OT: asset allocation

[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?

[(former)FormerSanDiegan]

I’m fairly conservative and mid 40’s. I’m old enough to have made every mistake in the book and young enough to recover. I used to aim for 1/3 Cash; 1/3 Property; 1/3 Stocks. I have tweaked things a bit based on throwing in inflation hedge and a play money allocation.

Here is where I am aiming (currently I’m too heavy in stocks and too light in RE)

30% Real Estate
30% Cash/short-term bonds
30% Stocks
5% Commodities (really just Gold)
5% Random (speculation, Stock timing, private business opportunities, stock options at work, etc)

Of the real estate … some can be REITS, but most aimed at investment property (for tax efficiency)

Of the stocks … at least 1/3 in foreign stocks, mostly large cap. The rest domestic.

If I really knew exactly what to do the 5% random would be a much larger chunk. But I have been around long enough that I don’t know everything.

[(former)FormerSanDiegan]

I’m fairly conservative and mid 40’s. I’m old enough to have made every mistake in the book and young enough to recover. I used to aim for 1/3 Cash; 1/3 Property; 1/3 Stocks. I have tweaked things a bit based on throwing in inflation hedge and a play money allocation.

Here is where I am aiming (currently I’m too heavy in stocks and too light in RE)

30% Real Estate
30% Cash/short-term bonds
30% Stocks
5% Commodities (really just Gold)
5% Random (speculation, Stock timing, private business opportunities, stock options at work, etc)

Of the real estate … some can be REITS, but most aimed at investment property (for tax efficiency)

Of the stocks … at least 1/3 in foreign stocks, mostly large cap. The rest domestic.

If I really knew exactly what to do the 5% random would be a much larger chunk. But I have been around long enough that I don’t know everything.

[(former)FormerSanDiegan]

I’m fairly conservative and mid 40’s. I’m old enough to have made every mistake in the book and young enough to recover. I used to aim for 1/3 Cash; 1/3 Property; 1/3 Stocks. I have tweaked things a bit based on throwing in inflation hedge and a play money allocation.

Here is where I am aiming (currently I’m too heavy in stocks and too light in RE)

30% Real Estate
30% Cash/short-term bonds
30% Stocks
5% Commodities (really just Gold)
5% Random (speculation, Stock timing, private business opportunities, stock options at work, etc)

Of the real estate … some can be REITS, but most aimed at investment property (for tax efficiency)

Of the stocks … at least 1/3 in foreign stocks, mostly large cap. The rest domestic.

If I really knew exactly what to do the 5% random would be a much larger chunk. But I have been around long enough that I don’t know everything.

[(former)FormerSanDiegan]

I’m fairly conservative and mid 40’s. I’m old enough to have made every mistake in the book and young enough to recover. I used to aim for 1/3 Cash; 1/3 Property; 1/3 Stocks. I have tweaked things a bit based on throwing in inflation hedge and a play money allocation.

Here is where I am aiming (currently I’m too heavy in stocks and too light in RE)

30% Real Estate
30% Cash/short-term bonds
30% Stocks
5% Commodities (really just Gold)
5% Random (speculation, Stock timing, private business opportunities, stock options at work, etc)

Of the real estate … some can be REITS, but most aimed at investment property (for tax efficiency)

Of the stocks … at least 1/3 in foreign stocks, mostly large cap. The rest domestic.

If I really knew exactly what to do the 5% random would be a much larger chunk. But I have been around long enough that I don’t know everything.

[(former)FormerSanDiegan]

I’m fairly conservative and mid 40’s. I’m old enough to have made every mistake in the book and young enough to recover. I used to aim for 1/3 Cash; 1/3 Property; 1/3 Stocks. I have tweaked things a bit based on throwing in inflation hedge and a play money allocation.

Here is where I am aiming (currently I’m too heavy in stocks and too light in RE)

30% Real Estate
30% Cash/short-term bonds
30% Stocks
5% Commodities (really just Gold)
5% Random (speculation, Stock timing, private business opportunities, stock options at work, etc)

Of the real estate … some can be REITS, but most aimed at investment property (for tax efficiency)

Of the stocks … at least 1/3 in foreign stocks, mostly large cap. The rest domestic.

If I really knew exactly what to do the 5% random would be a much larger chunk. But I have been around long enough that I don’t know everything.

[sdsurfer]

I wholeheartedly agree with you that being responsible seems to go unrewarded in a sense.

I guess I turn to real estate because I believe that although they can manipulate the RE market…it is to a lesser extent of the other markets. I truly get frustrated because I want to learn more about everything you mentioned above in order to make smart decisions with my money. However, when I read your post above it seems like you really know what your talking about and you end up with the same frustration because it does not make sense for them to do what they do.

Just like any other 33 year old I just want to provide for my family and get a decent return for my hard earned money so that one day I do not have to work so hard and can spend more time with my family as opposed to 80% of it working to provide for them.

Having a lot of family in Real Estate I was always amazed by how much my grandparents originally purchased property for, but when I talked to them about it they would always say, “that was a lot of money back then.” So I figure I’m going to try and buy property the way they did and hope for the best.

I feel like a stock or any other investment can go down to $0 without me doing anything wrong except not selling it in time.

A home can always provide a roof over someones head and even with the uncertainty of going up and down…it is always worth a certain amount per month.

I have a lot of respect for a lot of the people that contribute to this blog. I appreciate you bringing up this topic and know there are smart people reading this and would like one of them to tell me I’m wrong and I should do something else with my money because I know leaving it in the bank is not what I intend to do.

Thank you in advance for your time.

[sdsurfer]

I wholeheartedly agree with you that being responsible seems to go unrewarded in a sense.

I guess I turn to real estate because I believe that although they can manipulate the RE market…it is to a lesser extent of the other markets. I truly get frustrated because I want to learn more about everything you mentioned above in order to make smart decisions with my money. However, when I read your post above it seems like you really know what your talking about and you end up with the same frustration because it does not make sense for them to do what they do.

Just like any other 33 year old I just want to provide for my family and get a decent return for my hard earned money so that one day I do not have to work so hard and can spend more time with my family as opposed to 80% of it working to provide for them.

Having a lot of family in Real Estate I was always amazed by how much my grandparents originally purchased property for, but when I talked to them about it they would always say, “that was a lot of money back then.” So I figure I’m going to try and buy property the way they did and hope for the best.

I feel like a stock or any other investment can go down to $0 without me doing anything wrong except not selling it in time.

A home can always provide a roof over someones head and even with the uncertainty of going up and down…it is always worth a certain amount per month.

I have a lot of respect for a lot of the people that contribute to this blog. I appreciate you bringing up this topic and know there are smart people reading this and would like one of them to tell me I’m wrong and I should do something else with my money because I know leaving it in the bank is not what I intend to do.

Thank you in advance for your time.

[sdsurfer]

I wholeheartedly agree with you that being responsible seems to go unrewarded in a sense.

I guess I turn to real estate because I believe that although they can manipulate the RE market…it is to a lesser extent of the other markets. I truly get frustrated because I want to learn more about everything you mentioned above in order to make smart decisions with my money. However, when I read your post above it seems like you really know what your talking about and you end up with the same frustration because it does not make sense for them to do what they do.

Just like any other 33 year old I just want to provide for my family and get a decent return for my hard earned money so that one day I do not have to work so hard and can spend more time with my family as opposed to 80% of it working to provide for them.

Having a lot of family in Real Estate I was always amazed by how much my grandparents originally purchased property for, but when I talked to them about it they would always say, “that was a lot of money back then.” So I figure I’m going to try and buy property the way they did and hope for the best.

I feel like a stock or any other investment can go down to $0 without me doing anything wrong except not selling it in time.

A home can always provide a roof over someones head and even with the uncertainty of going up and down…it is always worth a certain amount per month.

I have a lot of respect for a lot of the people that contribute to this blog. I appreciate you bringing up this topic and know there are smart people reading this and would like one of them to tell me I’m wrong and I should do something else with my money because I know leaving it in the bank is not what I intend to do.

Thank you in advance for your time.

[sdsurfer]

I wholeheartedly agree with you that being responsible seems to go unrewarded in a sense.

I guess I turn to real estate because I believe that although they can manipulate the RE market…it is to a lesser extent of the other markets. I truly get frustrated because I want to learn more about everything you mentioned above in order to make smart decisions with my money. However, when I read your post above it seems like you really know what your talking about and you end up with the same frustration because it does not make sense for them to do what they do.

Just like any other 33 year old I just want to provide for my family and get a decent return for my hard earned money so that one day I do not have to work so hard and can spend more time with my family as opposed to 80% of it working to provide for them.

Having a lot of family in Real Estate I was always amazed by how much my grandparents originally purchased property for, but when I talked to them about it they would always say, “that was a lot of money back then.” So I figure I’m going to try and buy property the way they did and hope for the best.

I feel like a stock or any other investment can go down to $0 without me doing anything wrong except not selling it in time.

A home can always provide a roof over someones head and even with the uncertainty of going up and down…it is always worth a certain amount per month.

I have a lot of respect for a lot of the people that contribute to this blog. I appreciate you bringing up this topic and know there are smart people reading this and would like one of them to tell me I’m wrong and I should do something else with my money because I know leaving it in the bank is not what I intend to do.

Thank you in advance for your time.

[sdsurfer]

I wholeheartedly agree with you that being responsible seems to go unrewarded in a sense.

I guess I turn to real estate because I believe that although they can manipulate the RE market…it is to a lesser extent of the other markets. I truly get frustrated because I want to learn more about everything you mentioned above in order to make smart decisions with my money. However, when I read your post above it seems like you really know what your talking about and you end up with the same frustration because it does not make sense for them to do what they do.

Just like any other 33 year old I just want to provide for my family and get a decent return for my hard earned money so that one day I do not have to work so hard and can spend more time with my family as opposed to 80% of it working to provide for them.

Having a lot of family in Real Estate I was always amazed by how much my grandparents originally purchased property for, but when I talked to them about it they would always say, “that was a lot of money back then.” So I figure I’m going to try and buy property the way they did and hope for the best.

I feel like a stock or any other investment can go down to $0 without me doing anything wrong except not selling it in time.

A home can always provide a roof over someones head and even with the uncertainty of going up and down…it is always worth a certain amount per month.

I have a lot of respect for a lot of the people that contribute to this blog. I appreciate you bringing up this topic and know there are smart people reading this and would like one of them to tell me I’m wrong and I should do something else with my money because I know leaving it in the bank is not what I intend to do.

Thank you in advance for your time.

[scaredyclassic]

Odds are you are never going to earn enough to spend more time w family. It’s now or never.

Citation: cats in the cradle by Harry chapin

[scaredyclassic]

Odds are you are never going to earn enough to spend more time w family. It’s now or never.

Citation: cats in the cradle by Harry chapin

[scaredyclassic]

Odds are you are never going to earn enough to spend more time w family. It’s now or never.

Citation: cats in the cradle by Harry chapin

[scaredyclassic]

Odds are you are never going to earn enough to spend more time w family. It’s now or never.

Citation: cats in the cradle by Harry chapin

[Author]

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