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Asset allocation, account distribution and tilting question

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  • Avatar pedsmd 
    Participant
    Status: Physician
    Posts: 13
    Joined: 04/07/2016

    I have about 1.1 million in my employers retirement accounts and I’m in my mid 40s and my wife is in her early 40s. I have another 325k between roths/wifes 401k/taxable for 1.425mill total retirement savings thus far. I max out 403b/457. Wife contributes to 403b (works part time). we do backdoor roths and for the taxable we put in another 25k a year. With all that we’re in the high teens for savings (I know WCI says 20 but we’re close)

    The 1.1 million is split between 3 accounts:

    1. 403b, 2. nongovermental 457 (my employer is solvent, flexible withdrawal options, no forced distributions), 3. A defined contribution account (this is money my employer puts in for me. we get a fixed percentage of salary but no match).

    Currently the money is about equal in all 3 accounts and I asset allocate the same way:

    10% bonds, 20% international, 70% stocks (35% sp 500 / 35% extended market index).

    This has worked for my and my money has grown over the last decade or so. I have a pretty good risk tolerance. In some of the recent ups and downs I’ve seen a >10% dip and recovery and didn’t flinch.

    My questions:

    1. Is 10% in bonds too risky for our age?

    2. When I started with this allocation (about 6 or 7 years ago when I got a little more knowledgable) I didn’t know a lot about tilting so I did 50/50 for the stocks between sp500 and the rest of the market. I realize this is weighted in a way for more volatility and 80/20 is probably more representative of the total market. Is this split a bad idea or should I be more towards the sp?

    3. Is there a reason to not allocate all the accounts with the same percentages?

     

    #221304 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3800
    Joined: 01/08/2016

    1- up to you. It’s the minimum.
    2- up to you. I do 80:20.
    3- yes. It’s inefficient.

    #221315 Reply
    Liked by CordMcNally
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2263
    Joined: 01/03/2017

    1. Is 10% in bonds too risky for our age?

    Click to expand…

    Probably.

     

    2. When I started with this allocation (about 6 or 7 years ago when I got a little more knowledgable) I didn’t know a lot about tilting so I did 50/50 for the stocks between sp500 and the rest of the market. I realize this is weighted in a way for more volatility and 80/20 is probably more representative of the total market. Is this split a bad idea or should I be more towards the sp?

    Click to expand…

    Do you have a personal investment policy statement that lays out your desired asset allocation? Your current AA may be perfect for you or you may need to tweak it a bit.

     

    3. Is there a reason to not allocate all the accounts with the same percentages?

    Click to expand…

    In the name of tax efficiency, some funds are better served in certain retirement accounts than others. Also, depending on your investment options in a particular retirement account, you may not have a good fund option (or any fund at all) for certain things.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #221320 Reply

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