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Too junky for my taste. 37% questionable (VYM, VOT and VBK) + 16% concentrated in VNQ? No thanks. Even for a 27 YO.
What do you have against value? You do know that Fama French concluded that value beats growth on average, right? (That's an oversimplification, I should say, value stocks return more perhaps because of increased risk.)
i have to agree with you cfa, not something i would elect to go with...
although at the moment i do not own any international funds for those that want to include them i posted some models i like below.
if you have the stomach you may want to reduce the bond allocations and increase the equity allocations. not knowing a thing about anyones pucker factor i will post the more conservative versions and let you season it to taste. you may want to keep it as until you fully understand how much pain you can take in a downturn.
for a bit more coverage and one stop shopping including a bit of the out of favor international stuff:
20% VFINX S&P500
8% VTMSX Tax Managed Small
6% VGTSX Total International Equity
10% VINEX Internat'l Explorer (small)
6% VEIEX Emerging Markets
30% VBIIX Intermediate Bond Index or fidelity new market income
11% BEGBX International Bond
5% VGSIX REIT Index
4% Money Market Fund
one thing you have to keep in mind as you invest such large dollar amounts is what i call the dollar down effect. this is something few investors learn about or feel until many many years later, usually late in life when they accumulate large portfolios. .
the stakes in dollars and not percentages can be mind blowing.
one daily session today can wipe away 2 years of my wifes entire yearly salary. we saw that happen this week in 3 trading days.
to think in theory if you work 2 more years it would merely just put you back to where you were if those down days didn't happen psychologically can take a big toll.
in fact a mere 7% drop for us wipes out almost 9 years of maxing out my 401k contributions at the catch up level. or it likely represents 15-20 years of gains in the early years that are gone.
that is an insane amount of money to be down. as the portfolio gets larger and larger the dollar effect takes more and more of a toll on you.
being up is great , but the pitfall is how you react being down.
i am a seasoned investor doing this for more than 25 years but i would be lying if i didn't say these drops in dollar terms can make my stomach cringe.
that is why if one has no real experience in a downturn with a large amount of dollars i think they should start out more conservative and see how they react when they drop 100k or so in a realtively minor move. that would be just a 5% move on 2 million. that drop is more than most americans have.
no problems , then pedal to the metal and increase your aggressiveness..
Last edited by mathjak107; 01-10-2015 at 05:48 AM..
the payout funds are really a marketing creation rather than anything you want to count on for a lifetime of income.
they try to structure the payouts to last x amount of years but there are no guarantees it will and you get no more money from the fund once yours is gone if that should happen .
as anyone who follows retirement research can tell you while odds are good you will not run out of money drawing x amount nothing is 100% and failure is definately an option.
they were designed to be the spia for those who do not want an spia but have none of the guarrantees of going on the insurers dime if your own money runs out.
Good point mathjak107 regarding the dollar down days. My portfolio is nowhere near as large as yours but it's getting to the point where those 300 point daily Dow swings make your jaw drop.
With the market still on a 6-7 bull run I'm making 2015 all about aggressively paying down my mortgage. But that's a whole different topic entirely.
I think if I was the original poster I would slightly lower my exposure to stocks to smooth out the volatility. Seeing that 2.2 million turn into 1.4 million is going to be tough to stomach. You really don't know how you will handle it until you have been through it.
i never used to flinch at market downturns when i was building a portfolio. sure they were depressing but the dollar damage was never multi years pay like it is now.
i laugh when i hear new investors say they hope for a big drop so they can buy.
eventually they to will have sizeable portfolios and adding new money has the effect of peeing in the ocean,.
we had one poster comment that it was only a 7% drop we had and if you can't tolerate that then you shouldn't be in stoocks.
but as time goes on that 7% drop represents 8 years of maxing out your 401k.
it is rarely going to be about the percentage down , it will eventually be all about the dollars.
Good point mathjak107 regarding the dollar down days. My portfolio is nowhere near as large as yours but it's getting to the point where those 300 point daily Dow swings make your jaw drop.
With the market still on a 6-7 bull run I'm making 2015 all about aggressively paying down my mortgage. But that's a whole different topic entirely.
I think if I was the original poster I would slightly lower my exposure to stocks to smooth out the volatility. Seeing that 2.2 million turn into 1.4 million is going to be tough to stomach. You really don't know how you will handle it until you have been through it.
i never used to flinch at market downturns when i was building a portfolio. sure they were depressing but the dollar damage was never multi years pay like it is now.
i laugh when i hear new investors say they hope for a big drop so they can buy.
eventually they to will have sizeable portfolios and adding new money has the effect of peeing in the ocean,.
we had one poster comment that it was only a 7% drop we had and if you can't tolerate that then you shouldn't be in stoocks.
but as time goes on that 7% drop represents 8 years of maxing out your 401k.
it is rarely going to be about the percentage down , it will eventually be all about the dollars.
That poster was correct. If you can't handle a mere 7% pullback, you're clearly in the wrong business.
And it's always about the percentages, in my view.
Sometimes you sure don't sound like a "seasoned investor", 'jak...
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