I can't hit this target immediately due to limited 401k fund options, but I plan to leave my job soon and roll over into this asset allocation. When I retire, my plan is to hold this portfolio plus 1 year of living expenses in cash. I would probably spend about 4% of my portfolio in an average year, but about half of that would be optional things for fun (like international travel). I will have a trigger (such as a portfolio drop of more than 20%) where I will start spending only at the bare bones level (less than 2% of my portfolio at retirement) and spend that from the cash. I will probably consider trying to make some money at that point just to be able to buy some cheap stocks. When the market recovered (say, got back to a certain % of its value before the plunge) I would start to fill the cash pool again.
I realize that many on this forum will criticize having a 98% stock portfolio. But I think my strategy provides me the potential for an overall dramatically higher lifetime return with little risk. If I needed to live on 2% of my initial portfolio even for a few years, life would still be good. And I could always try to make some money if I wanted some luxury. The point of maximizing my long term portfolio return would be to fund charities since I don't need to spend the money on myself. If I get to the end of my life and there isn't much left, then it's a shame for the charitable causes, but I'll still be OK. I also have a steely and logical resolve. There is no chance that I would panic and sell stocks if the market crashed. I might be disappointed about not going to Europe for a few years if the downturn is long, but I'm just as happy reading a book and hiking in a national park anyway. I was 100% stocks (and not making much money) during the 2008 crisis and I never wanted to sell my stocks. The many scenarios I've run on cFIREsim and FIREcalc indicate that at the 4% withdrawal rate, a small amount of the time the portfolio lasts for 50 years but has dwindled to small amounts (sad charities). But most of the time the portfolio gets insanely large (happy charities).
15% VFIAX (500 Index Fund)
10% VIVAX (Large-cap value)
10% VSMAX (Small-cap)
15% VSIAX (Small-cap value)
5% VGSLX (REIT)
5% VEUSX (Europe large-cap)
5% VPADX (Pacific large-cap)
5% VTRIX (Intl large-cap value)
10% VFSVX (Intl small-cap)
5% VINEX (Intl small-cap growth)
10% VEMAX (Emerging markets)
It's 55% US/45% Intl, roughly 45% large/55% small, and 60% blend/40% value or growth. It would probably be something like 6,000-10,000 stocks in total. There's a lot of diversity in there, but a lot of potential for high long-term returns. I back tested (
https://www.portfoliovisualizer.com/backtest-asset-class-allocation) this for 1972-2014 (max available time frame) and there were portfolio declines of 20% or more about once per decade. Only once did the 5-year rolling return dip below 0 (-0.9% in 2011). The CAGR was 13.2% ($10k grew to $2M).
Thoughts?