Quote:
Originally Posted by chisness
Country you live in: USA
Risk Tolerance: high
Timeframe for investment: long
Debt: none
Any other information you might have that would help us: Have used the Bogleheads forum for advice and currently have this portfolio all at Vanguard:
10% IRA (maxed out for year)
50% Vanguard Total Bond Market Index VBMFX
50% Vanguard Inflation-Protected Securities VIPSX
90% Taxable
50% Vanguard Total Stock Market Index VTSAX
50% Vanguard FTSE All-World ex-US Index VFWIX
Main issues are:
1) Too much foreign? No foreign small cap
2) Not high enough bond %? Could move from 90-10 to 80-20 by keeping only TIPS in IRA and adding tax exempt bonds to taxable account?
3) Something about adding i bonds?
Other advice great too
1. If you weight the world investments by market capitalization, 50/50 is pretty much just right. Though one thing to consider is that many US companies make significant portion of their earnings from foreign countries, but in dollars...so a 50/50 US/World mix is in name only, it may actually be closer to 40/60 US/World. As for foreign small cap - unless you
want to start Slice 'n' Dicing, don't worry too much about market caps.
2. Bonds. Most people advocate a "your age in bonds" - but really it comes down to more then that. The more you can invest, the less risk you need to take. But then you also need to weigh whether you'll have enough to retire on at certain weightings.
If you decide to go with a muni bond fund in a taxable consider that you likely still have to pay
state taxes on the distributions unless you're from the state they were issued in.
3. I read the bogleheads forums also and have seen the uptick in I-Bond questions.
http://www.treasurydirect.gov/indiv/...nds_glance.htm I have to admit I really don't know much beyond what I've read at that site. Sounds like a sound tax deferred TIPs type investment - just limited to $5k/year. If inflation takes off though and I-Bond tax codes don't change, the tax hit could be substantial and erode a lot of the gained value. *shrug*
As for the IRA - I'd maybe think about adding the REIT, VGSIX, at something like 20%.