Asset allocation

I took advice from a number of folks to move my retirement assets to index-based funds or low cost mutual fund options. Currently, I have Retirement and non-retirement asset allocations as follows:

Mid cap index - 28%
Large Cap stock - 23%
International Index 20%
Mid cap Mutual fund (non index) - 15%
S&P 500 index - 5%
Large Cap Mutual Fund (non index) -5%
Mid cap stock - 4%

With the recent shifts to Index funds and low cost Mutual Funds, I feel the Cash/Cash Equivalents/ Bonds allocations has been significantly reduced.

When you see the above allocation, what other questions do you feel I should be asking myself (before they become self evident) as I sit in a 90 day holding period (clause in many plans else a penalty payment is required) before I can make future allocation shifts.

CUinFl said:

When you see the above allocation, what other questions do you feel I should be asking myself (before they become self evident) as I sit in a 90 day holding period (clause in many plans else a penalty payment is required) before I can make future allocation shifts.

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Why do I have so many funds? ... Seems overly complex, and thus, likely more costly than it needs to be.

Why don't I want any small cap weighting?

Why don't I have ANY bonds or cash? Can I really tolerate that risk?

Any REITs? What part of your total portfolio is this retirement portfolio? Its generally a good idea to set an AA for a total portfolio including combining spouses assets into one AA, non retirement accounts, and maybe other assets like SS or pension to flavor an AA. (Someone with a COLAd pension can have a more aggressive AA).

Thanks for the quick replies.

The allocation above is the "all in" allocation including Retirement / Non-retirement accounts and my / my spouse's allocation. It does not include my emergency cash (which would be ~2% of the total portfolio) or 529 savings.

As for the questions, my goal is to get to the following:
- International Index
- Large Cap / S&P Index
- Small / Mid Index
- company stock

That is what I am working towards as I shift our diversified portfolio into these 4 buckets. As I was 1/2 way through the transition, I realized I was increasing exposure on the Bond / Cash Equivalent side and decided to pause and re-evaluate my strategy.

Have you run your portfolio through M*'s Instant X-Ray? It will provide you with a nice analysis of your AA.

pb4uski, you are always good for a new perspective. I wondered if there was an Asset allocation tool that would help me.

Using M*'s Instant X-Ray, I see that I have a favorable Expense Ratio (0.35), but am too heavily in US Stocks (77%), have the right allocation in International (22%) and ~1% in Cash Equivalents.

After my 90 day "soak" in the new funds (to get around any penalty payments) I will need to pull off the US Stocks and increase my bond allocation.

Thanks for the tip pb4uski!

CUinFl said:

Thanks for the quick replies.

The allocation above is the "all in" allocation including Retirement / Non-retirement accounts and my / my spouse's allocation. It does not include my emergency cash (which would be ~2% of the total portfolio) or 529 savings.

As for the questions, my goal is to get to the following:
- International Index
- Large Cap / S&P Index
- Small / Mid Index
- company stock

That is what I am working towards as I shift our diversified portfolio into these 4 buckets. As I was 1/2 way through the transition, I realized I was increasing exposure on the Bond / Cash Equivalent side and decided to pause and re-evaluate my strategy.

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That sounds much better. S&P 500 index with a mid/small completion index and an all world ex-U.S. index is what I'd like to get my Mom into. I think I've finally pried her away from Morgan Stanley and awful fees. Not much you can do if you have multiple account providers that don't match up perfectly.

CUinFl said:

pb4uski, you are always good for a new perspective. I wondered if there was an Asset allocation tool that would help me.

Using M*'s Instant X-Ray, I see that I have a favorable Expense Ratio (0.35), but am too heavily in US Stocks (77%), have the right allocation in International (22%) and ~1% in Cash Equivalents.

After my 90 day "soak" in the new funds (to get around any penalty payments) I will need to pull off the US Stocks and increase my bond allocation.

Thanks for the tip pb4uski!

Click to expand...

You should do a little reading: Bogleheads® investing start-up kit - Bogleheads

I guess that some of your accounts have limited options as you could reduce those expenses of .35 by moving it all to schwab or vanguard.

100% stocks or stock funds at this point ....well it's not for me...could be a wild ride