Paralysis by Analysis...

[huskie92]

Whew! I have been working through all the info here and on the WCI course to bring myself up to speed on allocating our assets in the various accounts. I am suffering from paralysis by analysis and just want to get started! MY wife's 401k is currently in the vanguard retirement 2045 fund which for now is fine but I would like to take a LITTLE more control of things besides just that. However, I am not confident yet in my overall knowledge. So, in setting up our backdoor roths I was going to go for some more specific funds. I took the Vanguard risk tolerance survey and is said I should go 80/20 stocks to bonds. So I was thinking...

• 50% VTSMX


• 30% VGTSX


• 10% VBMX


• 10% VTIBX

This is me totally shooting off the cuff here just to get some momentum and something down on paper. I went for a mix obviously of US/International to get to my percentages. Could that basically be it until I get more knowledge? I realize there is no real estate in there so perhaps I could shift around to get 5-10% there as well. Is there much penalty to reallocate soon after initially setting everything up? Ugh its like drinking from a fire hose sometimes!

Thanks so much!

[jz]

MY wife’s 401k is currently in the vanguard retirement 2045 fund which for now is fine but I would like to take a LITTLE more control of things besides just that.  So, in setting up our backdoor roths I was going to go for some more specific funds.

Simple beats complex.

[cgossage]

huskie92 wrote:

Whew! I have been working through all the info here and on the WCI course to bring myself up to speed on allocating our assets in the various accounts. I am suffering from paralysis by analysis and just want to get started! MY wife’s 401k is currently in the vanguard retirement 2045 fund which for now is fine but I would like to take a LITTLE more control of things besides just that. However, I am not confident yet in my overall knowledge. So, in setting up our backdoor roths I was going to go for some more specific funds. I took the Vanguard risk tolerance survey and is said I should go 80/20 stocks to bonds. So I was thinking…

• 50% VTSMX


• 30% VGTSX


• 10% VBMX


• 10% VTIBX

This is me totally shooting off the cuff here just to get some momentum and something down on paper. I went for a mix obviously of US/International to get to my percentages. Could that basically be it until I get more knowledge? I realize there is no real estate in there so perhaps I could shift around to get 5-10% there as well. Is there much penalty to reallocate soon after initially setting everything up? Ugh its like drinking from a fire hose sometimes!

Thanks so much!

Click to expand...

i think your allocation looks pretty good.  You may consider adding some emerging market exposure or real estate in the future, but you are most of the way there.

No penalty. On Vanguard, you have the option to exchange funds, so you are a few clicks from changing your allocation if you want to get more granular.

[Hatton]

Pretty good.  I have two comments 1. I would not buy International bonds early on.  You could add later if you feel you need them.  Plan on converting to admiral shares as soon as you are eligible.

[Ryan]

I'm not sure about the Vanguard risk tolerance survey-- 80 stocks / 20 bonds may be the highest they ever recommend? They certainly never recommended 100% stocks to us despite us having a very high tolerance. If so, and since this is all post-tax, you may have much more risk tolerance and could do a 100% stocks-- US and international mix, say 90/10 or 80/20. We take most our risks in the Roth IRAs because the wins are bigger (less tax). And the nice thing about international stocks is they may not correlate 100% with US stocks (most recent decade aside) so you kind of reduce risk and increase returns, at least according to basic portfolio theory and the assumption of some non-correlation.