How's my asset allocation? How can I improve it?

[Captain Cactus]

In my retirement accounts I have 75% in total U.S. Stock market index fund (mostly VTSAX except for my 401k).
About 15% in Vanguard's total international index fund.
5% in Vanguard's total bond fund.
5% in high-yield equities (BDCs).

This adds up to about $207,000 and I add about $35,000/year into 401k and IRA.  I am going to focus on total U.S. Stock market going forward.

I'm 35 years old. 

How can I improve my allocation? 

[BarkyardBQ]

Your allocation has a problem, if it's 75/15/5/5 and you're only going to focus on the 75 til it's 99.

Why do you have international if you're not going to invest in it forever?

Why do you think US is better than international going forward?

Why reduce diversification?

What is your goal, investment timeline (when do you need to withdrawal)?

What happens if you retire and the US economy is down and International is thriving?

Do you know that the Total World Stock market is like 55/45 US/Intl? Why cut out half the worlds corporations and potential?
https://personal.vanguard.com/us/funds/snapshot?FundId=0628&FundIntExt=INT

You might want to avoid excluding any asset class, or overweighting any asset class for 'better performance' expectations. Emerging Markets beat the S&P500 three more times in the last 20 years.

[forummm]

I don't see glaring problems.

What's your Investor Policy Statement? Does "focus" on VTSAX mean "majority" or "entirely"?

[abbythebear]

This adds up to about $207,000 and I add about $35,000/year into 401k and IRA.  I am going to focus on total U.S. Stock market going forward.

Excuse any newbie ignorance, but I thought the IRS 401k contrib was $18k and IRA is $5500? How are you contributing $35k?

[forummm]

This adds up to about $207,000 and I add about $35,000/year into 401k and IRA.  I am going to focus on total U.S. Stock market going forward.

Excuse any newbie ignorance, but I thought the IRS 401k contrib was $18k and IRA is $5500? How are you contributing $35k?

Could be including a spouse or OP could have one of those nice 401ks that allows additional after tax contributions.

[Captain Cactus]

150% company match on the first 6% of my 401k.  Then there's the Roth IRA for both me and my wife.  It's actually closer to $37k annually into retirement accounts.

[DavidAnnArbor]

That means you make $88,888 in wages

[Captain Cactus]

Or it means that I max out the 401k limit of $18k :)

[Tyler]

How can I improve my allocation?

Your current AA is definitely stock heavy but generally seems reasonable.  Your question all depends on how you define "improve". 

Each of these calculators approaches the problem from a different perspective, and playing around with them may help you answer your own question.  They don't include high yield equities, but everything else is there (and much more).

Fundamentally, it sounds like the bigger issue is that you haven't settled on a long-term asset allocation that you're comfortable with.  For that problem, try browsing a bunch of different lazy portfolios recommended by various experts to see what resonates with you.  Pick a few that sound interesting, and read the supporting materials by their authors.  That should help you think more holistically and learn about some of the finer points of portfolio construction.

[MustacheAndaHalf]

Did you change your equity allocation as a result of the 2008 crisis?  Or did you start investing only after that?

I ask because 5% bonds seems low.  If you have confidence in equities, it could work.  But if you haven't been through a correction, there's a chance you'll swear off equities if they lose ground to cash and bonds.

[Captain Cactus]

Did you change your equity allocation as a result of the 2008 crisis?  Or did you start investing only after that?

I ask because 5% bonds seems low.  If you have confidence in equities, it could work.  But if you haven't been through a correction, there's a chance you'll swear off equities if they lose ground to cash and bonds.

I have been contributing to my ROTH IRA since January 2004 when I got in the Army.  I kicked my contributions into high gear in January 2009 when I got a corporate job with a 401K.  I guess the way I look at it is that I have lots of time 'til I plan on accessing the retirement accounts (about 24 years) so I can stomach the roller coaster.  That being said, as a result of this thread I am going to make 30% of my contributions into bonds (Vanguard total bond index).  The rest will go to equities.

[Captain Cactus]

How can I improve my allocation?

Your current AA is definitely stock heavy but generally seems reasonable.  Your question all depends on how you define "improve". 

Each of these calculators approaches the problem from a different perspective, and playing around with them may help you answer your own question.  They don't include high yield equities, but everything else is there (and much more).

Fundamentally, it sounds like the bigger issue is that you haven't settled on a long-term asset allocation that you're comfortable with.  For that problem, try browsing a bunch of different lazy portfolios recommended by various experts to see what resonates with you.  Pick a few that sound interesting, and read the supporting materials by their authors.  That should help you think more holistically and learn about some of the finer points of portfolio construction.

The lazy portfolios are wonderful.  Thank you for suggesting them!