Old_Skeet's All Weather Asset Allocation

[oldskeet]

                                                                                        Old_Skeet's All Weather Asset Allocation.

My all weather asset allocation of 20% cash, 40% income and 40% equity affords me everything necessary to meet my needs now being retired and in the distribution phase of investing. The benefit of this asset allocation is that it provides sufficient income, maximizes diversification, minimizes volatility, and provides long-term returns.

The 20% held in cash area provides me ample cash should I need a cash draw over and above what my portfolio generates plus it can provide the capital necessary to fund a special investment position (spiff) should I choose to open one during a stock market pullback. In addition, cash helps stabilize a portfolio during stock market volatility. Example of investments held in this area are cash, money market mutual funds and CD's.

The 40% held in the income area provides me ample income generation to meet my income needs in retirement. It is a well diversified area that incorporates a good number of income generating type funds. Some examples of investments held in this area are AZNAX, BAICX & PONAX.

The 40% held in the equity area provides me some dividend income along with some growth, equities generally provide, that help offset the effect of inflation. Some examples of investments held in this area are AMECX, IDIVX & SPECX.

Generally, for my income distributions, I take no more than a sum equal to what one half of my five year average total return has been. In this way, principal grows over time.

[johntaylor]

If I had been an investor at 12, my portfolio would have included Camillus knives, Henry lever action rifles, John Deere tractors, and Wrigley's Juicy Fruit chewing gum.

[oldskeet]

Hi johntaylor ,

Yes, I became an investor at twelve years of age from money I received as an Easter gift from my great grandfather. My first fund at the age of 12 was Franklin Income Fund. My second fund was Income Fund of America in the mid 70's while I was in my mid 20's and working my first job after college at 1st Union National Bank.

Interestingly, my grandaughter and grandson became investors at the age of 3 months. I believe it to be of good benefit to start kids early as investors rather than later.

And, yes ... I had toys as a child and so do my grandkids. As an adult. My gun collection totals only 12 firearms. Four skeet guns, four pistols and four hunting guns (two rifles and two shotguns).

[helmut]

Sept 21, 2021 13:55:33 GMT johntaylor said:

If I had been an investor at 12, my portfolio would have included Camillus knives, Henry lever action rifles, John Deere tractors, and Wrigley's Juicy Fruit chewing gum.

I just wish I had the baseball cards back that I foolishly put in the spokes of my bicycle to make it sound cool!

helmut 

[Deleted]

"My first fund at the age of 12 was Franklin Income Fund. My second fund was Income Fund of America in the mid 70's while I was in my mid 20's "

A very conservative and rather safe start to investing? Hopefully you became more aggressive as you learned

As I am learning the very hard way, in investing what looks like conservative and safe (Cash, bonds, value etc) is often completely the opposite in the long term.

[oldskeet]

Hi @waffle ,

Thanks for making comment.

My father's broker picked those funds for me because they contained both stocks and bonds plus they paid dividends. The thinking, at the time, was I would learn how investing worked and how it would benefit me in the long run not only through wealth generation but income generation as well.  And, if I chose the dividends could be paid to me instead of being reinvested.  It did not take me long to figure out just how much gingle the dividends could put into my pocket while I was in college.

The thought achmploished the intended goal because I suck with it. And, I am glad I did.

Today, I believe more investors measure success by how much their portfolio's gain in value over insight in just how much dividends can play an important role in building one's financial future. My late father had a saying ... "Income never goes out of style." Thus far, through my lifetime, I've never seen anybody prove him wrong.

I sincerely wish all ... "Good Investing."

Old_Skeet

[yogibearbull]

Franklin Income is among the funds misclassified by M*. Its nominal-equity is 53.03%, effective-equity is 66.18% (due to riskier bonds and convertibles), but M* says Allocation 30-50% (or, conservative-allocation).

List of misclassified funds by M* is growing.

[Deleted]

"Today, I believe more investors measure success by how much their portfolio's gain in value over insight in just how much dividends can play an important role in building one's financial future. My late father had a saying ... "Income never goes out of style." Thus far, through my lifetime, I've never seen anybody prove him wrong."

I was thinking about this few days back. My concepts are bit mixed up here.
They say compounding is most powerful force. But how does pure growth with no dividends and interest compound over time unless company you are invested in is reducing share count by buybacks which is same as reinvesting dividends but without tax hit?

[yogibearbull]

A company with earnings but no dividends can, in theory, grow faster by deploying retained earnings. So, the compounding of EPS can be at a higher rate. Reducing share count with buybacks may be an easy way out if the company doesn't see growth prospects. Of course, not all companies handle other people's money (OPM) well and then their investors get hurt.

[Deleted]

Makes sense. In case of growth company, the company management is investing back the cash into company and compounding it for you. In other cases, they are returning cash to you for you to invest/compound or spend as you may feel fit.