When I posted my November Net Worth Index update, I did not include my total portfolio allocation. I wanted to follow-up and run through this as part of my monthly update. It is always a good idea to do an overview of how your entire net worth is allocated to ensure that you aren’t exposing yourself to too much, or not enough, risk.
I’ve read a lot lately about people taking money out of stocks and moving it to cash and bonds. But is that really a good idea?
The allocation didn’t change all that much. With the stock market increase of the last couple weeks I would have expected my allocation to stocks to increase dramatically as a proportion of my total portfolio. This is part of my extreme investing approach.
However, the great thing was that my allocation to Investment Real Estate also increased with the purchase of my new rental property.
My previous allocations to my personal residence, broad market index in my 401 (k), and Cash were 15%, 11%, and 10% respectively. But these decreased while the Dow ProShares and Investment Real Estate both increased:
I feel pretty good about the 7% allocation to cash. I want to have enough cash to continue to purchase stock through dollar cost averaging and also to take advantage of any opportunities which present themselves. It is also a good idea to have an emergency fund for anything that might happen with the cars, the houses, or anything else that may pop up.
I’m making the final updates to the rental property. The house had a nice deck which wrapped around an above ground pool. There was also a very large shed with a refrigerator, a lathe, and various other electrical outlets and tools.
The problem is with these features is that I don’t feel that they are appropriate for a rental property. The shed was very old and was going to start leaking soon. The electrical service to the shed was also a little sketchy. I didn’t want someone getting shocked in there or having the shed burn to the ground.
I also didn’t want an old above ground pool at the property. This is a liability and it is something that would probably not be well maintained by a tenant. A couple of years ago I actually filled in an in-ground pool at my house because it was so old and needed so much work. It ended up being more work each week than it was worth. And opening and closing it were seasonal thorns in my side.
So I didn’t want a pool at my rental property.
With all that said, I hired a guy who specializes in removing junk from properties as well as demolition and fences. He moved the fence and demolished the shed and pool and hauled them away. He also removed several pieces of furniture and a box spring from the house. It was great.
After all of that was done, the only thing left to do was to update the deck! The deck is really nice and has an awning that comes out from the house to provide cover. Now that the pool is gone, the deck had no railing and was in a half-moon shape around where the pool used to be.
But now the deck is finished! The contractor matched the rails and also did a great job matching the paint stain. I am really happy with how the back yard looks now that the shed and pool are gone!
I’m hoping that we can get the smoke detectors and lead paint inspection complete soon. Those are the last steps before we can have someone move in. We’ll see how soon we get our first tenant!