I am 35 and currently have a net worth of $1.62M and need to work about 1.5 years more to fulfill a relocation contract. If I left early, I would owe a substantial sum of money from a relocation and bonus (~$130k).
Current Asset Allocation:
$1.4M Invested - 63% US Stocks, 31% International Stocks, 3% Bonds and the remaining is alternatives/cash (From a target date fund in my 401k).
$220k Cash paying 1% at Ally.
The cash position is large due to a number of bonuses recently and I wasn't sure what my tax bill would be from the relocation. Now that that is all squared, I've upped my monthly Vanguard investment to $7k to try to ramp this down (all goes into Taxable 35% International, 65% US Stocks).
My IPS says I should be 90/10 stocks to bonds, so I'm thinking I need to change the Allocation a bit in my 401k to put some more bonds into a Tax efficient vehicle. That being said, when I put the IPS 90/10 together I didn't take into account a Cash allocation which has grown over time. I'm thinking about taking the cash position down to about $100k which would be about 1.5 years of living expenses. We are planning to leave my job in 2019 to do some extended traveling.
Yearly Spending is $65k primarily due to rent in a HCOL area.
Questions:
1. Should I put the cash position even lower due to the expectation of some bonuses at the beginning of next year and a large equity payout at the end of next year? I am expecting this to amount to about $60k. I'm debating on just waiting until these Bonuses come in and then invest them.
2. I feel like I am potentially being too conservative here by holding all this cash, even if I put it down to $100k. Am I being to conservative here on the cash front?
3. I feel like I've already won the game so I'm not sure I should have this aggressive of an allocation (90/10). Note, I had no issues during the last down turn and when the last 10% correction happened, I piled more money into the market. I'm pretty comfortable with risk, but that has always been with a large margin of safety with my salary and cash position. We don't worry about money.