Moving out of Target Date Fund

[mammothunder]

My employer just announced our new investment options.  My current target date fund has a higher expense ratio than the Vanguard funds, so I want to create my own.  DH and I agreed on 85% stock / 15% bond (ages 28 and 30).  Here are all of the available index funds:

• Vanguard Total Bond Market Index Fund I (VBTIX) 0.06%
• Vanguard Institutional Index I (VINIX) 0.04%
• TIAA-CREF International Equity Index Instl (TCIEX) 0.06%
• Vanguard Extended Market Index I (VIEIX) 0.08%
• Vanguard Emerging Markets Stock Index I (VEMIX) 0.12%
• Vanguard REIT Index I (VGSNX) 0.10%

We've been reading Bogle's Common Sense on Mutual Funds, and 15% VBTIX, 68% VINIX, and 17% VIEIX seems reasonable.  I'm trying to approximate the Vanguard Total Stock Market Index fund with 4/5 VINIX and 1/5 VIEIX.

I wonder if there's a place for international stocks though.  The target date fund that I'm currently in has about 35% international, and Bernstein's "If You Can" document recommends 1/3 international.  And what about the emerging markets and REIT funds?

I'd appreciate your input because I'm nervous about moving around lots of money.  We're meeting with our TIAA-CREF adviser on Monday, and she convinced me to stay in the target date fund last time we met with her.  I really don't want to stay in the target date fund, so I want to have some confidence in my new plan.

[matchewed]

International is a just fine thing to have. Staying just US market is just fine as well.

I would lean towards more diversification by having international in the mix (the actual percentage is probably not very relevant, just large enough to offset any decline in US raise in Europe scenarios).

If you don't want to stay in the target fund then don't. Put your AA on a piece of paper and slide it over to the advisor. Tell them "This is what I want." If they ask any questions beyond clarifications just tap the paper and repeat "This is what I want".

Don't sweat the little stuff. Keep saving and stick with your AA that you decide on, you'll be fine.

[GGNoob]

Are these your only investments? Look at all of your accounts as a whole and hold pieces of your desired asset allocation where they are cheapest and most tax efficient.

With those fund options, I'd probably recommend something like this:

• 35% Vanguard Institutional Index I (VINIX)
• 10% Vanguard Extended Market Index I (VIEIX)
• 10% Vanguard REIT Index I (VGSNX)
• 20% TIAA-CREF International Equity Index Instl (TCIEX)
• 10% Vanguard Emerging Markets Stock Index I (VEMIX)
• 15% Vanguard Total Bond Market Index Fund I (VBTIX)

Here's some reasons why...

• A combination of 35% VINIX and 10% VIEIX does a pretty good job of imitating the US Total Stock Market Index.
• While you would already be holding RIETs through VIEIX, I like holding more because of the low correlation with the rest of the stock market.
• Rounded your international up to 30% to make it a nice number...split that between the 20% developed markets of TCIEX and 10% emerging.
• Then of course 15% to VBTIX.