Debt: ~16.5k in student loans @ 6.55% (in the process of refinancing to 4.25%), ~14.5k in car loans @1.9%
Tax Filing Status: Single
Tax Rate: 25% federal, 6.45% state (both marginal)
State: NY
Age: 26
Desired Asset Allocation: 85% Stocks, 15% Bonds*
Desired International: 20% of Stocks (open to going up a little)*
(*My question pertains to the details of my allocation)
Current Retirement Assets - all in 403(b):
30% VFINX - Vanguard 500 Index Inv
20% VTRIX - Vanguard International Value Inv
20% NAESX - Vanguard Small Cap Index Inv
15% VEIEX - Vanguard Emerging Mkts Stock Idx Inv
15% VIMSX - Vanguard Mid Cap Index Inv
Total Expense Ratio: 0.26%
Size of current portfolio: Less than 10k
Contributions: 10%/month (no employer match)
Available funds: Assuming I'm entirely in Vanguard (preferred for simplicity), all mutual funds with a 1k and 3k minimum investment are available
Pension: New York State Teachers Retirement System, Tier 6
Questions:
The above asset allocation was created for me by a CFP. I like him, but I know that unless I come up with my own AA I'll struggle to stick with it in bad times. So I've been revisiting AA and I think I have a rough sketch of something I like (realized I did not like one above!), but I could use some advice before I move forward.
My thought process:
Bonds = Age - 10, rounded to nearest 5 (I could revisit every 5 years)
International: 20% of stocks, but if people advise more I'm OK going up
REITs: 10% of stocks, just for diversification (could go up or down based on advice)
That leaves me with:
15% VBMFX - Total Bond Market
17% VGTSX - Total International Stock
8.5% VGSIX - REITs
59.5% ???????????????
What to do with the other 59.5%? I'm a little torn. The most simple plan would be to throw it all in VTSMX - Total Stock Market (or S&P?). Or I could slice and dice with LCB, LCV, SCB, SCV. Or perhaps a good "middle ground" is to do something like put 8.5% each in SCB and SCV, and the remaining 42.5% in TSM. I got this idea from Bogle's "Telltale Chart" speech, and I wonder if this could be a good way to split the difference in the slice and dice / tilting debate:
Also, on a side note - wondering if maybe I should split the Total Foreign Stock 50/50 between Developing and Emerging Markets.And even if you don't accept my challenge to S&D, I urge you, before you plunge into a 4x25 portfolio, to put more than 25% in the total market—say 55%. Then put just 15% in the three slices that you dice, thereby taking much of the risk out of your decision. Think then, about a 1 x 55% + 3 x 15% portfolio. If it is true, as Dr. Fama (and most other academics, to say nothing of many, many practitioners) says, that "for most people, the market portfolio is the most sensible decision," you might as well make the most of it.
Anyway, thoughts? All input is valued! I'm so grateful to have discovered this community while I am young. I am quite confident saying the entire trajectory of my financial life will forever be in debt to the world of Bogleheads!