Well if you’re going to try and change your portfolio, you might as well take a ‘Before’ snapshot for comparison later. I entered our retirement account holdings as of today into Morningstar’s X-Ray tool and got the following asset allocation:
This is based on our current holdings of only two mutual funds:
Vanguard Target Retirement 2035 Fund (VTTHX) – $13,798
Vanguard Target Retirement 2045 Fund (VTIVX) – $35,543
With these All-In-One type of mutual funds, you should really only be holding that one fund, or a mixture of two like we have, or your asset allocation can tend to go out of whack. Right now it’s like we have a Vanguard Target 2042 Fund, since we stopped buying 2035 and switched to only buying the 2045. That’s not our planned retirement date or anything, I was just trying to tilt things more toward stocks and add more international exposure.
According to the X-ray, we have 85% Stocks and 15% Bonds, with the equities split about 80% Domestic/20% International. I know that many people say that if you’re young you should go 100% stocks, but I am a bit more realistic about my risk tolerance. From my previous investing readings, I remember that bonds can temper the volatility of stocks greatly, while hindering the overall historical performance only slightly. This balance will smooth out the bumps and keep me from bailing out if there is a massive drop in the stock markets, which I’m sure will happen again sooner or later.
A good point that was raised is that I’m leaving out all my $28,000 of cash not tied up in 0% APR offers. Since my cash is designated for a very short term (< 2 years) goal, a house, I do not consider it part of my overall long-term portfolio. It is also serving as my emergency fund. Whether I really need to keep all of it separate or devote some towards retirement is something I need to ponder some more…
So many options!