Need advice on investment allocation

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Topic Author
jjthejetplane
Posts: 4
Joined: Thu Jan 13, 2022 11:25 pm

Need advice on investment allocation

Post by jjthejetplane »

Hi everyone, I'm 20 years old and am trying to see if my current plan for investment allocation should be changed. For background info, I'm investing around $400-600 a month and currently have a Roth IRA along with a taxable brokerage account both through Vanguard.

In my Roth I'm planning on investing solely into VTSAX for the diversification. In my taxable acount I've been acquiring ETFs (SCHD/VTI), and am looking to invest in VXUS. I am wanting to stay 70/30 with VTI and VXUS.

Any advice on how I could improve my plan or prevent any "mess ups" would be greatly appreciated.
3funder
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Re: Need advice on investment allocation

Post by 3funder »

Looks good. Make sure you max out your Roth IRA.
Global stocks, US bonds, and time.
dbr
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Joined: Sun Mar 04, 2007 9:50 am

Re: Need advice on investment allocation

Post by dbr »

You don't need SCHD which may eventually be less tax efficient than what you want.

Do you have a plan to intentionally tilt away from the total market for some reason?
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Percyjackcson
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Re: Need advice on investment allocation

Post by Percyjackcson »

I'm "relatively new" to this as well. But welcome!

I came from dividend and value investing before this, so I also currently have some SCHD. However as I have heard, a lot of BogleHeads don't like dividends. They are seen as unnecessary and create tax headaches. I have also seen and could agree with the idea that dividends are not needed now while I am not retired. All this to say I am unsure of what I will do with my SCHD allocation. Haven't bought anymore of it, but not sure if I will sell out of it.
Stress less, Smile more :)
dbr
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Joined: Sun Mar 04, 2007 9:50 am

Re: Need advice on investment allocation

Post by dbr »

Percyjackcson wrote: Fri Jan 14, 2022 10:24 am I'm "relatively new" to this as well. But welcome!

I came from dividend and value investing before this, so I also currently have some SCHD. However as I have heard, a lot of BogleHeads don't like dividends. They are seen as unnecessary and create tax headaches. I have also seen and could agree with the idea that dividends are not needed now while I am not retired. All this to say I am unsure of what I will do with my SCHD allocation. Haven't bought anymore of it, but not sure if I will sell out of it.
I would say more accurately that lots of Bogleheads don't not like dividends so much as they don't like liking dividends.
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Percyjackcson
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Re: Need advice on investment allocation

Post by Percyjackcson »

dbr wrote: Fri Jan 14, 2022 10:28 am
Percyjackcson wrote: Fri Jan 14, 2022 10:24 am I'm "relatively new" to this as well. But welcome!

I came from dividend and value investing before this, so I also currently have some SCHD. However as I have heard, a lot of BogleHeads don't like dividends. They are seen as unnecessary and create tax headaches. I have also seen and could agree with the idea that dividends are not needed now while I am not retired. All this to say I am unsure of what I will do with my SCHD allocation. Haven't bought anymore of it, but not sure if I will sell out of it.
I would say more accurately that lots of Bogleheads don't not like dividends so much as they don't like liking dividends.
Love the wording there :sharebeer
Stress less, Smile more :)
dbr
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Joined: Sun Mar 04, 2007 9:50 am

Re: Need advice on investment allocation

Post by dbr »

Percyjackcson wrote: Fri Jan 14, 2022 10:50 am
dbr wrote: Fri Jan 14, 2022 10:28 am
Percyjackcson wrote: Fri Jan 14, 2022 10:24 am I'm "relatively new" to this as well. But welcome!

I came from dividend and value investing before this, so I also currently have some SCHD. However as I have heard, a lot of BogleHeads don't like dividends. They are seen as unnecessary and create tax headaches. I have also seen and could agree with the idea that dividends are not needed now while I am not retired. All this to say I am unsure of what I will do with my SCHD allocation. Haven't bought anymore of it, but not sure if I will sell out of it.
I would say more accurately that lots of Bogleheads don't not like dividends so much as they don't like liking dividends.
Love the wording there :sharebeer
Yeah, I was thinking the other day that often the question about a lot of things in investing is not to ask what is wrong with a certain thing so much as to ask what is right about it. It takes away the negativity and focusses the discussion on what the reason is to do it.
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Taylor Larimore
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Location: Miami FL

Re: Need advice on investment allocation

Post by Taylor Larimore »

jjthejetplane wrote: Thu Jan 13, 2022 11:46 pm Hi everyone, I'm 20 years old and am trying to see if my current plan for investment allocation should be changed. For background info, I'm investing around $400-600 a month and currently have a Roth IRA along with a taxable brokerage account both through Vanguard.

In my Roth I'm planning on investing solely into VTSAX for the diversification. In my taxable acount I've been acquiring ETFs (SCHD/VTI), and am looking to invest in VXUS. I am wanting to stay 70/30 with VTI and VXUS.

Any advice on how I could improve my plan or prevent any "mess ups" would be greatly appreciated.
jjthejetplane:

Welcome to the Bogleheads Forum!

You will find this topic helpful:

The Three-Fund Portfolio

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "The beauty of owning the market is that you eliminate individual stock risk, you eliminate market sector risk, and you eliminate manager risk." -- "The odds of outpacing an all-market index fund are, well, terrible."
"Simplicity is the master key to financial success." -- Jack Bogle
dbr
Posts: 38867
Joined: Sun Mar 04, 2007 9:50 am

Re: Need advice on investment allocation

Post by dbr »

Taylor Larimore wrote: Fri Jan 14, 2022 11:00 am
jjthejetplane wrote: Thu Jan 13, 2022 11:46 pm Hi everyone, I'm 20 years old and am trying to see if my current plan for investment allocation should be changed. For background info, I'm investing around $400-600 a month and currently have a Roth IRA along with a taxable brokerage account both through Vanguard.

In my Roth I'm planning on investing solely into VTSAX for the diversification. In my taxable acount I've been acquiring ETFs (SCHD/VTI), and am looking to invest in VXUS. I am wanting to stay 70/30 with VTI and VXUS.

Any advice on how I could improve my plan or prevent any "mess ups" would be greatly appreciated.
jjthejetplane:

Welcome to the Bogleheads Forum!

You will find this topic helpful:

The Three-Fund Portfolio

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "The beauty of owning the market is that you eliminate individual stock risk, you eliminate market sector risk, and you eliminate manager risk." -- "The odds of outpacing an all-market index fund are, well, terrible."
I consider the 3 Fund concept as the clear cut starting point for any investment plan. One would make this more complicated only for good reasons that one understands very well.

That said you can read posts from me that don't get very bothered about bond selections being quite flexible. Messing with the stock selection needs a lot more justification.

Note the articles on 3 Fund don't dictate what allocations to choose between US and International stocks and between stocks and bonds. I suppose mathematically a US stock only portfolio is still a three fund portfolio with two of the allocations being zero, but the mathematician in me speaks there.
Topic Author
jjthejetplane
Posts: 4
Joined: Thu Jan 13, 2022 11:25 pm

Re: Need advice on investment allocation

Post by jjthejetplane »

3funder wrote: Fri Jan 14, 2022 8:27 am Looks good. Make sure you max out your Roth IRA.
That's the plan! Thank you for your response!
Topic Author
jjthejetplane
Posts: 4
Joined: Thu Jan 13, 2022 11:25 pm

Re: Need advice on investment allocation

Post by jjthejetplane »

dbr wrote: Fri Jan 14, 2022 10:08 am You don't need SCHD which may eventually be less tax efficient than what you want.

Do you have a plan to intentionally tilt away from the total market for some reason?
Ok good to know. And as of now no. Would going 70% on VTI and 30% on VXUS tilt me away from the total market?
Topic Author
jjthejetplane
Posts: 4
Joined: Thu Jan 13, 2022 11:25 pm

Re: Need advice on investment allocation

Post by jjthejetplane »

Percyjackcson wrote: Fri Jan 14, 2022 10:24 am I'm "relatively new" to this as well. But welcome!

I came from dividend and value investing before this, so I also currently have some SCHD. However as I have heard, a lot of BogleHeads don't like dividends. They are seen as unnecessary and create tax headaches. I have also seen and could agree with the idea that dividends are not needed now while I am not retired. All this to say I am unsure of what I will do with my SCHD allocation. Haven't bought anymore of it, but not sure if I will sell out of it.
I may sell my SCHD shares if that's the case because I don't have a large amount currently. I could then buy more into VTI and VXUS
dbr
Posts: 38867
Joined: Sun Mar 04, 2007 9:50 am

Re: Need advice on investment allocation

Post by dbr »

jjthejetplane wrote: Fri Jan 14, 2022 3:56 pm
dbr wrote: Fri Jan 14, 2022 10:08 am You don't need SCHD which may eventually be less tax efficient than what you want.

Do you have a plan to intentionally tilt away from the total market for some reason?
Ok good to know. And as of now no. Would going 70% on VTI and 30% on VXUS tilt me away from the total market?
The simple answer is no, with respect to size and value. I was referring to SCHD being a large value fund which is a tilt to large and value.

A more complicated answer is that 70/30 is clearly a tilt to the US market relative to the rest of the world. There can be massive discussion about whether or not that has the same implications as concentrating with respect to size and value characteristics.

The theory would be that small size (not large) and value actually predict higher returns due to a different risk structure while I am not clear that anyone suggests international stocks have a different risk and return than US stocks, a question that can be discussed.
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