Thoughts on my asset allocation?

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Jacky817
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Thoughts on my asset allocation?

Post by Jacky817 »

Hi guys, my asset allocation is as follows:
15% Total US bonds. Vanguard Total Bond Market (BND)
35% Total US stocks. Vanguard Total Stock (VTI)
25% US small value. Vanguard Small-cap Value (VBR)
25% Emerging market. Vanguard Emerging Market (VWO)

I'm in my mid-twenties with barely any asset at this point, looking for an aggressive portfolio. What do you think?
PFInterest
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Re: Thoughts on my asset allocation?

Post by PFInterest »

sure. im assuming you have a reason for your choices?
livesoft
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Re: Thoughts on my asset allocation?

Post by livesoft »

The portfolio you listed falls within the typical range of aggressive portfolios displayed on the forum.

I would not use solely VWO for my international equities, but would go more broad-market and small-cap myself as in VEU + VSS. I currently have a market weight for emerging markets, though tilted to small caps.
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Ron Scott
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Re: Thoughts on my asset allocation?

Post by Ron Scott »

The investment in the Small Value Fund reminds me of another recent post on investing strategies that behave like actively managed funds; rather than being aggressive, it just works against you. I'd suggest pouring that stuff into total US market--which has the added benefit of lower fees. The aggressiveness comes from a high % of assets in equities, not from gaming the equity side of the equation.

Malkiel says it well in "A Random Walk Down Wall Street": "Capitalization-weighted portfolios* are the market. If you believe a subset of securities will give you superior returns, you are counting on some 'dumb' investors to hold portfolios producing poorer returns."

All so-called "tilting" is a variant on active portfolio management, trying to beat the market and not match it. In the long run it reduces your return.


* Like Vangaurd's total stock indexes or an S&P500 index
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.
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stemikger
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Re: Thoughts on my asset allocation?

Post by stemikger »

Not bad, but I would go with Taylor Larimore's 3 fund portfolio instead.

https://www.bogleheads.org/wiki/Three-fund_portfolio

I am 53 and go with John Bogle's two fund portfolio (same as the 3 fund without international).

Good Luck!
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Topic Author
Jacky817
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Re: Thoughts on my asset allocation?

Post by Jacky817 »

Ron Scott wrote: Fri Nov 17, 2017 6:20 am The investment in the Small Value Fund reminds me of another recent post on investing strategies that behave like actively managed funds; rather than being aggressive, it just works against you. I'd suggest pouring that stuff into total US market--which has the added benefit of lower fees. The aggressiveness comes from a high % of assets in equities, not from gaming the equity side of the equation.

Malkiel says it well in "A Random Walk Down Wall Street": "Capitalization-weighted portfolios* are the market. If you believe a subset of securities will give you superior returns, you are counting on some 'dumb' investors to hold portfolios producing poorer returns."

All so-called "tilting" is a variant on active portfolio management, trying to beat the market and not match it. In the long run it reduces your return.


* Like Vangaurd's total stock indexes or an S&P500 index
Thx for your reply Ron. Could you elaborate further on your point? I read Malkiel's book some time ago and must have forgotten his stance and advice.
On the other hand, I've recently read Richard Ferri's book on all about asset allocation and Larry Swedroe's book (the only guide to a winning investment strategy you'll ever need). They both seem to advocate on tilting towards small cap and value. Are there legitimacy in their views?
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racy
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Re: Thoughts on my asset allocation?

Post by racy »

They are referencing the work by Eugene Fama and Kenneth French: the 3 Factor Model which showed that small size and value were important components of a stock's value. The Wikipedia: https://www.bogleheads.org/wiki/Fama_an ... ctor_model
youngpleb
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Re: Thoughts on my asset allocation?

Post by youngpleb »

Jacky817 wrote: Thu Nov 16, 2017 10:48 pm Hi guys, my asset allocation is as follows:
15% Total US bonds. Vanguard Total Bond Market (BND)
35% Total US stocks. Vanguard Total Stock (VTI)
25% US small value. Vanguard Small-cap Value (VBR)
25% Emerging market. Vanguard Emerging Market (VWO)

I'm in my mid-twenties with barely any asset at this point, looking for an aggressive portfolio. What do you think?
It's not a horrible AA, but 25% in SCV and 25% in emerging markets seems too extreme to me. There's nothing wrong with a tilt, but I feel like these two actually limit you because they are so dominant in your portfolio. If it were me, I'd keep about 10% in SCV and put the other 15% towards VTI. The 25% emerging markets is what I feel actually hurts you the most, since you are cutting out a lot of international sectors. Again, I'd go with 15-20% in total international and then the remaining 5-10% in emerging if you want to tilt. I'm honestly surprised that someone with a portfolio this aggressive has anything in bonds at all.
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Jacky817
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Re: Thoughts on my asset allocation?

Post by Jacky817 »

racy wrote: Sun Nov 19, 2017 8:01 pm They are referencing the work by Eugene Fama and Kenneth French: the 3 Factor Model which showed that small size and value were important components of a stock's value. The Wikipedia: https://www.bogleheads.org/wiki/Fama_an ... ctor_model
Yes, and Ron's points seem to go against this? Is there legitimacy in Fama French's model?
youngpleb wrote: Sun Nov 19, 2017 8:48 pm It's not a horrible AA, but 25% in SCV and 25% in emerging markets seems too extreme to me. There's nothing wrong with a tilt, but I feel like these two actually limit you because they are so dominant in your portfolio. If it were me, I'd keep about 10% in SCV and put the other 15% towards VTI. The 25% emerging markets is what I feel actually hurts you the most, since you are cutting out a lot of international sectors. Again, I'd go with 15-20% in total international and then the remaining 5-10% in emerging if you want to tilt. I'm honestly surprised that someone with a portfolio this aggressive has anything in bonds at all.
Hi pleb, thanks for your reply! Could you elaborate on what you mean by the terms "these two actually limit you" and "hurts you the most". As I am a young investor, I am looking at a pretty long time horizon. Minimally 15 years, but possibly way beyond 20 years. In that sense, wouldn't a more aggressive tilt give a higher expected return in the long term? Is it because that this makes me less diversified?
youngpleb wrote: Sun Nov 19, 2017 8:48 pm I'm honestly surprised that someone with a portfolio this aggressive has anything in bonds at all.
Haha you're right, I previously did not intend to have any bonds at all. But several people on this forum advised for a 10-20% bonds to take advantage of the rebalancing. With a (possibly) lower correlation between bonds and stocks, the inclusion of bonds can help to "signal" when is a good time to "buy low" and "sell high". Does this make sense?
lakja
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Re: Thoughts on my asset allocation?

Post by lakja »

Ron Scott wrote: Fri Nov 17, 2017 6:20 am Malkiel says it well in "A Random Walk Down Wall Street": "Capitalization-weighted portfolios* are the market. If you believe a subset of securities will give you superior returns, you are counting on some 'dumb' investors to hold portfolios producing poorer returns."
I’ve been looking into equal weight sectors, and some back testing shows some interesting returns. It seems appealing to me especially because the emphasis right now on market cap is heavily dominated towards tech and more specifically to a hand few companies in the tech sector. To me, that’s not diversified.

Based on recent months of market analysis, there seems to be a underlying shift into utlities and other underweight sectors.
MotoTrojan
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Re: Thoughts on my asset allocation?

Post by MotoTrojan »

I'd at least add some small cap int exposure via VSS, and swap VBR for VIOV (smaller).
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ruralavalon
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Re: Thoughts on my asset allocation?

Post by ruralavalon »

Jacky817 wrote: Thu Nov 16, 2017 10:48 pm Hi guys, my asset allocation is as follows:
15% Total US bonds. Vanguard Total Bond Market (BND)
35% Total US stocks. Vanguard Total Stock (VTI)
25% US small value. Vanguard Small-cap Value (VBR)
25% Emerging market. Vanguard Emerging Market (VWO)

I'm in my mid-twenties with barely any asset at this point, looking for an aggressive portfolio. What do you think?
What sort of account or accounts is this in?

That looks pretty good for an aggressive portfolio, not unreasonable.

In the mid 20s 15% bonds is within the range of what is reasonable in my opinion, although I usually suggest a minimum of 20% bonds. This is expected to substantially reduce volatility (risk), with only a relatively slight decrease in return. Graph, "An Efficient Frontier: the power of diversification". Please see the wiki articles Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk", and "Asset allocation".

In my opinion the 25% allocation to international stocks (i.e. 29% of stocks in international stocks) is also within the range of what is reasonable. I suggest around 20 - 30% of stocks in international stocks. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities". Historically, allocating 20% of an equity portfolio to non-U.S. stocks would have captured about 84% of the maximum possible diversification benefit, and allocating 30% of an equity portfolio to non-U.S. stocks would have captured about 99% of the maximum possible diversification benefit (p. 6). You can find lots of debate here on international allocation, opinions rangeing all the way from 00% to 50% of stocks in international stocks. If you want more viewpoints on international stocks please try the Google search box (upper right, this page).

I think it unwise to have only emerging markets for international stocks. I use Vanguard Total International index Fund, the ETF is VXUS.

You have 42% (25/60 = 42%) of domestic stocks in small cap-value, instead you could consider around 25% of domestic stocks in small-cap value. "My preference is 75 percent to a total market index fund and 25 percent allocation to a small-value index fund", Rick Ferri, etf.com (7/21/14), "To Tilt Or Not To Tilt?".

. . . . .

So my idea for an aggressive portfolio would be:

20% Total US bonds. Vanguard Total Bond Market (BND)
45% Total US stocks. Vanguard Total Stock (VTI)
15% US small value. Vanguard Small-cap Value (VBR)
20% Total International. Vanguard Total International (VXUS)
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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AtlasShrugged?
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Re: Thoughts on my asset allocation?

Post by AtlasShrugged? »

Jacky817....I think you should buy a healthy amount of Rolaids with that allocation. You are in for one hell of a ride. When your portfolio tanks, and it inevitably will in the next 40 years a number of times, do you have the strength to see it through? Because the biggest enemy of your portfolio is staring at you in the mirror.

Do you have a written IPS? If not, write one, and put your reasoning down in writing. Many times, I have committed things to writing, slept on it, and then thought the better of it.

On the plus side, I like the simplicity of your portfolio: four funds, and you are done. Mr. Larimore's three fund portfolio is even simpler, and probably less expensive. One huge plus I see: At age 22 you are thinking about this. When I was 22, I can assure you that I had my mind on other things. :oops:
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Ron Scott
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Re: Thoughts on my asset allocation?

Post by Ron Scott »

lakja wrote: Sun Nov 19, 2017 9:25 pm
Ron Scott wrote: Fri Nov 17, 2017 6:20 am Malkiel says it well in "A Random Walk Down Wall Street": "Capitalization-weighted portfolios* are the market. If you believe a subset of securities will give you superior returns, you are counting on some 'dumb' investors to hold portfolios producing poorer returns."
I’ve been looking into equal weight sectors, and some back testing shows some interesting returns. It seems appealing to me especially because the emphasis right now on market cap is heavily dominated towards tech and more specifically to a hand few companies in the tech sector. To me, that’s not diversified.

Based on recent months of market analysis, there seems to be a underlying shift into utlities and other underweight sectors.
Of course you and Malkiel are not in disagreement. Fama/French and the Larry Portfolio might be winners over some time period and we might be in that time now. Just realize that in attempting to beat-the-market you’d be betting on a specific inefficiency, taking $$ from those who overweighted the non-small value sector. You’re not taking $$ from the Bogleheads because they’re earning the market one way or the other.
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.
ChickenLittle
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Re: Thoughts on my asset allocation?

Post by ChickenLittle »

I can understand the aggressiveness, but I'd want some exposure to developed markets, too. I'm 33 and wanting an aggressive tilt. I'm wanting to go something like 16% EM and 14% developed markets. I'm in it for the long haul.
flyingaway
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Re: Thoughts on my asset allocation?

Post by flyingaway »

I advise my son, who is 25 and works for an investment bank, to have 100% in Vanguard Total Stock Market fund, until he is 35.
3funder
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Re: Thoughts on my asset allocation?

Post by 3funder »

Ron Scott wrote: Fri Nov 17, 2017 6:20 am The investment in the Small Value Fund reminds me of another recent post on investing strategies that behave like actively managed funds; rather than being aggressive, it just works against you. I'd suggest pouring that stuff into total US market--which has the added benefit of lower fees. The aggressiveness comes from a high % of assets in equities, not from gaming the equity side of the equation.

Malkiel says it well in "A Random Walk Down Wall Street": "Capitalization-weighted portfolios* are the market. If you believe a subset of securities will give you superior returns, you are counting on some 'dumb' investors to hold portfolios producing poorer returns."

All so-called "tilting" is a variant on active portfolio management, trying to beat the market and not match it. In the long run it reduces your return.


* Like Vangaurd's total stock indexes or an S&P500 index
+1
Global stocks, US bonds, and time.
betablocker
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Re: Thoughts on my asset allocation?

Post by betablocker »

Jacky817 wrote: Thu Nov 16, 2017 10:48 pm Hi guys, my asset allocation is as follows:
15% Total US bonds. Vanguard Total Bond Market (BND)
35% Total US stocks. Vanguard Total Stock (VTI)
25% US small value. Vanguard Small-cap Value (VBR)
25% Emerging market. Vanguard Emerging Market (VWO)

I'm in my mid-twenties with barely any asset at this point, looking for an aggressive portfolio. What do you think?
I have a couple of comments. I do think the emerging markets allocation is a bit high. The additional risk you take for the reward you get by over tilting to EM isn't worth it at some point. I'd take it down a bit. Maybe more like 10% and I think you could find better funds for the small cap value. Vanguard's funds don't tend to be very high in the value factor. Something like iShares Small Value (IJS) or DFA's SCV if you can get it through a 401k or other means. I'd also split the value allocation between a US SCV and an international SCV fund.

As far as risk goes that is a tough question. If you have $100k are you comfortable with a $42,500 loss or $50,000 given the emerging markets and value tilts? You'll have several of those throughout your investing life. That's a question you have to answer. No one else's tolerance on this board means anything. Just put away as much as you can and make sure the max out retirement accounts (401ks, IRAs, etc.) The exact asset allocation matters less in the long run than that and keeping fees low.
staythecourse
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Re: Thoughts on my asset allocation?

Post by staythecourse »

My opinion, same as it always is, don't get to fussy on asset allocation. Honestly, any reasonable one will do. The only way you will know if you are correctly overweight to one or underweight to another is in retrospect when you find out what did well or not on an expost basis. Asset allocation is overblown when it comes down to arguing exact %.

Most important is: LBYM, Get a good education to make a lot of money doing something you like, saving A TON, keep costs/ taxes down, and stay the course. It seems last 20 years asset allocation has become the sexy word on the street. BUT success is more about following the other aspects I mentioned.

Good luck.
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youngpleb
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Re: Thoughts on my asset allocation?

Post by youngpleb »

Jacky817 wrote: Sun Nov 19, 2017 9:16 pm Hi pleb, thanks for your reply! Could you elaborate on what you mean by the terms "these two actually limit you" and "hurts you the most". As I am a young investor, I am looking at a pretty long time horizon. Minimally 15 years, but possibly way beyond 20 years. In that sense, wouldn't a more aggressive tilt give a higher expected return in the long term? Is it because that this makes me less diversified?
I understand wanting an aggressive portfolio (I'm 26), so I totally relate. I just meant that by cutting out all international stocks besides emerging markets, you're losing quite a bit of exposure. The EM focus might really boost you some years, but it could also gouge you. I feel it's better to have the majority of international in some type of total international index and then do a slight tilt, rather than a total focus on an area such as emerging markets (which by definition fails to be a tilt at all really). The 25% SCV isn't as much of a negative, but I still think it'd be better in the long run to have the extra diversification.
Jacky817 wrote: Sun Nov 19, 2017 9:16 pm Haha you're right, I previously did not intend to have any bonds at all. But several people on this forum advised for a 10-20% bonds to take advantage of the rebalancing. With a (possibly) lower correlation between bonds and stocks, the inclusion of bonds can help to "signal" when is a good time to "buy low" and "sell high". Does this make sense?
Yeah, I gotcha. Rebalancing can definitely be a powerful tool. It's probably better in the long run for your sanity to do some type of percentage band-based rebalancing though, rather than trying to time when the market has bottomed out. :mrgreen:
TravelforFun
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Re: Thoughts on my asset allocation?

Post by TravelforFun »

If I could relive my mid 20s, I'd be 100% stocks but of course, everyone is different.

TravelforFun
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Re: Thoughts on my asset allocation?

Post by Fallible »

Jacky817 wrote: Thu Nov 16, 2017 10:48 pm Hi guys, my asset allocation is as follows:
15% Total US bonds. Vanguard Total Bond Market (BND)
35% Total US stocks. Vanguard Total Stock (VTI)
25% US small value. Vanguard Small-cap Value (VBR)
25% Emerging market. Vanguard Emerging Market (VWO)

I'm in my mid-twenties with barely any asset at this point, looking for an aggressive portfolio. What do you think?
Do you have emergency savings for 3-6 months?
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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Re: Thoughts on my asset allocation?

Post by pkcrafter »

Jacky, my only comments are, do you understand what holding that portfolio will do and can you hold. You have 4 times the market in small, so at times you will get huge tracking error, sometimes for more than 5 years on the down side. EM is almost double the international holding, and since most investors average about 30% international, you are 5x over average. Again, huge tracking error for your portfolio.

I'm not saying don't do it, but you better be prepared for lots of volatility and extended periods of underperformance vs holding just TSM. Yes, you will also get times of outperformance too, but those are much easier to endure than the down side. The overall result is your risk level is higher than a normal 85/15 portfolio.


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arcticpineapplecorp.
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Re: Thoughts on my asset allocation?

Post by arcticpineapplecorp. »

have you played around with portfoliovisualizer at all? www.portfoliovisualizer.com

I entered your percentages and compared it to a three fund portfolio (also 85/15) and the results (from 1985 anyway) are here:

https://www.portfoliovisualizer.com/bac ... tion7_2=15

compare the portfolios yourself and look at the difference in std deviation, cagr, max drawdown, etc.

What do you think about the difference in your portfolio and a three fund portfolio?
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Topic Author
Jacky817
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Re: Thoughts on my asset allocation?

Post by Jacky817 »

ruralavalon wrote: Mon Nov 20, 2017 5:39 am What sort of account or accounts is this in?

That looks pretty good for an aggressive portfolio, not unreasonable.

In the mid 20s 15% bonds is within the range of what is reasonable in my opinion, although I usually suggest a minimum of 20% bonds. This is expected to substantially reduce volatility (risk), with only a relatively slight decrease in return. Graph, "An Efficient Frontier: the power of diversification". Please see the wiki articles Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk", and "Asset allocation".

In my opinion the 25% allocation to international stocks (i.e. 29% of stocks in international stocks) is also within the range of what is reasonable. I suggest around 20 - 30% of stocks in international stocks. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities". Historically, allocating 20% of an equity portfolio to non-U.S. stocks would have captured about 84% of the maximum possible diversification benefit, and allocating 30% of an equity portfolio to non-U.S. stocks would have captured about 99% of the maximum possible diversification benefit (p. 6). You can find lots of debate here on international allocation, opinions rangeing all the way from 00% to 50% of stocks in international stocks. If you want more viewpoints on international stocks please try the Google search box (upper right, this page).

I think it unwise to have only emerging markets for international stocks. I use Vanguard Total International index Fund, the ETF is VXUS.

You have 42% (25/60 = 42%) of domestic stocks in small cap-value, instead you could consider around 25% of domestic stocks in small-cap value. "My preference is 75 percent to a total market index fund and 25 percent allocation to a small-value index fund", Rick Ferri, etf.com (7/21/14), "To Tilt Or Not To Tilt?".

. . . . .

So my idea for an aggressive portfolio would be:

20% Total US bonds. Vanguard Total Bond Market (BND)
45% Total US stocks. Vanguard Total Stock (VTI)
15% US small value. Vanguard Small-cap Value (VBR)
20% Total International. Vanguard Total International (VXUS)
Thank you so much for such a comprehensive and well cited answer! I'm very sure that my eventual decision on the allocation will be very close to this!

I think your question on what account im holding relates to tax and retirement account? I'm from Singapore, so I'm just holding a stock trading account to buy ETFs thru a broker. From what I know, I do not have capital gains tax. But i'm subjected to 30% US withholding tax on dividends. Also, there's a mandatory 20% (of income) contribution towards my retirement account whenever i'm employed (company adds another 17%). As far as my own investment is concerned, i'm ignoring this portion.
JCE66 wrote: Mon Nov 20, 2017 6:28 am Jacky817....I think you should buy a healthy amount of Rolaids with that allocation. You are in for one hell of a ride. When your portfolio tanks, and it inevitably will in the next 40 years a number of times, do you have the strength to see it through? Because the biggest enemy of your portfolio is staring at you in the mirror.

Do you have a written IPS? If not, write one, and put your reasoning down in writing. Many times, I have committed things to writing, slept on it, and then thought the better of it.

On the plus side, I like the simplicity of your portfolio: four funds, and you are done. Mr. Larimore's three fund portfolio is even simpler, and probably less expensive. One huge plus I see: At age 22 you are thinking about this. When I was 22, I can assure you that I had my mind on other things. :oops:
Thank you! Yea I have written an IPS. I make it a challenge for myself to "live within my means" AFTER i invest a fixed amount regularly. Don't worry, I'm not eating cat food everyday ;). I didn't mention i was 22 haha, but thanks, point taken =)
staythecourse wrote: Mon Nov 20, 2017 3:17 pm My opinion, same as it always is, don't get to fussy on asset allocation. Honestly, any reasonable one will do. The only way you will know if you are correctly overweight to one or underweight to another is in retrospect when you find out what did well or not on an expost basis. Asset allocation is overblown when it comes down to arguing exact %.

Most important is: LBYM, Get a good education to make a lot of money doing something you like, saving A TON, keep costs/ taxes down, and stay the course. It seems last 20 years asset allocation has become the sexy word on the street. BUT success is more about following the other aspects I mentioned.

Good luck.
Thank you for the advice! Totally agree with you, which is why I want to set my allocation in stone and be done with it. Heh.
youngpleb wrote: Mon Nov 20, 2017 6:35 pm
Jacky817 wrote: Sun Nov 19, 2017 9:16 pm Hi pleb, thanks for your reply! Could you elaborate on what you mean by the terms "these two actually limit you" and "hurts you the most". As I am a young investor, I am looking at a pretty long time horizon. Minimally 15 years, but possibly way beyond 20 years. In that sense, wouldn't a more aggressive tilt give a higher expected return in the long term? Is it because that this makes me less diversified?
I understand wanting an aggressive portfolio (I'm 26), so I totally relate. I just meant that by cutting out all international stocks besides emerging markets, you're losing quite a bit of exposure. The EM focus might really boost you some years, but it could also gouge you. I feel it's better to have the majority of international in some type of total international index and then do a slight tilt, rather than a total focus on an area such as emerging markets (which by definition fails to be a tilt at all really). The 25% SCV isn't as much of a negative, but I still think it'd be better in the long run to have the extra diversification.
Jacky817 wrote: Sun Nov 19, 2017 9:16 pm Haha you're right, I previously did not intend to have any bonds at all. But several people on this forum advised for a 10-20% bonds to take advantage of the rebalancing. With a (possibly) lower correlation between bonds and stocks, the inclusion of bonds can help to "signal" when is a good time to "buy low" and "sell high". Does this make sense?
Yeah, I gotcha. Rebalancing can definitely be a powerful tool. It's probably better in the long run for your sanity to do some type of percentage band-based rebalancing though, rather than trying to time when the market has bottomed out. :mrgreen:
Haha yea i get what you mean. Definitely a lot less diversified if I only go for emerging markets. The reason why i'm throwing such high % at EM and SCV is that i can only buy vanguard ETFs. As a non-US, I cant subscribe to index funds. So to minimize my broker commissions cost, I save up enough to purchase a larger bulk every quarterly. I think ruralavalon's suggested Total international to replace my EM makes perfect sense, it still has 20% EM in it anw haha.
TravelforFun wrote: Mon Nov 20, 2017 6:40 pm If I could relive my mid 20s, I'd be 100% stocks but of course, everyone is different.

TravelforFun
This was where i started haha. Still a very tempting proposal XD
Fallible wrote: Mon Nov 20, 2017 7:10 pm
Jacky817 wrote: Thu Nov 16, 2017 10:48 pm Hi guys, my asset allocation is as follows:
15% Total US bonds. Vanguard Total Bond Market (BND)
35% Total US stocks. Vanguard Total Stock (VTI)
25% US small value. Vanguard Small-cap Value (VBR)
25% Emerging market. Vanguard Emerging Market (VWO)

I'm in my mid-twenties with barely any asset at this point, looking for an aggressive portfolio. What do you think?
Do you have emergency savings for 3-6 months?
Yep. 10 months worth for myself. I'm also looking into insurance, which seems a lot harder to find information on in this forum. Point me in the right direction if you could! I think a significant part of personal financial management should also be insurance, not just emergency cash.
arcticpineapplecorp. wrote: Mon Nov 20, 2017 8:31 pm have you played around with portfoliovisualizer at all? www.portfoliovisualizer.com

I entered your percentages and compared it to a three fund portfolio (also 85/15) and the results (from 1985 anyway) are here:

https://www.portfoliovisualizer.com/bac ... tion7_2=15

compare the portfolios yourself and look at the difference in std deviation, cagr, max drawdown, etc.

What do you think about the difference in your portfolio and a three fund portfolio?
Thank you for the link and keying in all the funds for me too! But i don't think it is able to show a comparison from 1985. It is limited by some of the vanguard funds which was introduced less than a decade ago. This is what I got:
Image
I don't think a 9-year chart can say anything.

I did a quick search and substituted some of the funds to one that has a longer history, and it brought things back to 1997. I understand that the fund might be very different, just a quick one:
Image

For both cases, i feel that there is really not much difference between a "worst year" of -36% and -32%. Both are pretty steep and, to the best of my ability, I plan to stay disciplined during those times to invest regularly. My statistics intuition may not be great, but a SD of 15% vs 13% also doesn't seem to make any difference to me. What i do like is the 1% more in CAGR =D

Do challenge my opinions on this!
Topic Author
Jacky817
Posts: 17
Joined: Fri Oct 13, 2017 9:37 am

Re: Thoughts on my asset allocation?

Post by Jacky817 »

bump.
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