Creating my Investing Plan for 2012: Asset Allocation

My initial asset allocation strategy for the year will cover:

  • Re-paying the taxable investments I borrowed to increase my down payment
  • Maxing out my 401(k)
  • Employer contributions based on my initial salary
  • Maxing out my Roth IRA
  • No other taxable investment contributions

Since the most common good option in 401(k) plans seems to be a S&P 500 Index fund, I’m going to keep shares of the Vanguard Total International Stock Index Fund (VGTSX) in my taxable account. I will not set the dividends to automatically re-invest since that creates extra, annoying tax lots.


Re-paying my taxable investments into the International index will fill up pretty much all of my International allocation for the year. Any further taxable investments will also go into this fund with the intention of eventually reaching the Admiral shares level.

Roth IRA

I keep two funds in my Roth IRA: Vanguard Extended Market Index Fund (VEXMX) to complement the Vanguard S&P 500 Index Fund (VFINX) shares in my 401(k) and the International index. Right now, it’s looking like about a 65/35 split of my estimated $5,000 contributions to my Roth IRA. Maybe in 2013, I will be able to use Admiral Shares for one or both of these funds!


My employer matches into something that I categorize in my asset allocation calculations as a large US stock.

To meet my desired asset allocation at the end of 2012 with my projected contributions, I am going to split  15/85/0 between the three funds in my 401(k):

  1. Vanguard Retirement Savings Trust: 15%
  2. Vanguard S&P 500 Index Fund: 85%
  3. Vanguard Total International Stock Index Fund: 0%

I will already have filled up my international buckets with my taxable and Roth IRA contributions, so I’m not going to add any more money to that fund in my 401(k) in 2012.


2 thoughts on “Creating my Investing Plan for 2012: Asset Allocation

  1. Okay first you are so good at excel spreadsheets and now you are so discliplined to invest in index funds??


    I have very little discipline when it comes to putting my money in places where it should be. I am hoping the dividends turn out well ;)

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