Asset Allocation

Back in early 2006 when I reviewed the returns from my net worth in 2005 I realized I needed to spend some time looking at my asset allocation.

Here is what my asset allocation looked like in March:

I took a look at my total asset allocation in March, but dropped the ball and didn't dig any further. Unfortuntely, my asset allocation has already changed enough that I should start over.

Here is how my Total Asset Allocation looks now:

3 big changes since March:
1) I bought a second property.
2) I vested in my cash balance pension plan, thereby adding bonds (or really bond equivalent investment to the mix). My pension plan earns a yield equivalent to 1 yr treasuries + 1%.
3) I have burned through a sizable amount cash this year.

I actually think my asset allocation is better off today compared to March. I thought I wasn't exposed enough to real estate and given this is total assets (in the case of real estate ignoring the offsetting liabilities) then I think it make sense to have at least 1/2 your total assets in real estate assuming you have corresponding liabilities.

Related in Asset Allocation:

Stock Asset Allocation (Sep 20, 2006) After checking out my total asset allocation, I decided to drill a little further and look at my stock investment allocation. After a poor performance last year, I realized that my stock allocation was almost entirely in large-cap stocks and...

Here is my current asset (Mar 31, 2006) Here is my current asset allocation for all the assets on my balance sheet (just assets; this ignores liabilities). I don't have cars or personal property listed on my balance sheet so it won't show up here either. I suspect...

Comments (5)

I think you should break out stocks into US and foreign stocks. they're different enough to justify a separate category.

I agree that the investment in real estate was a good move but there is one thing that I would worry about is the potential for the value of the investment to decrease if the housing bubble bursts. I've been hearing that there's likely to be a decrease in real estate values accross north america; does this worry you?

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A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
Current Net Worth: $1,938,393


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