OT: asset allocation

[simonbart]

I don’t think this is a hard one to answer.

I would suggest a balanced portfolio of low cost index funds consisting of both domestic bonds and stocks & international stocks.

Your asset allocation into each of these classes should really be based on your age and risk tolerance.

The old rule of thumb is your age in bonds (percentage). Many of the large caps companies already have a big international exposure….so take that into consideration when considering your allocation to international funds.

Fidelity and Vanguard have excellent low cost funds index funds.

[scaredyclassic]

All in at this ratio today?

Or dollar cost average?

If latter over what time frame.

It’s much easier to allocate as you go than to allocate everything on a single day. It feels a lot like market timing when it’s all invested on one day.

Timing matters.

I’d say even if you think the allocation question is simple the when and how is not. Or it may be simple but still scary. Risk tolerance sounds abstract. I think the right question is would you start to feel reaaly upset if the Dow hit 5,000.

[scaredyclassic]

All in at this ratio today?

Or dollar cost average?

If latter over what time frame.

It’s much easier to allocate as you go than to allocate everything on a single day. It feels a lot like market timing when it’s all invested on one day.

Timing matters.

I’d say even if you think the allocation question is simple the when and how is not. Or it may be simple but still scary. Risk tolerance sounds abstract. I think the right question is would you start to feel reaaly upset if the Dow hit 5,000.

[scaredyclassic]

All in at this ratio today?

Or dollar cost average?

If latter over what time frame.

It’s much easier to allocate as you go than to allocate everything on a single day. It feels a lot like market timing when it’s all invested on one day.

Timing matters.

I’d say even if you think the allocation question is simple the when and how is not. Or it may be simple but still scary. Risk tolerance sounds abstract. I think the right question is would you start to feel reaaly upset if the Dow hit 5,000.

[scaredyclassic]

All in at this ratio today?

Or dollar cost average?

If latter over what time frame.

It’s much easier to allocate as you go than to allocate everything on a single day. It feels a lot like market timing when it’s all invested on one day.

Timing matters.

I’d say even if you think the allocation question is simple the when and how is not. Or it may be simple but still scary. Risk tolerance sounds abstract. I think the right question is would you start to feel reaaly upset if the Dow hit 5,000.

[scaredyclassic]

All in at this ratio today?

Or dollar cost average?

If latter over what time frame.

It’s much easier to allocate as you go than to allocate everything on a single day. It feels a lot like market timing when it’s all invested on one day.

Timing matters.

I’d say even if you think the allocation question is simple the when and how is not. Or it may be simple but still scary. Risk tolerance sounds abstract. I think the right question is would you start to feel reaaly upset if the Dow hit 5,000.

[sdsurfer]

I’ve heard of people that are qualified getting loans for around 5.25% on investment properties in town with 15% down. If you get a condo in La Costa or somewhere for around $200k that rents for $1700 or so would that seem like a good scenario? Of course you have to figure some vacancy/repairs/management/taxes and all, but I think you’d still be cash flowing a bit no matter what.

Yes the value might go down, but I do think that rents are going to go up in my opinion. I mean…do rents ever go down in a community like North County San Diego? Or course it is better to get appreciation and cash flow, but can’t you just let it cash flow until it does appreciate….of course not right around the corner, but if a 30k investment returns 6k a year…is’nt that a sound investment (I would think using the numbers above you could cash flow 500 a month)? Either way your making money from your money…just more some years than others right?

Am I missing something or not factoring in something that I should?

[sdsurfer]

I’ve heard of people that are qualified getting loans for around 5.25% on investment properties in town with 15% down. If you get a condo in La Costa or somewhere for around $200k that rents for $1700 or so would that seem like a good scenario? Of course you have to figure some vacancy/repairs/management/taxes and all, but I think you’d still be cash flowing a bit no matter what.

Yes the value might go down, but I do think that rents are going to go up in my opinion. I mean…do rents ever go down in a community like North County San Diego? Or course it is better to get appreciation and cash flow, but can’t you just let it cash flow until it does appreciate….of course not right around the corner, but if a 30k investment returns 6k a year…is’nt that a sound investment (I would think using the numbers above you could cash flow 500 a month)? Either way your making money from your money…just more some years than others right?

Am I missing something or not factoring in something that I should?

[sdsurfer]

I’ve heard of people that are qualified getting loans for around 5.25% on investment properties in town with 15% down. If you get a condo in La Costa or somewhere for around $200k that rents for $1700 or so would that seem like a good scenario? Of course you have to figure some vacancy/repairs/management/taxes and all, but I think you’d still be cash flowing a bit no matter what.

Yes the value might go down, but I do think that rents are going to go up in my opinion. I mean…do rents ever go down in a community like North County San Diego? Or course it is better to get appreciation and cash flow, but can’t you just let it cash flow until it does appreciate….of course not right around the corner, but if a 30k investment returns 6k a year…is’nt that a sound investment (I would think using the numbers above you could cash flow 500 a month)? Either way your making money from your money…just more some years than others right?

Am I missing something or not factoring in something that I should?

[sdsurfer]

I’ve heard of people that are qualified getting loans for around 5.25% on investment properties in town with 15% down. If you get a condo in La Costa or somewhere for around $200k that rents for $1700 or so would that seem like a good scenario? Of course you have to figure some vacancy/repairs/management/taxes and all, but I think you’d still be cash flowing a bit no matter what.

Yes the value might go down, but I do think that rents are going to go up in my opinion. I mean…do rents ever go down in a community like North County San Diego? Or course it is better to get appreciation and cash flow, but can’t you just let it cash flow until it does appreciate….of course not right around the corner, but if a 30k investment returns 6k a year…is’nt that a sound investment (I would think using the numbers above you could cash flow 500 a month)? Either way your making money from your money…just more some years than others right?

Am I missing something or not factoring in something that I should?

[sdsurfer]

I’ve heard of people that are qualified getting loans for around 5.25% on investment properties in town with 15% down. If you get a condo in La Costa or somewhere for around $200k that rents for $1700 or so would that seem like a good scenario? Of course you have to figure some vacancy/repairs/management/taxes and all, but I think you’d still be cash flowing a bit no matter what.

Yes the value might go down, but I do think that rents are going to go up in my opinion. I mean…do rents ever go down in a community like North County San Diego? Or course it is better to get appreciation and cash flow, but can’t you just let it cash flow until it does appreciate….of course not right around the corner, but if a 30k investment returns 6k a year…is’nt that a sound investment (I would think using the numbers above you could cash flow 500 a month)? Either way your making money from your money…just more some years than others right?

Am I missing something or not factoring in something that I should?

[carlsbadworker]

OK. Thank you all for the response.

paramount: yes, precious metal may play some roles as it is a hedge against inflation/deflation scenario. I don’t know how though.

masayako: I don’t know how diversification would help if they are somehow all correlated altogether.

simonbart: yes, low cost indexing works if you are happy with the returns. However, it is argued by Rich that value-based investing can out-perform your method.

sdsurfer: I don’t really agree with your number on ROI but I agree with your points. If one can find an absolute return scenario that meets the standard, who cares if the value drops or not? I have not taken that into account and I should think more about it. There is pockets of values even in the most over-valued market, that can be exploited to an informed investor.

Now let’s look at the issue from another angle. So we are saying that the policy makers have some enormous power in destroying the attractive of cash from a normal valuation point of view (I mean normally, you move money from over-valued assets to under-valued assets in your asset allocation, but currently I think cash is under-valued but policy makers are a threat to that asset class). In fact, US tax code & monetary policy have been rewarding debt accumulation and consumption, punishing savings and capital investment, as long as I can remember. You thought it would take a huge crisis such as the one we witnessed few years ago to change them, but they are still just kicking the can down the road.

So the question is, do they truly have that power? Wouldn’t such policy come back to hurt themselves because at the end of the day, only savings and capital investment by entrepreneurs can save the day. The government’s Keynesian policies encourage people to spend, or even take the initiative itself and start disposing huge public public spending–all this to get rid off the lack of demand and make businesses sell their products. But they destroyed savings in the process, forsake future higher productivity resulted from creative destructive in favor of selling products created at the current time that is not aligned to people’s need.

So it is apparently folly. The question then becomes in the presence of a mad crowd, is it only sensible to join them to keep alive?

[carlsbadworker]

OK. Thank you all for the response.

paramount: yes, precious metal may play some roles as it is a hedge against inflation/deflation scenario. I don’t know how though.

masayako: I don’t know how diversification would help if they are somehow all correlated altogether.

simonbart: yes, low cost indexing works if you are happy with the returns. However, it is argued by Rich that value-based investing can out-perform your method.

sdsurfer: I don’t really agree with your number on ROI but I agree with your points. If one can find an absolute return scenario that meets the standard, who cares if the value drops or not? I have not taken that into account and I should think more about it. There is pockets of values even in the most over-valued market, that can be exploited to an informed investor.

Now let’s look at the issue from another angle. So we are saying that the policy makers have some enormous power in destroying the attractive of cash from a normal valuation point of view (I mean normally, you move money from over-valued assets to under-valued assets in your asset allocation, but currently I think cash is under-valued but policy makers are a threat to that asset class). In fact, US tax code & monetary policy have been rewarding debt accumulation and consumption, punishing savings and capital investment, as long as I can remember. You thought it would take a huge crisis such as the one we witnessed few years ago to change them, but they are still just kicking the can down the road.

So the question is, do they truly have that power? Wouldn’t such policy come back to hurt themselves because at the end of the day, only savings and capital investment by entrepreneurs can save the day. The government’s Keynesian policies encourage people to spend, or even take the initiative itself and start disposing huge public public spending–all this to get rid off the lack of demand and make businesses sell their products. But they destroyed savings in the process, forsake future higher productivity resulted from creative destructive in favor of selling products created at the current time that is not aligned to people’s need.

So it is apparently folly. The question then becomes in the presence of a mad crowd, is it only sensible to join them to keep alive?

[carlsbadworker]

OK. Thank you all for the response.

paramount: yes, precious metal may play some roles as it is a hedge against inflation/deflation scenario. I don’t know how though.

masayako: I don’t know how diversification would help if they are somehow all correlated altogether.

simonbart: yes, low cost indexing works if you are happy with the returns. However, it is argued by Rich that value-based investing can out-perform your method.

sdsurfer: I don’t really agree with your number on ROI but I agree with your points. If one can find an absolute return scenario that meets the standard, who cares if the value drops or not? I have not taken that into account and I should think more about it. There is pockets of values even in the most over-valued market, that can be exploited to an informed investor.

Now let’s look at the issue from another angle. So we are saying that the policy makers have some enormous power in destroying the attractive of cash from a normal valuation point of view (I mean normally, you move money from over-valued assets to under-valued assets in your asset allocation, but currently I think cash is under-valued but policy makers are a threat to that asset class). In fact, US tax code & monetary policy have been rewarding debt accumulation and consumption, punishing savings and capital investment, as long as I can remember. You thought it would take a huge crisis such as the one we witnessed few years ago to change them, but they are still just kicking the can down the road.

So the question is, do they truly have that power? Wouldn’t such policy come back to hurt themselves because at the end of the day, only savings and capital investment by entrepreneurs can save the day. The government’s Keynesian policies encourage people to spend, or even take the initiative itself and start disposing huge public public spending–all this to get rid off the lack of demand and make businesses sell their products. But they destroyed savings in the process, forsake future higher productivity resulted from creative destructive in favor of selling products created at the current time that is not aligned to people’s need.

So it is apparently folly. The question then becomes in the presence of a mad crowd, is it only sensible to join them to keep alive?

[carlsbadworker]

OK. Thank you all for the response.

paramount: yes, precious metal may play some roles as it is a hedge against inflation/deflation scenario. I don’t know how though.

masayako: I don’t know how diversification would help if they are somehow all correlated altogether.

simonbart: yes, low cost indexing works if you are happy with the returns. However, it is argued by Rich that value-based investing can out-perform your method.

sdsurfer: I don’t really agree with your number on ROI but I agree with your points. If one can find an absolute return scenario that meets the standard, who cares if the value drops or not? I have not taken that into account and I should think more about it. There is pockets of values even in the most over-valued market, that can be exploited to an informed investor.

Now let’s look at the issue from another angle. So we are saying that the policy makers have some enormous power in destroying the attractive of cash from a normal valuation point of view (I mean normally, you move money from over-valued assets to under-valued assets in your asset allocation, but currently I think cash is under-valued but policy makers are a threat to that asset class). In fact, US tax code & monetary policy have been rewarding debt accumulation and consumption, punishing savings and capital investment, as long as I can remember. You thought it would take a huge crisis such as the one we witnessed few years ago to change them, but they are still just kicking the can down the road.

So the question is, do they truly have that power? Wouldn’t such policy come back to hurt themselves because at the end of the day, only savings and capital investment by entrepreneurs can save the day. The government’s Keynesian policies encourage people to spend, or even take the initiative itself and start disposing huge public public spending–all this to get rid off the lack of demand and make businesses sell their products. But they destroyed savings in the process, forsake future higher productivity resulted from creative destructive in favor of selling products created at the current time that is not aligned to people’s need.

So it is apparently folly. The question then becomes in the presence of a mad crowd, is it only sensible to join them to keep alive?

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