My Grandma's portfolio.

[Debaser82]

Quote from Trader666:

In your view? How about figuring out the correlations instead of guessing? You can start by doing a portfolio xray in Morningstar. It isn't perfect but better than guessing and you can improve on it with a little effort. Also, I'd put more in bonds and unless you know more about them than someone like Gundlach, put that part in a few good bond funds.

Past Performance is No Guarantee of Future Results...

A lot more smarter men then me sit at NBC all day discussing whether correlations between a wide variety of assets will continue or breakdown.

I'd like to be prepared for them to remain in place or not.

Anyway, thanks for the morningstar advice and I will certainly look into what bond funds have to offer these days.

 

[bwolinsky]

Quote from Debaser82:

My grandma sold her appartment as she is in a retirement home now.

After putting away some cash for covering expenses the next years (her pension only covers 1/2 of her expenses) and cash to pay for inheritance rights (it's a reality...) she has about 100K USD coming available to invest.

I was thinking about employing it the following way. The goal is to support her day to day expenses somewhat and not lose to much of the principal but I guess everyone wants that...

- 10K in the Nikkei. (I see there are small cap Japanese indexes too?). Nikkei has been dead for 20 years, if the Yen rises we do good, if the Yen tanks stocks could compensate for it.)

- 10K in a broad emerging market index.

- 10K in a emerging market of choice (Vietnam, India, Egypt?).

- 10K in the S&P.

- 10K in a local telephone company that pays a great dividend

- 10 K in a foreign corporate bond (but what currency the Euro tanked against most of them (like AUD)

- 20 K in rocksolid companies like Nestle or Roche or Total or utilities...

- 10K in a short instrument maybe best on emerging markets since they get hit worst when liquidity retreats.

- 10K in GDXJ (couldnt resist... )

What say you guys, would you leave your own grandma with such an alocation...

Cheers.

This allocation is not efficient. You'd need Macroaxis and more suitable investments to do a real portfolio. Every investment in this is too aggressive, and that's coming from an IA/CTA.

 

[anglagard]

Wait til April, then short XLF.

Cover half at 10%, then one quarter at 15% rest at 20% close by October, whatever comes first.

Then reverse long but only with the gains all the way til March.

Keep cash in CD until it's time to short.

Joe

 

[Mercor]

The goal should be Capital preservation along with tax avoidance.
I would look at guaranteed tax free instruments, Muni-Bonds.

 

[Debaser82]

Quote from Mercor:

The goal should be Capital preservation along with tax avoidance.
I would look at guaranteed tax free instruments, Muni-Bonds.

All capital apreciation is tax free here, interests get taxed 20%, stock dividends get taxed 25% national, 50% international.

 

[Debaser82]

I believe seniors (and people in general) who got hit hardest these last few years have been hit because:

- Too much exposure to individual stocks or companies. I'm sure everyone knows someone who had 90% of their money in say C bonds or stock.

- Too little diversification in regions, currencies, sectors. People used to think owning Meryl, BAC and JPM was being diversified.

- Little to no exposure to any upside making any rebound in risk assets of no influence to them. It's classic mom and pop to sell after a 50% loss and see the rebound go past you.

What am I missing...

 

[Debaser82]

I have given it a couple of weeks and have come to the decision that I will try and pursue a 25% cash 25% gold 25% stocks 25% bonds alocation for my mother and grandmother's savings combined.

I believe this is a smart way to limit risk, with upside potential in place while drops in the one could be countered by a rise in the other.

The cash amount will probably be higher then 25% since there will also be some of the money used for day to day expenses.

They already own all 4 of these assets, so adjustments will be smaller then just putting in all the money in at one time.

I will take the time to come to think about the allocation of the individual categories. For sure index investing will be the largest chunk of the stock part, since that as well lowers the risk.