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Learning, Sharing, and Teaching => Investor Alley => Topic started by: Hotstreak on July 26, 2013, 07:56:05 PM

Title: How's my asset allocation?
Post by: Hotstreak on July 26, 2013, 07:56:05 PM
Hi folks!

I have been reading a bunch about investing and asset allocation lately, and I wanted to check and see what people though about what I'm doing.  I am in my 20's, at the start of my career but ready to move up significantly soon, making 40k per year and paying off debt before investing heavily.  I put enough in to get my full match, and I have it allocated as follows:

20% Vanguard Bond Index
50% Vanguard S&P 500 Index
15% Vanguard Small/Mid (this is an S&P 500 completion index)
15% Vanguard International Index

All the funds have very low expense ratios, below %0.20.  I have a pretty good 401k!  I also have a ROTH with Ally Bank @ $400 that's in a money market.  I made a mistake putting that money there last year.  I won't max a ROTH this year, not even close, and I don't have enough to move it to Vanguard or some place I can get market exposure.  I'm wondering two things.

How is my asset allocation?  Any changes you would make?  My 401k has basically no other options but target date funds and actively managed funds that track the ones I'm invested in.

How should I view that $400 I have in the ROTH?  I can't move it, so I'm inclined to not count it towards my AA (because I can't rebalance it towards anything else).  But should I be considering this my "stable", i.e. bond, portion?

Any insight is appreciated.  I will have all my debts paid off next year and start to dig in to the savings, as well as hopefully having a better paying job.
Title: Re: How's my asset allocation?
Post by: matchewed on July 26, 2013, 09:21:01 PM
20% Bond is a bit conservative for your age but if you're comfortable with that and it is your planned asset allocation then so be it.

I think money market is factored into a bond mix. I would try to roll it over to another institution when you can or look to place it into a different investment within the Roth IRA.
Title: Re: How's my asset allocation?
Post by: Hotstreak on July 26, 2013, 10:15:17 PM
20% Bond is a bit conservative for your age but if you're comfortable with that and it is your planned asset allocation then so be it.

I think money market is factored into a bond mix. I would try to roll it over to another institution when you can or look to place it into a different investment within the Roth IRA.

Thanks, I am definitely looking to add enough to my ROTH to switch it somewhere like Vanguard.  If I have enough cash lying around at the end of the year, or from tax return, I will absolutely be doing this.

The reason I am 80/20 instead of 90/10 or 100/0 is that I have read it historically produces a better return than pure stocks.  Sorry I wish I had the source, I have done so much reading that there are too many articles to keep strait.  I believe the benefit was from rebalancing when stocks took a turn downwards, and resulted in both a higher return as well as less variability in value of overall holdings.  It might have been Bogleheads.