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Simplify Allocation
Old 08-01-2013, 03:56 PM   #1
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Simplify Allocation

Currently I have 6 funds in my portfolio. TIP, total bond index, total US market, total int'l market, REIT index, and small cap value index. I've simplified this from 10+ funds but this 6 seems too much now… I get lazy when it comes to rebalancing b/c it's a pain to reallocate 6 funds in 5 different investment accts. Lazy to the point of not rebalancing when I should be.

I'm thinking about getting this down to 4: total bond index, total US market, total int'l market, and REIT index.

Should I do this? Should I get rid of REIT index and just do 3?


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Old 08-01-2013, 04:09 PM   #2
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You portfolio holdings, as it stands now, are similar to mine. If you drop TIPS, REITs, or small value, you will lose some diversification.

If you drop small value, you will almost certainly lose some performance over the long run.

I would stand pat.

And if I claim to be a wise man, it surely means that I don't know.
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Old 08-01-2013, 05:55 PM   #3
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Outside of a couple of small holdings of individual stock, my portfolio is: S&P 500 Index Fund, Barclay Aggregate Bond Index Fund, Int'l Stock Index Fund. That makes up probably 95% of it. Simple is good. Simple with almost no expenses is better. Depending on whether or not you have a pension coming, that may be all you need.
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Old 08-01-2013, 10:14 PM   #4
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For simple, do the three. But you could keep the REITs and SV and just not rebalance them.
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Old 08-02-2013, 09:30 AM   #5
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What good are TIPs and bonds? I would toss them out until after rates rise to reasonable levels again. They cannot go up anymore.

What comes to my mind is Wellesley (bonds and dividend stocks), small cap index, value index, Dodge & Cox International (looking at this myself) and REITs.

This is part of my AA but not all.

Notwithstanding my opinions about bonds and other fixed income securities at this time, your AA looks OK to me.

Rebalance annually.
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Old 08-02-2013, 11:02 AM   #6
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Thanks all. I might combine TIP and bond to all bonds but looks like consensus is to keep REIT and small cap value.

Ugghhh... hate rebalancing these but I guess I gotta suck it up.
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Old 08-03-2013, 08:02 AM   #7
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Our overall allocation is pretty simply 30/30/30/10 for total stock market, total intl stock, total bond, and small cap. I'm kinda twisted with the bond part right now because of economic conditions, it is actually almost all in a GIC type dealie in wife's 457, last time I checked was paying 2.5%.

My biggest challenge is the combination of accumulating and rebalancing across my 401k, her 457, our IRAs, and our taxable investments with an eye towards keeping asset classes where they belong for tax efficiency.

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