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Originally Posted by IWEARGOGGLES
Hey everyone,
It is that time of the year where I need to put more money in my SEP and I just wanted to see if my current allocation is reasonable. I use Vanguard and here is the breakdown:
Vanguard FTSE All-World ex-US Index Fund Investor Shares 2.36%
Vanguard FTSE Social Index Fund Investor Shares 19.54%
Vanguard Target Retirement 2050 Fund 50.94%
Vanguard Total Bond Market Index Fund Investor Shares 3.25%
Vanguard Total International Stock Index Fund Investor Shares 4.85%
Vanguard Total Stock Market Index Fund Admiral Shares 19.06%
The first 5 range from .18-.30 expense ratios whereas Admiral Shares are .05.
It probably isn't hard to tell I have no idea what I'm doing. I think I started with the 4 random ones until I had enough for Admiral Shares. I then found the Target Retirement fund and obviously just started using that.
When I make my contribution this year I want to move things so they're where I want them to stay. I know the easiest thing to do is dump it all in the Target Retirement fund but I'm wondering if I should try to invest in more of the funds with low expense ratios like the Admiral Shares.
Thanks!
As stated, you have a ton of overlap. If you're comfortable with the Target date fund, sell your other funds and dump them into the target.
If you want to do some tinkering, use funds where you currently won't have a lot of exposure.
My recommendations include:
Admiral Emerging markets (EM has underperformed domestic markets big time and are more attractively priced from a long term valuation perspective)
Metals and Mining fund - has just been clobbered for 2.5 years.
Consider the REIT fund as well...especially if you don't have exposure to the real estate market via home ownership.
Finally, if there's one sector of the economy you believe in more than the others, you can use Vanguards ETF sector specific to add weight.
But in the end, the Vanguard Target Date fund is essentially all you need when looking at a gigantic time horizon.