McDonald's stock, or just about anything else but bonds. Some people like to invest 1/3 of their savings into bonds, and the other 2/3 into stocks. I figure, why bother with the 1/3 in bonds if they don't generate as much returns? I might as well put everything into stocks, and simply diversify with some good ETFs such as Vanguard. I sold off all my bonds, my silver, my IRA, and my mutual fund, and put everything into my Vanguard ETFs and a few solid solitary stocks that I hold. I had some electric utilities stocks that I bought in January, including UPW and VPU. I sold those a few days ago when they hit a peak and it looked like they were going down. Had I used better judgment, I would have held on to them for the long term. But, I managed to profit from that sale, move the money over into AGNC at less than its book value, and I'll collect a 4% dividend on that in June. |
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I'm around 75/20 stocks to bonds. 2-3% in cash. I'm 39. The great majority of the money is in index ETFs and mutual funds, mostly Vanguard. I own a few individual stocks. Some are down, most are up (AAPL, RST, F, BRK.B, INTC). Over the years, I've sold most of my individual stocks and I'm mostly sticking with the ETFs and funds. Bonds are VIPSX (TIPS), VWEHX (high yield) and BIV. Stock funds/ETFs are: VT, VTI, VB, VBR, VDE, VGK, VHT, VIG, VPL, VWO, VYM. Others: VNQ, VNQI (both REITs) and VGPMX and SLV (precious metals). Try the Morningstar X-ray portfolio analysis. You punch in all of your funds/ETFs and their values or percentage of your holdings, and it will give you a great big analysis of the how much you have in each market cap, bond risk, different sectors, etc. |
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Quoted:
I'm around 75/20 stocks to bonds. 2-3% in cash. I'm 39. The great majority of the money is in index ETFs and mutual funds, mostly Vanguard. I own a few individual stocks. Some are down, most are up (AAPL, RST, F, BRK.B, INTC). Over the years, I've sold most of my individual stocks and I'm mostly sticking with the ETFs and funds. Bonds are VIPSX (TIPS), VWEHX (high yield) and BIV. Stock funds/ETFs are: VT, VTI, VB, VBR, VDE, VGK, VHT, VIG, VPL, VWO, VYM. Others: VNQ, VNQI (both REITs) and VGPMX and SLV (precious metals). Try the Morningstar X-ray portfolio analysis. You punch in all of your funds/ETFs and their values or percentage of your holdings, and it will give you a great big analysis of the how much you have in each market cap, bond risk, different sectors, etc. That's a nice little tool, although I'm able to do similar analysis with my brokers website. I ran my whole portfolio and it pretty much exactly matched the analysis I've done on my tool, which was nice as it validated what I thought. When calculating allocations, do you guys factor in things like PM's or collectible items like art? I'm guessing if it was statistically significant, one would take the expected cash value of the item and treat it as cash with respect to the portfolio, with the assumption that the market conditions affect the real value of the item. I think that could be significant....it might still be perfectly conservative to sit at 5% in bonds if you are sitting on 20% of your net worth in PM's. For the same reason, the opposite is true.....someone sitting on 90% in PM's might want to start getting into equity funds. |
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I'm 36, and my usual allocations look something like this:
80% stocks 10% bonds 10% cash The money I keep in bonds is for a very specific purpose, so I don't care much about the yield. I've been buying I-Bonds since they first started selling them. There are, of course, index funds that deal primarily in corporate bonds that have better yields. But, I own stocks that are defined as "BDCs" that more or less generate similar, or better returns in a more streamlined process - without the middle-man. Right now, I'm getting close to having 20% in cash. A few of my favorite stocks have become very expensive, not in terms of P/E, but in terms of their dividend yields. I'm not waiting around for a huge crash or correction, but a 5-10% drop in the sectors I'm looking at will make those dividend yields a lot more attractive again. I sold off most of my PMs a couple years ago, but in general, I would probably never keep more than 10% of my portfolio in PMs. As far as art, or any other asset of that class, I would never include their values as a percentage of my portfolio. I prefer that my 'investment portfolio" only be comprised of assets whose value can be easily, and mathematically determined - almost down to the second of any day. I own a few antiques, but I have no idea what their value is on any given day. The only thing I know for sure is that they are probably worth less than I paid for them. |