All Financial Wisdom

My Retirement Portfolio Asset Allocation

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I figured now is a good time to fix my asset allocation in my retirement accounts and stick to it for a while.  It has been only 4 months since I have been able to contribute to a 401k at my job.  Before then, I was putting away money in my IRA and into my car loan (low interest rate).

First, I have a 401k, a traditional IRA, and a Roth IRA.  As of now, I plan on contributing to my 401k to benefit from the employer match and have the other accounts be static.  I added up my accounts and even transferred my IRAs to Vanguard to reduce transaction costs (my main cost at the moment).   I also reached out to the users of Bogleheads.org for some input of what I should be doing.  Check out my post here: 1 year reading Bogleheads and this is what I have to show for it

From all of the input and research, I have decided on an asAssetAset allocation of:

  • 55% Total Stock Market Index Funds
  • 20% International Stocks Index Funds
  • 20% Bond Funds
  • 5% REIT Index Funds

This combination allows me to have calculated risks while not being overly exposed or complicated.  I would have a 80%/20% split which should allow me for ample growth.

To get to this portfolio asset allocation, I am approximating the Total Stock Market with my 401k contribution allocation.  My 401k provider provides Vanguard’s Small cap, Mid Cap, and S&P 500 index funds and by choosing an allocation of 13%/6%/81%, I can approximately get the makeup of the Total Stock Market.  This was a great tip that was provided by one of the many helpful users of bogleheads.org  which directed me to Approximating total stock market on their wiki page.

2 Comments

  1. Howto$tuffYourPig

    August 13, 2015 at 7:34 pm

    Great diversification! The only thing I would watch carefully would be your REIT. During the Great Recession, I knew someone who lost $400,000 because of the housing collapse.

  2. Pingback: 5 Types of Passive Income and Where to Start

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