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 asset 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 wouldhave 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.