Suggested Assest Allocation for Funds (2.5 year horizon)

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Fotivator
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Suggested Assest Allocation for Funds (2.5 year horizon)

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linuxuser
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Re: Suggested Assest Allocation for Funds (2.5 year horizon)

Post by linuxuser »

Fotivator wrote: I can meet my target amount with my current monthly contributions and an 8.9% interest rate over the next 30 months.
Your target amount for what? Is this your grad school tuition money and you need 8.9% interest to reach your target?
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Fotivator
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Re: Suggested Assest Allocation for Funds (2.5 year horizon)

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linuxuser
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Re: Suggested Assest Allocation for Funds (2.5 year horizon)

Post by linuxuser »

I went back to school after 2 years. At that time I wasn't a Boglehead, but if I was, I would not be concerning myself with asset allocation for income.
The goal is retirement money.
ourbrooks
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Re: Suggested Assest Allocation for Funds (2.5 year horizon)

Post by ourbrooks »

May I suggest putting it all in cash equivalents and, perhaps, working a second job for a while to get what you need?

Historically, over rolling five year periods, the stock market has had a loss about 40% of the time. Yes, I know things look good right now, but they also looked good in 2007 and look how things were by 2009. How would you feel if when you started grad school, your portfolio was down by 60%?
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Fotivator
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Re: Suggested Assest Allocation for Funds (2.5 year horizon)

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linuxuser
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Re: Suggested Assest Allocation for Funds (2.5 year horizon)

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Fotivator
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Re: Suggested Assest Allocation for Funds (2.5 year horizon)

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BL
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Re: Suggested Assest Allocation for Funds (2.5 year horizon)

Post by BL »

You need emergency funds plus whatever you need in the next 2.5 years should be in cash equivalents so you don't get caught in a down market. What ever you are saving for retirement could be in a 3-fund portfolio which is in the Wiki. You want to avoid cashing in losses when you are in such a low tax bracket as it won't amount to much. You haven't said what/where you have additional resources which you could use for school years.
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Re: Suggested Assest Allocation for Funds (2.5 year horizon)

Post by pkcrafter »

losing 60% of my portfolio would be bad, but having 0% of reaching my goal would be worse.
You have defined the goal for this money as:
"I have a modest portfolio that I plan on using to supplement my income during Grad school in 2.5 years."


It's currently split up in the following allocation:

VOO: 40%
VXF: 15%
VEU: 20%
VWO: 5%
VNQ: 7%
VNQI: 3%
BND: 10%

This is not a modest portfolio.

I can meet my target amount with my current monthly contributions and an 8.9% interest rate over the next 30 months.

High expectations on returns and high risk of not meeting your goal if you use your proposed portfolio.

Of course I want to balance growth needs with capital preservation. My target amount is not essential, just a nice to have.

Your portfolio is not balanced between growth needs and capital preservation. I don't understand how you can think an AA of over 90% stock protects capital preservation. An appropriate AA for this goal and time frame would be something around 25% equity and the rest in st. term bonds and cash, but if you don't actually have a target amount and can tolerate losses, you can take more risk.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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