Author Topic: 36/39 yrs old with 80/20 AA. Ok?  (Read 4727 times)

theglobetrotter

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36/39 yrs old with 80/20 AA. Ok?
« on: June 18, 2014, 11:30:17 AM »
I am done. For now. Sold all loaded funds and have mostly indexes with a few balanced funds.

I have everything loaded into Personal Capital (and the free Morningstar instant X-Ray) and they said I am at 74% stocks (19% international and 55% US), 6% real estate (this considered US stock or it's own category?) and 20% bonds+cash (bonds + CD at 2.25% Barclays).

I was Googling our AA and came up with this: http://www.financialsamurai.com/the-proper-asset-allocation-of-stocks-and-bonds-by-age and we fit the financial samurai AA perfectly.

My husband will be vested in 2018 and can retire if he wish (military). I have a small pension also but only enough for groceries at the moment :)

Are we being too aggressive or ok? I figured since we will have a pension, being a bit aggressive won't hurt. Should we bump it down to 70/30? Also the bonds... Would a CD be better? A consistent return of 2.25% vs uncertain bond returns (or it looks uncertain to me).

Thanks!!


brewer12345

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Re: 36/39 yrs old with 80/20 AA. Ok?
« Reply #1 on: June 18, 2014, 11:41:24 AM »
What is your risk tolerance?  This is a question that may require some navel gazing on your part.

wtjbatman

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Re: 36/39 yrs old with 80/20 AA. Ok?
« Reply #2 on: June 18, 2014, 11:41:54 AM »
Yes it's ok. Don't over think it. The fact you sold out of your loaded/high fee funds and invested into index funds (I assume) is much more important than whether you have an 80/20 or a 70/30 AA.

Other posters know more about bonds specifically, but I don't think dropping them in favor of more CD's is a good idea. The point of holding both stocks and bonds is that if/when you rebalance you are effectively buying low and selling high, at least for purposes of your AA.

arebelspy

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Re: 36/39 yrs old with 80/20 AA. Ok?
« Reply #3 on: June 18, 2014, 11:49:04 AM »
+1 to Brewer, but if you're just asking for opinions... Sounds good to me.
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theglobetrotter

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Re: 36/39 yrs old with 80/20 AA. Ok?
« Reply #4 on: June 18, 2014, 01:24:25 PM »
Thank you! Yes, just want an opinion or some sort of confirmation. My husband has zero finance/investment knowledge. So I just have you all, Google, Bogleheads wiki, and books (read Bogleheads and Coffeehouse Investment) I think we're tough in terms of risk tolerance. We'll just forget we have money in our investment accounts :)

It feels really nice to not have a load AND low ER funds! 

AssetGrinder

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Re: 36/39 yrs old with 80/20 AA. Ok?
« Reply #5 on: June 20, 2014, 11:02:51 AM »
Good job. Portfolio allocation looks pretty good to me. When you get closer to retiring lets say 5-7 years away start shifting your allocation more towards bonds. Your CD is fine and keep it in there as interest rates should rise soon enough. Your REIT funds some consider fixed income assets so you could actually say you are 74/26 asset mix. By 45 it would be safe to see a 60-40 or 65-35 mix stock/bond mix. Best of luck and looking good!

Nords

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Re: 36/39 yrs old with 80/20 AA. Ok?
« Reply #6 on: June 21, 2014, 09:28:34 PM »
When you get closer to retiring lets say 5-7 years away start shifting your allocation more towards bonds. Your CD is fine and keep it in there as interest rates should rise soon enough. Your REIT funds some consider fixed income assets so you could actually say you are 74/26 asset mix. By 45 it would be safe to see a 60-40 or 65-35 mix stock/bond mix. Best of luck and looking good!
That's already happening because her spouse will have a military pension in 2018 (or his choice anytime after that).

Putri, you could consider your spouse's military pension to be the equivalent of U.S. I bonds.  Depending on the size of his pension, your overall asset allocation may be pretty conservative.  If you think you're tough for risk tolerance then you're probably fine with your current 80/20 AA.

http://the-military-guide.com/2011/03/24/asset-allocation-considerations-for-a-military-pension-part-3-of-3/

kyleaaa

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Re: 36/39 yrs old with 80/20 AA. Ok?
« Reply #7 on: June 22, 2014, 01:25:25 PM »
Your allocation falls within the 120-age in stocks rule-of-thumb.