Author Topic: Newbie Index Investor Guidance  (Read 2621 times)


  • 5 O'Clock Shadow
  • *
  • Posts: 82
Newbie Index Investor Guidance
« on: March 19, 2013, 01:02:09 PM »
I'm a new convert to Index Investing after reading this site and making my way through A Random Walk Down Wall Street.  I recently switched my Roth IRA over from Fidelity to Vanguard and am wondering what people think of this asset allocation.  I'm 28 and live with my wife who is 27 and we're looking to hold this for the long term (30 years).

VTSMX Total Stock Market Index Fund: 37%
VGTSX Total International Stock Index Fund: 36%
VBLTX Long-term Bond Index Fund: 15%
VGSIX REIT Index Fund: 12%

Additionally, can anyone recommend good reading material for understanding asset allocation as it applies to holding index funds for the long-term?


  • Bristles
  • ***
  • Posts: 325
Re: Newbie Index Investor Guidance
« Reply #1 on: March 19, 2013, 01:52:00 PM »
Have you checked out the Bogleheads wiki? It's full of tons of great stuff, including where to place your funds to be the most tax efficient, thinking of your portfolio as one whole, etc.

I don't know how big your Roth IRA is, but if it's all of your retirement investments, a target date fund might be easier/cheaper if you can't get $10,000 into each of the four funds listed.

What was your allocation at Fidelity? You should think of specific index funds as the implementation of your asset allocation, rather than the asset allocation. So do you want the following as your asset allocation?

12% bonds / 88% stocks
Stocks split to: 44% US / 43% International / 14% REIT

Is your wife also on board with this?

In addition to Bogleheads, Mike Piper of Oblivious Investor often also writes great blog posts about simplicity:


  • Magnum Stache
  • ******
  • Posts: 3000
  • Age: 37
  • Location: North Carolina
    • Freedom35
Re: Newbie Index Investor Guidance
« Reply #2 on: March 19, 2013, 05:47:59 PM »
Congratulations and goodluck!
I also second both the Bogleheads wiki and Forum, it's full of good advice and helpful posters.

A couple of things jump out to me:

1)Why did you choose a long term bond fund? That will be very interest rate sensitive, and will tend to have more fluctuations in price than you may want from a bond fund. If you purposely chose the long term bond fund for some kind of anti correlation, that may make sense, but if you want the bond component to provide safety, or a ballast, an intermediate (or Vanguard Total Bund) fund is probably a better choice.

2) You have an 85% equity allocation, and only a 15% bond allocation. This may be right for you, but it is (IMO) risky. You have to make sure that in a downturn, when you might see the value of your account drop in half, that you will still manage to hold that allocation and even invest more money. You don't want to find yourself selling because you chose too aggressive an allocation.

Just my two cents


  • Stubble
  • **
  • Posts: 230
  • Location: Los Angeles
Re: Newbie Index Investor Guidance
« Reply #3 on: March 19, 2013, 10:40:14 PM »
Assuming this is your only tax-advantaged retirement savings:  I would suggest using the total bond market index instead, or maybe split between the total bond market and the inflation-protected securities fund.

Also, is this your only tax-advantaged retirement savings?  If either or both of you have 401(k)s at work, you might want to use the Roth IRA to allow you to focus your 401(k) on either the best, or the least bad, funds available to you in that.