Putting your mouth in the money: What is your current allocation?

[systemskeptic]

It's fun to talk theory on here, but I am curious how people's portfolios stack up in reality and where people are currently at in their re-balancing bands.

So, let's be honest, what assets allocations are you at for your entire portfolio (PP + VP, either listed together or separate)?  Have you hit any re-balancing bands recently?  Do you have any other mentionable asset classes that do not fall into the PP four?  Another interesting data-point would be what percent your gold allocation is held in physical vs. paper form. 

How many Harry Brownes do we really have around here?

I just added up mine in a spreadsheet, and here's what I have:

28.8% Gold
22.7% Bonds
30.1% Cash
18.5% Stocks

Of the 28.2% "Gold", 2.6% is silver bullion, 22.5% is gold bullion, and 3.6% is paper gold (SGOL).

[Lone Wolf]

My PP currently sits at:
24.12% Stocks
25.32% Bonds
22.62% Gold
27.95% Cash

For my children's 529, I'm unable to construct a PP.  For this I have:
50% Total Stock Market
50% Total Bond Market

[bigamish]

Keeping in mind that I am in the accumulation phase (and recently rebalanced after hitting 35% cash):

26.4% Gold
24.4% Cash
25.5% Stocks
23.7% Bonds

[Alanw]

My PP is less than 1 year old and I have already rebalanced once because of the gains in LTT (Rates couldn't go any lower).  I am semi-retired and use the PP cash portion for living expenses.  80% of my retirement and non-retirement funds are in the HBPP.

Gold      25.36%
Stock    26.37%
LTT      23.72%
Cash    24.54%

[pp2910]

IAU (Gold): 24.1%
IEF (Cash+Bonds): 48.7%
VTI (Stocks): 27.2%

Last contribution/re-balance was on 11/22 since then stocks have outperformed gold and bonds.

[pershing83]

My PRPFX is up 4% YTD. I could do 50% on the year? Goodness.!

OTOH my VWINX is up 1%. 60% bonds and 40% income stocks for those not familiar..

I will settle for the 12%.

Anyway, the board needs to be brought up to speed.

[systemskeptic]

For those who have posted, thanks for sharing.  Looks like most of the above are pretty close to a strict 25/25/25/25 in the "PP" part of the portfolio.

Do you guys also maintain a VP?  If so, what do the numbers look like if they are combined into a single portfolio? 

[dualstow]

My pp allocations are currently all in the 20%s, although long bonds hit 30% pretty recently.
I don't know the exact numbers if you include the vp, which has been around much longer, put it puts the the stock allocation much higher, like 50-60%. The pp now constitutes more than 1/4 of (vp+pp), which is more than it has ever been. Just started in late 2010.

Do you have any other mentionable asset classes that do not fall into the PP four?

I have muni funds, both state and federal.
I also own VCIT, which is Vanguard's intermediate corporate bond index etf, in my roth.
I have a skosh of Vanguard's REIT fund.

How many Harry Brownes do we really have around here?

I'm simply not smart enough to call myself a Harry Browne, but I'd like to think of myself as a loyal follower, keeping my speculative forays within the vp realm.

...what percent your gold allocation is held in physical vs. paper form.  

Right now it's 44% physical coins, but that keeps changing. If the price goes below 1600 an oz, I might dare to do a big coin order.
If it doesn't, but I have cash to add to the pp, I'll probably buy gold ETF shares on or around the same day that I buy equal amounts of the other assets.

[l82start]

i haven't hit my first re-balance yet, cash is low due to counting emergency funds in the cash portion of the PP, and needing to make withdraws to pay bills during tough times....

cash 17.90%
gold  25.84%
ltt    31.24%
stock 25.02%

[systemskeptic]

The pp now constitutes more than 1/4 of (vp+pp), which is more than it has ever been. Just started in late 2010.

With a near 60% allocation, I take it you are pretty bullish on equities?  Given that you have been in the PP for the last couple years, what's stopping you from going past 25% in it?

I myself just switched from about 50% intermediate bonds / 50% cash to the above allocation.  The hardest part was buying the 1st gold coin, but now that I did I'm definitely glad.  To a lesser extent it wasn't easy to sell off bonds to buy stocks either (55% draw down in 2008 still fresh in the mind, eek).

[dragoncar]

Gold: 19.3%
Stock: 23.1%
Bonds: 23.3%
Cash:  34.2%

Yes, I started with 4x25, and have been accumulating cash... almost time to rebalance, eh?

(but I'm also considering using extra cash as a down payment on a house so...)

[dualstow]

The pp now constitutes more than 1/4 of (vp+pp), which is more than it has ever been. Just started in late 2010.

With a near 60% allocation, I take it you are pretty bullish on equities?  Given that you have been in the PP for the last couple years, what's stopping you from going past 25% in it?

More like one year.
The short answer is that I would like to go to 90% pp, 10% vp. I wish I had just gotten it all done at once like Craig did, as the timing was accidentally perfect. While I have no trouble sticking to the pp plan, I'm having trouble extricating myself from the vp.

1) I used to be in 95% stocks, pre-pp. It's not that I was/am bullish on equities. I was young, into the bogleheads, and not in a great hurry to add bonds. Stocks for the long run. Part of me still feels that this isn't the worst strategy in the world, though I'm *very* grateful to have seen Craig's boglehead posts which changed everything for me.
2) Selling most of the stocks would create tons of taxes. I do sell some losers and some breakeven ones now and then. A tax neutral sale is psychologically easy for me. It's as if I just held it as cash and I'm happy to get out without a loss, and without much gain other than collected dividends.
3) A bunch of these stocks are paying really good dividends, and since they have been raised year after year, the yield on the original cost is quite high. If the *current* yield is as good as the yield I've built up over the years, sometimes I sell. Depends on the details.
4) There is no stock or muni fund that makes up more than  3 or 4% of vp + pp, so I don't mind keeping them. I enjoy the income. I'd be lying if I said I used it for living expenses, though. At least I tend to reinvest the money into the pp. And, I invest new cash into the pp.
5) I hold some stock index funds that I'm not in a hurry to sell, but they are part of the reason vp+pp = stockheavy. The dilemma is whether I should leave them alone and continue to buy gold and treasuries, or sell these funds down a bit to buy (less) gold and treasuries. Neither feels right.

I think I'm content the way things are. If stocks have a huge run-up, maybe I'll rebalance so that I have more pp and less vp. If stocks fall, the pp core will still probably do really well.

 

The hardest part was buying the 1st gold coin, but now that I did I'm definitely glad.

Same here.  

[FarmerD]

The short answer is that I would like to go to 90% pp, 10% vp. I wish I had just gotten it all done at once like Craig did, as the timing was accidentally perfect. While I have no trouble sticking to the pp plan, I'm having trouble extricating myself from the vp.

1) I used to be in 95% stocks, pre-pp. It's not that I was/am bullish on equities. I was young, into the bogleheads, and not in a great hurry to add bonds. Stocks for the long run. Part of me still feels that this isn't the worst strategy in the world, though I'm *very* grateful to have seen Craig's boglehead posts which changed everything for me.
.... The dilemma is whether I should leave them alone and continue to buy gold and treasuries, or sell these funds down a bit to buy (less) gold and treasuries. Neither feels right.

Dualstow,
Ditto on everything you say above.  Your situation sounds a lot like mine.  Up until a year ago I had the vast majority of my investments in stock indexes with some in short term cash equivalents.  Selling my stock indexes now means a big capital gains tax and I just can't bring myself to do it.  Even after tax harvesting, moving retirement assets around, and leveraging my long term bonds with edv, I'm at about 48% stocks, 20% gold, 20% bonds, and 12% cash.  I could just about reach a 3 X 33 PP by converting my entire retirement account to EDV but I hate the idea of my retirement account being solely in long term bonds, plus with my entire retirement account in Long term bonds, I don't have wiggle room in my IRA to rebalance stuff so I keep some stocks and gold there.  As I accumulate more savings, I buy more physical gold while simultaneously selling my ETF gold and using the proceeds to buy more EDV.  It's headache figuring out a sensible way to move pieces around.  Eventually I will be able to get a higher percentage of my portfolio into the PP but I'll never be able to get it all in there unfortunately.   

[akratic]

Equities 21%
Bonds 21%
Gold 17%
Cash 41%

I've got to be the laziest person at rebalancing my PP.

My thought process goes like this: "I should buy gold first... but I don't want to pay state sales tax at the local dealer... so I should choose an online dealer... the *optimal online dealer*... this one looks good... no maybe this one... this is nuts, I'm going to send them a five digit check and they're going to mail me gold coins within 20 days of receiving the check...?!  Fuck it, I'll do this next weekend..."

Repeat ad nauseam while the cash builds up and the sum of the hypothetical money I would have made from being fully invested makes me sicker and sicker.  Just sick enough to experience the feelings of regret, but not sick enough to actually call gold dealers.

[stone]

akratic, getting an etf is the really lazy option.

[akratic]

@stone, almost all my savings are taxable, and I've been too lazy to deal with the tax hassles of the gold ETFs in a taxable account.  Or are they not that bad? 

Probably what I should do is get myself squared away with 4x25% now using ETFs, and transition from the ETFs to physical when convenient.

[dragoncar]

@stone, almost all my savings are taxable, and I've been too lazy to deal with the tax hassles of the gold ETFs in a taxable account.  Or are they not that bad? 

I think they're probably not too bad when you sell in taxable... and wouldn't you have the same problem selling physical?  Plus, if you are still accumulating, you probably won't sell anytime soon.  Plus, if gold tanks, you probably won't have to calculate the taxes :-P

If you wait to sell when you are RE, then you'll pay your marginal tax rate which may end up being a pretty good deal.

[akratic]

It's not the taxes at sale that bother me so much as the forms and calculations that you have to deal with every year.

[quote=Bogle Head Forum]GLD, IAU, and SLV are all taxed as a "pass-through entity", which means they pass along their costs of operation to you, and you get to take an itemized deduction for "investment expenses" (if you have enough other deductions to itemize, and enough "miscellaneous itemized deductions" to deduct them). In order to pay the trust's expenses, they sell off a small amount of gold (or silver) at the end of each month. This generates a taxable gain or loss which is also passed through to the shareholders. Your portion of the gross proceeds from the sales are reportable on Schedule-D, and deductible as investment expenses. You need to calculate your basis in the gold (or silver) sold according to a complex formula, and subtract that basis from your portion of the gross proceeds, to arrive at your taxable gain or loss. Your basis in the investment is REDUCED by the basis of the "trust sale", which INCREASES your taxable gain when you eventually sell the shares, effectively canceling the aforementioned subtraction. Although technically incorrect, since the amounts are small, it would be reasonable to treat the "trust sale" as though there were a basis of zero, paying tax on the gross proceeds. Then you wouldn't reduce your basis, and pay the tax later. This would save a lot of record-keeping and calculations for a few piddling dollars.

Although the EFT surely has the information and computer resources available to provide all the data you need in a compact format, they have opted to provide a ridiculously complex 10-page formula instead. Last year (2009) was the first year they were required to report the trust sales, so they actually provided more usable figures, saving you most of the calculations --- but they failed to explain what those figures represented, instead referring you to the complex formulae --- and they "forgot" to pro-rate them for the number of days held when there was a purchase of sale during the month! [/quote]

[MikeK]

Note, I'm only a few weeks in to converting to the PP and that I've only transferred funds in my tax advantaged accounts, still trying to figure out what assets I should sell in my tax disadvantaged accounts (and also trying to over come the thought of buying that much virtual gold...)

stocks 43%
bonds 44%
gold 0%
cash 12%

Also, the above makes up about 40% of my total assets, hope to get it up to 60% when I'm done making all the initial purchases.

[dualstow]

...
I could just about reach a 3 X 33 PP by converting my entire retirement account to EDV but I hate the idea of my retirement account being solely in long term bonds, plus with my entire retirement account in Long term bonds, I don't have wiggle room in my IRA to rebalance stuff so I keep some stocks and gold there.
...

My 401(k) is almost all 30-year treasuries and TLT. I wonder if there are account representatives who look at my account and think, Wow, this guy really knows how to pick investments. If so, the reps at another company are looking at my taxable account and thinking, This guy completely missed out on bonds. Not very smart.


FarmerD, I think part of the problem is that we know we're supposed to buy all the assets at the same time. In retrospect, it would have been great to sell much *more* stock and buy gold and bonds. But this party can't last forever. Selling stocks because they predate the pp and not because of a huge runup not only feels like market timing, it feels like market timing in the wrong direction! The counter-intuitive direction.
Perhaps the solution - for my sitch, anyway - is to go ahead and buy more blocks of stock index funds along with the other assets, but to keep selling old individually held stocks at opportune times.

This is off-topic but I'm dying to know if you're really a farmer.

[FarmerD]

Dualstow,
To the best of my ability I did convert all available assets to the PP at once.  However, many of my funds are now sitting on a 350% gain.  Even at a cap gains rate of 15% that's still a lot of money to give away to the govt.  So for the time being, I'll have to content myself with with approximately a 70% PP-like portfolio.     

You're right about reverse market timing.  Over the past twenty years I've been investing, I've always practiced "regression to the mean type investment strategy" and I've always done pretty well with it.   My biggest losers last year (Vanguard Precious Metals and Mining and EM) are shooting upward now.  Notwithstanding the tax implications, I hate selling them now for this reason. 

BTW I grew up on our family farm.  I also worked my way through college there by working weekends, summers, spring breaks, etc.  Lot of 100 hour work weeks.  My only connection with farming now is my rather large garden.   

[dualstow]

A 350% gain- that's a high class problem!  If I were you, I might at least trim those holdings once a year and lock in some profits.

[rhymenocerous]

Stocks- 32%
LTT- 30%
Gold- 30%
Cash- 8%

I just recently decided to pay off all of my student loan debt (which feels great!), so my cash allocation is extremely low.  Currently, I'm building it back up through my savings account and new 401k contributions, which are going right into a money market fund.

[PP67]

Right now about 25% of my investable assets are in a 4x25% taxable PP started the first of this year...  I have another 25% in cash and the remaining 50% in a 401k earning a pretty steady 3.5%/yr for the past 10 yrs...

I am seriously thinking of converting the 25% cash position to a 4x25% taxable PP today...

Any Black Swans on the immediate horizon?

Cheers!

[PP67]

Too late!....  I drank the Kool Aid!...  I'm feeling a little woosy...  Is that a dark duck landing in my pond?