Author Topic: please help me with my asset allocation  (Read 521 times)

nsmall

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please help me with my asset allocation
« on: January 31, 2019, 12:24:04 AM »
My wife and I have both have ROTH's (98k), I have a 403b roth (46k), a 403b (3k), and a taxable brokerage account (137k).

RIGHT NOW I AM 100% Vanguard index funds in all accounts, mainly Vanguard Total Stock Market (VTSAX) and Vanguard US Growth Fund.

Can you help me plan out a 3 fund portfolio? I am most interested in a 60% US, 20% International, and 20% Bond portfolio.

I am fairly convinced to change my asset allocation to 60 US/20 International/20 Bond and I am not confident how to make these changes.

Not sure if this matters, but I am 39, live in CA, I plan to retire at 49 in WA state. I have a pension that kicks in at 60. I have 100k a year to invest for 6 years and 50k a year for the remaining 4 years.   

1) Should I buy the Vanguard total bond market fund for my future 403B contributions?

2) Should I sell some VTSAX and buy International Funds in the Roths and 403b Roth?

3) Is there a good Vanguard Bond fund to buy for my taxable account?

Maybe I should NOT buy any Bonds, I just like a little peace of mind and if there is a market crash I would just use the bonds to buy more VTSAX.

Thank you very much in advance

Neil

PS If I should post this in "case studies" please let me know.

Andy R

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Re: please help me with my asset allocation
« Reply #1 on: January 31, 2019, 01:07:54 AM »
When contributing so much, just direct new investments into international and bonds until you reach your allocation. No need to sell anything.


As for bonds, it is a tough decision. If you can tolerate seeing your net worth halve over a couple of years and not knowing when it will stop dropping and if it will take a decade or more to recover, then not much need for bonds.
If you are like most of the population and will worry and not be able to sleep every night for months or years because of this, then you have found a use for bonds.

For example, lets say you have 1mil
In a 50% crash, 100/0 will drop 1,000k -> 500k
In a 50% crash, 70/30 will drop 1,000k -> 750k

That smaller loss might be enough to stop you panic-selling and facing unnecessary stress as you see a decade or more of sacrifice disappearing. Many panic and sell low which crystallises the loss and ensures they can never recover from it.

A wise person once posted over on the bogleheads forum -
If you can reach your financial goal with savings alone in just a few years, why take the extra risk and return if when it works out with a lower allocation, it doesn't matter? Do not gamble on something if even when you win, it does not matter to you. You are guaranteed to lose.

terran

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Re: please help me with my asset allocation
« Reply #2 on: January 31, 2019, 06:12:47 AM »
This should help with where you should place the different funds: https://www.bogleheads.org/wiki/Tax-efficient_fund_placement