I briefly considered moving everything to a Vanguard brokerage account because ETF expenses are lower than fund expenses in general, but then I realized that I will now qualify for Vanguard's Admiral share class in most of my investments (assuming I choose a fund with an Admiral share class option). The Admiral share classes have even lower expense ratios - as low or nearly as low as the ETF expenses in a comparable fund. So I decided to stay put. Besides, I like being able to see the 5+ year history on my account.
My 401k Rollover is now complete, and so for the first time in six years ALL of my retirement assets are in one place. Now I have to decide what to do with them! As a default I selected the Vanguard Total Stock Market Index for the initial transfer of my Roth 401k assets, just so I wouldn't be totally uninvested while I debate about how to allocate everything. My traditional 401k assets (employer matches and what I put in before my company rolled out a Roth option) are in cash (technically I now have 2 IRAs - my original Roth, into which I was able to roll my 401k Roth assets plus a new Traditional IRA into which they rolled the Traditional assets).
I have almost exactly $120,000 in my IRAs right now. Here's how it's allocated:
- Total Stock Market Index: $57,500
- Total International Stock Index: $21,100
- Prime Money Market Fund: $16,750
- Precious Metals & Mining Fund: $12,000
- Total Bond Market Index: $5,100
- REIT Index Fund: $4,200
- TIPS: $3,700
In cash you're wondering, that breaks down into 31% Large Cap US, 30% Small/Mid Cap US, 18% International Stock, 7% Bonds and 14% cash. The small/mid cap holding is skewed with the REIT and the Metals/Mining though, which I consider a separate "alternative' holding that totals 13%. Ultimately I want that to be more like 5-7% so I have no plans to add to those assets.
I will be eligible to contribute to my new 401k Plan in March, and I plan to max it out for the year. The only decent/cheap fund they offer is the Vanguard 500 Index, so I have set it up to put 100% of my contributions ($17000 for 2012) in that fund. My employer will match around $3000 so I'll have around $20,000 in that fund by the end of the year, assuming zero market appreciation. Therefore I need to slightly under-allocate large cap US stocks in my IRA.
SO the number one question is - what should my asset allocation be? Secondly, which fund should I choose to help me execute my allocation decision?
I am thinking 30% International, 50% US stocks, 15% bonds/cash, and 5% "other" including REITs and commodities. But as for the fund choices I'm torn a bit. Any suggestions??