Folks,
It turns out there is no such consistent view on what is an aggressive asset allocation. And, what does aggressive actually mean?
1) Person A is 100% stock with zero emergency fund. But, all retirement expense is funded by pension and social security. So, is person A aggressive in asset allocation? Person A is not taking any risk or impact to his lifestyle even if the portfolio goes to zero.
2) Person B is 100% stock with zero emergency fund. The retirement expense is to be 100% funded by the portfolio. But, the portfolio is 100X aka 100 years of expense. Is person B having an aggressive asset allocation? Not exactly. The person's portfolio is so big that even if the stock market drops 50% and more, it won't impact the lifestyle.
3) Person C is 100% stock with zero emergency fund. But, the person's real estate portfolio is 2X the stock portfolio and his retirement is funded by rental income. Is person C having an aggressive asset allocation?
It seems to me that without the total context/financial picture of the person and how the expenses are funded, it is very hard to say every X% stock portfolio is aggressive or not.
What do you mean by an aggressive portfolio?
KlangFool
It turns out there is no such consistent view on what is an aggressive asset allocation. And, what does aggressive actually mean?
1) Person A is 100% stock with zero emergency fund. But, all retirement expense is funded by pension and social security. So, is person A aggressive in asset allocation? Person A is not taking any risk or impact to his lifestyle even if the portfolio goes to zero.
2) Person B is 100% stock with zero emergency fund. The retirement expense is to be 100% funded by the portfolio. But, the portfolio is 100X aka 100 years of expense. Is person B having an aggressive asset allocation? Not exactly. The person's portfolio is so big that even if the stock market drops 50% and more, it won't impact the lifestyle.
3) Person C is 100% stock with zero emergency fund. But, the person's real estate portfolio is 2X the stock portfolio and his retirement is funded by rental income. Is person C having an aggressive asset allocation?
It seems to me that without the total context/financial picture of the person and how the expenses are funded, it is very hard to say every X% stock portfolio is aggressive or not.
What do you mean by an aggressive portfolio?
KlangFool
Statistics: Posted by KlangFool — Fri Jan 10, 2025 12:16 pm — Replies 4 — Views 300
