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Subject:  Allocations Date:  12/14/2006  5:06 PM
Author:  CPAScott Number:  54767 of 105396

Well ...

After posting about my consdieration to move a 401(k) to my Rollover IRA at Vanguard (, I started thinking about how my retirement assets are allocated. I had played around with Vanguard's allocation information before, but not in too much depth. Plus, I had not recorded any oustide investments (my two 401(k) accounts outside Vanguard).

Today I entered those outside investments (one at NYLife Investment Management and one at T. Rowe Price) and took a deeper look at the Portfolio Allocation tool on the Vanguard website. I was impressed!

If you have an account at Vanguard, I'd certainly suggest taking a look. Other places probably have similar tools, but I'm not sure how in depth they go. Vanguard's is pretty good.

Here is the current make-up of all of my retirement accounts.

* I am 34 years old
* My compensation is just under $100K
* I currently contribute 5% to my 401(k) and receive a 3% match.
* I intend to maximize my Roth IRA contribution in 2007.
* My total retirement portfolio consists of the following:
* 401(k) w/current employer (held at T. Rowe Price)
* 401(k) w/former employer (held at NYLife)
* Roth IRA (held at Vanguard)
* Rollover IRA (held at Vanguard)
* I currently own the following funds:
CURRENT 401(k)
Oakmark Interational I (OAKIX)
TRP Equity Index 500 (PREIX)
TRP Equity Income (PRFDX)
TRP Small-Cap Value (PRSVX)
TRP Mid-Cap Growth (RPMGX)
FORMER 401(k)
MainStay S&P 500 Index (MSXAX)
Davis NY Venture (NYVTX)
American Funds EuroPacific Growth (RERCX)
American Funds Growth Fund of America (RGACX)
Vanguard Target Retirement 2035 (VTTHX)
Vanguard Target Retirement 2035 (VTTHX)

My portfolio is currently allocated as follows:

U.S. Large-cap Stock - 57.1%
U.S. Mid-cap Stock - 17.1%
U.S. Small-cap Stock - 9.2%
Europe Stock - 8.7%
Pacific Stock - 4.8%
Canada Stock - 0.3%
Emerging Markets Stock - 2.1%
Long-term Bonds - 1.1%
Mid-term Bonds - 2.5%
Short-term Bonds - 3.0%

What do you think of this current allocation? I'm thinking (as I previously posted) of increasing my allocation to U.S. small caps or, perhaps, international. If I move 100% of my former 401(k) to the Vanguard Small Cap Index for example, my allocations would change as follows:

U.S. Large-cap Stock - 32.6% (-24.6)
U.S. Mid-cap Stock - 13.3% (no change)
U.S. Small-cap Stock - 35.6% (+28.5)
Europe Stock - 7.0% (-1.7)
Pacific Stock - 3.3% (-1.5)
Canada Stock - 0.0% (-0.3)
Emerging Markets Stock - 1.7% (-0.4)
Long-term Bonds - 1.1% (no change)
Mid-term Bonds - 2.5% (no change)
Short-term Bonds - 3.0% (no change)

The only aspect I don't like is that this scenario may overweight to U.S. small caps. It also takes nearly 4% away from international.

A second option is to move $10,000 to the Small Cap fund and the rest to VTTHX. This scenario would produce the following allocations:

U.S. Large-cap Stock - 37.0% (-20.2)
U.S. Mid-cap Stock - 19.1% (+1.8)
U.S. Small-cap Stock - 26.8% (+19.7)
Europe Stock - 8.0% (-0.8)
Pacific Stock - 3.8% (-1.0)
Canada Stock - 0.0% (-0.3)
Emerging Markets Stock - 1.9% (-0.1)
Long-term Bonds - 1.3% (+0.2)
Mid-term Bonds - 2.9% (+0.3)
Short-term Bonds - 3.4% (+0.4)

This scenario creates better U.S. stock allocations, but raises my allocation to bonds by nearly 1%.


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