Comments on Vanguard Portfolio Plan

[curtains]

Small Cap Value: 25%
Mid Cap Index Fund: 18%
Total Stock Market: 18%
International Value Fund: 18%
European Index Fund: 14%
Emerging Markets: 7%


I'm fine with some decent risk, but like to be diversified. Also don't plan on needing the money anytime soon, meaning hopefully decades from now. So pretty much whatever will earn the most money in a 10-20 or more year period is the best idea for me.

Also, does it make sense to rebalance my funds perhaps once per year? I like to add to them weekly because its fun, but Vanguard seems to stop you from doing so for a few months if you sell from the funds at any point.

[ilikeaces86_]

Looks good.

[Perplexity]

That's a very large overweight on small cap. The Total Stock Market fund is about 14% small cap. So your domestic allocation is like 45% small cap ((25 + (0.14 * 18)) / 61). Overweighting small cap is a reasonable/good idea but this is pretty extreme.

Otherwise looks good.

[NajdorfDefense]

1) too much small cap
2) too much mid-cap [i assume this is US_only]
3) Where's your bonds/cash/dry-powder?

The market will take a 10% tumble at some point in the near future, you should always have some dry powder in reserve.

[curtains]

I dunno, why would a 10% tumble concern me? FWIW I keep the rest of my money in INGDirect for liquidity purposes.

[IdealFugacity]

My Vanguard plan, through 401(k), is going to be:

60% VIIIX (Large-Cap Blend)
20% VSCIX (small-cap blend)
20% VIDMX (int'l)

This will be somewhere minimum 7% of my salary-10% depending on expenses (+3.5% from match for that entire range)

for the first while all my extra money that is getting taken-home will be going into VMMXX to build a 6-month emergency fund

Thoughts?

[BeL0wMe]

[ QUOTE ]
1) too much small cap
2) too much mid-cap [i assume this is US_only]
3) Where's your bonds/cash/dry-powder?

The market will take a 10% tumble at some point in the near future, you should always have some dry powder in reserve.

[/ QUOTE ]

Naj, the market is always going to have corrections, or recessions as we have seen throughout time. The main thinking behind Bogle was to buy and hold, which I would assume is what the OP is trying to do. In that case it's more than fine to be 100% equities. Since the beginning of it, the SPX has averaged 10.8%, while bonds are around 5.1%, when you are this young, and can ride out the market, it would certainly be in your best interest to be 100% equities.

FWIW the market already had a 5% correction this year, and my portfolio is still up 7.5%, but I guess I'm just a buy and holder until I die.

[NajdorfDefense]

[ QUOTE ]
[ QUOTE ]
1) too much small cap
2) too much mid-cap [i assume this is US_only]
3) Where's your bonds/cash/dry-powder?

The market will take a 10% tumble at some point in the near future, you should always have some dry powder in reserve.

[/ QUOTE ]

In that case it's more than fine to be 100% equities. Since the beginning of it, the SPX has averaged 10.8%, while bonds are around 5.1%, when you are this young, and can ride out the market, it would certainly be in your best interest to be 100% equities.

[/ QUOTE ]

It is beyond question horrible advice to jump-start with 100% of your investable assets all hitting the market on Day 1, for curtains. Anyone who says otherwise is an idiot.

No rational [or professional] investor does this. Essentially, you are saying that, using SPX as an example, it is OPTIMAL to put 100% of your funds in on Day 1. It will never go down more than a tiny bit, the optimal solution is all of it, now.
After all, the SPX has underperformed bonds for 8 years now.

Since we know the market will have a tumble of that size, it is more optimal to invest some/most now and the rest later.
Or DCA over 3, 6, etc months, whichever you prefer.

You seem to lack a basic understanding on these issues you are giving advice on.

[curtains]

[ QUOTE ]
That's a very large overweight on small cap. The Total Stock Market fund is about 14% small cap. So your domestic allocation is like 45% small cap ((25 + (0.14 * 18)) / 61). Overweighting small cap is a reasonable/good idea but this is pretty extreme.

Otherwise looks good.

[/ QUOTE ]

Aren't Small Caps supposed to be the most +EV over the long term?

[TheMetetron]

[ QUOTE ]
[ QUOTE ]
That's a very large overweight on small cap. The Total Stock Market fund is about 14% small cap. So your domestic allocation is like 45% small cap ((25 + (0.14 * 18)) / 61). Overweighting small cap is a reasonable/good idea but this is pretty extreme.

Otherwise looks good.

[/ QUOTE ]

Aren't Small Caps supposed to be the most +EV over the long term?

[/ QUOTE ]