Author Topic: asset allocation of retirement savings  (Read 3289 times)

bjack2

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asset allocation of retirement savings
« on: May 26, 2014, 03:12:45 PM »
Hello
My wife and I have fidelity through work and have various 401a and 403b funds there (about 400K saved so far).  We have maxed out all funds from a contribution / matching standpoint.  My question is which funds should I hold?  I have been reading a lot of Bogle stuff and of course stuff on MMM that recommends a combination of US stock index funds, international stock index funds, and bond index funds (all of which fidelity offers as an option).  What % of each should I hold ?.  I definitely want to invest passively as I have no interest in timing the market or making many changes but I also want to be smart about it.  Should I increase the % of bonds as I get closer to retirement?  I would love thoughts on this from the large group of WAY more experienced and knowledgeable investors in this community.  Thanks thanks, thanks for anyones advice.
Ben

butchmonkey

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Re: asset allocation of retirement savings
« Reply #1 on: May 26, 2014, 03:24:03 PM »
One thing to consider is buying a single premium immediate annuity to cover your basic needs and then investing the remainder very aggressively (ie 90% stock) in low cost index funds.

Another thing to keep your eye on is TIPS yields. When they get up to 3% yield, you can back the truck up and fill your portfolio with 50 or 60% long term tips.

You've then guaranteed a real 3% income on your bonds for 30 years which means you need very little performance from the rest of your portfolio to get to 5% real return in the long run. (Hence a safe 4% withdrawal rate. )


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Frankies Girl

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Re: asset allocation of retirement savings
« Reply #2 on: May 26, 2014, 03:39:05 PM »

It sounds like you're still very unsure of your goals and how everything works. Asset allocation is completely up to you, your risk level comfort, and what your FIRE plans are. You have to figure out all of that stuff first and then figure out your investment policy statement.

http://www.bogleheads.org/wiki/Investment_policy_statement

http://jlcollinsnh.com/stock-series/
^read if you haven't already - one of the best series out there

And then from there, you figure out what to hold based off your unique situation.

wtjbatman

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Re: asset allocation of retirement savings
« Reply #3 on: May 26, 2014, 06:26:17 PM »
Listen to Frankies Girl, not butchmonkey.

We love telling people what to do around here (er, I mean offering advice), but finding an asset allocation you are comfortable with is entirely up to you. We can give you suggestions of common ones, like having your age in bonds, but without knowing your risk tolerance we can't guarantee advice you will be comfortable with in the long run. And that's obviously what matters the most, finding a strategy you are comfortable with for a long time.

Mr Mark

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Re: asset allocation of retirement savings
« Reply #4 on: May 26, 2014, 07:03:40 PM »
+1

and do not pay anybody to invest, beyond the minimum transactional costs. Fees kill. All these financial 'products'  are in a mustachian sense, a waste of your valusable cash.

You see, it " depends" on so many factors there is no-one who can better figure it out than you, wrt asset allocation and risk.  We can offer advice to generic profiles, but this thus comes with a wide range of outcomes.

personally, I think a 4% swr, in the usa, given an average distributoon of 491k, ira, et al, is super conservative.

With a bit of effort, local and perhaps national real estate investment, vanguard, pentions, alternative local 'angel' investments, etc etc, plus occasional earnings for doing what you love and kick ass at, you should be able to pull an effective after tax income of say, $80k  per year with a stash of 1.2 mill.

IMHO.

YMMV

bjack2

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Re: asset allocation of retirement savings
« Reply #5 on: May 26, 2014, 08:26:58 PM »
Thanks to all.  What a great community of like minded thinkers that have no financial incentive for helping.  I appreciate the advice and hope to pay it back someday when my stache grows a bit.  We will sit down and try and map out a plan based on the links provided.  Thanks!

sleepyguy

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Re: asset allocation of retirement savings
« Reply #6 on: May 26, 2014, 11:23:30 PM »
I generally do the 1/2 age rule of bonds and split the rest up how ever I feel for the year, lol.

I'm 35 so...

17% bonds
33% US index
25% Canadian index
25% International index

Once I'm fully "retired", as in no part-time work or side income things, I'll scale back to 1:1 bonds to age ratio.  I'll still keep the 1/2 age rule of bonds until then, even once FIRE.

Pretty simple as I only use 4 funds and rebalance about twice a year.