Kevin1989 wrote:Index Allocation Strategy for next few years is…
Small Cap Value 25% (Expense Ratio: 0.24) – Roth IRA
Total International 25% (Expense Ratio: 0.10) – Company Roth 401k
Large Cap Value 15% (Expense Ratio: 0.08) – Company Roth 401k
Small Cap Index 20% (Expense Ratio: 0.06) – Company Roth 401k
Large Growth 5% (Expense Ratio: 0.08) – Company Roth 401k
REIT 10% (Expense Ratio: 0.08) – Company Roth 401k
My thoughts: Since I am young I have 100% of my investments in stocks, with a lean toward small cap and value indexes. I want good asset allocation in the stock index funds I choose. My goal is to invest $20,000 (after company match) each year into my Roth IRA & 401k, . . . . I like the very low Roth-401k expense ratios I have access to through my employer (a large company). My Roth-401k doesn’t offer a good Small Cap Value fund, so I have that in my Roth IRA and will purchase $5,000 throughout the year. The remaining $15,000 will be split between my Roth 401k holdings.
Any advice? The only thing I am currently thinking about changing is moving some of the emergency savings in my savings account into short-term Bonds/CDs offered by my bank. Also, I don’t see an issue with all my holdings in my IRA and 401k being Roth, but am I missing anything?
Kevin1989 wrote:For International I was thinking about including some Emerging Markets. So something like:
15% Vanguard Total International (VTPSX) ER: 0.10
10% Vanguard Emerging Markets (VEMRX) ER: 0.10
In my opinion your proposed allocation to Emerging Markets is way too high. Remember that Total Int'l is already 16% Emerging Markets, VTIAX, on Morningstar , (15 X .16 = 2.4), so adding that the amount of Emerging Mkts fund you propose (10%) gives you a total of about 50% of your international in emerging markets (2.4 + 10 = 12.4 emerging mkts; 12.4/25 = 49.6% of int'l in emerging mkts). This is much more than Mr. Swedroe suggests in his Model Portfolios (16% of int'l, p.166) or in his Sample Portfolios (33% of int'l, Appendix I).
Kevin1989 wrote:Wow, good replies! I live in Chicago, Illinois.
Now to read up on some of these links you've all posted, and research how much Emerging Markets is included within the International fund my 401k plan has.
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