Vanguard Portfolio Assistance?
Question:
40% - Vanguard CA Intermediate term tax exempt fund (VCAIX)
40% - Vanguard Total Stock Market Index Fund (VTSMX)
20% - Vangaurd Tax Managed International Fund (VTMGX)
I am 27 and hope not to touch the money until retirement in at least 30 years. I want a simple portfolio with a 60/40 split (I have a 401k but dont want that to come into consideration here). Am I on the right track or does anyone have any suggestions for improvement?
Thanks in advance!
Answer:
It looks like a reasonable mix to me. I would suggest minor changes. Vanguard recommends putting no more than 20% of your stock investments in International stocks, and 80% in domestic stocks. Since your stock allocation is 60%, you should theoretically put 12% in foreign stocks and 48% in domestic stocks. The Tax Managed International Fund has almost no emerging markets exposure, While the Total International Stock Fund has approximately 14% emerging market exposure. You should also be in Admiral funds for accounts over $100,000.
You may also want to consider a higher exposure to stocks than a 60/40 mix at age 27. Many people your age would have about a 90% stock exposure. (Look at the Vanguard Target Retirement 2045 Fund (VTIVX); it's 90% stock.) However, you may not have the appetite for higher risk.
I would suggest
40% Vanguard California Intermediate-Term Tax-Exempt Fund Admiral Shares (VCADX)
48% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
10% - Vanguard Tax Managed International Fund (VTMGX)
2% Vanguard Emerging Markets Stock Index Fund Investor Shares (VEIEX)
It looks good, but make sure you keep some funds available for traditional stock purchases and trades but otherwise I think you are good to go.
Looks good, but you should leave some in a more liquid account incase some investment opportunity comes along.
At your age 40% in muni bonds is too conservative. I'd go 70% in equities and 30% in the CA tax exempts. I'd allocate 20% of the equities in the VG Total Stock Market Index, 20% in a VG MidCap fund, 20% in a VG small cap fund and the remaining 10% in the International fund. As you get closer to the time you want to retire or use these funds you can weight the allocations more to fixed income and less to equities. You're 27 and in this for the long term, you have to be concerned about inflation, equities should outpace inflation, where the fixed income won't.
Good luck!
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