British FT All Share stock index, and House Price Only (excluding imputed rent benefit)What is 'House PO' and what is FTAS?
Also funny that those that advocate broad diversity of assets, may then propose that you concentrate into just one group of assets. Owning a home + imputed rent is somewhat stock + dividends like, combine that with domestic stocks + international stocks ... as your 'equity' allocation. Combine T-Bills with bonds and gold as your 'bond' allocation. Initial equal weightings of those = 50/50 "equities" and "bonds". Rebalancing or not, can yield similar overall outcomes, with non rebalanced the tendency is towards ending up with a high weighting in the asset(s) that performed the best, low weighting in the assets that performed poorly. If you leave your home value non-rebalanced, rebalance the remainder US stocks, Int Stocks, cash, bonds, gold - that's generally fine. The collective of that is inclined to be a less volatile middle road portfolio value, in contrast to the individuals that wax and wane in some cases significantly - that opens up debates such as comparisons of outcome via selected time periods when one asset performed exceptionally well, or poorly.
UK data chart, British RPI (inflation) adjusted
Have reasonable expectations, a 3.33% 30 year return of your inflation adjusted capital, supplement that with additional withdrawals if/when the portfolio value has, as more often will be the case, performed relatively well.
Some may lose out via over-analysis paralysis or repeated profit-chasing (changes) .... "if you held this tilt instead then the rewards were greater" (over a particular period). Or "results were lousy if you held this asset" (again over a particular period). Fundamentally concentration risk is the major risk factor, easily diluted.
Statistics: Posted by seajay — Sat Nov 30, 2024 7:43 am