pinecamp wrote: ↑Tue Sep 12, 2017 5:44 pm
I'm new to Bogleheads, so thanks for having me!
The rule here is we have to be nice to newbies or else.
pinecamp wrote: ↑Tue Sep 12, 2017 5:44 pm
I additionally have a small but significant-for-me portfolio of cryptocurrency, which I have held over the past few years.
No comments on that. See above.
pinecamp wrote: ↑Tue Sep 12, 2017 5:44 pm
The Plan(?) for Roth IRA
Stocks (90%)
- 65% SCHB: US Broad Market, 0.03% ER
- 10% SCHA: U.S. Small-Cap, 0.05% ER
- 15% SCHF: International Equity, 0.06% ER
- 5% SCHE: Emerging Markets Equity, 0.13% ER
- 5% SCHC: International Small-Cap Equity ETF, 0.12% ER
Bonds (10%)
- 75% SCHZ: U.S. Aggregate Bond, 0.04% ER
- 25% International bond ETF? (Looking for advice here)
Nice plan.
pinecamp wrote: ↑Tue Sep 12, 2017 5:44 pm
I have a high tolerance to risk in the form of short-term variance (see crypto), but this is my retirement account, so I want to make sure my choices make sense over the long term. My thinking with the setup above is to tilt small and foreign, in the hopes of catching greater long-term growth in those areas.
Long term? My concern if I were in my 20's would be how my hair looked but ok seriously...
You aren't tilted to foreign. You are tilted US which is at high valuations and has lower "expected" returns than international.
That said, US equites have positive "expected" real returns so don't hesitate to buy them. International stocks have higher "expected" returns because the market prices them that way for whatever reasons.
I don't view your equities as being too risky. Some will argue high valuation make US equities riskier. Other quote Bogle as saying international "NO!".
A 90% stock 10% bond portfolio going by global market cap now would be:
SCHB 47.9%
SCHF 29.9%
SCHC 4.3%
SCHE 8.0%
SCHZ 10.00%
I put a calculator for Schwab ETFs here.
https://docs.google.com/spreadsheets/d/ ... sp=sharing . anyone can edit the page, so log in to a google account and make your own copy if you want to use it. Sometimes Morninstar updates there pages and it stops working temporarily or they change their format and I have to notice and change the page though.
Another option is to go down the rabbit hole of factor investing and use value funds such as FNDC, FNDE, FNDA instead of SCHC, SCHE, and SCHA. But that really is a rabbit hole and if you are lucky maybe it will make a difference after a decade or so of underperformance. No guarantees. None.
There are strong differences here about how much international to hold and whether to go straight market cap or to tilt (even if only to small). Just pick a reasonable low cost index fund allocation and save money.
*** What you want to do is focus on your career, make money and invest as much as you can. That will have a bigger and more certain impact than trying to predict what the best allocation will turn out to be. ***
The target index funds are a great option too.
About bonds:
Local currency emerging market bonds have done well and many believe will continue to do so. Hedged International bonds seems similar to US ones except that inflation and rate hikes will be at a different timing from US ones, so you can have less volatility than being US bond only. No advice here really.
Anyway, I am thinking about moving $65k US holdings to emerging markets, and get close to global market capitilization for the US with an overweight on emerging markets. I couldn't imagine putting money in bitcoin though. Who is right? No idea.
Note: "expected" doesn't mean that things are guaranteed to turn out that way. It could very well not be the case.