Thanks, good advice! Do you still think it's okay for someone inexperienced to buy outside of a target fund? I was drawn to VTSMX because it seems to have a higher return over the long term and still a cheap expense ratio.
One the one hand, VTSMX is a quite safe choice, so if you really want to buy it, go ahead, you won't be making a big mistake. On the other hand, you clearly don't fully understand what you'd be doing. Buying VTSMX instead of the target date fund decreases your international exposure and also your allocation to bonds. Do you have a good reason to do either?
Do you really think that this most recent minor downturn has made U.S. stocks a better deal than international stocks? Have you looked at the relative valuations? Many believe that international stocks are on sale right now while U.S. stocks are overpriced. They could be wrong though, for example, if U.S. stocks are headed for a long rally.
The Vanguard Target Retirement 2045 fund consists of approximately 90% stocks and 10% bonds. Some claim that a 10% bond allocation is unnecessary for people far away from retirement and argue for having 100% stocks instead, and there are some convincing arguments in favor of this. However, a 90%/10% split is generally considered by most a very agressive portfolio that's on the riskiest end of what's recommended for young people who have the nerves to ride out market crashes. Why specifically would you want to decrease your bond allocation below 10%? Are you sure you're in the tiny minority who have the mental fortitude to handle an even more agressive portfolio, should another 2008 or 1929 come?
My point is that you'd be flying blind if you started to tweak your asset allocation right now or in the near future. Don't rush, there's no need. It's not like you'd be missing out on a lot of gains if you only start customizing your investments a year from now, should you still believe then that it's a good idea.
