Hi everyone, I'm looking for some feedback about a portfolio allocation I am thinking of committing myself to. I already have an aggressive asset allocation (90%equity/10%bonds) but I'm thinking of getting rid of my bonds and going 100% equity.
Background:
I am young (low 30s), a PGY-1 in EM, debt-free with a decade commitment to the military (I already have 14 years of active service). Assuming an average military promotion cycle, I'll leave the military in my late 40s with an annual pension in the 60-80K range (2017 dollars) with good health benefits.
Current Asset Allocation (90% Equity / 10% Bonds):
45% Vanguard Total Stock Market Index Fund
20% Vanguard Small-Cap Value Index Fund
15% Vanguard Total International Stock Index Fund
10% Vanguard REIT Index Fund
10% Vanguard Total Bond Market Index Fund
Proposed Asset Allocation (100% Equity):
40% Vanguard Total Stock Market Index Fund
20% Vanguard Small-Cap Value Index Fund
20% Vanguard Total International Stock Index Fund
20% Vanguard REIT Index Fund
I have put a lot of thought into my aggressive asset allocation, and while very controversial, I came to the conclusion that because I'm young, will have a decent pension with health benefits that I can live on for the rest of my life (and thus weather volatile markets in retirement age), that I don't need bonds. To me, the benefit of "smoothing" out the volatility of the stock market with bonds isn't as important because I'm in my accumulation phase, won't be touching my portfolio for at least 30 years, and have a generous military pension. I'd rather have the historically increased returns stocks have provided over bonds. I understand that past performance does not guarantee future results, but I think over a long-enough time horizon (30+ years), the probability of bonds outperforming stocks is very low.
Assuming I can faithfully stay the course with my 100% stock allocation (I remained invested through the 2008 recession), am I crazy for having this aggressive of a portfolio allocation? I feel that my military pension gives me the room to stay aggressive for at least the next 30 years. I presume when I do come close to tapping into my retirement 30+ years from now, that I would start allocating a percentage of my portfolio to bonds.
Any comments are appreciated.
Background:
I am young (low 30s), a PGY-1 in EM, debt-free with a decade commitment to the military (I already have 14 years of active service). Assuming an average military promotion cycle, I'll leave the military in my late 40s with an annual pension in the 60-80K range (2017 dollars) with good health benefits.
Current Asset Allocation (90% Equity / 10% Bonds):
45% Vanguard Total Stock Market Index Fund
20% Vanguard Small-Cap Value Index Fund
15% Vanguard Total International Stock Index Fund
10% Vanguard REIT Index Fund
10% Vanguard Total Bond Market Index Fund
Proposed Asset Allocation (100% Equity):
40% Vanguard Total Stock Market Index Fund
20% Vanguard Small-Cap Value Index Fund
20% Vanguard Total International Stock Index Fund
20% Vanguard REIT Index Fund
I have put a lot of thought into my aggressive asset allocation, and while very controversial, I came to the conclusion that because I'm young, will have a decent pension with health benefits that I can live on for the rest of my life (and thus weather volatile markets in retirement age), that I don't need bonds. To me, the benefit of "smoothing" out the volatility of the stock market with bonds isn't as important because I'm in my accumulation phase, won't be touching my portfolio for at least 30 years, and have a generous military pension. I'd rather have the historically increased returns stocks have provided over bonds. I understand that past performance does not guarantee future results, but I think over a long-enough time horizon (30+ years), the probability of bonds outperforming stocks is very low.
Assuming I can faithfully stay the course with my 100% stock allocation (I remained invested through the 2008 recession), am I crazy for having this aggressive of a portfolio allocation? I feel that my military pension gives me the room to stay aggressive for at least the next 30 years. I presume when I do come close to tapping into my retirement 30+ years from now, that I would start allocating a percentage of my portfolio to bonds.
Any comments are appreciated.
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