Date: Thu, 1 Feb 2007 14:59:03 -0600
From: "dan" 
Newsgroups: misc.invest.financial-plan
Subject: Re: Looking for some thoughts on my asset allocations
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On Feb 1, 1:53 pm, "jIM"  wrote:
> > > The risk changes once the item being purchased is obtained, therefore
> > > cash allocation could decrease once a house is purchased.
>
> > > The short term need (for a house downpayment) temporarily would skew
> > > risk.  This is why I suggested cash for the house down payment be
> > > outside the typical allocation model for retirement.  For example,
> > > once the house was purchased with a downpayment of $50,000, then there
> > > would be little need for a $50,000 cash position after the purchase of
> > > the house.
>
> > Right, this makes perfect sense.  But it sounds like you're suggesting
> > that the $50,000 should not be counted toward the OP's cash allocation.
> >   For example, let's say that the OP determines that he needs a 10% cash
> > allocation and this amounts to $10,000.  Should the OP hold only the
> > $50,000 for the downpayment in cash, or should the OP hold $50,000 +
> > $10,000 = $60,000 to satisfy the OP's cash allocation?  I would think
> > that just holding the $50,000 and then rebalancing when that $50,000 is
> > consumed would be the right choice.  
>
> I do not think $50,000 is part of "cash allocation" for a short term
> need.  If someone needs a $10k cash allocation, then another $50k cash
> for a short term/ immediate need, I would not count the 50k as part of
> the allocation model.
>
> primary reason- if all assets for retirement are in a 401k/Roth/IRA
> and the short term cash is in another account type (taxable), I would
> not want to mix apples with rocks.  The need is short term and the 10k
> being discussed is part of 401k and not the taxable account.
>
> If more retirement assets were in taxable accounts, then the point
> above holds less merit.- Hide quoted text -
>
> - Show quoted text -

Here's how it breaks down amongst the accounts:
Taxable account:  56%
401k:  37%
Roth IRA:  7%


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