We had made a major pivoting decision with regards to our Bedokian Portfolio. It was not an overnight decision and sudden course of action. The transformation had taken place for the past six to nine months.
Okay, so what is the pivot all about?
For our Bedokian Portfolio built with our disposable income, we had followed the balanced allocation since its inception, which was 35% equities, 35% REITs, 20% bonds, 5% commodities and 5% cash.
Then what is our new allocation?
That would (currently) be 40% equities, 35% REITs, 15% bonds, 5% commodities and 5% cash. Basically, we had reduced the bond component by 5% and added it to the equities part.
I could call this “balanced-plus” Bedokian Portfolio, or “aggressive-minus” (for information, the aggressive Bedokian Portfolio make-up is 40% equities, 40% REITs, 10% bonds, 5% commodities and 5% cash)1, because it sits right in between balanced and aggressive.
Okay, it is just a shift of 5% from bonds to equities.
But that is not all. To “complicate” things a bit (and not advisable for passive investors), the combined equities-REITs would stand at 75%, with either component not going above 60% of the 75%, or below 40% of the 75%. In other words, we are “free-floating” the two asset classes between 60/40 and 40/60.
The next thing popping up in your mind would probably be “why the pivot?”.
After a few lengthy discussions with my other half, we had settled (somewhat) at an age where we would “step-down”. Contrary to “retire early”, step-down would be when we intend to leave the rat race and settle for a job with lesser responsibility (and lesser pay) and/or a more freelance role (and lesser pay). Several major factors contributed to the age number, and that includes our children’s age of entry to the workforce, the maturing amounts of our savings plans, the CPF amounts that we (might) take out to augment the Bedokian Portfolio, etc.
With our current runway, we decided to accelerate things a bit by going slightly aggressive not just on our Bedokian Portfolio, but on our investments via CPF and SRS, too. The key word is “slightly”; we are not going full retard into 100% equities. Diversification is still key in our overall approach.
1 – The Bedokian Portfolio (2nd Ed) p75