[quote=j.passing.by,Oct 12 2018, 06:28 PM]
Continuing from previous post on Rebalancing…

What is the proper Asset Allocation for a Unit Trust Investor?

In other words, what is the best Equity/Bond ratio that will be most suitable to the investor?

Explained in details in this blog by Financial Samurai, there are various models and all are based on the age of the investor.

https://www.financialsamurai.com/the-proper...d-bonds-by-age/

The classic model is using age 100 and subtracting your age to get the equity ratio. If you are 30 years-old, the appropriate ratio would then be 70/30; if age 60, then the ratio is 40/60.

There are 5 different models in the article. Do read the reasons why the models differ slightly from each other. Maybe you would be able to vary and adjust the ratio slightly and make it your own.

I find the Survival Model interesting. It is 50/50 from age 35 onwards. Perhaps it would be more appropriate if the age is set to 45 instead of 35, and taking into account that we (or rather most of us) have EPF too.

For those who are age 60 and in retirement and depending solely on passive income from their nest eggs, the 4-box method could also help to find the best ratio to have.

The 4-box method (as mentioned in an earlier post) is 2 boxes on expenditures (basic necessities and other things you can do or spent if there is the money for it) and 2 boxes on incomes (stable income and not-so-sure-and-risky income.)

In each of the 2 expenditure boxes, write down all the appropriate needs/expenditures and their cost. Then put as much assets into the stable-income to match the basic-necessities box.

For example, if the basic monthly expenditure is $3,000 a month or $36,000 a year, then there should be a principal of $600,000 in an investment vehicle giving an annual return of 6%. This ensures that you will never run out of money before you die since you are withdrawing only the annual returns.

Then put the remaining assets into the not-so-sure-and-risky income box. This is the asset that you can take some risk. If the annual returns are good, you spent more; if not so good, spent less.

Hopefully, the last box can conservatively, without too much risky expectations from it, match the other-needs box; else your nest egg is not as big as you had initially thought.

Edit: last sentence corrected to "not as big as..."

[quote=j.passing.by,Mar 13 2020, 03:49 PM]
EPF as part of retirement portfolio.

- Dividend is paid till age 100.
- Full withdrawal can be done any time after age 55.
- Contributions made after age 55 can be withdrawn at age 60.
- No limits on withdrawal in a month/year, on both the amount and frequency
- Nomination(s) can be easily and conveniently changed upon your request.
- Withdrawal transaction is quick and easy, transferred into your bank account within 3/4 working days.
- You can place a standing instruction to withdraw the yearly dividend automatically every year.


Above is what I posted and shared in a post on Feb. 26 last year.

=========

My journey so far…

I started the journey blind with very little knowledge on unit trust funds. In other words, I got suckered into Public Mutual. LOL

Made all the mistakes one could possibly make. At one time, the portfolio was at negative 60%. This woke me up.

My main goal was building a portfolio of unit trusts to compliment the retirement fund in EPF. Thus have to persevere and put extra efforts to achieve the goal.

So, to turn around the portfolio, I have tried this and that, push it around from one asset class to another, switch here, switch there, sometimes lucky, sometimes not.

Over the years, I have rollover (total switching in/out) RM2 million and more!

Passed a significant milestone in 2016, lost it in 2018, and regained it last year. Maybe I was becoming wiser over the years, or becoming less greedy for more, the portfolio was slowly switched to nearly 100% bond funds by the end of December, 2019.

At the moment, equity is 3% of the portfolio.

So, had I foreseen this massive market sell-off happening now?

No, lah. The asset allocation was accordingly to my internal financial plan and nothing to do with external market noise. The journey is at the last stage, and the re-balancing was done as planned.

Cheers.

=========

Rebalancing the asset allocation… this was posted and shared on Oct. 12, 2018, "What is the proper Asset Allocation for a Unit Trust Investor?"


[/quote]

[quote=j.passing.by,Oct 12 2018, 06:28 PM]
Continuing from previous post on Rebalancing…

What is the proper Asset Allocation for a Unit Trust Investor?

In other words, what is the best Equity/Bond ratio that will be most suitable to the investor?

Explained in details in this blog by Financial Samurai, there are various models and all are based on the age of the investor.

https://www.financialsamurai.com/the-proper...d-bonds-by-age/

The classic model is using age 100 and subtracting your age to get the equity ratio. If you are 30 years-old, the appropriate ratio would then be 70/30; if age 60, then the ratio is 40/60.

There are 5 different models in the article. Do read the reasons why the models differ slightly from each other. Maybe you would be able to vary and adjust the ratio slightly and make it your own.

I find the Survival Model interesting. It is 50/50 from age 35 onwards. Perhaps it would be more appropriate if the age is set to 45 instead of 35, and taking into account that we (or rather most of us) have EPF too.

For those who are age 60 and in retirement and depending solely on passive income from their nest eggs, the 4-box method could also help to find the best ratio to have.

The 4-box method (as mentioned in an earlier post) is 2 boxes on expenditures (basic necessities and other things you can do or spent if there is the money for it) and 2 boxes on incomes (stable income and not-so-sure-and-risky income.)

In each of the 2 expenditure boxes, write down all the appropriate needs/expenditures and their cost. Then put as much assets into the stable-income to match the basic-necessities box.

For example, if the basic monthly expenditure is $3,000 a month or $36,000 a year, then there should be a principal of $600,000 in an investment vehicle giving an annual return of 6%. This ensures that you will never run out of money before you die since you are withdrawing only the annual returns.

Then put the remaining assets into the not-so-sure-and-risky income box. This is the asset that you can take some risk. If the annual returns are good, you spent more; if not so good, spent less.

Hopefully, the last box can conservatively, without too much risky expectations from it, match the other-needs box; else your nest egg is not as big as you had initially thought.

Edit: last sentence corrected to "not as big as..."