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Asset Allocation

1,502 Views | 3 Replies | Last: 5 yr ago by Dazed and Confused
aa4136
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I am curious how others go about deciding on this? Beyond "risk tolerance" is there anything else that you guys consider when trying to decide between how much you place in each investment type?
SnowboardAg
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AG
I try to just consider not based on risk tolerance, but based on years remaining till retirement. I don't want to be as risky as I am today, but I know it's the right thing given my age. Stay the course and don't sell. Just hold cash on the side for buying dips if anything. I have 25% cash on the sideline to buy dips. I'm maybe 8-10% bonds and the rest split between domestics and international stocks. Weighted more to internationals given the run-up in domestics.
SnowboardAg
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AG
One other thing - pick a roboadvisor and let them invest your money based on your investment style. Then marry the strategy with your work 401k or IRA. I'll use a self directed brokerage to buy the ETFs that follow the roboadvisor. It's not perfect, but it gives me a plan and I don't get analysis paralysis or try to time the market. It's just easier and methodical. Holds me accountable.
Casey TableTennis
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AG
I start with global weights of assets classes and shift from there based on lots of factors. Some of those factors are behavioral, some are fundamental and some are personal. The personal factors are balancing often competing objectives like risk tolerance, liquidity needs, risk need, stability of income, spending/saving relative to wealth, etc...
Dazed and Confused
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AG
Might add not only age to retirement, but length of retirement, expected/needed withdrawal rate in retirement, any legacy desires, and SWAN. Asset allocation needs to be so I Sleep Well At Night and don't make an emotional dumb decision in a downturn.
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