the doctor prescribed me tums for my broken toe how saving and investing require personalized...

The Doctor Prescribed Me Tums For My

Broken ToeHow Saving and Investing Require Personalized Solutions

Matt

Sascha & Burke

Master of Busy-Ness Administration

2.16

Bankrate.com

Portfolio Allo-what?

A Few Key Drivers of Portfolio Allocation• Cash needs• Cash needs• Cash needs• “Risk” Tolerance

• American Large Cap• American Mid-Cap• American Small-Cap• American Real Estate• European Equity• Asian Equity• American Federal Debt• American Municipal Debt• American Corporate Debt• Gold• Silver

• Private Equity• Savings Accounts• Venture Capital• Options• American Peer-to-Peer Lending• American Crowd Funding• Developing Market Equity• Developing Market Debt• Developed Market Debt• Foreign Government Debt• Currency Trading & Speculation

Howard Marks Invest vs. Speculate

• If there is no cash flow, it’s speculation, not investing.

Swenson’s Basic Theory

• 6 “asset classes”• US equity• Foreign developed equity• Emerging market equity• US Real Estate• US Treasuries• US TIPS

• 5% - 30%• Consistent Allocation

Cash needs. Cash Needs. Cash Needs.

When will you need cash?

Simple Solution?

• If you have consumer debt, you have no money to invest.

Complex Solution

• If you have consumer debt that is highly likely to charge more interest than you can otherwise earn on investments, then you have no money to invest.

Your debt load is a personal decision

• As a general rule, the less cash you HAVE to spend on debt, the more flexible your life may be.

What does you near-term life cost?

• Emergencies arise how will they be paid for?• Borrowing cushion on credit cards?• Cash savings?• Borrow from retirement?• Borrow on your home?• Borrow from Prosper, LendingClub or similar peer-to-peer sites.

Pick your own cure

• Minimum:• Cash savings for at least one month of expenses

• Moderate:• Cash savings equal to 3 months of income

• Too good?:• Cash savings equal to 1-year of income