Quote:
Originally Posted by tominboise
Our TIRA and Roth IRA asset are all sitting in Fidelity and have this allocation:
Domestic stock - 39%
Foreign stock - 18%
Bonds - 39%
Short term/other - 4%
These assets are invested in 12 different funds in our Fidelity accounts.
I was lying in bed thinking that I would have been better off just investing like so:
FXAIX - 40% (S&P 500)
FSKAX - 40% (Total stock market)
FIPDX - 20% (TIPS)
I think I would have a higher net return, maybe with greater volatility due to the greater stock exposure, but overall with a higher net gain over time that negates that volatility.
We are retired, me age 62, her age 60. Going to draw SS at age 70.
Thoughts on this?
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Your current allocation is 57% Stocks, 39% Bonds, 4% Cash Short term.
You want to move to 80% Stocks, 20% Bonds-TIPS exclusively.
So you want more volatility up-side? What about down-side? And minimum potential to earn interest and only at the inflation rate? The S&P500 is overrepresented in your allocation twice because it is also in the Total Stock Market fund. And you need to understand that most S&P500 stocks also have an international equity exposure because of their international operations.
You lose the dampening value to volatility that corporate bonds and other treasury bonds (other than TIPS) bring to your portfolio.
But run your suggested new portfolio through FIREcalc to see the effect on your portfolio short term and when Social Security kicks in. Also, if you want to see the allocation exposure of these Fidelity funds, get a free Morningstar Account and use the Instant X-Ray tool. (Morningstar then Portfolio then Tools then Instant X-Ray).
- Rita