I am 100% equities and re-balance with new contributions. I am OK with my aggressive approach. I have a healthy cash bankroll which gets used for deals and whatnot. I don’t factor that in to my AA since it would just complicate things in my mind, and this way I can easily focus on equity AA without the up/down of cash balances.
10% VNQ (REIT in IRA)
30% VEA (international developed 75% of int’l)
10% VWO (international, emerging, 25% of int’l)
10% VB (small cap)
10% VO (mid-cap)
30% VTI (total market)
My preferred target allocation is partially influenced by three and four-fund Lazy Portfolios:
60% US equities (like Russel 3000 index or FSTVX)
25% international equities (like MSCI all country index or FSIVX)
15% bond index (like BND)
However, I’m currently ~35% cash, because the P/E ratio is too high, dividends are too low, and we’re into a 7 year bull market, so I’m expecting a correction. Although prediction is very difficult, especially about the future .
I will post my general asset allocation here, although I am not sure how useful it will be. Many years ago, when I settled on index fund investing, I picked certain percentages and have stuck with them. I would never argue that this AA is the best or most optimal, but I think it’s important to come up with a mix you’re comfortable with and stick to it.
My general goal was to have broad exposure to all freely traded, open market equities worldwide. Further, I have not factored in cash or bonds. We have a set amount of cash and CDs that we consider adequate. This cash amount is stable in absolute terms but will vary significantly as a percentage as the equity portion of our investments rises and falls with the market. I.e., in bull markets our cash may be only 20% but in downturns it may rise to 40% or more.
50% US large cap
25% US mid/small cap
25% Int’l, divided equally between MSCI EAFE and Emerging Markets
I use 5 Fidelity index funds, and rebalance at most once a year. Pretty lazy, if you ask me.
Edited to add: I’ve been retired for 11 years now and am no longer adding to my equities, buying and selling only for the purpose of rebalancing.
Indeed. Rapidly changing, but here’s a current snapshot of my taxable investments. No indexes here:
320% long, lots of hand-picked low risk Things That Go Up*
-110% short, lots of hand-picked high risk Things That Go Down*
It’s been working well for me, but it’s a lot of work. I’ve been getting AA lately too - you’re too smart, we ban you from trading with us, or we retroactively bust your trades when we regret being on the other side of them. Anyone know a good securities lawyer? Gotta take these guys to task on this nonsense.
I’ve subscribed to the BogleHeads approach and I sleep very well at night. I do hold 4%-5% metals which isn’t fully subscribed to but it scratches my itch for diversity. For those that don’t know that approach, it’s an appropriate asset allocation based on age and risk tolerance, in highly diversified low expense funds. See below.
89% stock, 11% bond
30% US Equity
19% Blended stock fund
14% Emerging Markets
12% International Equity
14% Small Cap
Far more conservative in standard/taxable accounts:
30% boring dividend stocks, mostly energy/utilities
20% various equity mutual funds I acquired years ago
40% cash/cash equivalents (waiting on opportunities or emergencies)
10% home equity (paid off, no outstanding loans)
All equities here, 40 yo. With my wife and I both earn a good living, so we’re completely happy with it being this aggressive.
I don’t necessarily have a target I try to hit. We’ve got money flowing into all 4 buckets with regularity, so they can’t get too out of whack. If we reach a point where we get out of line (whatever that means), I’ll make an adjustment.
This majority is done through index funds, dependant upon the investment options in our respective employers’ retirement plans and HSAs.
47% Large Cap
23% Small Cap
18% Mid Cap
@therivler1 forgot to mention that I appreciated seeing your “re-balance with new contributions” comment. I’ve done the same for the past ~20 years and it’s worked quite nicely in my experience. This is another area where folks often have passionate opinions - “you have to rebalance annually!”, etc. I believe I’ve done better by putting confidence in my past decisions/historical performance and just not messing with it. Avoids temptation to chase prior returns.
LG US 22%
LG US Value 10%
SM US 7%
SM US Value 6%
Int Value 5%
Emerging Markets 5%
Muni Bond 19%
Corporate Bond 4%
Basically all Vanguard index funds and ETFs.
And, like @therivler1, I rebalance with new contributions, and I also have all of my taxable funds send their distributions to a money market account so I can use that to rebalance without another taxable event.
My numbers are across tax-deferred and taxable accounts, and I accord each dollar the same weight to keep it manageable, but that’s really a mistake to some extent.
I wanted to chime in on re-balancing. I’m a big believer in keeping your asset allocation aligned with your target (based on age and risk tolerance).
I’m in agreement to use new contributions to balance on a quarterly basis, but you reach a point where new contributions don’t have as much effect on your portfolio as market movements.
Also I try to avoid creating taxable events during re-balancing by using my tax sheltered accounts to make changes.
Bottom line – yearly re-balancing at a minimum and if you are up for it quarterly doesn’t hurt either. Vanguard PAS will re-balance quarterly if you are >5% off your target allocation. Or you can do it yourself and save .30% in expense.