Asset Allocation Question

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Joined: Sat Mar 23, 2013 11:30 am

Asset Allocation Question

Post by ichy » Sat Mar 23, 2013 11:31 am

Emergency funds: More than six months of expenses as long as I don't have some medical catastrophe.
Debt: Just the mortgage on my primary home. I refinanced into a 30-year, 3.5% fixed rate last year. Currently mortgage payments are about 10% of my pre-tax income.
Tax Filing Status: Single
Tax Rate: 25% Federal, 4.5% State
State of Residence: MD
Age: 29
Desired Asset allocation: 100% stocks right now. I plan to start buying bond funds when I turn 30.
Desired International allocation: 45% of stocks

Asset allocation:
US Large Cap: 30%
US Small Cap Growth: 7%
US Small Cap Value: 10%
REITs: 8%
EAFE: 30%
Emerging Markets: 15%

My current portfolio size is about 150% of my annual salary split between a Roth IRA, a rollover IRA from an old job's 401(k) and my current 401(k). All of my IRA money is in Vanguard ETFs, all of my 401(k) money is in their mutual funds. I'm maxing out my Roth IRA every year, putting 17% of my salary into my 401(k) and getting a company match of 6% (although that'll only be fully vested if I'm there for five years.)

The funds/ETFs that I use for each asset class are

US Large Cap: VOO, VIIIX
US Small Cap Growth: VBK
US Small Cap Value: VBR
Emerging Markets: VWO

Sorry I don't have this broken down by how much is in each account, but my question has more to do with my asset allocation and whether it's a lit

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Re: Asset Allocation Question

Post by mhc » Sat Mar 23, 2013 8:57 pm

Welcome to the forum.

You should edit your original post to include a question.

For international you may consider VXUS. It has the entire international market.

I would recommend that you have at least 10-20% bonds. You say that you will start adding bonds when you turn 30. What percent of bonds are you thinking?

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Re: Asset Allocation Question

Post by ichy » Sun Mar 24, 2013 12:37 pm

Hmm, for some reason my post got cut off. My question just had to do with my asset allocation (what people thought of it, is it took risky, other advice.) Sorry those last few lines went missing.

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Re: Asset Allocation Question

Post by jimkinny » Sun Mar 24, 2013 12:58 pm

If I was going to go with 100% stocks and then wanted more risk than that I would go with small value both domestic and international. Read a few of the hundreds of threads dealing with French-Fama risk factors on this forum.

Think about what is meant by long term and understand a few of the errors that we bring to investing such as regretting under performing an index for 5-10 years because we decided that long term meant just a few years instead of 15, 20 or 30 years.

Rick Ferri had a nice article a year or so ago that dealt with long term perfromance of one risk vs another risk. With a bit of looking on his website you will find that article.

Also, think about you ability to withstand a severe equity downturn like 2008/2009. Can you stay the course or will you sell low when you lose 50-60% of you savings that you accumated.

Here is a link to another of Rick Ferri's articles that deals with risk as a new investor. maybe you know this stuff already. ... llocation/


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