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Strategic Asset Allocation?

Discussion in 'Investing Strategies' started by Redwing, 4th Oct, 2007.

  1. Redwing

    Redwing Well-Known Member

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    We have a number of Properties and in relation to the Properties our other Assets probably need further consideration

    How does everyone else work out OR aim for, Strategic Asset Allocation?
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    What is it you mean by strategic asset allocation ?
     
  3. coopranos

    coopranos Well-Known Member

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    You worried about being overloaded with property over other asset classes, or risk management?
    At the end of the day if your properties are going well and you are comfortable doing that, just keep plugging away with that. If you need more funds to cover negative gearing, perhaps you could spread out your navra holdings into some other higher growth oriented funds, and draw from your margin loan to fund shortfalls
     
  4. Redwing

    Redwing Well-Known Member

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    Location:
    PERTH..WA
    mmm..

    I’m not looking to over diversify and the plethora of Funds that get mentioned here and the insane amount of detail within some of the Product Disclosure Statements does my head in :eek:

    I’d define Strategic Asset Allocation as having a plan of putting a certain amount or % of funds into several different Asset Classes and various types within those classes; Planning what percentage of your net worth you want to invest and over what risk categories without spreading yourself to thin.

    If looking at a new Investment (and you are maybe a good example here Sim :D as you have a number of investments/funds and are very analytical) how do you decide how much of your Net Worth/Funds you will allocate to that Investment and mitigate those risks depending on the Goals for them?

    I’ve also been thinking of late about the Total Size of the Assets, I was talking to a good workmate who sold his Residential Property as Perth’s Property Market was picking up and with his $100k profit he tipped it into shares for that year and picked up another 60%, he was suggesting I look at doing the same with an IP or two and considering the Markets run over the last few years; we then talked about CGT, Transaction costs etc, it turned out a lot of this % return was from trading and he’s got a nice tax bill due that he’s not happy with (majority of profits all been spent), but he’s expecting another good year (not 60% but a good year none the less).

    I was discussing our loose strategy and LOE with him and the fact that I think the Size of the Asset counts i.e. a great 60% return on $100,000 is $60,000 but a reasonable 10% return on $1M is $100,000 and that I prefer to keep my IP’s because of the size of the Asset (sold out of my direct shares Tuesday to put funds into another IP, however, still have Shares via our SMSF).

    On a side note..

    I was once told by a friend a few years back who was making a nice income trading in the Market to invest $8-10k minimum in any one Stock for the reason that a 10% Gain on $1,000 invested in one stock is only $100 whereas a 10% Gain on $10,000 invested in one stock is $1,000; the $100 gain will quickly be eaten up by transaction costs, stock selection, risk mitigation and the size of the asset plays a huge role as they can't all be Ten Baggers
     
    Last edited by a moderator: 5th Oct, 2007