Retirement asset allocation

Don’t touch it. Come back here when you’re 50-55 and we’ll talk again.

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Don’t touch it. Come back here when you’re 50-55 and we’ll talk again.

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This right here, ignore the noise.

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20% Best performing asset of all time

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HKRS?

YAYO?

In the S&P 500 fund, about 33% of your money is going into ten stocks. They are what is called the "magnificent seven" but with a double dose of Google plus Berkshire Hathaway and Broadcom.

In most target date funds, about 33% of your stock allocation would go into a foreign stocks, then once again about 30%+ of the remaining stock allocation would be the same stocks as mentioned above. So you'd be putting about 1/3 of your stock allocation into foreign stocks, which have absolutely sucked for the past 20 years and mostly sucked for the last 25, then another third of your stock allocation into about 10 domestic stocks that have been leading for a while and maybe ripe for a pullback, then the remaining 1/3 of your stock allocation would be in smaller and more diversified stocks.

Is it good or bad? Do you want 1/3 of your money to go into foreign stocks and another 1/3 to go into just 10 US stocks, most of which are concentrated in just 1/9th of the total market (large growth)? That would leave just 1/3 of your stock allocation for the remaining 8/9 th's of the US stock market.

Small Value stocks are the highest returning asset class over the long term. That would probably be less than 1% of your allocation in the target date fund. It is probably 0% in your current allocation.

25% Growth/tech
20% S&P
20% mid cap
20% small cap
10% international
5% value

Don't use target funds.

Keep the majority in s&p500 or Russell1000. If I was going to do a set it and forget it approach, the these would be my choices. 90% s&p is not a bad choice.

At your age, I followed typical advice, and was diversified into about 10 funds. Over time, the 500 came out better, with lower fees. I got out of Inter tional funds many years ago. Decided to focus on US stocks. Most decent sized US companies are international, and investing in international funds is complicated. Maybe consider moving your international money to small cap US, like Russell2000.

Check out Paulmerriman.com

I shouldn't have used the words "asset class", I should have said "stock style". Obviously, large cap growth has dominated over the last ten years and especially the last five, but over the very long term (90 years or so) US small value has beaten all the other US stock styles.

It seems like this stuff was easier to find with a search a few years ago, but there is some discussion and charts at this link that will give a quick answer. It is from 2020, and obviously the market has been dominated by a narrow advance of a few large cap growth stocks since then, but there are other sources out there.

LINK /

The important thing to remember is that we are probably at the end of a large growth lead market cycle. At the end of a market cycle like that large growth index funds are going to look outstanding, just because a cycle like that usually ends with a few mega cap large growth companies advancing when smaller caps are not. Because most index funds are market cap weighted, this the large cap index funds look great because they have low expenses and they are very concentrated in the largest growth stocks, even if they aren't a "growth" fund, those stocks grow and concentrate in even a broadly diversified index fund at the end of a growth dominated market cycle.

Now, of course, no one knows if the growth lead market is over right now, but if it is, if you are investing in a large cap market cap weighted index you are putting more of your money into stocks that are going to go down in price. Meanwhile, the rest of the 80% of the market gives you more for your money.

So I have my retirement in vffvx - target retirement 2055.
What am I missing.
Vanguard total stock market index - 54%
Vang total international stock index - 36%
Vanguard total bond index - 7%
Vanguard total International bond - 3%
Return is 21% in last year.
Not arguing but what am I missing with this choice?
I see 90%/10%