Portfolio Allocation Ideas & Strategies

fred495

On another investment forum, a thread has recently been started to share portfolio allocation thoughts & strategies for discussion/comparison. I thought it would perhaps be a worthwhile exercise and/or learning experience to have a similar thread on this topic on this forum. Here was my contribution:

As a retired investor, "I dislike volatility!", to quote keppelbay. Especially in the current uncertain market and political environment, preserving capital is more important to me than chasing returns on capital. I prefer to err on the side of caution since I don't need a lot more money, and all my expenses are covered by generous pensions and Social Security.

Currently, my conservative portfolio allocation is as follows:

- 45% Bond OEFs (APDPX, DHEAX, PYLD and RCTIX)
- 30% CDs
- 25% Alternative OEFs (QDSNX and QLENX)

Once the CDs mature next year, I may shift my portfolio allocation to the following:

- 60% Bond OEFs (will probably add BINC and/or ESIIX)
- 25% Alternative OEFs (no change)
- 15% Allocation OEFs (probably split between PMAIX and PRCFX)

Hopefully, this will be a "sleep well portfolio" by keeping the standard deviations of the allocation and the alternative OEFs below 10%, and the bond OEFs below 5%. Of course, nothing is set in stone. I will always be dancing near the exit if the circumstances warrant it.

Good luck.

P.S. Based on Portfolio Visualizer, and back testing with a start date of July 2023 (inception date of PYLD), my current portfolio would have had an annualized return (CAGR) of 10.5% with a standard deviation of 2%, and a 0.47% correlation to the S&P 500.

hank

d

Crash

I've not kept my circumstances a secret. Doing a lot of investing for heirs, colored by a simultaneous streak of concern for preservation. The political scene these days is a dysfunctional and abominable cluster-flop. I'm about 53 stocks and 46 bonds, and just a percent or so in cash. 40% of total is in PRWCX, so that's a giant step toward good sleeping at night.

28% of my 46% in bonds is Junk. Deliberately wanting the yield. 18% of total is in 3 single-stocks. Quite happy with them, so far. Dividend payers. A few years before RMDs are due, I'm already taking a few or several thousand each January from the T-IRA, reducing, ostensibly, the size of the RMDs when it comes time for that.

I used to always be trying to diversify for its own sake, but more recently have taken the advice of the late Charlie Munger. "Don't be doing that for its own sake." Heaviest in Info Tech, not because I like those Big Name slimeballs, but because my mutual funds are there. A close 2nd-place is Financials, lagging by just 1%, 26 to 25. Only 4.35% of stocks is in International.

The Market ignores politics and ethics (or lack thereof) until it just won't, anymore.

FD1000

Fred: Of course, nothing is set in stone. I will always be dancing near the exit if the circumstances warrant it.

As usual, it's a very thoughtful way to invest, and the main key is stated well above.

linter

crash: when you remove money from your t-ira, how do you calculate the amount to remove such that you don't land yourself in a new worse tax bracket given that your totals for the year aren't known until year's end, if that makes any sense? thanks!

gman57

linter said:

crash: when you remove money from your t-ira, how do you calculate the amount to remove such that you don't land yourself in a new worse tax bracket given that your totals for the year aren't known until year's end, if that makes any sense? thanks!

Not crash (re: roth conversions/income): I use last years tax calculator online and also last years tax return. If they tell me I can convert 50K stay in certain tax bracket and owe $x, I'll convert 40k in January. Then around Nov when the real next years tax calculators are available I'll fine tune the final conversion/withdrawal. On final withdrawal withhold $fed, $state, and whatever is left is for me.