Buffett has generally suggested that if you own a home, kids have flown the nest, no debt, have a million in stocks paying $30K/year in dividends, you likely have little need for any cash, i.e. 100% stock can be fine. He's also advocated time averaging into stocks - over a decade or so. As such the 90/10 might be considered as a indicative time averaged guidance figure.Buffett's advice seems fine if you keep in mind that he probably was discussing investing in general, not precise asset allocation as Bogleheads view it. If you only are considering your investments, and exclude assets that you need to protect from investment risk ( like a paid-off home and a few months or years of expenses) --
all a US investor really needs to invest in are what Buffett said. You don't need to try to optimize or diversify as many Bogleheads like, but should do fine.
Consider one who retires, initially puts 33.3% hard cash in their safe, alongside 22.2% gold and 44.4% is invested into a stock accumulation index fund. They spend the hard cash, perhaps over the first 8 to 10 years, maybe end their first retirement decade with the initial 67/33 stock/gold proportion having transitioned to 80/20 stock/gold and no hard cash remaining. Once all of the cash is spent they also sell the gold and add the proceeds to stocks. For the first decade they time averaged something like 17% cash, 20% gold, 63% stock. For the next two decades, out to 30 total years, 100% stock. Over the full 30 years they time averaged 6% cash, 7% gold, 87% stock, near-as his 90% stock figure -from a initial base of having started with 55% in combined gold and hard cash. Conceptually at least, reduced earlier years sequence of returns risk, whilst capturing most of the right tail longer term good/great rewards that a 90/10 asset allocation might yield.
Statistics: Posted by seajay — Tue Dec 05, 2023 9:58 pm — Replies 219 — Views 33408