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Last year I changed the methodology by which I calculate my portfolio's allocations. The main change involved my treatment of mutual funds.
Previously, for funds that held assets of several classes, I would consider the entire fund to be of the asset class that made up the majority of the fund's holdings (for simplicity). For instance, if a fun holds 80% equities, 10% bonds, and 10% cash, I would just add the entire position into my equities category. I never really evaluated its accuracy; rather, I just assumed that it was close enough.
After reviewing some updated data sheets, I realized that this simplified approach was causing some significant error in my allocation calculation -- my cash exposure was actually several thousand dollars more than I thought. So I made a spreadsheet that, using the published allocation data for each fund, calculates my exposure to each asset class in each fund. So if I know that I have $1000 in Fund XYZ, and that it is comprised of 80% equities, 10% bonds, and 10% cash, then I take credit for $800 in stocks, $100 in bonds, and $100 in cash.
So that leads me to a few questions. Does anyone else calculate their allocations with such granularity? And if so, how often do you update your calculation?
Last year I changed the methodology by which I calculate my portfolio's allocations. The main change involved my treatment of mutual funds.
Previously, for funds that held assets of several classes, I would consider the entire fund to be of the asset class that made up the majority of the fund's holdings (for simplicity). For instance, if a fun holds 80% equities, 10% bonds, and 10% cash, I would just add the entire position into my equities category. I never really evaluated its accuracy; rather, I just assumed that it was close enough.
After reviewing some updated data sheets, I realized that this simplified approach was causing some significant error in my allocation calculation -- my cash exposure was actually several thousand dollars more than I thought. So I made a spreadsheet that, using the published allocation data for each fund, calculates my exposure to each asset class in each fund. So if I know that I have $1000 in Fund XYZ, and that it is comprised of 80% equities, 10% bonds, and 10% cash, then I take credit for $800 in stocks, $100 in bonds, and $100 in cash.
So that leads me to a few questions. Does anyone else calculate their allocations with such granularity? And if so, how often do you update your calculation?
I use to do that, but I have stopped for a couple of reasons. #1 I was worried that if I micromanaged things too much I would be more likely to strike out than get a hit. #2 I moved into Index Funds for my 401K. They are more straightforward as to their stock/bonds/cash positions and I appreciate their significantly lower management fees within my 401K plan.
I move the pretax $$.$$ around twice a month. I also have 6% of my total pay going to the index funds, real estate trusts, bonds and or annuities.
I no longer like mutual funds and make the pre-retirement deposit via internet.
I get paid twice a month and I get really close to my allocations...I am nver exact anymore but never off more than 1% per 6 months span. I enter all my haves and paid in an spreadsheet I made and the differences in propsals to exact are slightly different up to the 1%.
I move the pretax $$.$$ around twice a month. I also have 6% of my total pay going to the index funds, real estate trusts, bonds and or annuities. I no longer like mutual funds and make the pre-retirement deposit via internet.
I, too, generally prefer index funds to mutual funds; though unfortunately, mutual funds are the only choice for my 401k. I've been looking to start an IRA so that I can continue to contribute to the 401k for the sake of earning the company match, while putting anything above the minimum contribution into an indexed IRA.
Quote:
Originally Posted by Synergy1
I get paid twice a month and I get really close to my allocations...I am nver exact anymore but never off more than 1% per 6 months span. I enter all my haves and paid in an spreadsheet I made and the differences in propsals to exact are slightly different up to the 1%.
The allocations in my 401k are similar to the allocations of my entire portfolio, so the 401k stays pretty balanced and doesn't much affect the allocations of the entire portfolio. Actually, I haven't rebalanced the 401k since October 2009.
In my after-tax accounts, though, I have to rebalance my cash and equity positions pretty frequently. My cash position is always skewing upwards, while the equity position is always skewing downwards, mostly because I deposit cash every two weeks, but buy stocks much less frequently or regularly.
I use to do that, but I have stopped for a couple of reasons. #1 I was worried that if I micromanaged things too much I would be more likely to strike out than get a hit. #2 I moved into Index Funds for my 401K. They are more straightforward as to their stock/bonds/cash positions and I appreciate their significantly lower management fees within my 401K plan.
I really wish that was an option. Unfortunately, our options (no pun intended) are pretty slim.
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