Help me determine my asset allocation
Help me determine my asset allocation
What if you were the same age but had double or triple your current net worth. Would your investment strategy or asset allocation be any different? If yes, what and why?
Same question, but what if you had one half or one third your current net worth?
I currently mulling over my goals and my own asset allocation and risk tolerance. Im looking to spark conversation. Help me think of things I haven’t thought of, consider variables I didn’t know even mattered.
Same question, but what if you had one half or one third your current net worth?
I currently mulling over my goals and my own asset allocation and risk tolerance. Im looking to spark conversation. Help me think of things I haven’t thought of, consider variables I didn’t know even mattered.
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Re: Help me determine my asset allocation
Not really. 95/5 is already aggressive enough for me. If my AA is smaller then I'd increase fixed income, perhaps 90/10.
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Re: Help me determine my asset allocation
A much larger piggy bank probably wouldn’t change thing much - maybe be more a bit more aggressive. However, I would likely be more conservative if the bank were substantially smaller (less ability to take risk).
Keep in mind that this is just me - based on my portfolio and attitude towards risk. I would imagine a lot of people here would do the exact opposite, which is fine. The answers you receive may not be helpful if you don’t know the posters’ financial status.
Keep in mind that this is just me - based on my portfolio and attitude towards risk. I would imagine a lot of people here would do the exact opposite, which is fine. The answers you receive may not be helpful if you don’t know the posters’ financial status.
Last edited by Doctor Rhythm on Wed Jun 16, 2021 7:11 pm, edited 1 time in total.
Re: Help me determine my asset allocation
Makes sense. If you have more more willing to take risk. What would you say to someone that said, I don’t have much so I have to be aggressive so it will grow. Or someone saying I have plenty, so I don’t feel the need to be as aggressive?Doctor Rhythm wrote: ↑Wed Jun 16, 2021 7:07 pm A much larger piggy bank probably wouldn’t change thing much - maybe be more a bit more aggressive. However, I would likely be more conservative if the bank were substantially smaller (less ability to take risk).
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Re: Help me determine my asset allocation
Net worth is irrelevant. What percentage of the assets you need to retire is the measure that matters.ryanbohle wrote: ↑Wed Jun 16, 2021 6:37 pm What if you were the same age but had double or triple your current net worth. Would your investment strategy or asset allocation be any different? If yes, what and why?
Same question, but what if you had one half or one third your current net worth?
I currently mulling over my goals and my own asset allocation and risk tolerance. Im looking to spark conversation. Help me think of things I haven’t thought of, consider variables I didn’t know even mattered.
Avid user of forums on variety of interests-financial, home brewing, F-150, EV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.
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Re: Help me determine my asset allocation
I added to my post a bit, saying that you need to know the baseline situation to understand the motivations. Many people de-risk when they have enough (“stop playing after you’ve won the game”). Other see financial security and independence as an opportunity to take more risk.ryanbohle wrote: ↑Wed Jun 16, 2021 7:10 pmMakes sense. If you have more more willing to take risk. What would you say to someone that said, I don’t have much so I have to be aggressive so it will grow. Or someone saying I have plenty, so I don’t feel the need to be as aggressive?Doctor Rhythm wrote: ↑Wed Jun 16, 2021 7:07 pm A much larger piggy bank probably wouldn’t change thing much - maybe be more a bit more aggressive. However, I would likely be more conservative if the bank were substantially smaller (less ability to take risk).
The reason it matters for your hypothetical is that a doubling or tripling of their portfolio will put a lot of people into the “won the game” camp. At that point they have both no need to take risk but also greater ability to do so. So it all comes down to their willingness / personality as the dominant variable.
A huge loss to one’s portfolio that you describe may take away their financial security. If they are now “back in the game” as a result of the loss, they will need to determine how much risk is needed to grow back their savings as well as how much risk they are capable of taking. And again, personality will affect the decision but less so than in the winning scenario.
Last edited by Doctor Rhythm on Wed Jun 16, 2021 8:19 pm, edited 2 times in total.
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Re: Help me determine my asset allocation
I'm one of those people who would say that. I am a very conservative investor, and my tendency is to only take as much risk as I need to meet my financial goals. I was actually chastised a bit for this point of view by someone who, in my position, would be much more aggressive, for the sole reason of wanting more.
Re: Help me determine my asset allocation
And I think these examples show that what matters is an individual’s unique needs and interests, how each determines what is important and responds to it.Doctor Rhythm wrote: ↑Wed Jun 16, 2021 7:15 pmI added to my post a bit, saying that you need to know the baseline situation to understand the motivations. Many people de-risk when they have enough (“stop playing after you’ve won the game”). Other see financial security and independence as an opportunity to take more risk.ryanbohle wrote: ↑Wed Jun 16, 2021 7:10 pmMakes sense. If you have more more willing to take risk. What would you say to someone that said, I don’t have much so I have to be aggressive so it will grow. Or someone saying I have plenty, so I don’t feel the need to be as aggressive?Doctor Rhythm wrote: ↑Wed Jun 16, 2021 7:07 pm A much larger piggy bank probably wouldn’t change thing much - maybe be more a bit more aggressive. However, I would likely be more conservative if the bank were substantially smaller (less ability to take risk).
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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Re: Help me determine my asset allocation
If my net worth tripled today, I would buy more bonds to cover several more years of expenses, but my asset allocation would be more equity heavy than yesterday.
Re: Help me determine my asset allocation
A increase in wealth means a increased ability to take risks. Willingness is a different matter. For some it increases l, for other it decrease. No right answer. For myself it increases it, but that is me.
A decrease in wealth means lower ability. Willingness is, once again, a different matter. Technically it is still independent. However there has been a fair amount of behavior research here. For most it means a decrease in willingness. Protecting what you currently have dominants the mind.
A decrease in wealth means lower ability. Willingness is, once again, a different matter. Technically it is still independent. However there has been a fair amount of behavior research here. For most it means a decrease in willingness. Protecting what you currently have dominants the mind.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Re: Help me determine my asset allocation
Strategy and allocation is a lot more dependent on wealth and income than on one's age. As such, even if you were not the same age, your allocation might likely change.
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Re: Help me determine my asset allocation
2-3x current net worth: I’d have “enough” so I’d be conservative overall since I wouldn’t need to take risk but then I’d break off a portion and have fun with it In the market because I enjoy investing and think conservative portfolios are boring. Edit: and “conservative” might be 50/50 stocks/bonds.ryanbohle wrote: ↑Wed Jun 16, 2021 6:37 pm What if you were the same age but had double or triple your current net worth. Would your investment strategy or asset allocation be any different? If yes, what and why?
Same question, but what if you had one half or one third your current net worth?
I currently mulling over my goals and my own asset allocation and risk tolerance. Im looking to spark conversation. Help me think of things I haven’t thought of, consider variables I didn’t know even mattered.
1/2 current net worth: I wouldn’t have “enough” so I would be aggressive, like all stock. You have to take risk to get returns.