One part of being financially fit, is rebalacing your asset allocation in your portfolio. It’s probably been about a year since the last time I “rebalanced,” putting most of my funds into a Vanguard 2055 Retirement Fund. I loved it because there was no need to ever rebalance! That is, until I read an article by Jeff Rose over at Good Financial Cents called “Why I Hate Target Date Mutual Funds and You Should, Too.” Err, what?
The bulk of my portfolio was in target date mutual funds. Laziness kept me from figuring out how to truly allocate my assets, and instead I just threw them in the target date and hoped everything would work out. Well, the post snapped me out of it and I set about rebalancing. Immediately. I did some research, looked at other PF bloggers thoughts and maybe their own allocations, and then did more research.
I’m not a personal finance pro, just a person that has a personal interest in personal finance, so this allocation is what I think best for myself at this time. That could change tomorrow or next week. Right now I have a very high tolerance for risk. I have (hopefully) 40 more years until official retirement age and a lot of time to make up what I might lose. And if the global stock market collapses… well… I’m young enough to recover somewhat.
75% International Growth
22% Total Stock Market
3% Total Bond Market
Not many people really feel comfortable with the ups and downs being so heavy in stock (97%) shows, but I am. That picture above? That’s what my investment return chart really looks like with the major dip being 2008. It’s scary, but I’m optimistic that making it a priority now will reflect well in the future.
What does your asset allocation look like? Is it a “simple” as mine or much more complex?