Investment Advice

[inquisitive]

I'm 27 and am wondering if people can give advice on my situation. This is the current breakdown of my investments:

401k - 64% of my account, have maxed my contributions the last couple yrs. I have 20% in funds of large cap growth, small cap, real estate investment, latin america, and the pacific basin.
Roth IRA - about 17% of account - all in vanguard total stock market index (a total US index fund)
individual stock account - about 17% of investments. 100% in EFG, a world stock market fund that has about 50% in the UK, Japan, and Switzerland, and the rest from a number of countries.

Is this reasonable? I am thinking of switching my individual account to either individual stocks per Greenblatt's method, or maybe just putting half in his new US mutual fund and half in the world mutual fund, as these should be following his method. Then I would maybe put the Roth into a total world fund.

The major drawback is that I am 100% invested in equities, but I think this would be best in the long-term since there will be big drawdowns but big increases as well.

 

[LOL!]

No, I don't think this is reasonable. You need to read about 5 or 6 books and get a handle on investing. May I suggest that you start with an asset allocation tutorial?
http://www.early-retirement.org/forums/f28/asset-allocation-tutorial-31324-2.html#post578722

 

[brucethebroker]

Many will disagree, but you might try putting some of your money in a money market type fund. An old rule of investing is to put your age (%) in bond/income investments the the remainder of "100%" in equities. In your case, put 27% in income. This will cushion any downturns in the equity market and also allow you to invest a lump sum into equities should a downturn happen.

Do some repositioning and change your future investment choices.

I think interest rates will continue to climb-for that reason, bonds might not be a good choice currently.

 

[Midpack]

LOL! is probably right.

I've seen much, much worse but - it looks a little disjointed with a hint of 'hot tips' to it. Can you explain why you hold each of your holdings? You should be able to explain why you've chosen your asset allocation, and why each holding within each asset class. If not, start reading...The Four Pillars of Investing is my favorite, but there are many others. Investment Books

I was 100% equities until I was about 40, though that would be considered very aggressive by the mainstream investing public.

You're starting young, which is outstanding, best of luck.

 

[jIMOh]

I would ask yourself "what SHOULD your allocations be" (in total, not by account). Accounts are just "wrappers", you need to take a step back and examine 100% of holdings and express all percentages in terms of that 100%.

Focus on how much risk you are willing to take, and assign a specific % you want to hold of that asset.


I would do an xray on portfolio to make sure you are holding things in proper weight.

Compare what you want to hold to what xray says you are holding... then ask the same questions as your OP. You might even be able to answer them too.

 

[Gotadimple]

I'm 27 and am wondering if people can give advice on my situation. This is the current breakdown of my investments:

401k - 64% of my account, have maxed my contributions the last couple yrs. I have 20% in funds of large cap growth, small cap, real estate investment, latin america, and the pacific basin.
Roth IRA - about 17% of account - all in vanguard total stock market index (a total US index fund)
individual stock account - about 17% of investments. 100% in EFG, a world stock market fund that has about 50% in the UK, Japan, and Switzerland, and the rest from a number of countries.

Is this reasonable? I am thinking of switching my individual account to either individual stocks per Greenblatt's method, or maybe just putting half in his new US mutual fund and half in the world mutual fund, as these should be following his method. Then I would maybe put the Roth into a total world fund.

The major drawback is that I am 100% invested in equities, but I think this would be best in the long-term since there will be big drawdowns but big increases as well.

401K: Nicely balanced for stocks as a starter investment. As it is the majority of your savings, I'm assuming by now its enough of an investment that you don't want to risk losing 25-30% of it. I might tweak it a bit: backing off 5% in REITs and increasing Small Cap by 5%. Small cap is where you should see growth, as well as with the emerging markets in Latin America and Asia.

Roth: OK. I'm assuming this isn't a large amount.

Individual: This is your 'play money' and you have to be willing to lose all of it. Because it's 17% of your overall, are you willing to work with the other 83% to get you where you need to be?

As you've said, you're 100% stocks, and you're right that you need to back off of stocks. Bonds are contrarian (as are REITS), but unlike REITS which area volatile, bonds tend to lower volatility.

It looks like you are over 40% in International between your 401k and Individual account (before you make any changes to it). So the question becomes, what did you intend for your asset allocation?

All About Asset Allocation is a good book by Rick Ferri where he provides info on how to best allocate between various investments and why those investments are important to a long-term portfolio.

Something to think about anyway.

-- Rita

 

[inquisitive]

Thanks for the great advice everyone. I will do some reading on asset allocation. Interesting that Midpack was 100% in equities until 40 but I will think about it and decide what I really want. I also noticed after I made the post that I was over 40% international. I had never calculated out the percentages until I wrote that post.