Asset allocation

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Joined: Mon Oct 30, 2017 4:18 pm

Asset allocation

Post by thegoprogrammer » Mon Oct 30, 2017 4:31 pm

I am a 30 year old married man (no kids). I don't have any debt. I have total savings in cash of $40K. I am intending to open a ROTH IRA.

Risk tolerance: I do not want to take high risk. Moderate risk is good for me.

Tax status: "married filing jointly" However, my wife does not earn any income as of now.

Tax rate: Federal :30%. I reside in California. Sorry, not aware of the State tax rate

I have a Employer sponsored 401K.

My estimated/desired asset allocation: 60% in stocks and 40% in bonds/assured return instruments.

Im planning to buy stocks as part of my ROTH IRA. Non retirement/brokerage account: I want to go in for Index funds. Considering Vanguard and Charles Schwabb.

My questions:

1. Kindly suggest a good asset mix for my age.

2. Is it advisable to invest in Growth Stocks or Value stocks?

3. Considering expense ratios and trading fees, which one is cheaper, Vanguard or Charles Schhwab?

4. Any fund asuggestions, if thats not asking for too much.. :D :D

Ron Scott
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Joined: Tue Apr 05, 2016 5:38 am

Re: Asset allocation

Post by Ron Scott » Mon Oct 30, 2017 6:31 pm

60-40 sounds excellent given your stated interests.

Rather than thinking "growth" vs. "value", think "index" like a total index fund or S&P500 fund.

Schwab and VG are comparable in price. Know them both, like them both. I'm in VG.

VTSAX for stocks and VBTLX for bonds, for starters. No ETFs and avoid trading.

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Re: Asset allocation

Post by youngpleb » Mon Oct 30, 2017 6:35 pm

Hi! Good job on going after that Roth IRA and being proactive! A 60/40 mix is definitely on the safe side for your average 30 year-old, but if that helps you sleep good at night then it is worth it. The basic Boglehead starting point is your age in bonds, which is pretty moderate risk. So I'd maybe think about that, since that 10% difference could affect the final amount pretty significantly in the long run! Regardless of 60/40 or 70/30, I'd do about 80% of stocks into VTSAX and the remaining 20% into a good international stock index, with all bonds going in Total Bond Market Index.

As for growth vs value, the war wages on. Growth does very well in bull markets (like the current one), and is evident in the recent returns for many growth-centric funds. It really just comes down to the individual investor, but having a good mix is always healthy. Personally I like to lean towards value just slightly in my balance.

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Re: Asset allocation

Post by Fallible » Mon Oct 30, 2017 6:50 pm

Welcome to the forum.

Have you read the wiki on asset allocation?

Another good read is pro Boglehead Rick Ferri's book, All About Asset Allocation, 2nd ed.

I think 60/40 is the right allocation for you now considering your stated risk tolerance. The basic question to ask yourself (and your wife) when setting an allocation is how much money you can afford to lose in a market crash before you will need it. For more on that, see the wiki's risk tolerance page:
SatuMedia® wiki | Investing Advice Inspired by Jack Bogle

Ron Scott
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Re: Asset allocation

Post by Ron Scott » Tue Oct 31, 2017 9:53 am

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Earl Lemongrab
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Re: Asset allocation

Post by Earl Lemongrab » Tue Oct 31, 2017 10:27 am

There is a lot of information missing or suspect. There is no 30% federal tax bracket. If that is your average or effective rate, then your taxable income and so MAGI is quite high. You likely wouldn't even be able to put money directly into a Roth IRA. We need actual numbers. However, if that's at all near where you are, especially in CA where your state tax rate is probably 9% or better, then you need to be maximizing deductible investing. Are you using the 401(K)?

Take a step back, go through this:


Put that information together and it will help you and the people here make the best choices.
This week's fortune cookie: "You will do well to expand your horizons." Ow. Passive-aggressive and vaguely ominous.

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