Allocate…. part III


(Note: the featured pie chart is the asset allocation of the Yale University Endowment Fund, managed by David Swenson) I’ve recently been writing about asset allocations based on risk tolerance.  Today I decided to divulge my own personal asset allocation.  As a disclaimer, this is based on my own personal risk tolerance as well as my investment preferences.  This is not advice nor intended for anyone to “piggy-back” my investments and/or allocations.  My asset allocation is based on several factors: my risk-aversion (hence the high % invested in “alternatives” such as real estate and hedge funds), the proximity to my planned retirement from the workforce in a few years (by 2023, God willing), and my psychological need for liquidity.

Taxable Account:

  • Real Estate Crowdfunding      32%
  • Cash                                                   28%
  • Residential Mortgage Bonds  7%
  • Domestic Equities                        5%
  • International Equities                 5%
  • Municipal Bonds                          3%
  • Hedge Funds                                20%

* Misc (I hold physical bullion equal to approx. 2% of my investable assets)



  • Cash                                                    18%
  • Alternative Mutual Funds         27%
  • Unconstrained Bonds                14%
  • International Equities               12%
  • Commodity Fund                        10%
  • Residential Mortgage Bonds  10%
  • Domestic Equities                       9%


As the reader will notice immediately, my holdings are very diverse.  My goal is to hold as many non-correlated assets as possible, somewhat impervious to the whims of the stock market.  My taxable account has a generous cash flow from the Crowdstreet Real Estate holdings, as well as the bonds and cash. My savings account is with Pure Point , the nation’s highest yielding savings currently at 1.60% APR (I am not an affiliate and receive no remuneration from this link).   I’ve held a higher equity allocation in the recent past but sold down these holdings in early December 2017.  The residential bonds have not sold off during the recent sell-off in treasuries.  This holding is very stable and currently pays an average 3.49% with a duration of less than 2 years.  The unconstrained bond funds are managed by Doubleline and Guggenheim  and currently have a negative duration, meaning they are hedged from interest rate risks.

For my readers who are Wall Street Bulls,  up until December of 2017 I have held equities in the form of ETF’s (SPY, MDY, PFF), select individual stocks (such as MSFT and UTX) and equity mutual funds (HDPMX & YACKX) for several years.  This year I’ll pay a hefty capital gains tax bill.  For the time being, I won’t benefit from any upside in the stock market.  Inversely, I won’t lose sleep at night when the eventual bear market arrives as I’ll be safely invested in cash and in a low beta portfolio, with very little exposure to any potential Black Swan events.

You see, this blog is a FIRE blog, for those interested in financial independence and retiring early.  If one has a goal of retiring in five years is it prudent to be heavily invested in equities now, especially at these lofty valuations?  If one’s portfolio loses 30% in value, he/she doesn’t have time on their side to  recoup those losses.  This is not to say I won’t be reinvesting this cash later on.  My plans are to redeploy the dry powder back into equities at far lower prices.  I truly believe in selling at high prices and rebuying at much lower prices.  Occasionally the markets offer investors stocks at a discount., it’s always wise to hold ample cash for these occasions.

Enough about asset allocations.  My next blog posting will be a on the subject of DEBT and how to rapidly reduce it.



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