I am considering changing up my 403B fund allocation. Right now I am 100% in VFFVX (Vanguard Target Retirement 2055 Fund) which has an ER of 0.08. I initially chose it several years ago, out of simplicity, because I didn't know what I was doing then and 2055 is around my anticipated retirement date.
I don't love it, though, in part because, after much thought, I think my 403B should be 100% stocks right now. If I'm not touching this money for 30+ years, I don't see why I need the targeted fund distribution of (in total) 11.6% going towards bonds/cash at this time. I would rather start investing in VBTIX (Vanguard Total Bond Market Index Fund Institutional Shares) later in life in my 403B to shift my AA.
My 403B offers fairly limited selections, but right now I am thinking of mixing several reasonable (in my estimation) funds to mirror my overall asset allocation. Specifically, I am thinking:
-VIIIX (Vanguard Institutional Index Fund Institutional Plus Shares) - ER 0.02
-VTSNX (Vanguard Total Intl Stock Index) - ER 0.08
-VSCIX (Vanguard Small-Cap Index Fund Institutional Shares) - ER 0.04
These are pretty much the best options for an approximation of TSM, international, and small cap among the choices.
My overall desired allocation right now is 55% TSM, 35% international, 10% SCV; my other holdings are a mix of Fidelity and Avantis index funds in taxable, Roth, and HSA. I realize this is a very aggressive allocation, but I am at the start of my career with a very stable position, have significant long-term future expected earnings, a good financial cushion, the ability to pick up extra shifts at work to significantly increase income, am very risk-tolerant, do not have significant debt, etc. Plan is to slowly transition to a 65%/35% ish AA later in career; this would be done with VBTIX in 403B + either bonds or MMF in taxable, for which I have a written plan.
Right now I am thinking of either:
-Approximating my overall allocation, which I would accomplish with 45% VIIIX, 35% VTSNX, and 20% VSCIX (accounting for differences in portfolio between FSKAX, my main TSM holding, and VIIIX), and which would halve my ER, or
-Doing 100% VIIIX, which would be simple and quarter my ER, though which would throw off my current allocation and entail rebalancing through my taxable account.
-I am leaning toward the former. In the future, my plan would be to gradually increase allocation to VBTIX and decrease allocation to stocks, keeping the same percentages of the remainder.
My questions are:
1) Does this seem reasonable (or dumb?)
2) Any alternative approaches I should consider?
3) I've never actually changed my holdings in a tax-deferred account, but am not aware of any possible downside in exchanging all of my holdings in VFFVX for the above funds?
Thank you.
I don't love it, though, in part because, after much thought, I think my 403B should be 100% stocks right now. If I'm not touching this money for 30+ years, I don't see why I need the targeted fund distribution of (in total) 11.6% going towards bonds/cash at this time. I would rather start investing in VBTIX (Vanguard Total Bond Market Index Fund Institutional Shares) later in life in my 403B to shift my AA.
My 403B offers fairly limited selections, but right now I am thinking of mixing several reasonable (in my estimation) funds to mirror my overall asset allocation. Specifically, I am thinking:
-VIIIX (Vanguard Institutional Index Fund Institutional Plus Shares) - ER 0.02
-VTSNX (Vanguard Total Intl Stock Index) - ER 0.08
-VSCIX (Vanguard Small-Cap Index Fund Institutional Shares) - ER 0.04
These are pretty much the best options for an approximation of TSM, international, and small cap among the choices.
My overall desired allocation right now is 55% TSM, 35% international, 10% SCV; my other holdings are a mix of Fidelity and Avantis index funds in taxable, Roth, and HSA. I realize this is a very aggressive allocation, but I am at the start of my career with a very stable position, have significant long-term future expected earnings, a good financial cushion, the ability to pick up extra shifts at work to significantly increase income, am very risk-tolerant, do not have significant debt, etc. Plan is to slowly transition to a 65%/35% ish AA later in career; this would be done with VBTIX in 403B + either bonds or MMF in taxable, for which I have a written plan.
Right now I am thinking of either:
-Approximating my overall allocation, which I would accomplish with 45% VIIIX, 35% VTSNX, and 20% VSCIX (accounting for differences in portfolio between FSKAX, my main TSM holding, and VIIIX), and which would halve my ER, or
-Doing 100% VIIIX, which would be simple and quarter my ER, though which would throw off my current allocation and entail rebalancing through my taxable account.
-I am leaning toward the former. In the future, my plan would be to gradually increase allocation to VBTIX and decrease allocation to stocks, keeping the same percentages of the remainder.
My questions are:
1) Does this seem reasonable (or dumb?)
2) Any alternative approaches I should consider?
3) I've never actually changed my holdings in a tax-deferred account, but am not aware of any possible downside in exchanging all of my holdings in VFFVX for the above funds?
Thank you.
Statistics: Posted by breakfastinbed — Thu Feb 22, 2024 9:48 pm — Replies 3 — Views 275