September 21, 2008

My Current Asset Allocation

Looking at all of our assets this is how much percent we have in each category:

Real Estate 60%
Cash 16%
Pension plan 14%
Equities 5%
Bonds 3%
Employer stock 2%

Graphically our current asset allocation looks like this:Looking at the different categories:

Real Estate - We have about $145k equity in our home. In addition we also have about $236k equity in 4 separate rental properties. We hold 2 mortgages on the rentals for about $254k so we're only about 50% leveraged. The rental investments also give us an annual cash flow from rents as well as significant depreciation deductions for our taxes.

Cash - This is money held in savings accounts. Most of it is in high yield accounts giving 3-4% return. We like to have a large emergency fund. The money is between 3 banks primarily and is all FDIC insured.

Pension plan - I have an employer provided pension plan. That money is managed by my employer so I have no say in its allocation. I'm 100% vested in the pension.

Equities - These are mutual fund and stock holdings in our 401k and IRA retirement plans. These investments are relatively high risk.

Bonds - A portion of our retirement funds are invested in stable income assets.

Employer Stock - I have a few hundred shares of stock in my employer. I've been divesting my holdings for the past few months because I feel its not a good idea to have stock in your own employer. Plus I also have stock options so if the value of the stock goes up in the future then I can cash in that way. Right now I've got my investment down to a relatively small amount and I'm going to hold on to it for a while until the stock rebounds.

Overall I feel our assets are quite safe. Its possible that our real estate investments may go down some in the next few years but those are long term investments that I expect will appreciate again in coming years. We have very little of our investments in high risk assets.

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