Help me allocate my 401(k)?

Question

I am 23 years old and my salary is $50,000.
My employer matches dollar for dollar up to 5%.
I am risk tolerant.

I am leaning towards this way of allocate my investments:
Large Cap Value Index Fund (Russell 1000 Value): 20%
S&P 500 Index Fund (S&P 500): 55%
Small Cap Index Fund (RUSSELL 2000): 15%
International Large Cap Index Fund (MSCI EAFE): 10%

These are the other funds I can allocate to:
Short-Term Fixed Income Fund
Stable Value Fund
Government Inflation-Protected Bond Fund
Core Bond Fund
Intermediate Bond Fund
High Yield Bond Fund
Large Cap Value Fund
Growth and Income Fund
Large Cap Growth Index Fund
Large Cap Growth Fund
Mid Cap Value Fund
Mid Cap Growth Fund
Small Cap Core Fund
Small Cap Blend Fund
International Large Cap Value Fund
International Large Cap Core Fund
International Small Cap Fund

Should I diversify the portfolio more? I want to stay completely away from bonds however...

Thanks for all of your help!

Answer 1

Your proposed allocation is what I would consider to be reasonable. You are still young (lucky devil). You should diversify just a little more broadly overseas in my opinion. I would suggest reducing the S&P 500 portion to 35%. The main problem is that you are way overweighted towards U S companies. When the rest of the world is where the economic growth is. Too bad none of your choices are foreign developing markets. I would like you to consider foreign small cap for about maybe 5-10% and some in mid cap growth. Growth funds are currently outperforming the rest of the market. They have lagged for several years.

Answer 2

At you age I'd add more international & mid cap. Although I like many "index funds" the MSCI EAFE is not one of them. If you have a good managed international fund make your allocation 20%.

I'd only do 35% - 45% in the S&P500.

Answer 3

There is significant overlap in the Russell 1000 value and S&P 500 funds. You may want to consider a small allocation to international small cap to better diversify your stated goals, especially considering your age.

Answer 4

At 23 you don't need to diversify much if at all. 100% International Index Fund is all you may need. Note: you'll make money off the falling dollar.

Answer 5

I like what you are doing. I would add Mid Cap growth and international small cap. These sectors tend to outperform when the markets are going up.

Answer 6

It's all in the ammount of risk you are comfortable taking.

I am over twice your age and have more % in International than you do - but that's just me.

At your age, most advisor's would tell you to go with more in international and add some growth funds.

Use Yahoo Finance and plug in the ticker symbol of each and see what they're invested in and look at history of each.