401k question
I have a managed account through Vanguard and have it set to moderately aggressive and I’m 40 and plan on retiring at 65. Based on these parameters, my current asset allocation is as follows:
1% cash and short term bonds
10% Bonds
37% US large cap stocks
16% mid/small cap stocks
36% International stocks
Curious if this allocation is appropriate and if it’s worth sticking with a managed account. It does not follow the 60/40 rule and was wondering if perhaps this is too risky or typical for someone my age who still has at least 25 years from retirement? Considering dropping my risk level down one level to what they considered “typical for my age”which would be at a scale of 3 out of 5 instead of 4 out of 5 which I have currently.
Benjamin Tan's avatar
Hi Jeff - what a coincidence as I just finished a book called All About Asset Allocation and wrote a blog post on it. It has an interesting take on asset allocation and correlation risk. On your 401k, the author does talk about zooming back to take into account all assets (cash, properties, brokerage account, etc) before assessing portfolio splits

Jeff Sanders's avatar
@consumeowntech That’s awesome! Will give it a read.
The Hippie Investor's avatar
All depends on what you’re comfortable with. I’m basically in the same situation and don’t find that to be too risky, especially now with markets having just gone through a down year. Maybe in about 5 years after some equity gains I’d readjust to 20% bonds.
Christian's avatar
Great question. I don’t have an answer for you as I’m just starting out my 401k investing journey. Only been doing it for like a year. But my portfolio in my 401k is 60 percent domestic stocks, 31 percent foreign stocks, 2 percent bonds and the rest in short term assets
Jeff Sanders's avatar
@christian7621 Ok cool good to know. I thank you. Was curious what other folks allocation is.
Alex Biestek's avatar
I agree with @the_hippie_investor here in regards to doing what you're comfortable with. If your account is managed, I would reach out to them and seek professional advice about your asset allocation.

BUT since this is the internet, and you're publicly seeking opinions lol, I don't think there is anything wrong with your ~90/10 allocation. 25 years until retirement seems like a reasonable amount of time to let your stocks appreciate comfortably (hopefully), especially after such a brutal '22. A "moderately aggressive" portfolio isn't too risky at your point in time. Then again, it all depends on your goals, time horizon, risk tolerance etc etc.
Jeff Sanders's avatar
@acb123 good points.
Joshua Simka's avatar
Oh my...this doesn't even begin to tread on "risky". It truly is all about what you're comfortable with and I'm curious what others will say. Not advice, but if this were my portfolio and I were your age, I would swap out the bonds for stocks entirely, lower the international allocation to something like 10%, and boost the cash to 5-10% for some ballast and dry powder for opportunistic buying. With decades til retirement there's no reason to be holding bonds. And even once you do retire, all you need is around 5 years of expenses in cash.
Jeff Sanders's avatar
Great points everyone! Gives me more to think about and take into consideration. You guys rock!



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