What Percentage of your Net Worth is in Stocks & Bonds?

Our investment portfolio is 75% stocks, 20% bonds, 5% alternatives; we don't take distributions. Our house is currently worth 2/3 of total portfolio. We live on spouse's state pension which is money we didn't have to save to provide income, which is considerable if calculated at a 3% annual distribution rate.

We don't yet collect SocSec; I'm 2 yrs from FRA [full retirement age] and spouse is 5 yrs from FRA claiming. His SS will be quite small as his employer withdrew from SocSec 30 yrs ago so although he has his 40 qrtrs in there were no earnings for the last 30 yrs.

Very small interest-only 2nd is our only outstanding loan; not even worth paying off as we plan to sell the house in 5-7 yrs. Pay off all charge cards every month. 2 cars, both paid in cash.

We do pay a lot for insurance. Homeowners, car, umbrella liability, earthquake, and we each have a long-term care policy (LTCi). No need to save for eldercare svcs since the LTCi will pay for most of it if required.
 

i use a dynamic portfolio that changes as volatility changes .

to date no one ever lost a penny in diversified funds because of markets . what made them lose money is bad investor behavior .

they either tried to time things , mis-matched time frames for the use of the money or they panicked . with markets higher then ever it was the only way you could have lost money .

there is no way in retirement i could support the draw i need , keep up with inflation and have some legacy money left without an allocation to equity's .

to draw about 4% inflation adjusted safely takes at least 35% equity's with 50/50 showing very very high rates of success through the worst of times .

in fact do you know to date a 50/50 mix of diversified funds has never had a losing year in any 10 or 20 year time frame . yep , never happened .

one of the issues today is that market volatility has picked up since 2000 . so if you were comfortable with a 50/50 mix , today you may have to step down to a 40/60 mix to see the same volatility range .

so i prefer to stay dynamic .. while my max in retirement is around 50% at the moment i am only 35% equitys and the rest diversified bond funds .

but about 1/3 of the bond budget is in high yield . when i bought the high yield funds they were beaten to a pulp and represented great value so as a proxy for some equity's i use the high yield funds .

they have 1/2 the volatility of the s&p 500 yet returned more , ytd they are up more than 10%.

when they become to over valued they will be swapped likely for more equity's .

i don't change things often but like steering a big ship the portfolio gets nudged to keep it on course based on the big picture .

i have been using a newsletter that caters to fidelity funds but is not owned by fidelity . i have been using them since 1987 with excellent results .

why do i use a newsletter when i can put portfolio models together in my sleep ?

i know me and i am never happy being average . i always stick my finger in the pot and try to time things and out smart markets .

but no one can do that over and over so to keep me from myself i use the newsletter . i never spend time 2nd guessing my last move or plot my next move . our multi 7 figure portfolio has about 30 seconds a week devoted to it reading a weekly e-mail update.

so that is what has worked for us for decades . only major changes were about 7 years before retiring i went from 90-100% diversified stock funds to a range now between 35-50% .

unless we are looking at estate taxes the only assets i count are those that i can use to draw an income off of at the current moment . they are the only ones my withdrawal rate is based on .

i am not selling my car , our art work , our furniture or our jewelry so they are never part of the equation . when and if the day comes they are no longer consumption items and are sold then they become part of the asset base , other wise they cost me money while i use them .
 
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