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My Asset Allocation

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  • My Asset Allocation

    The age-old question of asset allocation...

    I am wondering if I can get some advice. I'm 33 years old. My goal is long-term investment for retirement. I am still in 190k of debt, but I'm paying this aggressively. I think my risk tolerance is pretty high, but I've never been in a really bad market. During this recent dip I did not waver from my plan (in fact, it timed perfectly with my monthly 401k contribution). My current asset allocation is as follows:
    US Total stock market 25%
    US Small cap value 10%
    International total stock market 20%
    International small cap 10%
    REIT 5%
    Total Bond 15%
    TIPs 15%

    This feels a bit too conservative to me, since I'm early in my career and I think I have high risk tolerance. It's also pretty heavily diversified in international markets, but I don't know that I have a good reason to change this. I was thinking of maybe bringing my bond percentage down to 20% total. I honestly don't know why I chose to put half my bond money in the total bond market and half in TIPs. I was planning to simplify this and just put all of my bond investments in the total bond market. Here is what I was thinking of changing to when I rebalance:
    US Total stock market 30%
    US Small cap value 15%
    International total stock market 20%
    International small cap 10%
    REIT 5%
    Total Bond 20%


    What do you all think? I know that nobody knows what asset allocation is best, and it's more important just to stick to your plan. I really appreciate your advice though.

  • #2
    Originally posted by hayy_bails View Post
    My current asset allocation is as follows:
    US Total stock market 25%
    US Small cap value 10%
    International total stock market 20%
    International small cap 10%
    REIT 5%
    Total Bond 15%
    TIPs 15%

    Here is what I was thinking of changing to when I rebalance:
    US Total stock market 30%
    US Small cap value 15%
    International total stock market 20%
    International small cap 10%
    REIT 5%
    Total Bond 20%

    What do you all think? I know that nobody knows what asset allocation is best, and it's more important just to stick to your plan. I really appreciate your advice though.
    80:20 is perfectly reasonable. so is 90:10 or 70:30.
    50% SCV tilt is not my style. realize youll need to hold that......forever to potentially have it work.
    anything from 0-50% intl is acceptable. same comment bout ISCV.
    i am a Ferri Core Four person, so yes to REIT, although 5% might not matter.
    definitely no TIPS. they are for unexpected inflation...which doesnt matter if you have >80% of your assets in stocks that will outpace inflation. drop em.

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    • #3
      Appreciate that response. I might need to educate myself more about the SCV tilt. Any good resources? I'll sink my time into it this week and google around.

      Comment


      • #4
        If you stick with that second portfolio you will do fine.
        If you stick with your first you would do fine
        If you follow Peds advise you will do fine
        Just make a resonable plan and stick with it. https://www.whitecoatinvestor.com/15...er-than-yours/


        I personally like things less complicated and do not tilt. My opinion is just set your risk tolerance and pick an international percentage between 0-50% and forget it. Reevaluate every 5-10 years based on risk tolerance.

        Stay the course. Good luck.

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        • #5
          Originally posted by hayy_bails View Post
          Appreciate that response. I might need to educate myself more about the SCV tilt. Any good resources? I'll sink my time into it this week and google around.
          https://www.bogleheads.org/wiki/Fama...e-factor_model
          https://www.bogleheads.org/wiki/FAQ_small_cap_funds
          read everything associated here.

          Comment


          • #6
            SCV returns well in recessionary times, not so good during growth periods as the past 10 years have proven
            Intl small caps - might as well burn that money in your fireplace, Intl index funds are the better choice
            TIPS for a 33y/o - why???
            For your age, 70/30 or even 80/20 is about average
            It's psychosomatic. You need a lobotomy, I'll get a saw.

            Comment


            • #7
              It's kind of hard to asset allocate with a clear head when the equities market fluctuates 1000 pts each day.

              I was due for rebalancing and decided to pull a significant allocation throughout this week and staged segments of each surge. Still have a very good amount in equities and total market, but pulled back to more a 50/50 bond/stock and stock in more dividend ---much more conservative mode shift since we passed FI; don't need an aggressive portfolio and entering a relatively period of unknown.

              The harder part will be folk in the early stages and 20+ year retirement horizons. Does one still go 90/10 or pull back the percentages during times of extreme volatility?

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