About a year ago I hired a financial planner to manage assets in my retirement accounts but am starting to think about doing it myself.

I don’t disagree with the general approach they’re taking, but it seems like it should be simple enough for me to do myself every 6 months or whatever.

The gist of the strategy is a balance across large/mid/small cap and sectors at certain percents along with some % of bond funds and some real estate funds.

I think my main questions are how do I identify and compare various funds that fall into these broad categories to try and pick the ones I want to actually invest in.

  • sugar_in_your_tea@sh.itjust.works
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    1 year ago

    I’ll go with the others and say use a simple three fund portfolio.

    The general idea is, if you are comparing your performance against an index, why not just buy the index? Most investors fail to beat the S&P 500, so if you buy an S&P 500 fund, you’ll be doing better than most over the long term.

    Here’s my personal target portfolio:

    • US stocks - 70%
    • International stocks 30%
    • cash and bonds - 0%

    Instead of going for an index like the S&P 500 that targets the top 500 companies, I want to buy all the companies at market weight. So here’s my ideal portfolio with US Vanguard funds:

    • VTSAX - 70%
    • VTIAX - 30%
    • BND - 0%

    My actual portfolio is a bit messier because of fund availability, but it’s pretty close to the above. For example, my workplace doesn’t have a cheap total US market fund, so I split between an S&P 500 fund and a small cap fund in an 85/15 split.

    I’m considering adding bonds now that yields are more interesting and I’m almost close enough to retirement to start ramping in to them, but for now I only own a handful of short term treasuries as part of my efund. But if I did own bonds as part of my retirement portfolio, I’d either own or approximate BND.

    • epchris@programming.devOP
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      1 year ago

      Just out of curiosity, since I’m also considering bonds, what is “close to retirement” enough to consider non insignificant bod allocation?

      • sugar_in_your_tea@sh.itjust.works
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        1 year ago

        That’s totally up to you. My personal number is about 5-10 years from retirement, though I’m pretty risk tolerant.

        My plan is a rising equity glidepath. Basically, I’m going to load up on bonds (20-40% bond tent) a few years before retirement, and then ramp back down to no bonds in the first 10-20 years of retirement. I’m planning to retire early, and this plan seems to have a higher chance of success vs a consistent bond portfolio given a >30 year retirement.

        The same strategy works for a shorter retirement, and you can keep your bond allocation constant as well. This strategy makes sense if you have a high risk tolerance, but recognize the need for portfolio stability in retirement. If you have a lower risk tolerance, do the “normal” strategy that target date funds use: 10% starting out, and increase as you get older.