This is a “safety first” approach. Given one is young, has a high savings rate, but a low net worth, this seems like a good idea; and is exactly how I accumulate. I have plenty of life to take the risk; actually saving the money is the biggest gain.I suggest this. Instead of thinking about percentages, think about an absolute amount.
If you are saving $30,000 a year, 50/50... Maybe keep doing that until the bonds/cash side is certain number that you are comfortable with, and then you could increase the amount you put into stocks.
Maybe it's $150,000 or $200,000 or something. Get the bond/cash side up that high, so you have that large safety net, and then maybe you can put more in stocks after that more comfortably.
I have done the numbers; I turned the corner on my portfolio where more money can be solely invested in riskier investments without causing any realistic harm. I have won the game in the sense that I do not need to save more to maintain my standard of living; I just need to pay bills until retirement age when social security is available. Saving excessively is to thank, not the asset allocation. Being smart with the safe money is the second most important thing because I did far better than a checking account.
But I do not plan on letting up; I would like not being required to work until that age, especially when I do not feel that good as it is.
Statistics: Posted by secondopinion — Sun Jan 05, 2025 4:15 pm — Replies 65 — Views 4682