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How should one modify their retirement asset allocation
when they buy a home? How do they interact?

For example, before buying a house, suppose that
somebody has $100,000 invested in the following mix:

$75,000 stock
$15,000 bonds
$10,000 cash

If this person now invests $25,000 in a house, how
should they modify their asset allocation? Should they apply the same percentages (75% stock, 15% bonds, 10% cash) to the remaining $75,000 they have? Or should they consider that real-estate is another diversification away from stocks, which bonds also are, and so should the relative portion invested in bonds decrease?


--Pete Shell
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