Here is my retirement portfolio...Tell me what you think about it as I am young and think I need more risk?

Question

At the moment I have five mututal funds with Vanguard in my Roth IRA. The fees are low and everything is indexed...I'll never jump the shark I guess. I recently upped my international fund to 20% and want to know if I am covering myself for quality growth or am I missing anything. Is this low cost way of going about my retirement the best bet?

I am currently 26-years of age and would love to know what people think about the funds I am working with and if I should turn it up a notch and get into different sectors with more risk. I max out this fund every year and will do so again this year and have a few thousand more to put in this year, which I need "help" putting into the proper fund.

Here they are...

18% in VHGEX Vanguard Global Equity

22% in VIMSX Vanguard Mid Cap Index

21% in VISVX Vanguard Small Cap Index

18% in VTIVX Vanguard Target Retirement 2045

21% in VTSMX Vanguard Total Market Index

Thoughts? Comments? Suggestions? Answers :o)

Can you add anything else?

Answer 1

Your "Total retirement 2045" and "Total Market index" are making this calculation more complex. Because both of those funds, are essentially made up of other funds.
For example, the Vanguard Target Retirement 2045 is really just a grouping of:
Vanguard Total Stock Market Index Fund71.9%
Vanguard European Stock Index Fund10.9%
Vanguard Total Bond Market Index Fund9.8%
Vanguard Pacific Stock Index Fund5.1%
Vanguard Emerging Markets Stock Index Fund 2.3%

Then you are adding more Total Stock Market on top of that.

The "Target Retirement" funds are great because they do the diversification for you. You can literally put everything into one of those funds, because it is a "fund of funds."

As for "are you taking enough risk," you have to ask yourself what you would be comfortable losing in a year. If you can stomach a 20-30% loss, then maybe add more small and international. If not, go for more bonds. 20%-30% International is probably about right for someone your age if you can tolerate the risk (volatility).

Answer 2

That is an excellent diversified approach. I have only few very minor suggestions. 1. You could used a cash portion in your retirement account, a money market fund would provide that. 2. You obviously have your IRA account with Vanguard. You might think about with additional contributions setting up an IRA account with a different group. 3. You also might consider focusing some into a developing markets fund, specifically a fund that invests in India and China. 4. the Vanguard Global Equity is not actually much of a foreign investments fund 40% of its holdings are in the U S, so you actually have about a 10% exposure to foreign markets. In my opinion you should have about 25% at least. That will provide you with some protection against the possibility of a falling dollar.

Answer 3

The thought you are underdiversified is false, you actually might be over diversified if anything. Also you have to remember you will be getting your diet of bonds from the 2045 fund.

One of the big problems that those that are 65 and have 401Ks have only managed to have $65,000 in their account. many thought real estate will be their answer and they might sell a $600,000 to buy a $400,000 house. After taxes that $200,000 difference becomes even less.

I don't think you will end up with the same problem as them. $4,000 each year till you hit 70 and at 7% annual (Warren Buttet's projected SP 500 compounded increase in the next 30 years, but he could be wrong) will get you a total of $1.2 million tax free. Unfortuately if the inflation in your state is 3%, it will take you $110,000 in 44 years what you can buy now for $30,000. California has a core inflation rate of 5% which could wipe out much of your gaines (but at least you won't have negative savings like if you kept the money in a matress).

Answer 4

I would get rid of the target retirement since it overlaps with the other funds. Your core fund should be the Total Market Index and everything else should be built around it. Since your young, I would go:

45% VHGEX
25% VTSMX
20% VTIVX
10% VIMSX

That's using your fund choices. Global markets are far outpacing the US. Small and Mid Caps are practically the same and they generally outperform over the long-run.

Answer 5

Not diversified enough. A retirement portfolio must be more diversified outside stocks and bonds - for instance, maybe 30% maximum in stocks and bonds if you really insist on it. The rest should be outside or independent of the financial markets.

Answer 6

Yes you could learn invest by yourself. it is your money, you should know how to do with it. for starter check this site out.

http://www.pathtoinvesting.org/index_fla...
http://www.stockcharts.com
http://www.streettalklive.com>... university. a lot amount of information. It will serve you well
I accumulate in good amount in 401k at the young age.I could share with you. when consider invest in stock market. you should consider basic 3 things:

fundamental analysis==(economic data,finincial health, management, business model, competetion)>>what to buy

technical analysis==(chart+indicator)>> when to buy

Sentiment/schycho analysis==>>mood of investor, Contrarian point of view.
Market cycle===>> check out book Trader Almanac by jeff hirsch will give you inside stuff
When you combine 3 thing, It is one of the powerful knowledge goinh with you for the rest of your live

At the age of 32. my 401k is amassed 74,000.00 and 30000.00 in taxble account. by follow simple rule