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Review my asset allocation (equities)

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  • Avatar familydocPA 
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    Status: Physician
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    Joined: 03/03/2017
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    I’ve been admittedly pretty casual (lazy) about my asset allocation in my taxable account – mostly because, to this point, the balances have been very small, so I just automatically invest monthly into VTSAX and a small amount into small cap value.  Moving forward, I’d like to be intentional and create an asset allocation for my equity portion of my portfolio and stick to it.  I have considered the following 3 possible allocations, from simplest to most complex.  I do believe in some of the factors and would like a small tilt, but was trying to avoid getting as complex as Merriman’s ultimate B&H portfolio.

    Age: 34, Investment time horizon: 15+ years.

    Note that I am not including the FI portion here, this is only a discussion of how to invest the equity portion.

    Simplest:

    70% Total US market

    30% Total international

     

    With factors:

    50% Total US market

    10% Mid-cap index

    10% Small-cap value

    20% Total International

    10% Emerging Markets

     

    Both portfolios are 70/30 domestic/international, and I’m open to changing that. I considered adding other factors such as International value but left them out due to simplicity.

    I’m interested in any thoughts/perspectives.  Thanks in advance.

    #220968 Reply
    Avatar Peds 
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    Status: Physician
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    Joined: 01/08/2016

    its fine.

    i do 70:30 split. but have some REITs as well.

    its not what i would do, but its fine.

    #220971 Reply
    Avatar JBME 
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    Joined: 03/26/2018

    its fine.

    i do 70:30 split. but have some REITs as well.

    its not what i would do, but its fine.

    Click to expand…

    wait, include REITs in the taxable account? Maybe I misunderstood the OPs request but I know Peds wouldn’t recommend REITs in taxable. OP, I’d just do your simplest approach. You have two funds that are both tax efficient and one of them is international so you can take advantage of the foreign tax credit. This is my plan once we open a taxable account in a few years. Do your tilts in your tax-advantaged retirement accounts. If you’re looking for 70/30 overall you should do that across all of your accounts, not just the taxable

    #221002 Reply
    CordMcNally CordMcNally 
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    Status: Physician
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    I’m 80:20 with a small cap tilt. Any of the proposed plans would be perfectly fine. Whichever one works best for you (and makes you feel most comfortable) is the one I’d recommend.

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

    #221004 Reply
    Avatar saildawg 
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    Status: Physician
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    Joined: 01/24/2016

    70/30 simple approach sounds better to me.  Spend less time on the investments and more time on tracking your savings rate.  Anything you do to improve your savings rate will make you more wealthy than potential returns of factor based investing vs market cap indexing.

    #221006 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3787
    Joined: 01/08/2016
    wait, include REITs in the taxable account? Maybe I misunderstood the OPs request but I know Peds wouldn’t recommend REITs in taxable.

    Click to expand…

    no thats for overall. yes REITs do not go in taxable.

    i assumed the OP was balancing taxable out with retirement accounts. otherwise is just mindless mental accounting.

    #221008 Reply
    Liked by Tangler
    Dreamgiver Dreamgiver 
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    Status: Physician
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    Joined: 03/09/2017

    Similar to mine except I skipped the mid cap portion. Don’t think you can go wrong either way.

    #221010 Reply
    Liked by Tangler
    Lordosis Lordosis 
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    Status: Physician
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    Joined: 02/11/2019

    I personally do not see a reason to complicate things.  I am 80/20 and my US is entirely VTSAX or it being replicated by its components where not available.  My international is VTIAX.

    Good luck.

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

    #221014 Reply
    Liked by Tangler, saildawg
    Avatar Tangler 
    Participant
    Status: Physician
    Posts: 259
    Joined: 08/23/2018

    70:30 stocks:bonds
    Stocks in VTSAX [80] + vanguard tot international [20%]
    bonds in VG total bond index

    That is what i would do if i could start over.

    I have a tilt toward small & value but would not repeat

    VTSAX is really all you need at 34

    Savings rate = key 🔑

    #221107 Reply
    Liked by familydocPA
    Avatar familydocPA 
    Participant
    Status: Physician
    Posts: 63
    Joined: 03/03/2017

    70:30 stocks:bonds
    Stocks in VTSAX [80] + vanguard tot international [20%]
    bonds in VG total bond index

    That is what i would do if i could start over.

    I have a tilt toward small & value but would not repeat

    Click to expand…

    Can you expand on this?  I’m curious as to both your reasons for doing it at first and your reasons you would not repeat.

    #221369 Reply

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