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?

[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 ]

[Perplexity]

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

[/ QUOTE ]

The short answer is yes... but it's not really clear. Small caps did a lot better from like 1900-1980, but haven't done better over the last 25 years. I don't have statistics/links close at hand.

IMHO it's still right to overweight small cap, but not as much (45%) as in your proposed portfolio. Personally I hold 28-30% small cap in USA (about double their market weight).

[curtains]

Ok so lets say I switched to the following plan:


Small Cap: 20%
International Value: 20%
Total Stock Market: 20%
Mid Cap Blend: 15%
European Index: 15%
Emerging Markets: 10%

Hows that look compared to the original?


btw I notice I gave wrong figures last night, I actually had emerging markets at 9% and a few others 1% lower. Was typing it by memory [img]/images/graemlins/smile.gif[/img]