Allocation Thoughts

[trixs]

Over the last few weeks I have been thinking about my portfolio allocation. I have had a slice and dice ETF portfolio for at least the last decade and have been thinking about moving to an all in one mutual fund or perhaps two. The slice and dice portfolio doesn't seem to do any better than an all in one mutual fund.

Here is my current allocation:

Total Bond Market						21.39%
TSP G Fun				4.62%
Emerging Market					10.80%
Regional - Pacific					10.80%
Regional - Europe					10.81%
United States REIT					9.15%
United States Small Cap Value					10.81%
United States Large Cap Blend					10.81%
United States Large Cap Value					10.81%

The thought is move to equal parts of the following funds:
Vanguard LifeStrategy Moderate Growth Fund (VSMGX)
Vanguard LifeStrategy Growth Fund (VASGX)

This would put me at approximatly 40% US stock, 30% international, and 30% bonds. The returns have been remarkably similar to my current portfolio but is obviously more of a set and forget style. For those interested here is the various portfolio compared: link

Benefits:
1. Hands Off
2. Wife can easily understand if something happens to me.
3. Can increase or decrease allocation to one fund or the other to easily change bond allocation.

Drawbacks:
1. I like Fidelity (two factor authentication with VIP Access)
2. Capital Gains (also a benefit of doing it now.. only more capital gains in the future)
3. Boring

What would you do? I am 36 years old and my wife is 32. The portfolio just surpassed 500K a few months ago and would have probably 100K in capital gains. Also, this probably doesn't matter, but I have 4 more years until I am eligible for a military pension.

 

[LOL!]

If this is all in tax-advantaged accounts and none in a taxable account, then I think you are thinking the right way and suggest you do it.

OTOH, if you have taxable assets, then I would at least not have the taxable assets in a balanced fund of any kind. I would have tax-efficient investments in taxable only.

And capital gains are of no consequence in tax-advantaged accounts. Clearly, with the TSP G fund you have at least one tax-advantaged account.

 

[trixs]

If this is all in tax-advantaged accounts and none in a taxable account, then I think you are thinking the right way and suggest you do it.

63% is in a taxable account and the rest is within Roth IRA's and the TSP.

I've always, probably erroneously, duplicated the investments across the accounts. My thinking in the past was that while I take a tax hit from having some bonds in a taxable account I also grow my tax advantaged accounts faster by utilizing equities in taxed advantaged.

 

[gayl]

Building on what LOL stated: if taxable take all dividends and put that into a broad based stock index ETF (like SCHB which has 2500 vs. SCHA which is small cap)

And yes, pension matters

 

[easysurfer]

I would move "boring" under the Benefits heading .

 

[Curmudgeon]

I would move "boring" under the Benefits heading .

+1