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re: Need help with 401(k) allocation
Posted on 5/23/13 at 10:01 am to Dr Rosenrosen
Posted on 5/23/13 at 10:01 am to Dr Rosenrosen
quote:
I would only have about 5% in bonds at your age and maybe 10-15% in foreign stocks.
0
Posted on 5/23/13 at 10:09 am to Kreg Jennings
quote:
Even though some conventional wisdom might tell you it aids in diversification.....accomplishing that vs what you are giving up capturing potential gains when the stock market rises is a lot more than you might think.
Having bond allocation helps you take advantage of market swings better.
Market dives, increasing your bond allocation, and you sell off to buy more stock when it's low.
You can later rebuild bond allocation during rebound/peak period.
This isn't an insignificant benefit, and is why many long term allocations still include bonds. If you had a long horizon I wouldn't go beyond 5-10% but it still needs to be there.
Posted on 5/24/13 at 8:49 am to stendulkar
quote:
Suppose let's say I want to guarantee myself $2,000,000 when I retire 25 years from now
I don't think it's been mentioned, but this may be on the low side. I dont' know where you live or how you wish to retire, but $2M to retire at 56 isn't that much considering your income(I'm assuming). That leaves you potentially a very long time to be retired. If people live to 65, they are more then likely to make it to 82 now. In 25 years, it is likely to be higher then that. Obviously 56 year old retirement is an option and goal not a requirement. Other than that you appear to be in good position. Definitely have additional investment vehicles outside of a 401k. Tax diversification and general capital flexibility are good things to have.
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