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Old 04-21-2013, 07:43 PM   #21
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Total index funds like the ones at Vanguard cover the different stock sectors in their mix, so you don't have to worry about them. If you were to run VTSAX through Morningstars XRay, it would advise you you have a fairly normal allocation of sectors, caps, etc. that's the way the 'total stock' funds are set up. Same with the combined funds such as Weelington or Wellesly, which are set up at particular AAs. You don't need to know what percentages of each sector, or how much is in which cap that way. The funds are set up for a normal mix.
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Old 04-21-2013, 07:48 PM   #22
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For example, I'm currently setup with a total stock, a total international stock, and a total bond fund. The KISS principle.
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Old 04-22-2013, 05:57 PM   #23
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Originally Posted by ER Eddie
I understand that asset allocation is key. The problem is, I have a very rudimentary understanding of "asset allocation." I am 51, planning to retire at 53, and I currently have about 53% in stocks, 43% in bonds, and about 6% in cash/CD. Beyond just the stock/bond/cash split, which I'm not sure I've got right, there is also another layer of "asset allocation" that I need to understand as well -- the one dealing with large cap, medium/small cap, foreign, etc. That part I do not understand well.

Can someone give me advice about asset allocation and suggest some trustworthy resources that are good for beginners and not too detailed or in-depth? I'm not stupid, but my eyes glaze over when I read detailed financial analysis (I find it pretty boring, to tell the truth). I have a couple of pieces of advice in this area, but I'm not sure I trust them. Someone help a noob out?
Asset allocation is the largest determiner of return. Nobody knows what AA will be ideal going forward, although many think that an AA heavily weighted in stocks will be superior. Only you know your time frame and tolerance for volatility. I just sold some stocks to reduce my allocation of equities from 75 to 60% to smooth out the ride a bit but if we get a major correction I will probably amp up again.
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Old 04-23-2013, 10:42 AM   #24
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Asset allocation is the largest determiner of return. Nobody knows what AA will be ideal going forward, although many think that an AA heavily weighted in stocks will be superior. Only you know your time frame and tolerance for volatility. I just sold some stocks to reduce my allocation of equities from 75 to 60% to smooth out the ride a bit but if we get a major correction I will probably amp up again.
You can all thank me for the run up in stocks today as I sold a substantial yesterday. My new AA will help me sleep better.....Just not tonight. lol
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Old 04-25-2013, 09:27 PM   #25
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That's a little different...
I think it's based on that Nobel prize winning AA theory...I forgot what it was called. It's also covered in the "How to Retire and Live Well..." book.
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Old 04-26-2013, 04:23 PM   #26
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I think it's based on that Nobel prize winning AA theory...I forgot what it was called. It's also covered in the "How to Retire and Live Well..." book.
The book it's covered in is "Work Less, Live More" by Bob Clyatt. That other book I mentioned, was not right.
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