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Learning, Sharing, and Teaching => Investor Alley => Topic started by: britri3650 on June 03, 2013, 11:00:12 AM

Title: Need Help with Cleaning Up My Asset Allocation
Post by: britri3650 on June 03, 2013, 11:00:12 AM
I need some help/advice for reallocating my retirement assets so they are both more simple to track and are more optimally allocated to maximize return and minimize risk, please. First, background.

My wife and I are in our mid-40s.
We have two kids who are about 8 yrs. from starting college.
My wife has been a homemaker the last 10 yrs. but plans on re-entering the workforce within a year.
I've been a federal worker for 15 years.
Our only debt is our $355K 30 yr. mortgage @ 3.375%. Now the financials.

$300K in my Thrift Savings Plan (TSP) curently allocated pretty evenly among the F fund (govt., corporate and mortgage-backed bonds - matches performance of the Barclays Capital U.S. Aggregate Bond Index), the C fund (large and medium US companies - mimics S&P 500), the S fund (small and medium US companies - mimics Dow Jones US Completion TSM Index), and the I fund (stocks from 21 developed countries - mimics Morgan Stanley Capital International EAFE Index).
$5k in a Roth IRA invested in the Fidelity Contra Fund and another $40K in a Rollover IRA invested in mostly in the Dodge & Cox Intl. Stock Fund , Fidelity Contra Fund, and Royce Value Plus Service Class (RYVPX).

My wife:
$12K in a Roth IRA invested in  T Rowe Price Mid Cap Value Fund,
a SEP IRA with $10K invested in Royce Value Plus Service Class and $10K invested in Vanguard 500 Index Fund,
Rollover IRA with $30K invested evenly between 3 funds - Oppenheimer Main Street Class A (MSIGX), Oppenheimer Discovery Class A (OPOCX) and Oppenheimer Global FD Class A (OPPAX).

I've read about Bogle's 4 asset class allocation strategy and it makes sense to me. One question is, how should I asset allocate between my federal TSP and my Roth IRAs and Traditional IRAs/SEP IRAs? Do I use my TSP to invest in index funds for bonds, large cap, small cap, and international stocks and use my IRAs for investing in REITs and commodities so I achieve an overall balanced asset allocation, or should I also allocate my IRA money across all four major asset classes?

Also, what index mutual funds, REITs, ETFs would you recommend that are best if sticking to a 4 asset class allocation for the long (10+ yrs.) term that have low expenses?

Thank you.
Title: Re: Need Help with Cleaning Up My Asset Allocation
Post by: oldtoyota on June 03, 2013, 01:26:57 PM
For low expenses, I recommend Vanguard. You'd be hard pressed to find another company with lower overall loads.

For more info, read The Bogleheads. One chapter in the book is devoted to showing how mutual fund costs adversely affect returns. Costs are huge. Avoid them.