Asset Allocation for Retirement

**autoxer** · 05-15-2015, 06:37 AM

Are you thinking of David Swensen who runs the Yale Endowment investment portfolio?

http://www.bogleheads.org/blog/david-swensens-portfolio-from-unconventional-success/

**BrokeGirlGetsRich** · 05-15-2015, 07:49 AM

Yeeesss! That's it!

Thanks! Hahaha, I couldn't remember it to save my life. :P

The link is great - thanks for sharing it.

And just to keep asking... by any chance does anyone have the YF&B book and/or know Suze Orman's recommendations?

Maybe it's because I'm out of the country, but my online searches are just yielding overly-basic advice on determining your risk tolerance. :/

**autoxer** · 05-15-2015, 08:17 AM

I don't have suze's book, but when I was researching asset allocations, I gathered up a few portfolio recommendations by a few of the industry leaders (like swensen). Even the professionals have vastly different opinions of what the ideal asset allocation is, because nobody can predict the future. I was trying to understand why to choose one asset allocation over another, so I read the book 'The Four Pillars of Investing'. That book is fairly intense if you really want to dive into the theory of it all.

I eventually decided to keep it faily simple, but if you do decide to construct a more complex portfolio, go ahead and write out an investment policy statement as the bogleheads forum recommends. You will be more successful long term if you don't mess with it to much, and that document will help you stick to a plan.

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http://www.bogleheads.org/wiki/Investment_Policy_Statement

When I get home I'll dig up my notes and post them here.

**BrokeGirlGetsRich** · 05-15-2015, 03:26 PM

Thanks autoxer.

Yea, it's definitely something I want to keep simple. At the time I read Suze's book I also read a few other personal finance books, and I remember her advice resonating with me the most. (For example, I found Ramit Sethi's recommendations for asset allocation okay, but a little more over-simplified than I preferred.)

Anyway, I guess what I'll be doing is looking at different pro recommendations I can find online and doing what feels best for the time-being and my future goals.

**autoxer** · 05-15-2015, 04:24 PM

Here are some of the portfolio recommendations that I found:

David Swenson

20% Domestic Stock
20% International Stock
10% Emerging Markets
20% REIT
15% Long Term US treasuries
15% TIPS

Ray Dalio All Weather

30% Stocks
40% US Treasuries
15% Intermediate Treasuries
7.5% Gold
7.5% Commodities

Rick Ferri

27% Total Stock
9% Small Growth
6% REIT
5.4% Europe
5.4% Pacific
3.6% Emerging Markets
3.6% International Small Value
2.4% Total Bond
8% Inflation Protected Bonds
8% High Yield Bonds

7Twelve

8.3% Large US Stock
8.3% Mid US Stock
8.3% Small US Stock
8.3% Non US Stock
8.3% Emerging Markets
8.3% Real Estate
8.3% Resources
8.3% Commodities
8.3% US Bonds
8.3% TIPS
8.3% Non US Bonds
8.3% Cash

And Warren Buffets advice for the trustees of his estate:

90% S&P 500 Index
10% Short Term Government Bonds

**snafu** · 05-17-2015, 04:51 PM

Since you are just starting your retirement plan, I suggest you keep it simple for your initial year of contributions. If you choose DCA [Dollar Cost Averaging] with a no fee, low management investment like Vanguard's Index Fund, you will be investing in the broad USA {domestic stock] market which gives you the advantage of companies that are familiar and Vanguard looks after the details. An agreed sum automatically transfers to your Sep-Ira buying more units in a lower market, or a lower number of units in a really high market. Once you're comfortable or if market dictates, you can easily divert the automatic sum to Bonds or International stock. If you are working in a region you feel is full of promise with stable government and an acceptable level of corruption you can easily ask your contribution focus on that stock market. It's never 'written in stone' and you can have holdings transferred into other segments as you become more experienced.

I suggest you work out your allowable annual contribution, divide it by 12 to determine your monthly contribution and sign on electronically. I believe Vanguard requires an initial $ 3,000. contribution to open an account [details are available on-line]. Keep it easy peasy until this all feels easy to manage.

**feh** · 05-18-2015, 05:34 AM

Originally posted by BrokeGirlGetsRich View Post

Hi Everyone,

I've just started investing for retirement in my Roth IRA a few months ago, with monthly contributions to max out by the end of the year (I'm self-employed - no 401k), and right now I'll I've got are investments in a total marketing index fund - I'm happy with it, I just know I need to diversify a bit.

I just finished rounding out my emergency fund ahead of schedule, so now I also want to start making investments into a Sep-IRA, but I'd like to start building my portfolio out so my investments are appropriately diversified for my age - 27.

At home, I have Suze Orman's YF&B book and the IvyBytes Beginner's Guide to Investing. I know they both have good advice on asset allocation, but I'm traveling for the next five months so I won't have access to them, and I'd really like to get going before that.

I remember either one or both of those books mentioned guidelines from a guy who does the investing for an Ivy League school (but I can't remember his name or the school for the life of me, so my Google searches aren't yielding much of anything), so I'm particularly interested if any of you know his name or know his advice off hand. (Or if any of you have the books and can let me know.)

I know lifecycle funds are an option, but I'm in the process of running the numbers to see what's best for me.

Any advice or hints are appreciated.

Thanks!

Here is all the diversification you need:

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http://www.bogleheads.org/wiki/Three-fund_portfolio

If you want more info:

http://www.bogleheads.org/wiki/Bogleheads%C2%AE_investing_start-up_kit

You don't need to read books (not that that's a bad idea); those pages will get you on your way.

Asset Allocation for Retirement