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I have been calculating portfolio asset allocations using [expected] defined benefit payments as a bond equivalent. This allows me to be less conservative in equity allocations. Anyone see a problem with this point of view/strategy?
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Greetings, IEABarry, and welcome

<<I have been calculating portfolio asset allocations using [expected] defined benefit payments as a bond equivalent. This allows me to be less conservative in equity allocations. Anyone see a problem with this point of view/strategy? >>

It sounds reasonable enough to me. The pension payments are a steady source of income that you could use as an equivavlent of interest payment income. However, your needs over and above that amount must be met with a fluctuating principal. As long as you can ride out the dips in equities so your supplemental income needs won't decline, then using a broader exposure to equities is okay IMHO.

Regards..Pixy
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for IEABarry:

I do the same thing, taking the discounted present value of my small private pension and (gulp) even my social security as bond equivalents. You have to pick a life expectancy and an interest rate to do that calculation, of course. While I'm at it, I include the conservatively estimated current value of the house I own and live in as a bond equivalent, since it pays me the equivalent of free rent. (OK, OK, I have to pay property taxes, maintenance, utilities, and insurance for the house, but I don't pay income taxes on the rental value.) The government statisticians include the rental value of owner-occupied houses as part of Gross National Product (according to my econ professor thirty years ago).

Regards,

Chips
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