Asset Allocation Discussion (Real Estate/Cash/Stocks & Bonds)

5 Replies

There are many schools of thought out there regarding asset allocation... There are hardcore Real Estate Investors that will only invest in Real Estate and hold cash reserves, and there is a substantial part of the FI (Financial Independence) community that advocates for Index Fund investing (a la J.L Collins' "Simple Path to Wealth"). Leaving alone the whole stocks vs. bonds discussion, I'm really curious what are some "seasoned" investors thoughts on holistic asset allocation? 

Currently, my portfolio (net worth) is 85% Real Estate Equity, 10% Cash, 5% Stocks/Bonds. This is primarily due to a focus on aggressively growing my real estate portfolio in my 20's. Now into my 30's I feel compelled to rebalance a bit, though I'm really interested to hear what others have to say about asset allocation?

Specifically, what are your thoughts on the "ideal" (let's pretend one exists) asset allocation? Looking forward to hearing some thoughts. 

The question for you @Seth M. Jones is how would you diversify when all your wealth is tied up in RE? If it means borrowing against your equity to buy stock I'd say that is a bad idea.

I am 66 and my  RE has been great to me and the stock market has been a waste of time.

At 40 I was no cash or stocks and all RE and debt. Now I am very little debt and relatively lots of cash.

@Jeff S. I would not borrow to rebalance my portfolio... I have a high savings rate which allows me to save and invest at a high rate. I would just shift my focus from acquiring more properties to building a nest egg in a Vanguard Index fund... I'm curious Jeff, did you ever stop acquiring property? Was there a magic number of units/properties for you? Was it a monthly income number? 

@Seth M. Jones no magic number, just have responded to my environment. My last 3 purchases were within a mile of each other. I like it that way because I always forget tools and I like going home for lunch.

Planning is good but things have a way of turning our plans upside down. My wealth is just some serious dumb luck. 

You look to have a good plan and lots of years to let it all grow. Lots of people your age believe in index funds and many think renting is the smarter move. We can raise their rents to change that point of view.

Florida seems to be a great market. I know of at least one very large player who has shifted everything from CA to Florida. I like Florida but hurricanes scare me.

@Seth M. Jones Great topic! PS I went to high school in Port Orange. 

This is my breakdown as of today:

70% Apartment syndication investments

15% Note-lending syndication investments 

5% Self-storage syndication investments 

5% Cash and reserves 

5% High-growth stocks and "long-shot" investments that never seem to work out for me 

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