I am 35 years old and extremely uneducated when it comes investing, but am finally at a point where I am making good money, and I want to make sure I am understanding asset allocation correctly. My ultimate goal is when my youngest graduates in 14 years I would like to have the option to start pulling $100-$150,000 from my investments if I chose to do so, I currently really enjoy what I do for a living but would like to have the option to just downsize to a very small house, buy an RV and just travel during the winter months.
I currently have:
- $225,000 of VTI stock in a taxable eTrade account which I have just been buying more each time I have extra money.
- $100,000 cash above my emergency fund
- I also have roughly $10,000 left over after my monthly expense, however this extra is sales bonuses and side business income which comes as follows ($40,000 in March, $40,000 in July, $20,000 in August, $40,000 in November and I usually have a $20,000 out of pocket tax bill)
- This year I finally started fully funding my simple IRA I get from my employer and fully funded a Solo 401K I set up through my side business.
I am trying to figure out how to invest this cash and a plan for future investments. I read through some of the old articles and came across this,
Quoted from the article "Book Review: The Intelligent Asset Allocator"
If you only want four, the author suggests you might hold these ones, by simply plopping 25% of your investment portfolio into each:
US Large-capitalization stocks (as measured by the S&P 500 index)
US Small-cap stocks (the Russell 2000 index):
Foreign stocks (the Europe, Australasia, and Far East index, also known as EAFE)
US short-term bonds
If you wanted to do all your investing with Vanguard funds as I do, you might throw 25% each into VFINX, VB, VDMIX, and VBISX.
Am I understanding this correctly I should liquidate my VTI and with that and my cash on hand buy $81,250 of VFNI, VB, VDMIX and VBISX. Invest 25% of sales bonuses and side business income as they come into the above funds. Then once a year rebalance the account by selling the "winners" and buying the "losers" to where it is back to the same dollar amount invested into each fund.
Are these funds listed in the article still relevant or are their different ones to use now?
Is there a better way to do this?
Is it better to throw the $100,000 cash in now or do it in $20-$25,000 chunks?
Does it matter what time of the year I would rebalance the portfolio?
Should I be doing something different than piling this into my taxable?
Is my above goal realistic?
Thanks for any and all advice!