an asset allocation plan

[fluorescenthippo]

I made a post a few weeks back about where to put my money (like 85k) and the book All About Asset Allocation was recommended to me. Im 22 and graduating in December. Im looking for long term investments (20 years+) for most of my money. I don't know much but I was thinking of diversifying based upon that book. on page 228 there is an early savers portfolio breakdown.

here is the breakdown:

US equity

vanguard total stokc market index (VTSMX) 25%
ishares S&P 600 barra value (IJS) 10%
brideway ultra small company market (BRSIX) 5%
vanguard REIT index fund (VGSIX) 10%

international:

vanguard pacific stock index (VPACX) 5%
vanguard european stock index (VEURX) 5%
vanguard international explorer fund (VINEX) 5% (this one is closed)
DFA emerging markets (DFEMX) 5%

FIXED:

vanguard high yield corporate bonds (VWEHX) 10%
vanguard inflation protected securities (VIPSX) 5%
ishares agg bond fund (AGG) 10%
payden emerging markets bond fund (PYEMX) 5%


how does it look?

and a few questions:

the early savers plans suggest no money in liquid. how is this possible or practical? I was planning on keeping like 10K in an online money market. should that money just be considered part of my fixed investments instead of bonds then?


i dont know much about rebalancing but you get taxed on gains if you do this right? so i was just going to rebalance when i make more investments and hopefully be close enough to the target percentages

the book also talks about dollar cost averaging and tax swapping. is tax swapping even worth it? i dont think ive seen much about it in this forum.

[Jeff W]

First, do you have tax-deferred space for those bonds and REITs? You should never hold either of those in taxable.

Second, you can't access VINEX or DFEMX. Use ETFs GWX and VWO for those asset classes.

Third, Cash should be considered part of your fixed income allocation.

[fluorescenthippo]

[ QUOTE ]
First, do you have tax-deferred space for those bonds and REITs? You should never hold either of those in taxable.

Second, you can't access VINEX or DFEMX. Use ETFs GWX and VWO for those asset classes.

Third, Cash should be considered part of your fixed income allocation.

[/ QUOTE ]

right now my ROTH IRA is 100% in the S&P 500 index thru vanguard. so do i want that space for bonds and REITs instead? what are my other options for tax deferred space?

thanks for your help

[Jeff W]

[ QUOTE ]
right now my ROTH IRA is 100% in the S&P 500 index thru vanguard. so do i want that space for bonds and REITs instead?

[/ QUOTE ]

Yes.

[ QUOTE ]
what are my other options for tax deferred space?

[/ QUOTE ]

Some kind of tax deferred vehicle like an IRA, 401k, etc... what you can use depends on how your income is earned.