Ideal asset allocation

BLB53

Do you have a particularly creative accountant or financial adviser who can squeeze an extra 10% out of somewhere

Thanks, duly amended!

Prism

I am all equities in my savings and pension

I have about 55% in two active global funds which i rarely touch
I have about 30% in 5 or so regional mid/small cap active funds which I sometimes rebalance
I have about 15% in sector tracker or ETF funds which I play with a little more. Tech, Health, Automation, gold etc

OldMusicGuy

If I look at my total net worth, it is as follows:

46% property (equity in current house)
33% invested for the long term (10 to 15 years) in multi-asset tracker funds (probably about 50/50 equity/bonds)
21% cash and fixed interest bonds.

The ideal asset allocation is one that suits your financial objectives. There is no single "ideal", so that's a bit of a silly question to ask.

inflationbuster

Allot allocation for me is based on risk if l want greater profits my allocation is adjusted accordingly biased towards the stock market.

bostonerimus

I'm in the US and so I overweight that area: 50% US equity index, 30% US bond index, 20% Global equity Index ex-US. I do this with 3 funds. I plan to let my equity allocation increase during retirement. I have dribs and drabs of other stuff that I've acquired over the years, a DB pension and own my home and a rental flat that are probably around 25% of my net worth.

dunstonh

I dont include primary residence as you have to live somewhere. It will be my children/grandchildren that benefit from that. And it's not an income generating asset whilst I am alive.

Only if you intend to downsize and use the equity or use equity release does your primary residence come into play.

I'm currently more cash heavy than I would normally be as I am house hunting. So, if I included my cash now, my asset weightings would be totally different to what they would be when I have the house. Which brings us to the point made in above posts that weightings, if you include everything, are a very personal thing.

Moneycat

Interesting thread. My personal allocation is currently roughly as follows:

60% property
20% equities (through S&S ISAs)
13% cash (mixture of P2P, cash)

I am in the process of incresing the equity exposure. The property allocation is heavy on balance, for no other reason than like many, I!!!8217;ve felt more comfortable investing in bricks and mortar as it!!!8217;s easier to understand than the stock market. I have however taken the plunge few years ago into equities through S&S ISAs and look to continue for the foreseeable future. Trying to keep the pounds working for me instead lying idle on the bank accounts but I have no great interest in studying the ins and outs of the markets. I!!!8217;m hoping to keep ahead of inflation and anything achived over the bank rates is a bonus. I keep the money in the S&S ISAs as I have no particulr need for it, monthly salary from the day job comfortably covers the outgoings. I am planning for an early retirement though and if that were to materialise, then I would need to bridge a gap of few years before pension kicks in. I have a target figure in mind that I!!!8217;d like to achieve before going down this route. So far so good, but the next 4 years will be very interesting given the Brexit affecting the day job so the early retirement plan/dream may well need adjusting

bostonerimus

bostonerimus wrote: »

I'm in the US and so I overweight that area: 50% US equity index, 30% US bond index, 20% Global equity Index ex-US. I do this with 3 funds. I plan to let my equity allocation increase during retirement. I have dribs and drabs of other stuff that I've acquired over the years, a DB pension and own my home and a rental flat that are probably around 25% of my net worth.

I forgot cash......strict raw cash in the bank is around 1% now. That's enough for emergencies and one time large payments.

OldMusicGuy

dunstonh wrote: »

I dont include primary residence as you have to live somewhere. It will be my children/grandchildren that benefit from that. And it's not an income generating asset whilst I am alive.

Only if you intend to downsize and use the equity or use equity release does your primary residence come into play.
.

Which we do, which is why I included it. We will downsize next year to release 150 to 200K of equity for us, and will give our son about £100k to help him get on the housing ladder. We will move to a smaller place in a cheaper part of the UK and stay there for 20 to 25 years (health allowing), at which point we will move to a flat, releasing probably another 200K equity in today's terms. The flat can then be sold to pay for care home fees if needed, assuming that probably only one of us will survive that long.

We've always planned to use equity from the house in our retirement planning (it's making early retirement feasible). I see too many elderly people staying in houses that are too big for them for too long, then either getting suckered into equity release or worse trying to avoid IHT and care home fees.

Our son needs money now, not in 20 to 30 years. So freeing up equity from the house now and gifting it to him is effectively giving him his inheritance now. I think parents from our generation have a responsibility to help their kids get on the housing ladder because it was so much easier for us, and we have done very well out of property. But that is just me, of course YMMV.

Audaxer

dunstonh wrote: »

Some models adjust weightings to reflect timescale.

So, allocation models are not static. The move throughout the economic cycle and can have variations depending on the objectives. There is no one right way to do it. However, there are wrong ways to do it. The important thing is not to pick random allocations (e.g. 10% in 10 sectors) as that is just hit and hope and the lack of any structure will mean you are more reliant on luck than strategy. You would be better to use a multi-asset fund if you can't follow or utilise a proper model.

I'd interested to know how a DIY investor like me finds such an allocation model to follow to ensure that my single sector income portfolio is structured properly?