When the facts change, I change my mind
The other day I got to thinking (it happens occasionally), and I realised it might be time to adjust my wife's portfolio asset allocation.
A bit of context: my wife and I have separate accounts. I manage all of them and have a general overview of everything.
My wife's portfolio consists of:
My wife has cash in personal accounts as well as her business account (she runs her own school) which has emergency funds of about six months' expenses. We try and keep this for peace of mind after our experience after the 2011 earthquake, where we had to close the school for a couple of months. During that time, we had no money coming in but still had to pay rent, utilities, etc. This cash is 30-40% of my wife's assets.
This is with Iwate Bank, which used to be a good option but is no longer competitive. I will be looking to transfer this account to SBI or Monex later this year. The current allocation is 50% international stocks, 25% high-yield stocks, 25% balanced fund (70% stocks).
My wife has a THEO account for the simplicity. Their interface is so easy to understand (you either put money in or take it out, basically) that even if something happened to me I think she'd find it easy to manage. The costs are too high though, and it doesn't have a yield, so I am considering whether to keep this or sell it and move the money into the NISA/taxable account. It's currently set to 「おまかせ」 so THEO manages the portfolio according to their take on my wife's risk profile (I'm guessing this is based on age/amount of assets). This ends up being 43% stocks 39% bonds, 18% cash/commodities/REITs/etc. No rush either way.
4. NISA/Taxable account
This is where the change will be made. We've been treating the taxable and NISA accounts as one unified portfolio, with 50% in VT (world stocks), 20% in BND (US bonds), 20% in 1308 (Japanese stocks), 10% in 1345 (Japan REIT).
My wife is slightly older than I am and thus getting closer to retirement age. Stock markets seem to be richly valued right now, so I think it might be time to change this allocation and make it slightly more conservative/defensive.
I would like to have fewer stocks and more bonds in the account. The new target allocation will be 45% VT, 30% BND, 15% 1308, and 10% 1345.
We will not be selling to rebalance, but rather will use new contributions to adjust the portfolio. I guesstimate it will take about a year to reach the new allocation, unless something interesting happens in the meantime with the markets.
You may think this plan is a bit fuzzy, and you would be right! I'm a great believer in good enough. For me, that means focusing on spending (a lot) less than we earn, and investing the excess (mostly) in things that aren't stupid. I am not too bothered about endlessly adjusting things to save a further 0.01% in costs, or chasing hot new sectors to make slightly more money.
Our needs are modest enough and our saving rate high enough that we'll probably be okay even with my lazy efforts at managing our money. I figure we have another 20-30 years of adding to our portfolio before we start drawing down.
How about you? Any changes to your portfolio on the horizon? Any comments/advice for me?