Couple of questions on asset allocation

bigadaj

Ray_Singh-Blue wrote: »

My way of thinking is to include in the asset mix everything that can be sold.

How much are you valuing your body at?

And is that for sexual favours or medical research?

Ray_Singh-Blue

anything that can be sold... legally...

bigadaj

Ray_Singh-Blue wrote: »

anything that can be sold... legally...

Ok, so you're including prostitution but excluding organ sales I presume.

Ray_Singh-Blue

If you have to ask the price, you can't afford it...

bigadaj

And sadly amortising with age.

mmo_2

What is going on in this thread?

badger09

mmo wrote: »

What is going on in this thread?

The usual:D

Malthusian

Ray_Singh-Blue wrote: »

My way of thinking is to include in the asset mix everything that can be sold. So a house would be in there.

If I took this approach my recent portfolio would have looked something like 20% UK equities, 50% overseas equities, blah blah, 5% music CDs, 2% cars (well, car), 1% furniture. While potentially interesting in a very self-indulgent and nerdy way, it tells me very little about how I should allocate my investments.

There is a difference between investments which you hold purely because you expect them to appreciate or provide income and possessions which you hold for their utility.

The purpose of asset allocation is not to count up your possessions like Scrooge McDuck, the purpose is to tell you how you should allocate further investments or whether you should switch existing ones to diversify. Including personal possessions brings no useful information to that calculation.

All investment portfolios have an objective (even if that objective is the indeterminate "to achieve long term growth for an unknown need in the distant future or failing that to pass to my heirs"). In my case the aim of the portfolio was "to save for a house deposit", and implicit in that aim is "...without selling my CDs or my car". So including possessions in my portfolio makes no sense as I was never going to sell them in order to spend on the house deposit.