Author Topic: Asset Allocation  (Read 3281 times)

Texan

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Asset Allocation
« on: July 20, 2014, 04:52:26 AM »
I am wondering if I should invest in bonds currently. I am 23 and looking for some growth and not much security. I have about 8.5k in my Roth invested just in VFINX and outside my roth I have: 1k in VDE and just 300 in VGIT

Soon I plan to invest more in either small or mid cap index funds, and this will be outside my Roth IRA. Is buying more shares of VGIT even worth the diversification? I do not really understand asset allocation very well yet. I just bought those few shares because I thought it was 'smart'.

Any advice would be great. thank you. !

edit: obviously, currently the majority of my investments are in stock funds. Because I want growth.

icek05

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Re: Asset Allocation
« Reply #1 on: July 20, 2014, 06:00:08 AM »
As long as you don't mind the market fluctuations and aren't going to panic and sell, I don't think there is any real reason for you to own bonds.  JLCollins has a great series on stocks which is definitely worth the read and this article specifically talks about asset allocation:
http://jlcollinsnh.com/2012/05/12/stocks-part-vi-portfolio-ideas-to-build-and-keep-your-wealth/

Also, regarding your Roth, I'm not sure if this happens automatically or not but once you have 10k in your account you can switch from VFINX to VFIAX which is the same fund but has a lower expense ratio.

Texan

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Re: Asset Allocation
« Reply #2 on: July 20, 2014, 06:59:58 PM »
As long as you don't mind the market fluctuations and aren't going to panic and sell, I don't think there is any real reason for you to own bonds.  JLCollins has a great series on stocks which is definitely worth the read and this article specifically talks about asset allocation:
http://jlcollinsnh.com/2012/05/12/stocks-part-vi-portfolio-ideas-to-build-and-keep-your-wealth/

Also, regarding your Roth, I'm not sure if this happens automatically or not but once you have 10k in your account you can switch from VFINX to VFIAX which is the same fund but has a lower expense ratio.

Thanks! I did not know that about VFIAX

TomTX

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Re: Asset Allocation
« Reply #3 on: July 20, 2014, 08:31:21 PM »
As long as you don't mind the market fluctuations and aren't going to panic and sell, I don't think there is any real reason for you to own bonds.  JLCollins has a great series on stocks which is definitely worth the read and this article specifically talks about asset allocation:
http://jlcollinsnh.com/2012/05/12/stocks-part-vi-portfolio-ideas-to-build-and-keep-your-wealth/

Also, regarding your Roth, I'm not sure if this happens automatically or not but once you have 10k in your account you can switch from VFINX to VFIAX which is the same fund but has a lower expense ratio.

Thanks! I did not know that about VFIAX

Have you already made your 2014 Roth contribution? If not, I would scrape all of that money into the Roth, come up with another $200 and go 100% VFIAX.

At $10,000 - you don't have enough money to worry about diversifying between stocks and bonds. As long as you don't panic sell when the market crashes. And the market WILL crash.

However, since you are in the early accumulation phase, market crashes are awesome for you - you get more shares for your money as you contribute.