Thank you in advance, this is long.
I am 26 years old been saving since my first job (eternally grateful for the lessons my parents taught me). I live very frugally though much of this is because I live with my parents. It is a mutually beneficial deal, they have a paid for house that is too big for both of them and they like the neighborhood so don't want to downsize, have offered rent but they have refused, stating that they would have just invested the money for me.
I don't want to share exact figures but I am currently investing 69.4% of my pretax income, with weekly direct deposits to Vanguard, money I don't have I can't spend. I pay off my credit card biweekly, I don't like customers that are slow to pay their invoices so I pay off any bills I have as promptly as I can (golden rule).
My investments are my Roth IRA is entirely in Total Stock Market, do you think it wise to diversify this?
In my normal account the breakdown is
Total Stock Market- 55.42%
Interational Stock Market- 22.91
Total Bond Market- 16.47
International Bod Market- 5.19
When adding in my Roth IRA the breakdowns are
Total Stock Market- 58.15%
Interational Stock Market- 21.51%
Total Bond Market- 15.47%
International Bod Market- 4.87%
I do not have a timeline in line for being able to retire, I do not know if I will retire once I reach FI but I do like the idea of having a significant savings should any hard time come or if I should decide to do something different. The past few months have been incredibly stressful and lead me to think that my company is going to be making some drastic changes in 2014 (for the past few years my company's owner has been buying more and is now focusing on shedding much of the inventory and has slowed new purchases). I am extremely confident that my position in the company is secured (just received a new title bump with more responsibilities and believe that he is grooming me to take over more operations), but these moves me even more vigilant in cutting down my expenses to save more. I have bringing in lunches and curtailing eating out with the exception of socializing, and have been carpooling most days to save on gas and car wear/tear (plus it is better to socialize).
Being conservative in my estimates (assuming no pay raise, 3% inflation, and 10% return on investments) I anticipate finally able to live on a 4% withdrawal rate in about 10 years. This of course is also assuming no significant lifestyle changes. I am currently single.
I am willing to reallocate this after any year end dividends and capital gains. Do you think this is a proper allocation? Do you think I should transfer some of Roth IRA towards bonds? Do you think my assumptions (3% inflation and 10% return) are reasonable?
With your experience do you have any advice for future expenses (marriage and buying a home)?
Thank you for your advice and for taking the time to read this.
