I have been index fund investing for the last five years mostly in VTSAX (with some leftover bond funds from our past advisor, ~5%) after having read J Collins and desperate to get out from under our sleazy advisor. I am now rolling over my 401k from a previous employer to Vanguard and decided to take a look at asset allocation which has led me to do some reading beyond J Collins. Of course, being an engineer, that has led me to want to optimize. I started out with the target allocation suggested by personal capital, did some simplifying, added some tilt, and ended up with this:
50% VTSAX (US Total Stock)
25% VTIAX (Int'l Total Stock)
10% VSIAX (Small Cap Value)
5% VGSLX (REITs)
10% VBTLX (US Total Bond)
I have not invested through a downturn, but I have been following MMM long enough (5 years) to understand that sticking to an AA is the most important variable, especially when markets hit the fan. That is why I want to get a target AA nailed down ASAP. I believe I am comfortable with my 90-10 stock-bond ratio... the rest is mostly interesting to me and although I could probably simplify a bit, this is more fun (and likely won't make much difference in the end).
We are 34 with 2 young children. We were on track to FIRE in 8 years, but 8 months ago we quit our high paying jobs and moved to Russia where the cost of living is really low. My husband works 30 hours a week and I don't work at all; with our house rented out back home we are still able to save ~$1250 per month. We are currently hoarding it in high interest savings accounts because we want to be able to move back home in about two years and might buy another property. That is another reason I'm comfortable with the 90-10; we have more than a year's expenses in cash (including the cost of our house mortgage). I have no idea now what our FI timeline is, but I think it's safe to call everything we have (minus the cash) long term investments. We have $15k in a taxable account and $230k in a variety of retirement accounts. We will max out ROTH IRAs this year. Our house is ~$300k, we owe $135k @4.375%, PIMI is $1450 and rent is $2k. We did a lot of updates when it was our primary residence, so don't anticipate any major expenses in the next few years.
All that to say, this is my first hack at a target asset allocation. What do you think? Any glaring problems? Does it seem like a reasonable plan? I've had fun putting this together, but I'm definitely still a novice so would appreciate criticism. I'm also working on writing an IPS, mostly to address our cash hoarding tendencies and to reinforce the importance of a buy and hold strategy (no matter what), in case I start doubting myself.