bond vs REIT investment

@nada Seems like standard advice, that's all - part of diversifying is diversifying into int'l equities. PE ratio is VEA 15 .1 vs VOO 20 so maybe that accounts for their outlook? More room for growth. It's not my wheelhouse

MTH, it’s perhaps that too.

Keith, I do it for risk and taxes. There are govt money market funds that are similarly low risk but invest in repos (lending to people who use the money to purchase govt bonds, held as collateral). They might have a smidge more yield than T-bills but are not state & local tax exempt.

Thanks ?

> - 20-25% cash (T-bill funds)
- 10-15% equities (private US companies & public ex-US developed market stocks)
- 65% alternates

> The alternates and the bulk of my equities earn T-bill rates plus some additional amount of expected reward +/- risk. In aggregate, something like 95% of my net worth benefits directly from T-bill rates of 5.25% — as in cash in the door — without asset value exposure to rates.

Thanks inonada for sharing your investments. As an amateur investor, I don't have investments in the alternates or private companies. I do have some % investments in the international stock index fund.

It's amazing that you have 95% of your net worth benefits directly from T-bill rates of 5.25% without the asset value exposure to rates.

For my self,
20% in the fixed income: 6% in cash (including I-bond, Treasury bills and others), 7% in TIPS bond and 7% in nominal bond)
8% in VNQ
48% in US total stock
24% in Total International stock

The 20% fixed income can cover about 5 years of my annual living expense. I have stopped contributing to TIPS and nominal bond and VNQ for a while.

For the new money: 50% cash + 45% US total stock + 5% International stock. The 50% cash part can cover about 30% of one year's living expense. Aiming to eventually to have 10 years of living expense covered by fixed income where at least 50% of fixed income is coming from cash.

Sounds like you have saved 25 yrs of current expenses and are adding 0.6 more each year. That’s a pretty good situation to have placed yourself in.

On your assets, why do you pay special attention to the portion in cash? And why are you increasing the portion to US stocks relative to international?

>On your assets, why do you pay special attention to the portion in cash? And why are you increasing the portion to US stocks relative to international?

Personal finance is very individual. I am already 50, not nearly retirement age yet but not too far away. In the worst scenario when my current employer let me go, I don't have much luck to get a similar job due to old age and so I have been forced to a very early retirement or to switch to another career that pays much less, I want to be able to rely my investments for my living expense.

The other asset (stock, bonds, TIPS or VNQ) are for the long term (10+ years). When market crashes, the cash part is the money that I can actually spend without worrying the stock price fluctuation. I'm hoping that the cash asset can last long enough to have the stock recovered., if still not enough, the other fixed asset (bonds and TIPS) should be able to pick up the rest.

Yes, I am decreasing the international VERY SLOWLY relative to US stocks, and want the % going down to 20% from the current 24%. Yes, international stock has the potential to have a higher return, but the theory I read said that the international stock is more volatile than US domestic stock due to the additional layer of currency exchange rate risk.

@nada that should have been 'thanks!'

No worries Keith — that’s how I understood it anyways.

Woodside, thanks for explaining your reasoning. Personal finance is indeed very individual, but I feel there’s always something for me to learn from others’ perspectives.

What you said about international stocks and higher volatility from additional currency risk makes sense. But they probably have a larger degree of diversification than US-only, which lowers it to a degree. Reading that into Vanguard’s projections of volatility, the two seem to offset more or less.

https://www.nytimes.com/2024/08/12/business/private-reit-redemptions.html?unlocked_article_code=1.Dk4.mKCM.U7wPKV5D0KBz&smid=nytcore-ios-share&referringSource=articleShare