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14 year old Roth Asset allocation- what would YOU do?

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  • Avatar SLC OB 
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    Status: Physician
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    As we invest my 14 year olds Roth IRA… wondering what asset allocation you would pick, with such a long term horizon and knowing that she does NOT plan to pull any $$$ out until she is over 59.5 years old (45 year time line)?

    Thoughts?

    Currently, since there is not much in it, she is 100% in FSKAX (total stock market index at Fidelity). International funds? Would you tilt the portfolio since she has so much time? I don’t want bonds in there but would be nice to teach her how to “re-balance” her portfolio.

    Thanks in advance!

    #220187 Reply
    Liked by Kamban
    Avatar auggie1983 
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    Status: Physician
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    Joined: 12/31/2018

    60% UPRO 40% TMF go big or go home

    #220188 Reply
    Avatar DCdoc 
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    I would have the 14 year old decide if it’s his/her money.

    #220189 Reply
    Avatar ajm184 
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    The 100% allocation to FSKAK is appropriate IMO.  No reason to ‘teach’ a 14 YO (unless she has significant interest in equities currently) about rebalancing.  If the exception applies, show it on one of your own accounts versus inducing unnecessary drag on her portfolio to ‘teach’.

    #220191 Reply
    Lordosis Lordosis 
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    Who knows what is going to win in 40 years. I would just do a total US market fund. If she wants international she can add it when she has 100k or so invested.

    Just because we love this stuff does not mean our kids will. Keep it simple. They can make it complex if they want.

    “Never let your sense of morals prevent you from doing what is right.”

    #220192 Reply
    Avatar SLC OB 
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    I would have the 14 year old decide if it’s his/her money.

    Click to expand…

    She has no idea.

     

    #220213 Reply
    Liked by Craigy, DCdoc
    Avatar Peds 
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    Status: Physician
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    Joined: 01/08/2016

    Total stock.
    Intl wheb you want to teach rebalance.
    SCV when you want to teach tilt.

    #220231 Reply
    Liked by SLC OB
    Avatar SLC OB 
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    Status: Physician
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    Joined: 06/23/2018
    SCV

    Click to expand…

    Are there low cost SCV at Fidelity?

    Looks like FCPVX has an expense ratio of 0.91%

    However, FSSNX has expense ratio of 0.025% but is Small Cap Index (not only value).

    #220267 Reply
    Dreamgiver Dreamgiver 
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    Fskax is great, I’d add intl exposure with developed and emerging markets

    #220281 Reply
    Liked by SLC OB
    Avatar Kamban 
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    Status: Physician
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    Joined: 08/01/2016
    Earnest refinancing bonus
    As we invest my 14 year olds Roth IRA… wondering what asset allocation you would pick, with such a long term horizon and knowing that she does NOT plan to pull any $$$ out until she is over 59.5 years old (45 year time line)?

    Click to expand…

    My 15 year old worked in my office diligently during last summer and earned a small sum. I opened a Roth in vanguard ( where she has a UTMA) and put it all in a S& P 500 ETF. It is diversified enough that she can continue adding to it till she decides to further diversify in Intl arena. At this stage I want her to concentrate more on saving and investing in diversified index fund rather than worry about asset allocation.

     

    #220709 Reply
    Liked by SLC OB
    Vagabond MD Vagabond MD 
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    I have both of my kids (17 and 20) in 70:30, US:International with a SCV tilt and an emerging markets allocation. It’s way too complicated. New money is going into either US Total Market or Total International.

    "Wealth is the slave of the wise man and the master of the fool.” -Seneca the Younger

    #220711 Reply
    Liked by SLC OB, Peds
    Avatar jhwkr542 
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    Status: Physician
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    Joined: 02/15/2016

    I would just leave it in total stock. I think you need to have some basic understanding of how businesses function to learn the why and how of re-balancing (or at least have an interest). Asset allocation is one of the more nuanced, oft-debated, and less important points of investing (because savings rate matters so much more, see CYAI post about multi-millionaire doc). Learning about the magic of compound interest while riding the market is probably the first lesson of investing. “Your money tripled in 10 years. Too bad you only had $1000 in to start with.”

    #220717 Reply
    Liked by SLC OB, Kamban

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