Dec 5 2009

My Proposed Retirement Portfolio Allocation

Posted by Simon Zhen in Investing, Retirement
5 Comment

Ever since I’ve found a part-time job leading to some steady source of income, I have been slowly saving up for contributions to my Roth IRA. After plenty of research and an assessment of risk tolerance, I designed the retirement portfolio that I will be working towards.

Here is the asset allocation and funds I intend to use:

asset

funds

An All Stock Portfolio???
I’m 22. Using bonds or some other sort of fixed income investments to diversify my portfolio never crossed my mind. To me, having 10% in bonds does not represent much of a safety net to volatility. An all-stock portfolio definitely contradicts my typically conservative nature.

The Two Actively Managed Funds
While index investing certainly seems like a great way to start, I want to be a little more aggressive and try to get higher returns. Dodge & Cox has held a long time reputation of outperforming the market on a consistent basis. Despite recently dropping in ratings, I believe that everything will return to normal once the market turns around for the better.

Look! ETFs!
It’s a new age in investing and ETFs have become increasing popular and I can see why. Vanguard’s funds have always been popular choices for their simple diversification purposes. But, their $3,000 minimum initial investment has deterred many from even beginning to invest in their funds. Vanguard’s ETFs enables newbie investors (such as myself) to diversify without needing too much money. And look at those close-to-non-existent expense ratios!

Staying On Track
Well, simply saying that this is what I want isn’t exactly going to get me there. In the near future, I’ll be sharing my financial reports with everyone – much like many other personal finance bloggers have done. Doing so will reveal my progress towards my goals.

I mean come on. How many 22-year-olds do you know who are doing this??

Disclosure: At the time this post was published, I do own shares of Dodge & Cox Stock Fund (DODGX).

Related Posts

If you liked this post, please leave a comment, share it, or subscribe to my RSS feed.

5 Comments on this post

Trackbacks

My Financial Goals for 2010 | Realm of Prosperity wrote:

[...] Max out my Roth IRA. Pretty straightforward. I’ve taken time to seriously create my own fund allocation setup for my investment portfolio. Ever since putting in my first $1,000 into a mutual fund, I feel somewhat addicted to saving up [...]

January 2nd, 2010 at 4:00 pm

Adam said:

Good luck Simon! Just wanted to offer encouragement from an investing peer (I’m 23 so hopefully at our age we’re both ahead of the game!). I have a similar strategy but without REITs.
I will be reading with interest.

December 16th, 2009 at 7:19 pm
Meg said:

Oooh, join me in on the love for Vanguard’s Emerging Market ETF. That baby has all but made my portfolio. I’ve felt like such a savvy investor ever since I picked out my own allocation. (Like you, mostly Vanguard ETF’s. For the same reason too.) I think I also have the Total Market ETF and Small Cap ETF myself as well, plus Large Cap and Mid-Cap. All Vanguard ETF’s. Viva la ETF!

And FWIW, I’m 21, so I feel ya on the stock portfolio. I did throw in some bond market ETF’s, just for a bit of balance. (But then switched to the Large Cap when the market started to go back up.)

December 18th, 2009 at 9:20 pm
Simon Zhen said:

It’s so nice to see so many other young adults taking control over their financial future! It seems that the economy was a good sign to 20-year-olds that we need to manage our finances better.

@Adam: Why no REITs? Good dividends and has picked up steam recently.

@Meg: Word, ETFs are in! Hehe, VWO certainly has been performing nicely – lucky you. I’m slowly putting money in and VWO or VNQ is probably my next buy. Will probably fall in love with VWO also (if it goes up that is).

December 18th, 2009 at 9:42 pm
Adam said:

“It seems that the economy was a good sign to 20-year-olds that we need to manage our finances better.” Haha. I got into PF at the start of 07 (when I was 20) so am a bit jealous that PF then became ‘popular’ with the crashing economy (j/k…its great people are becoming more proactive… I also think its great how the internet has broken down information barriers so anyone can find out about anything as long as they want it).

Being in the UK, Vanguard isn’t as accessable so I prefer indexing with Fidelity. I’ve avoided REITs because I believe that companies are much more likely to create real value rather than dirt on the ground. And as I’m thinking long-term I figure that my asset allocation will swing towards real-estate when I buy a property in a few years time.

December 21st, 2009 at 5:35 pm