BRIAN5000 wrote:I would like to know, off the top of your head, how you would design a portfolio for "capital stability".
For example 50/50 IF/EQ with the 50% in equities spread between a diverse array of dividend growth stocks? Would this be an overly aggressive portfolio tor someone wanting income etc. over 30 years?
In this case your down 40% or $400,000.00 on a 2mil port.?
An asset allocation is not static for most investors. Remember the 'rule of thumb' which is '100 less age equals equity component'? That allows for increasing conservatism as the portfolio is drawn down and one ages. OTOH, if you have rich enough($2 million) to not to have to touch capital, then maintaining 50/50 throughout retired life may be a viable option.
The key to success is to re-balance annually to maintain the allocation, and yes, that means this January, one would normally sell some FI to replenish the equity side. The other method is to simply leave the equity component alone and draw down the FI component for living needs.
EQ component has XIU/XIN/XSP in it, FI component has XBB/GIC/XSB in it. IF you prefer to have more dividend income than growth in the equity component, then buy XDV/VTV/VGK. If you buy your own stocks, then yes, I would substitute dividend paying blue chips (and no one stock is more than 5% of the portfolio).
Being $400k down at this point should not be an issue, or else one should not have been in a 50/50 allocation. 5 years from now, that person should have totally forgotten about being $400k down (on paper) in 2008.