Author Topic: Please help me with allocation  (Read 1180 times)

MountainTown

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Please help me with allocation
« on: March 30, 2018, 02:20:21 PM »
After getting married I was mostly focusing on getting as much money into accounts as possible and some of that went into VTSAX for simplicity's sake. Right now I am looking at portfolio and it's broken up about:

16% International
80% US
(of which only 5% is small cap, the rest is mid/large)

So I have reallocated my TSP to focus on the S fund. Part of my strategy has been using my wife's accounts for the Total Stock Market types as she has higher fees than me. My thinking is that perhaps I should rebalance about 10 to 15% of my TSP to Small cap. Is this a good strategy or this too drastic to do all at once? I definitely think I can afford a lot more risk in the portfolio if there are gains to be had.


INTERNATIONAL

I am in a bit of a quandary with the International. Until the I Fund(TSP) gets fixed I have stopped investing in it. Again, this is a super cheap option for the TSP and all my wife's options have a .5 % management fee on top of the index fees. Is 16% way too low? Should I just be putting it in the I fund regardless? I have used as much of my IRA space as I could to put into VWIGX.

I can provide more specifics. But as I said part of my strategy here is to avoid higher fees so I have been shifting small cap/mid cap/international out of my wife's and into my TSP as those are way cheaper options for those riskier funds.




MountainTown

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Re: Please help me with allocation
« Reply #1 on: March 30, 2018, 02:23:26 PM »
Does anyone know of an easy way to cut/paste Personal Capital holdings in here so I can provide more specifics?

CowboyAndIndian

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Re: Please help me with allocation
« Reply #2 on: March 30, 2018, 03:59:27 PM »
Remember the old adage, don't put all your eggs in one basket. That is what asset allocation is.

When you have a bunch of different sectors, it is possible that one might zig when the other zags [technical term ;-) ]. This reduces the volatility of your allocation and hence reduces the risks.

So, for an allocation, follow a set of simple rules
  • Spread your assets in different asset classes (Stocks, Bonds, REIT's etc.)
  • Within an asset class, spread your assets around different asset classes (for stock, Large Cap, Mid Cap, Small Cap)
  • Spread your assets around different countries. Do not invest in just one country. So, if you are in the US, you need to invest in emerging markets as well as emerged markets.

This is how I break up my assets into different asset classes and what ETF I have used.

Bonds(20%)
  • Corporate (LQD)7.00%
  • US Treasury Short Term (SHY) 7.00%
  • US Treasury Mid Term (IEF) 4.00%

Stocks (80%)
  • US Large Cap (VOO) 20.00%
  • US Mid Cap (IVOO) 20.00%
  • US Small Cap (VTWO) 20.00%
  • Int. Developed Large Cap (VEA) 5.00%
  • Int. Emerging Large Cap (VWO) 7.00%
  • India (EPI) 10.00%

The one item on my list which might make you scratch your head. India. I decided that would be the secret sauce in my recipe since I knew it would grow at a breakneck rate for the next 15 to 20 years. Also, check my username;-)

Also, I do not have any REIT's right now since a lot of money is tied up in real estate.

Give us more information on what choices you have. I do not think you have a problem right now,  asset allocation is not necessary if you have a  small portfolio.
« Last Edit: March 30, 2018, 04:03:23 PM by CowboyAndIndian »

CowboyAndIndian

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Re: Please help me with allocation
« Reply #3 on: March 30, 2018, 04:04:04 PM »
Does anyone know of an easy way to cut/paste Personal Capital holdings in here so I can provide more specifics?

Take a screenshot and attach it as an image.

MountainTown

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Re: Please help me with allocation
« Reply #4 on: March 30, 2018, 05:14:51 PM »
Here is the holdings. Sorry...it's messy.

MountainTown

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Re: Please help me with allocation
« Reply #5 on: March 30, 2018, 05:16:07 PM »
I should also mention the reason I don't have bonds is I am super heavy into cash. $50000 in CD's. Reason: plan to buy a house in 1-3 years

appleshampooid

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Re: Please help me with allocation
« Reply #6 on: April 01, 2018, 06:27:57 PM »
Remember the old adage, don't put all your eggs in one basket. That is what asset allocation is.

When you have a bunch of different sectors, it is possible that one might zig when the other zags [technical term ;-) ]. This reduces the volatility of your allocation and hence reduces the risks.

So, for an allocation, follow a set of simple rules
  • Spread your assets in different asset classes (Stocks, Bonds, REIT's etc.)
  • Within an asset class, spread your assets around different asset classes (for stock, Large Cap, Mid Cap, Small Cap)
  • Spread your assets around different countries. Do not invest in just one country. So, if you are in the US, you need to invest in emerging markets as well as emerged markets.

This is how I break up my assets into different asset classes and what ETF I have used.

Bonds(20%)
  • Corporate (LQD)7.00%
  • US Treasury Short Term (SHY) 7.00%
  • US Treasury Mid Term (IEF) 4.00%

Stocks (80%)
  • US Large Cap (VOO) 20.00%
  • US Mid Cap (IVOO) 20.00%
  • US Small Cap (VTWO) 20.00%
  • Int. Developed Large Cap (VEA) 5.00%
  • Int. Emerging Large Cap (VWO) 7.00%
  • India (EPI) 10.00%

The one item on my list which might make you scratch your head. India. I decided that would be the secret sauce in my recipe since I knew it would grow at a breakneck rate for the next 15 to 20 years. Also, check my username;-)

Also, I do not have any REIT's right now since a lot of money is tied up in real estate.

Give us more information on what choices you have. I do not think you have a problem right now,  asset allocation is not necessary if you have a  small portfolio.
I got a headache just reading that insanely complicated allocation strategy. Split it across a couple of accounts (taxable, IRA, roth etc) and it gets even worse.

I'll stick to my lazy 3-fund portfolio.

daverobev

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Re: Please help me with allocation
« Reply #7 on: April 01, 2018, 08:11:31 PM »
There is a whole load of stuff you don't 'need'. REITs are possibly one of them, assuming you own a house. Or even if you don't, as they are included in vanilla indices anyway.

Why not just do cap weighting globally? Especially if you're American already.

Roughly 50% total US (VTI), 30% everywhere else (VXUS), and 20% bonds?

My God, I wish I'd been that sane a few years back. My holdings are more of a mess than yours (and I don't want to rebalance because of capital gains and whatnot... do as I say, not as I do, ha, ha, ha).

Mighty-Dollar

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Re: Please help me with allocation
« Reply #8 on: April 01, 2018, 11:25:39 PM »
16% International
80% US
(of which only 5% is small cap, the rest is mid/large)
No bonds? You're taking a whole lot of risk by being 100% in stocks.

MountainTown

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Re: Please help me with allocation
« Reply #9 on: April 01, 2018, 11:30:37 PM »
I have $50k in cash right now. For a down payment. That is why I am not in bonds. It seems like a lot of loss opportunity cost to have that much in cash