In my July update, I shared my target asset allocation:
- 52% US stocks, split 80/20 into 42% 500 Index and 10% Extended Market Index
- 35% International stocks
- 13% Fixed income
Investing is pretty new to me, so asset allocation is still something I am struggling with. In June, I finally set that asset allocation and I think I’m happy with it. (At the very least, I haven’t tried to change it in the last couple of months like I did with all of my previous ones, to just “tweak it a little bit”.)
This has taken quite a few iterations, but I like this because it’s fairly simple to implement. I picked one stock fund to use for the International stocks (Vanguard Total International Stock Index) and one fund to use for fixed income (Vanguard Retirement Savings Trust). I would have picked one fund for the US stocks portion, but my 401(k) plan doesn’t offer the Vanguard Total Stock Market Index fund, so I went with using the Vanguard 500 Index and Vanguard Extended Market Index to replicate that.
In October of last year, I actually owned some shares from almost every fund offered in my 401(k)! So I’m quite happy with my four-fund plan.
So far in the month of August (as of the 8th), my investments have seriously tanked. I have lost most of the investment return that I have gained over the last year and a half and my investments have dropped lost over 10% of their value in the last 8 days alone. Somehow, I don’t care. I believe in my asset allocation and will continue to hold. This will be a good learning experience for when I have a larger balance on my investment accounts.