Tactical Allocations

Monthly Portfolio Update: The new tactical allocation for September will be:   Large Cap Equity:    75%   Small Cap Equity:    25%   High Yield Debt:       0%    Inv. Grade Debt:       0%   Look for a re-cap of performance on September 1st. The Equal portfolio:  There are no changes to the equal portfolio. The cash balance at month end is $727.11, total market value is $102,021.92. I will only rebalance when weightings get off by 5% or more (i.e. one of the asset classes has less than a 20% or more than a 30% weighting) or the cash balance hits $1000. The TA portfolio:  The change from the previous month is a reduction in Small Cap Equity (VTWO) and an increase in Large Cap Equity (VONE). This makes the portfolio a little more defensive, however it is still 100% in equities and therefore very bullish. I am adjusting the way I calculate what to sell this month. Inst...

"Compound interest is the most powerful force in the universe"   ~ Albert Einstein Procrastination is a basic trait of human nature that I think most people struggle to overcome. When it comes to savings, procrastination has a much higher cost than we understand because we do not fully understand the power of compound interest.  I like to use examples as it is easier to think in terms of real numbers. For a 20 year old, retirement is a long way off. At this age finances are tight, we do not have much spare money. We also have lots of expenses and needs as we begin paying for higher education and our own transportation and within a few years a home and kids. It is easy to understand why very few start saving for retirement when they are very young but... The true cost of procrastinating can be many times the amount we set aside! The chart below is the expected retirement savings balance of a 20 year old. It assumes they invest $10,000 per year and earn a 7% return...

PERFORMANCE: The  Equal weighted portfolio  returned 1.2% and is the baseline for the other portfolios.  The  TA portfolio  (which actively allocates among the four asset classes that are in the equal weighted portfolio) outperformed the equal weighted portfolio returning 1.9%.  The  Enhanced portfolio  (which uses the allocation of the TA portfolio and seeks to enhance those returns with security selection) did the best, returning 5.1%. The relevant security returns (used in the above three portfolio's) for the month of July (excluding dividends) were:  VTWO  0.8%,  IEMG  5.5%,  VONE  2.0%,  DSEUX  4.3%, KXI 0.7%,  JNK  0.5%,  AGG  0.1% Color significance for whole post:   Red  is small cap equity  Orange  is large cap equity Purple  is high yield debt Green  is investment grade debt ALLOCATION: Allocations during ...

TRADES  (performed in the morning on August 1st) : Equal Weight Portfolio: Beginning cash $564.75 No trade made because allocations were within acceptable range and cash was below $1000 TA Portfolio: Beginning cash $428.81 Sold 75 shares of VTWO at $113.71 per share, $7 commission, total proceeds $8,521.25 Purchased 78 shares of VONE at $113.49 per share, $7 commission, total cost $8859.22 Cash left over $90.84 Enhanced TA Portfolio: Beginning cash $549.15 Sold 163 shares of IEMG at $52.96 per share, $7 commission, total proceeds $8,625.48 Purchased 181 shares of JXI at $50.64 per share, $7 commission, total cost $9,172.84 Cash left over $1.79 I will post last months performance and the allocation adjusted for today's trades tomorrow. DISCLAIMER: Past performance is not a guarantee of future performance.  This strategy is presented for informational purposes only and is not a solicitation to buy or sell any securities....

Monthly Portfolio Update: The new tactical allocation for August will be:   Large Cap Equity:  66%   Small Cap Equity:  34%   High Yield Debt:      0%    Inv. Grade Debt:       0%   Look for a re-cap of performance in August 1st's post. The Equal portfolio:  There are no changes to the equal portfolio. The cash balance at month end is $564.75, total market value is $102,032.59. I will only rebalance when weightings get off by 5% or more (i.e. one of the asset classes has less than a 20% or more than a 30% weighting) or the cash balance hits $1000. The TA portfolio:  The change from the previous month is a reduction in Small Cap Equity (VTWO) and an increase in Large Cap Equity (VONE). This makes the portfolio a little more defensive, however it is still 100% in equities and therefore very bullish. The size of the trade will be 1/12th of the total portfolio value (market value of po...

You may notice some changes to the blog the next time you visit. I am new to blogging and am constantly learning about new ways to make my site easier to navigate and new ways to keep key information easy to find.  To this end, I have added pages that give: The blog's mission statement and a little about me  An overview of the different portfolios Help with navigation The links to these pages are found in green at the top of the blog. I have also added labels to each blog so you can view only the type of blogs you want to see. The two  labels I have so far are: Insights (posts on general financial related topics) Allocations (posts on changes in the portfolio and performance reviews) These are found by clicking the ^ symbol in the upper right hand portion of the blog. This will reveal a couple of buttons labeled "Insights" and "Allocations". By clicking on the button you will only see that type of post. To go back to seeing all posts click on ...

I have had many people ask me the very difficult question: When can I retire? Most people are looking for an age but underlying this question is a dollar amount. What we really want to know is "When can I retire and live comfortably for the rest of my life without financial worries?". The answer to this has just as much to do with your retirement savings as it does with your age. Without a crystal ball, there is no way to know the exact answer. So like most things, the answer is, "it depends". There are so many unknown's (how long will you live, how will your spending habits change, what will your investment returns look like, what will inflation do)?  But there are also some things that we control and those are what I would like to analyze together. To do this, we will look at the retirement related decisions we make and their impact on retirement age (holding all the unknowable things constant). We will find that decreasing spending is more powerful t...