Author Topic: Mostly stocks, not much bonds  (Read 2006 times)

merlin7676

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Mostly stocks, not much bonds
« on: August 23, 2017, 08:52:59 AM »
A little background.  41 male married no dependents.
I have a 401K through work and have it split 50/50 between two target date funds.  a 2040 and a 2045 (when I signed up years ago I wanted to be more aggressive as i plan to retire at 55 which is 2031).

I also have VTSAX which is all stocks.

While the target funds get more conservative (less stock, more bonds)  the closer to the target date I am thinking I should start looking into some more bonds.
As I have 14-15 more years of accumulation phase left I am unsure if I should start looking into a vanguard total bond or something or should i just keep my allocations as they are now?
I'm fine with having a high risk, high reward currently as I have many more years to go. I see most people on here recommend a 80/20 but that seems a little conservative to me at this point.

Suggestions are appreciated.

talltexan

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Re: Mostly stocks, not much bonds
« Reply #1 on: August 23, 2017, 09:26:57 AM »
Keep them as you are. If you're truly committed to retiring after 14 more years, that should be long enough for stocks to out earn bonds.

D Bopp

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Re: Mostly stocks, not much bonds
« Reply #2 on: August 23, 2017, 09:30:28 AM »
I'm similar to you. 38 and plan to retire at 55.  I have a lot of my 401k in VFIAX, which is the Vanguard 500 fund.  But I also have a portion going in VBIAX, the Vanguard balanced fund which is 60% Total mkt fund, and 40% total bond fund.   This may be a good option for you if available.

AlmstRtrd

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Re: Mostly stocks, not much bonds
« Reply #3 on: August 23, 2017, 06:24:14 PM »
I would look at the amounts you have invested in each of those funds and do some quick math to determine roughly what your current AA is. For example, check out the Fidelity Freedom 2040 Fund here:

https://fundresearch.fidelity.com/mutual-funds/composition/315792101

That fund is currently 63% domestic stocks, 31.5% international stocks, 4.5% bonds and another 1% or so in cash. You might find that you are nearly all stocks at this point. Not saying that is good or bad, just that you should know what you own.

Then you can look at target date funds for 2035, 2030, etc. and see more or less what kind of glide path you are on.

Finances_With_Purpose

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Re: Mostly stocks, not much bonds
« Reply #4 on: August 24, 2017, 01:52:05 AM »
I would also evaluate for your expenses: you may be paying a lot for a target fund, when you could just as easily reallocate your stuff every so often and save the extra margin by using a combo of VTSAX and Vanguard bond (or whichever ones you prefer!).  Just a thought. 

AlmstRtrd

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Re: Mostly stocks, not much bonds
« Reply #5 on: August 24, 2017, 05:45:09 AM »
I would also evaluate for your expenses: you may be paying a lot for a target fund, when you could just as easily reallocate your stuff every so often and save the extra margin by using a combo of VTSAX and Vanguard bond (or whichever ones you prefer!).  Just a thought.

Yeah, that's a good point. The Fidelity fund that I linked to above has an ER or .75% which is way high compared to a low-fee index fund. The stock/bond percentages would be easy to replicate on one's own with a (very small) bit of effort. I will say that when I owned a Fidelity target fund, I almost never thought about it because I was essentially paying someone else to manage my money. Now that I understand how fees kill returns over time, I'd likely only go back if I were in bad shape mentally. But for some people they are good instruments.