Author Topic: How should I allocate??  (Read 2236 times)


  • 5 O'Clock Shadow
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How should I allocate??
« on: March 25, 2016, 03:40:28 PM »
I got some good news from my employer.  They finally added the ability to self direct - and gave us index funds....  The fees on my current holdings are mostly 1.XX.  So I'm excited to whack those fees and hopefully get some better performance.  I'm wondering how I should allocate across these funds given I'm 49.  I guess I'm moderately risk tolerant.  I need to grow this 401K but at the same time can't afford to lose it all either...

The funds are
Vanguard 500 Index Admiral (VFIAX)
Vanguard Developed Markets Idx Admiral (VTMGX)
Vanguard Total Bond Market Index (VBTLX)
BlackRock High Yield Bond Instl (BHYIX)
Metropolitan West Total Return Bond I (MWTIX)

Curious as to what you guys would do.


  • Stubble
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Re: How should I allocate??
« Reply #1 on: March 25, 2016, 03:47:31 PM »
Were it me I'd put half VFIAX and half in VTMGX and call it a day.

If you're a fan of bonds, then perhaps 10% in VBTLX with the percentages in the S&P and Developed markets adjusted accordingly.


  • Pencil Stache
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Re: How should I allocate??
« Reply #2 on: March 26, 2016, 06:56:24 AM »
I think some sort of allocation between VFIAX and VBTLX is appropriate. Without knowing the entirety of your retirement assets and your goals, it's hard to weigh in with a precise allocation.

I would avoid developed markets and the actively managed bond funds


  • Walrus Stache
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Re: How should I allocate??
« Reply #3 on: March 26, 2016, 07:59:12 AM »
Draw a dividing line between funds charging 0.50% or more, and those that charge less.  That will eliminate the two non-Vanguard funds from your list (and sadly, those are the improved expenses according to OP's first post).  Given that leaves you a US index, international index, and bond index... it's time you learn about the 3 fund portfolio.

The idea is to make two decisions: your bond allocation based on time until retirement.  Maybe (age - 20) in bonds, or about 30%.  That leaves 70% in stocks.  A Vanguard paper on diversification said the most likely benefits to having international funds occurs at 20%, but can provide a benefit up to 40%.  Since this is new, find a percentage you can stick with when things go wrong:  20% x 70% = 14% international, or 1/5th of your stock allocation.

So here's my rough guess at an allocation (age ~50, new to international investing):
30% Vanguard bond fund
14% Vanguard international stock fund
56% Vanguard US stock index

As you might expect, I'm not a financial adviser.  I'd recommend you take on that role, and learn about 3 fund portfolios.  They seem to nicely fit what you have available to you at low cost in your retirement plan.


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