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Still can't tell your granularity ... so of the 19% in mfunds, what percentage is in PONCX? 5% of the MS one is cash, but perhaps that can be ignored.
If PONCX is around a third of your mfunds, let us say, then including the MS cash you appear to have ~28% in cash or bonds (plus bank), the rest in equities. Aggressive if true, and if you can stomach it and can afford it, rock on.
I've mentioned before the work of Pfau and Kitces suggesting that one should get more aggressive as one progresses through retirement. Here's a reasonably digestible article, followed by a more detailed writeup. (I believe I've linked to the latter before.)
So you are saying you have virtually no bank savings or cash? That 99.5% of your liquid investable net worth is in stocks, bonds, mutual funds and ETFs? That is aggressive.
@MikeM- It's all well and good to be "100% invested" but it tells you nothing about an individual's overall exposure if you don't have some idea of their actual cash/cash equivalent position.
Big difference between someone "100% invested" while also sitting on 500k in bank accounts (but we won't count that) and someone "100% invested" with $500 in the bank. My hunch is that Ted is in the first category.
If the cash is already earmarked for near-term needs, than I agree with you. I also think it’s extremely important folks plan ahead at least a year out and have secure reserve funds for those near term needs.
But, If the cash is being held back as a lever for potential investment at a later date (perhaps in anticipation of a more attractive market entry point or opportunity), than I would respectfully disagree with you. It should be included.
Some investors believe in holding back some “dry power” for possible future deployment (in the form of cash). If that’s their purpose, than I’d vote for counting that sum as part of the overall portfolio. And I believe the questions being asked of @Ted (essentially to fully disclose his cash position on the investment side, if any) are perfectly reasonable.
Agree with your underlying premise that cash held in a savings or checking account is unlikely to be part of one’s investment pool. However, it could be. One interesting case is Price’s ultra short term bond fund (TRBUX). In our own case that fund is held in both an “IRA” (comprising investment cash) and also in a “TOD” account (cash earmarked for near term needs). Regarding the “TOD” account (Transfer on Death in TRP’s language), I actually write checks against that account (minimum $500) to cover near term needs.
Bottom line: When posting one’s holdings as a discussion topic (Let’s assume the purpose here is to provide instruction for others), I think it’s important to be totally clear.
BTW - There is also a “gray area” in that many do hold a large cash reserve (5+ years worth of living expenses). The reason I most often hear is that this allows them to remain very aggressively invested with their invested portfolio. The problem with not counting that cash, is that its mere existence does in fact improve their long-term portfolio performance. So it’s adding to their yearly portfolio numbers - whether or not they want to admit it.
@hank - nicely said. One's near-term needs, unless one is just starting out, should be small relative to one's total portfolio (including IRAs, 401ks, etc.). So including all of one's cash in calculating one's asset allocation shouldn't significantly distort the figures.
Besides, separating out what cash is for what can get even more confusing. I keep cash in a position MMF at Fidelity. That's one where you have to explicitly purchase shares. But Fidelity courteously draws on that fund automatically as I pay expenses (bill pay, checks). So I've got near-term cash and investment cash in the same fund in the same account.
Then I've got some cash in an online bank, paying a similar yield. That's partly for diversification (all these rates fluctuate), and partly because a bank account can serve as a last resort if Fidelity is forced to put redemption restrictions on the prime MMF.
That bank account is really just an extension of the MMF which in turn serves as both a checking account and an investment vehicle. The form isn't what's important, it's how it is used.
Vanguard:
Investors may maintain cash in their portfolios for a number of reasons, such as to cover daily living expenses and in case of emergencies. As such, cash should be invested in a manner appropriate to the need. Investors have many options for investing their cash, such as money market funds, Federal Deposit Insurance Corporation (FDIC)-insured accounts, certificates of deposit (CDs), bonds, and short-duration bond funds.
@msf: Schwab holds cash in their bank, so if forced to put redemption restrictions on their MMF I'm lead to believe I could retrieve my cash. Do you have any thoughts on this ? Derf
That sounds correct. The new restrictions apply only to MMFs, and even then, generally don't apply to government MMFs. Bank account rules haven't changed.
That's why brokerages (that don't sweep cash into banks) switched the core/transaction/settlement funds in accounts from prime funds to government funds. For example, Vanguard changed its brokerage settlement account to VMFXX (Fed MMF).
If the cash is already earmarked for near-term needs, than I agree with you. I also think it’s extremely important folks plan ahead at least a year out and have secure reserve funds for those near term needs.
But, If the cash is being held back as a lever for potential investment at a later date (perhaps in anticipation of a more attractive market entry point or opportunity), than I would respectfully disagree with you. It should be included.
Some investors believe in holding back some “dry power” for possible future deployment (in the form of cash). If that’s their purpose, than I’d vote for counting that sum as part of the overall portfolio. And I believe the questions being asked of @Ted (essentially to fully disclose his cash position on the investment side, if any) are perfectly reasonable.
Agree with your underlying premise that cash held in a savings or checking account is unlikely to be part of one’s investment pool. However, it could be. One interesting case is Price’s ultra short term bond fund (TRBUX). In our own case that fund is held in both an “IRA” (comprising investment cash) and also in a “TOD” account (cash earmarked for near term needs). Regarding the “TOD” account (Transfer on Death in TRP’s language), I actually write checks against that account (minimum $500) to cover near term needs.
Bottom line: When posting one’s holdings as a discussion topic (Let’s assume the purpose here is to provide instruction for others), I think it’s important to be totally clear.
BTW - There is also a “gray area” in that many do hold a large cash reserve (5+ years worth of living expenses). The reason I most often hear is that this allows them to remain very aggressively invested with their invested portfolio. The problem with not counting that cash, is that its mere existence does in fact improve their long-term portfolio performance. So it’s adding to their yearly portfolio numbers - whether or not they want to admit it.
If that's how you're thinking about cash then I do agree. It should also be included in any performance calculation of the overall portfolio then as well.
For retirees, how aggressive a particular allocation is depends very much on the level of income from pensions, annuities, and/or Social Security. Ted almost certainly has a generous pension from Uncle, and might even be a double dipper, so in this case, the bare bones portfolio allocation is likely telling someone else essentially nothing about how aggressive it is.
@AndyJ: Have enjoyed MFO Members give their opinion of my asset allocation, especially picking apart the cash allocation. Since you took the trouble to ask, my wife and I are retired school teachers with reasonably good pensions along with Social Security from part time jobs. In addition, I own a 1,200 acre farm raising corn and soybeans west of Dubuque, Ia. Regards, Ted
Bogle was 80+years old and his portfolio is also very aggressive... I guess great minds think alike... But know when to get out is upmost important...Ted portfolio Very simple easily controlled and easily to manipulate /changed portfolio
Agree with jojo. I think Ted laid it out pretty well for a general overview of investments.
Sorry, but exactly "how aggressive" someone is investing in retirement NEEDs information regarding how much cash that individual holds.
If I have 90% cash and 5% in PONCX and 5% in ETFs, is not aggressive. That's like saying if you take a photo of me at exactly certain latitude and longitude, at a certain distance, in a certain light, and wearing glasses that cloud vision, I look like Brad Pitt.
I think people know I don't do bonds except for RPHYX and RSIVX, but they are a smattering of my total investments. If I simply total up whatever I've invested and not in VMMXX, then I will also be an aggressive investor. Fact is I am a wimp.
Bottom line, if subject line says "here's my asset allocation", then it should say something like
40% Cash (i.e. FDIC insured) 20% Money Markets (e.g. VMMXX, etc. etc.) 20% Domestic (e.g. VTMSX) 10% International (e.g. VTPSX) 10% Fixed Income (e.g. PONCX)
Then there is also no need to say "its' aggressive" or "its not aggressive", yeah?
A post such as above would not need so many more posts following it to ask questions. But I do understand we are all bored and this is so much better than Effbooking eh?
Sorry, but exactly "how aggressive" someone is investing in retirement NEEDs information regarding how much cash that individual holds.
No it doesn't. Look, my point is @Ted simply stated his investment allocation. He didn't suggest it be used by anyone else. He didn't ask for advise. He didn't ask for comments. In fact, I'm sure most of the suggestions and comments are quite amussing him, rightly so.
Bottom line, if subject line says "here's my asset allocation", then it should say something like...
So he didn't follow what you would have expected (or obviously many here). Hang the bastard...
Comments
Regards,
Ted
ETFs:
IVV
QQQ
Mutual Funds:
TRBCX
MSOPX
PONCX
If PONCX is around a third of your mfunds, let us say, then including the MS cash you appear to have ~28% in cash or bonds (plus bank), the rest in equities. Aggressive if true, and if you can stomach it and can afford it, rock on.
https://retirementresearcher.com/use-rising-equity-glide-path-retirement/
https://www.onefpa.org/journal/Pages/Reducing Retirement Risk with a Rising Equity Glide Path.aspx
Regards,
Ted
Big difference between someone "100% invested" while also sitting on 500k in bank accounts (but we won't count that) and someone "100% invested" with $500 in the bank. My hunch is that Ted is in the first category.
If the cash is already earmarked for near-term needs, than I agree with you. I also think it’s extremely important folks plan ahead at least a year out and have secure reserve funds for those near term needs.
But, If the cash is being held back as a lever for potential investment at a later date (perhaps in anticipation of a more attractive market entry point or opportunity), than I would respectfully disagree with you. It should be included.
Some investors believe in holding back some “dry power” for possible future deployment (in the form of cash). If that’s their purpose, than I’d vote for counting that sum as part of the overall portfolio. And I believe the questions being asked of @Ted (essentially to fully disclose his cash position on the investment side, if any) are perfectly reasonable.
Agree with your underlying premise that cash held in a savings or checking account is unlikely to be part of one’s investment pool. However, it could be. One interesting case is Price’s ultra short term bond fund (TRBUX). In our own case that fund is held in both an “IRA” (comprising investment cash) and also in a “TOD” account (cash earmarked for near term needs). Regarding the “TOD” account (Transfer on Death in TRP’s language), I actually write checks against that account (minimum $500) to cover near term needs.
Bottom line: When posting one’s holdings as a discussion topic (Let’s assume the purpose here is to provide instruction for others), I think it’s important to be totally clear.
BTW - There is also a “gray area” in that many do hold a large cash reserve (5+ years worth of living expenses). The reason I most often hear is that this allows them to remain very aggressively invested with their invested portfolio. The problem with not counting that cash, is that its mere existence does in fact improve their long-term portfolio performance. So it’s adding to their yearly portfolio numbers - whether or not they want to admit it.
Interesting that almost half of your investments are in individual stocks (49 %).
Besides, separating out what cash is for what can get even more confusing. I keep cash in a position MMF at Fidelity. That's one where you have to explicitly purchase shares. But Fidelity courteously draws on that fund automatically as I pay expenses (bill pay, checks). So I've got near-term cash and investment cash in the same fund in the same account.
Then I've got some cash in an online bank, paying a similar yield. That's partly for diversification (all these rates fluctuate), and partly because a bank account can serve as a last resort if Fidelity is forced to put redemption restrictions on the prime MMF.
That bank account is really just an extension of the MMF which in turn serves as both a checking account and an investment vehicle. The form isn't what's important, it's how it is used.
Vanguard: https://personal.vanguard.com/pdf/s343.pdf
Derf
That's why brokerages (that don't sweep cash into banks) switched the core/transaction/settlement funds in accounts from prime funds to government funds. For example, Vanguard changed its brokerage settlement account to VMFXX (Fed MMF).
Since you took the trouble to ask, my wife and I are retired school teachers with reasonably good pensions along with Social Security from part time jobs. In addition, I own a 1,200 acre farm raising corn and soybeans west of Dubuque, Ia.
Regards,
Ted
Related getting mutualiized w bogle
https://www.bloomberg.com/news/audio/2018-06-27/getting-mutualized-with-jack-bogle
https://www.desmoinesregister.com/story/money/agriculture/2018/06/15/china-tariffs-soybeans-could-cost-iowa-farmers-up-624-million/705121002/
If I have 90% cash and 5% in PONCX and 5% in ETFs, is not aggressive. That's like saying if you take a photo of me at exactly certain latitude and longitude, at a certain distance, in a certain light, and wearing glasses that cloud vision, I look like Brad Pitt.
I think people know I don't do bonds except for RPHYX and RSIVX, but they are a smattering of my total investments. If I simply total up whatever I've invested and not in VMMXX, then I will also be an aggressive investor. Fact is I am a wimp.
Bottom line, if subject line says "here's my asset allocation", then it should say something like
40% Cash (i.e. FDIC insured)
20% Money Markets (e.g. VMMXX, etc. etc.)
20% Domestic (e.g. VTMSX)
10% International (e.g. VTPSX)
10% Fixed Income (e.g. PONCX)
Then there is also no need to say "its' aggressive" or "its not aggressive", yeah?
A post such as above would not need so many more posts following it to ask questions. But I do understand we are all bored and this is so much better than Effbooking eh?
Nice - Thought you would enjoy this video.