Q2 2018 Asset Allocation Report

This is a series inspired by Miss Jill of frugalhoney She reports her net worth on a quarterly basis, which is simply her total assets minus total liabilities. I chose to report only my assets, since my only liabilities are my auto loan and credit card loans.

I did not include my car in total assets, so there is no need to report the liability. As for the credit card loans, I always pay in full monthly. So here it is:

ScreenHunter 10

The breakdown is as follows:

Retirement Fund – Calculated as how much my wife and I would receive if we resigned from our respective companies. My retirement fund is currently invested in a balanced fund.

Cash and Cash Equivalents – Composed of 2 savings accounts (including emergency fund), 1 UITF composed of short term fixed instruments, and 1 Credit Cooperative Account. I opened the UITF when my wife got pregnant, so we could already set aside money for the labor and delivery costs.

Insurance CSV – The cash surrender value of our VUL insurance accounts, which is basically the fund or investment portion.

Stocks – These are our direct stock investments and 1 UITF equity index fund for long term goals.

There are several ways to allocate your assets, but I would like to focus on the one that Mr. Fitz Villafuerte suggested in one of his blogs:

  • Low Risk = AGE / 2 ——————-> 30/2 = 15%
  • Moderate Risk = 50% ————————>= 50%
  • High Risk = (100 – AGE) / 2 ->(100-30)/2= 35%

If you are 60 years old and nearing retirement, you don’t want 80% to 90% of your total assets in stocks and equities, since the market could turn bearish and you will have to wait a long time for it to recover. On the other hand, if you are just starting to work, it would be wise to invest your excess money (after emergency fund) in stocks and equities, because you have the time to endure the fluctuations.

My asset allocation:

  • Liquid Assets & CSV Life Insurance = 52%
  • Retirement Funds (Balanced Fund) = 25%
  • Stocks and Equity Index Fund = 23%

As you can see, we are far from the suggested asset allocation. Again, it is only a suggested formula. Personal finance is still that. Personal. In our case, we consciously focused on building up the hospital fund and our emergency fund.

The good thing is you can always reallocate your assets and adjust it accordingly as you get older. If you’ve never given thought to you asset allocation, it is never to late to start.

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