Quote:
Originally Posted by vaJAZzled
how did you decide upon this allocation?
Well, basically from what I understand, it's a weird time to invest. I was shooting for something a little more conservative, with less overall equity, but, it was hard to find other safe plays than equities with Bonds being as they are right now. With the European established markets and the EURO being in such doubt, it made it even harder to diversify.
My starting off point was a basic:
30% US equities
20% International equities
20% Fixed Income
15% Commodities
15% Real Estate
Then from there I kind of looked at how everything was doing currently, and decided how comfortable I was in terms of aggression. At my age I can be a little more aggressive in equities anyway. I wanted to have more fixed income that wasn't corporate, but investing in US Bonds and most municipal bonds right now is out of the question, so most of my fixed income was an audible. I went with JNK, PFF, etc. I tried to add some international corporate bonds so at least I was diversified in that way. There I went with EMCB (Emerging Market Corporate Bonds) and AUNZ which is an Australia/NZ debt fund.
I'll re balance every year or maybe less and continue to contribute to the IRA. Having more than one holding in each sector should make it a little more flexible when it comes time to re balance and take losses and gains with taxes too.
It being an all ETF portfolio, I've maintained as much liquidity and wiggle room as possible. I'll be able to move things easily and change allocation when it's called for. I've also minimized fees as low as possible, by getting 30 free trades a month with Merrill.
My goal was to minimize fees as much as possible, take advantage of every tax benefit, all while maintaining as much diversification as possible within reason. Once, I found the different sectors to put my money in, and tried to diversify and try to make tiny plays within each sector. I have almost all of the dividend funds in my IRA. This way I can just re-invest those automatically and let them grow tax free.
Hard time to find an easy play though. GLD had been on a heater for a while, although it's been down since I bought it, which is exactly my point. I'm kind of waiting for the stock market to have it's correction as well. But where else would I have put the money? Sitting out even longer really isn't an option. Gotta just jump in and go with it long term, but it would have been a lot easier to start this process 3 years ago, that's for sure.
The only buy low option right now is in Europe and I just don't feel great about it right now. Maybe in a year or so when the signs start point up. That's why I went with Germany, Canada, Malaysia and the Euro Debt Fund which is a somewhat safer way to play it. I've thought about getting into VEU as kind of a buy low type situation, but I'm going to see how the year plays out.
I've also thought about getting into Brasil and maybe out of Canada since it's so closely tied to our economy. At the time I liked the conservative nature of that, but now it's seems a bit pointless.