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Asset allocation for 24 year old?
Old 05-02-2008, 03:32 PM   #1
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Asset allocation for 24 year old?

Hey guys, what do you think about this asset allocation for a 24 year old?

  • Weights Name Ticker Category Exp Ratio
  • 30% DWS EAFEŽ Equity Index Fund - Institutional Class BTAEX Foreign Large Blend 0.53%
  • 24% DWS Dreman High Return Equity Fund - Institutional Class KDHIX Large Value 0.74%
  • 16% Goldman Sachs Mid Cap Value Fund - Institutional Class Shares GSMCX Mid-Cap Value 0.77%
  • 10% DWS RREEF Real Estate Securities Fund - Institutional Class RRRRX Specialty-Real Estate 0.55%
  • 10% Wells Fargo Advantage Small Cap Growth Fund - Institutional Class WFSIX Small Growth 0.90%
  • 5% DWS High Income Fund - Institutional Class KHYIX High Yield Bond 0.67%
  • 5% DWS US Bond Index Fund - Institutional Class BTUSX Intermediate-Term Bond 0.36%

Average weighted expense ratio is about 0.65%

Instant X-Ray gives me this:

Cash 1.47
U.S. Stocks 58.52
Foreign Stocks 29.88
Bonds 9.33
Other 0.80
Not Classified 0.00

How's this look? Any suggestions?
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Old 05-02-2008, 03:35 PM   #2
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Asset allocation for a 24 year old?


Bet it all on black, man.


Seriously, those expense ratios seem high, but the overall allocation seems very reasonable for a 24 year old, in my opinion.

Edit: In this post I was talking about the instant xray allocation of 90% stocks with 2/1 US to Foreign.
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Old 05-02-2008, 11:45 PM   #3
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Originally Posted by Maurice View Post
Seriously, those expense ratios seem high, but the overall allocation seems very reasonable for a 24 year old, in my opinion.
Those expense ratios look way below average to me. You realize most all of those are actively-managed funds, right?
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Old 05-02-2008, 11:51 PM   #4
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Seems reasonable and second that they are expensive, but if those are what you are limited to in your plan then they certainly aren't the worst ER's around. Hope you don't have to pay any loads...

DD
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Old 05-02-2008, 11:54 PM   #5
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Originally Posted by slazenger View Post
Those expense ratios look way below average to me. You realize most all of those are actively-managed funds, right?
They are. But you can get lower. Mine is 0.22. Long-term expenses matter alot and one of the few things you have any control over.

DD
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Old 05-02-2008, 11:58 PM   #6
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I think he's interested in comments on his asset allocation, not misinformation about ~0.65% expense ratio being high for a portfolio of mostly actively managed funds.

The average actively managed fund hover around an even 1%. He doesn't have a single one that high.
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Old 05-02-2008, 11:59 PM   #7
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Originally Posted by DblDoc View Post
They are. But you can get lower. Mine is 0.22. Long-term expenses matter alot and one of the few things you have any control over.

DD
Not everyone thinks index funds are the be-all, end-all.

The average actively managed fund underperforms an index funds. That's a statistic I'd worry about if I had no choice but to randomly pick my funds.

I have about half of each type as a way of hedging my bets.
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Old 05-03-2008, 12:05 AM   #8
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Originally Posted by drdavidge View Post
Hey guys, what do you think about this asset allocation for a 24 year old?

  • Weights Name Ticker Category Exp Ratio
  • 30% DWS EAFEŽ Equity Index Fund - Institutional Class BTAEX Foreign Large Blend 0.53%
  • 24% DWS Dreman High Return Equity Fund - Institutional Class KDHIX Large Value 0.74%
  • 16% Goldman Sachs Mid Cap Value Fund - Institutional Class Shares GSMCX Mid-Cap Value 0.77%
  • 10% DWS RREEF Real Estate Securities Fund - Institutional Class RRRRX Specialty-Real Estate 0.55%
  • 10% Wells Fargo Advantage Small Cap Growth Fund - Institutional Class WFSIX Small Growth 0.90%
  • 5% DWS High Income Fund - Institutional Class KHYIX High Yield Bond 0.67%
  • 5% DWS US Bond Index Fund - Institutional Class BTUSX Intermediate-Term Bond 0.36%

Average weighted expense ratio is about 0.65%

Instant X-Ray gives me this:

Cash 1.47
U.S. Stocks 58.52
Foreign Stocks 29.88
Bonds 9.33
Other 0.80
Not Classified 0.00

How's this look? Any suggestions?
My only comment is to ask you are you sure you'll be comfortable with the volatility that will come with a 80% stock allocation? A lot of experts will recommend that for young folks, but it still takes a strong stomach to take the volatility. 60-70% would provide a little smoother ride and might make you more likely to maintain it in tough times.

If i read your allocations right, you have 10% to a real estate fund not accounted for in your summary? If you buy a home down the line, I'd probably lose the real estate fund since you'll have plenty of money getting that type of exposure with a mortgage.
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Old 05-03-2008, 12:06 AM   #9
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He asked how his portfolio looks and for suggestions. He got them. Nuff said.

DD
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Old 05-03-2008, 12:11 AM   #10
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He asked how his portfolio looks and for suggestions. He got them. Nuff said.

DD
He also had some misinformation cleared up too.
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Old 05-03-2008, 12:26 AM   #11
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drdavidge;

I would recommend reading this: The Relentless Rules of Humble Arithmetic

To give you an insight into the "debate" that may have distracted you from your OP.

And will reiterate again. Your AA looks fine and your expenses are not bad.

DD
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Old 05-03-2008, 12:48 AM   #12
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And will reiterate again. Your AA looks fine and your expenses are not bad.

DD
That's actually the first time you said his expenses are not bad which, I agree, they aren't. We don't have a debate anymore.

I'm a huge Bogle fan. I don't hold half index for nothing! My overall expense ratio also hovers around mid .6%.... but I have more index, yet my active funds are a bit higher priced than even his.
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Old 05-03-2008, 03:45 PM   #13
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Thanks for the suggestions. I am familiar with index funds and how much expense ratios compacting 40 years effects returns, along with Bogle's books. There are no loads or fees with any of these funds for me besides the expense ratio. I'll be okay weathering the down years with the 90% stock allocation..I am pretty controlled and understand that the best thing to do is set it and leave it. I should probably also note I max out a Vanguard Roth IRA that is 100% invested in their target retirement 2050 fund (VFIFX) too.

These are all of the choices I have in my 401k:
  • American Century Strategic Allocation Conservative Fund - Institutional Class Shares ACCIX Conservative Allocation 0.79%
  • DWS High Income Fund - Institutional Class KHYIX High Yield Bond 0.67%
  • DWS Core Fixed Income Fund - Institutional Class MFINX Intermediate-Term Bond 0.62%
  • DWS US Bond Index Fund - Institutional Class BTUSX Intermediate-Term Bond 0.36%
  • American Century Strategic Allocation Moderate Fund - Institutional Class Shares ASAMX Moderate Allocation 0.85%
  • American Century Strategic Allocation Aggressive Fund - Institutional Class Shares AAAIX Large Blend 0.98%
  • AllianceBernstein Value Fund - Class I ABVIX Large Value 0.75%
  • DWS Capital Growth Fund - Institutional Class SDGTX Large Growth 0.73%
  • Janus Adviser INTECH Risk Managed Growth Fund - Class I JRMGX Large Growth 0.60%
  • Goldman Sachs Mid Cap Value Fund - Institutional Class Shares GSMCX Mid-Cap Value 0.77%
  • Dodge & Cox Balanced Fund DODBX Moderate Allocation 0.52%
  • DWS International Fund - Institutional Class SUIIX Foreign Large Blend 0.84%
  • Thornburg Core Growth Fund - Class R-5 THGRX Mid-Cap Growth 0.99%
  • DWS Global Thematic Fund - Class S SCOBX World Stock 1.28%
  • Royce Value Fund - Institutional Class Shares RVFIX Small Blend 1.04%
  • DWS RREEF Real Estate Securities Fund - Institutional Class RRRRX Specialty-Real Estate 0.55%
  • DWS Mid Cap Growth Fund - Institutional Class BTEAX Mid-Cap Growth 1.00%
  • DWS Small Cap Growth Fund - Institutional Class SSDIX Small Growth 0.83%
  • DWS Equity 500 Index Fund - Institutional Class BTIIX Large Blend 0.21%
  • DWS EAFEŽ Equity Index Fund - Institutional Class BTAEX Foreign Large Blend 0.53%
  • Wells Fargo Advantage Small Cap Growth Fund - Institutional Class WFSIX Small Growth 0.90%
  • DWS Dreman High Return Equity Fund - Institutional Class KDHIX Large Value 0.74%
  • Dodge & Cox International Stock Fund DODFX Foreign Large Value 0.66%

Do you think I can do any better with my options here?
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Old 05-06-2008, 07:31 AM   #14
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Any other suggestions?
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Old 05-06-2008, 11:32 AM   #15
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I thought a 90-10 asset allocation is good. It will be a roller coaster ride, but until you have more invested than annual contributions, I would be going quite aggressive.

The dodge and cox international fund is good, I know little about the other funds listed. My portfolio is 100% managed funds. Do not let the indexers sway you unless you truly believe everything they say.
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Old 05-07-2008, 10:17 AM   #16
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I thought a 90-10 asset allocation is good. It will be a roller coaster ride, but until you have more invested than annual contributions, I would be going quite aggressive.

The dodge and cox international fund is good, I know little about the other funds listed. My portfolio is 100% managed funds. Do not let the indexers sway you unless you truly believe everything they say.
Ah.. I forgot I wanted to split up my international. I was going to move it to 10% the EAFE and then 20% in the dodge & cox international fund. I now have it as:
  • Weights Name Ticker Category Exp Ratio
  • 10% DWS EAFEŽ Equity Index Fund - Institutional Class BTAEX Foreign Large Blend 0.53%
  • 20% Dodge & Cox International Stock Fund DODFX Foreign Large Value 0.66%
  • 24% DWS Dreman High Return Equity Fund - Institutional Class KDHIX Large Value 0.74%
  • 16% Goldman Sachs Mid Cap Value Fund - Institutional Class Shares GSMCX Mid-Cap Value 0.77%
  • 10% DWS RREEF Real Estate Securities Fund - Institutional Class RRRRX Specialty-Real Estate 0.55%
  • 10% Wells Fargo Advantage Small Cap Growth Fund - Institutional Class WFSIX Small Growth 0.90%
  • 5% DWS High Income Fund - Institutional Class KHYIX High Yield Bond 0.67%
  • 5% DWS US Bond Index Fund - Institutional Class BTUSX Intermediate-Term Bond 0.36%

Average weighted expense ratio is about 0.68%

Instant X-Ray gives me this:

Cash 1.68
U.S. Stocks 59.82
Foreign Stocks 28.58
Bonds 9.33
Other 0.59
Not Classified 0.00

Any more comments?
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