Is VEXMX over-valued? (also, rate my asset allocation)

[Vitai Slade]

Given the 40% -pop- that VEXMX (ext. market index) had in 2013, do you think that the fund is over-valued right now? Would it be a good time to jump in and get my feet wet? Or is the price sky high and should I wait for it to go on sale?

Right now I'm pumping as much money as I can into investment accounts. I've got my entire 401k contribution spilling into an S&P500 fund (lowest cost, best option), I've got my Roth IRA funds in the Vanguard REIT index (and some in individual mREITs... waiting for those to come back before selling and putting that money into the Vanguard fund as well) and now that my retirement accounts are maxing out, I want to balance the S&P 500 fund with the Extended Market index fund to complete it and make a pseudo-total market fund out of it all, but because my tax-advantaged accounts are maxed out (and done as efficiently as possible... I think), this last fund will be in a taxable account. Given the $3,000 minimum investment, I'm waiting for a good time to jump in. I could do it now by emptying my investment money market account at my bank (the one I made for investments) as well as my vacation account, which is a bit full anyway... or I can wait a little longer and see if the price drops.

What do you think? Also, what do you think about my asset allocation?

Maximum 15% of income 401k - Approx. $8,200/yr. to S&P500 index (41%) (Principal - PLFPX)
Maximum Roth - $5,500/yr. (and up when the max rises) to REIT index (27.5%) (Vanguard - VGSIX)
Everything else taxable account - Approx. $6,300/yr. to Ext. Market index (31.5%) (Vanguard - VEXMX)

[Khan]

S&P500 fund (lowest cost

Lowest cost is great, but don't let that prevent you from gaining wider exposure to other markets. Even if your S&P500 ER was ~.1%, and other options such as emerging markets, Europe, Japan, small cap, value, bonds have ER's in the ~.5, the diversification is an incredibly important point to go for. Not all equities are equal, ESPECIALLY when you throw in different currencies, countries, etc. into the mix.

Which is what I say to VEXMX too. There are other options out there. I wouldn't -not- invest in it, but look at other funds too.

[kyleaaa]

Don't try and time the market.

Your asset allocation confuses me. You don't have anything allocated to bonds or foreign stocks and you own a TON of REITs. Why?

[mpbaker22]

Don't try and time the market.

Your asset allocation confuses me. You don't have anything allocated to bonds or foreign stocks and you own a TON of REITs. Why?

Not sure that foreign stocks are necessary (I recommend them, but if the OP doesn't care, I don't care), and I wouldn't recommend bonds if the OP is in his/her 20s and doesn't need the cash for a house down payment, etc. in the next 5 years.  Agree with the REITs.  I'm at ~8% and I think it's a tad high.

[Vitai Slade]

Don't try and time the market.

Your asset allocation confuses me. You don't have anything allocated to bonds or foreign stocks and you own a TON of REITs. Why?

Not sure that foreign stocks are necessary (I recommend them, but if the OP doesn't care, I don't care), and I wouldn't recommend bonds if the OP is in his/her 20s and doesn't need the cash for a house down payment, etc. in the next 5 years.  Agree with the REITs.  I'm at ~8% and I think it's a tad high.

I am not interested in foreign stocks. I do not believe them to be a necessary part of a strong portfolio. In my honest opinion, if the US goes to the sh*tter then the rest of the world is coming down with us. With as much foreign influence as we have here on trade, policies, etc. I'm betting on the rich super power that I live in. (As a side-note, by investing in the S&P and the Total Stock Market, I automatically gain at least SOME foreign influence. Companies like McDonalds have restaurants and interests around the globe.)

I am not interested in bonds for the reason that I am 24 (as of this post) and have at least 15+ years of 'asset building'. I'm sure that this will change as I get closer to FIRE, but as of now, it's full steam ahead. And yes, I have already purchased my first house (been living here for almost a year now) so I do not need a down payment for one.

Honestly, I'm not really sure why so much on the REITs. When I first started investing (and knew nothing) AGNC and NLY were hot and making a ridiculous amount of money for their stockholders by their extremely high dividends. That was the cheese that led me to the trap into mREITs (and stock picking as a whole). I'm stuck in those positions for a while as I refuse to sell them for the loss I've taken now only to see them shoot back up in the next couple of years. While waiting for them to come back, they STILL have ridiculously high dividends (even compared to the price I bought them at) so it doesn't hurt me to stay. I also really liked the tax treatment loophole of REITs in a ROTH. While they are very risky, I'm still in the early stages of my portfolio building. I'm sure the ratio of those stocks as a part of my portfolio will decrease as I build assets, but as of now, I still only have around ~$23,000 in investments.

This all may change as I build more assets, but right now I'm trying to build a core portfolio alongside a risky option that may boost my initial growth (the REITs)