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Mid-20s Investment Portfolio
Old 07-11-2020, 08:52 AM   #1
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Mid-20s Investment Portfolio

DD is mid-20s. Changed jobs, $2.7k in old employer 401k. Previous employer rolled her 401k into a Vanguard tIRA.

She used a 2060 retirement date fund at previous 401k.

I looked around on VG website and their 2060 target date fund had 36% Intl fund inclusion - too much Intl.

I'm thinking 75% VTI, 20% VXUS, 5% BND.

Does this sound reasonable?

She is now eligible for the new company 401k (Blackrock funds). For now I intend to use the same allocation with the new 401k.

Would appreciate any feedback.
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Old 07-11-2020, 09:01 AM   #2
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I would not try to outsmart or second guess the target date fund on exposure and percentages - especially when looking at one with a 40 year time horizon.
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Old 07-11-2020, 09:16 AM   #3
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100% equities and read her the copilot checklist: "Sit down, shut up, and hang on."

Here is the reason:



For her, dollar cost averaging, stock market volatility is actually desirable. Because the left side fat tail is fatter than the right, the market will spend more time offering her bargains than it will selling her overpriced stocks.
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Old 07-11-2020, 10:17 AM   #4
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I would not try to outsmart or second guess the target date fund on exposure and percentages - especially when looking at one with a 40 year time horizon.
Agreed. Intl could be good, bad, indifferent over the next 30 years. I wouldn't worry about it, just let it ride. Even bringing it up with her might get her thinking this is too complex, and that could lead her into making mistakes. Just let it be, I trust Vanguard to decide this as well as the next guy, including you or me.

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Old 07-11-2020, 11:30 AM   #5
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I agree with OldShooter, 100% equities at your daughter's age and time horizon. Depending on her income and savings ability, might consider saving some in Roth vs pretax 401k. I am personally not a fan of 36% international, although I do agree some intl is good to have. I would limit to 20% max intl in my shoes.
The biggest key is have daughter save as some percentage each paycheck auto withdrawal and just let it ride the compounding wave over time.
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Old 07-11-2020, 12:03 PM   #6
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Re international, here are a couple of links I have posted before:
Vanguard: " Global equity investing:The benefits of diversification and sizing your allocation" https://www.vanguard.com/pdf/ISGGEB.pdfhttps://en.wikipedia.org/wiki/Dunnin...3Kruger_effect

Dr. Ken French on home country bias: https://famafrench.dimensional.com/v...home-bias.aspx
Our portfolio has zero home country bias, hence it is about 50% international. VTWAX mostly. I don't like making sector bets so I don't*, but both regression to the mean and the likelihood of the dollar's value declining are very bullish for international stocks.

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*Why? See: https://www.callan.com/wp-content/up...odic-Table.pdf
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Old 07-11-2020, 02:41 PM   #7
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At her age there is no need for any bonds. Stick to equities for the next 30 - 35 years. 20% VTIAX and 80% VTSAX or a reasonable equivalents.
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Old 07-11-2020, 03:20 PM   #8
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OK, so 80% VTI, 20% VXUS.

She will stick to the plan, I have spent a lot of time showing her trends of my portfolios and the volatility during big corrections/recessions.

She told me her account was down a lot in mid-March and that she was just let it ride.

She is very frugal!
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Old 07-11-2020, 03:42 PM   #9
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OK, so 80% VTI, 20% VXUS.

She will stick to the plan, I have spent a lot of time showing her trends of my portfolios and the volatility during big corrections/recessions.

She told me her account was down a lot in mid-March and that she was just let it ride.

She is very frugal!
You have taught her well. Glad to hear she was sanguine about the recent bumps. Good practice. Each time it gets easier.

I suggest you continue coaching her early and often to ignore the mistaken idea that volatility equals risk. She should completely ignore volatility for about the next thirty years.
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Old 07-11-2020, 08:29 PM   #10
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I agree with OldShooter, 100% equities at your daughter's age and time horizon. Depending on her income and savings ability, might consider saving some in Roth vs pretax 401k. I am personally not a fan of 36% international, although I do agree some intl is good to have. I would limit to 20% max intl in my shoes.
The biggest key is have daughter save as some percentage each paycheck auto withdrawal and just let it ride the compounding wave over time.
Yep, she has been on autopilot save mode since she started working.
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Old 07-17-2020, 06:07 PM   #11
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OP, good job on getting your DD to invest. MY DD is 24 and she is 70 total US market and 30% total international.
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