I am curious how other people calculate their total wealth and how they implement their asset allocation strategy.
At first, this seems straightforward, but there are actually several decisions to make. E.g.: Pillar 3 and 2 money will be taxable (include future taxes?), Pillar 1 (include this? when will I die?), etc. All this is further complicated when one also has assets in another country with its own investment vehicles and tax rules.
Another consideration is asset allocation… once one has decided on values (current, projected, tax-discounted, etc.) for each asset, one can categorise them. For example, one can separate things into these 5 categories of increasing risk and aim (and maybe fail ) to maintain a certain percentage of each, e.g.:
a) 10% cash
b) 10% bonds
c) 50% real estate
d) 25% broad market (ETFs, mutual funds)
e) 5% sector ETFs / individual stocks
(yes I know that some would move real estate further down the list… … and others not present here would have a category f for put options, etc.)
Personally, I do not include future taxes on Pillar 2 and 3, and don’t count pension (Swiss OASI and foreign equivalents) in net worth calculations. I count Pillar 2 as bonds. And any ETFs like health care or automation or emerging markets or whatever get assigned, with individual stocks, to the last category.
There is obviously not one single way to do these types of calculations… and some might actually do their asset allocation strategy completely outside their Pillar 2/3 money. Curious to hear about other methodologies (and I’m sure many here would jump at the chance to tell the world about their amazing spreadsheets…).