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matt rector

NEA Self Directed plan--any advice on investment options

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Hello

I am using the NEA Self Directed plan through Security Benefit (thank you for telling me about this option) --can anyone offer any advice about how to I should be breaking out my investment options? I am currently using this ratio:

Vanguard Total Stock Market = 70%

·         Vanguard Total Int’l Stock Market = 10%

·         Vanguard Intermediate Term Bond = 20%

I have been teaching for 20 years and I plan to teach about 10 more years. Someone told me my allocations are very conservative---too conservative? Any advice or help is appreciated. Thank you. 

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31 minutes ago, matt rector said:

 

. Someone told me my allocations are very conservative---too conservative? Any advice or help is appreciated. Thank you. 

Just the opposite .I think who ever told you that doesn't know much about investing. You have an 80% equity allocation and 20% in bonds. To me that qualifies as an aggressive allocation.  I think your current allocation is perfect and at rock bottom cost.. The only advice I can offer is that adding more bonds would make your portfolio less aggressive and depending on your age and risk tolerance you might add more bonds  not less going forward.  

As a counterpoint If you plan on collecting a teacher's pension plus social security you could I guess go 100% equity and quit the bonds all together and count your pensions as your fixed component. However I think having some bonds adds to your diversification and bonds CAN outperform stocks at times so I wouldn't make any changes.

Tony

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I agree with Tony completely! It's a reasonable asset allocation for someone 10 years from retirement who will have a pension and maybe social security. The TBF is not earning very much right now, but it will look great if there's a big downturn in the stock market. The TISF at 10% isn't going to be a big factor no matter what happens, but it adds diversification and you never know when it will do better than it has recently. We own some TISF also. 

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On 11/11/2020 at 5:23 PM, matt rector said:

Vanguard Total Stock Market = 70%

·         Vanguard Total Int’l Stock Market = 10%

·         Vanguard Intermediate Term Bond = 20%

Only you know what asset allocation is appropriate for your risk tolerance.

Expect stocks will, at some point, lose half their value quickly. If you will do something foolish like sell stock or stop investing during that time, that's a problem. If your mental health will be at risk, that's a problem. Bonds will reduce your expected returns, but they can be used to keep your portfolio from dropping to a level that'll cause you a problem. Fees are a huge deal, but people panicking, selling during a crash, and buying back in after a recovery is a disaster. You need to make sure you never do that.

You might want to read the Investing 101 page I wrote.

...whatever domestic vs international stock split you opt for, just stick with it for life. Nobody can tell you what is optimal.

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Hi Matt,

To answer your question, as others have said, your allocation is NOT too conservative, its not even close to conservatism! 

My portfolio is definitely conservative because at 73 my bones are beginning to ache! LOLs: 

Q3 2020 Asset Allocation.jpg

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Steve's portfolio is a conservative portfolio that works for him. It's well diversified. You could learn much by studying it.  He always gets a decent return too .

Tony

 

 

 

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