Variable asset allocation


We emphasize in our blogs that, over the long term, a properly selected U.S. index Exchange-Traded Fund (ETF), one that tracks the S & P 500, held in tax-advantaged account, has been the investor’s best way for growing savings and is likely to remain so for many years. Simple to set up, simple to manage, requiring attention of just few hours annually, the program will beat over 90% of portfolios including professionally managed ones. Who could ask for more?

More is possible. Possible, but the method comes with no guarantees. It is called variable asset allocation. We learned about it from the renowned dentist L. D. Pankey who made a great deal of money in the stock market.

How do we select an appropriate ETF from the more than 5,000 which are traded daily? (5,000 is not a misprint.)  There is only a small number of applicable ones and their charts are identical.

  1. The S&P 500 ETF (symbol SPY)
  2. The Vanguard S&P 500 (symbol VOO) or
  3. The iShares S&P 500 (symbol IVV).

Any one of these would be fine.

It would be useful to review the concept of asset allocation here. Variable asset allocation places an increasingly greater percentage of portfolio cash into the market as it declines. Questions:

  1. How often do markets decline and to what extent do they decline?
  2. How much time do markets need to recover from a decline?
  3. How does variable asset allocation vary?
  4. Is the asset allocation different at different stages of life?
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Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me

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