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