No. of Recommendations: 0
IMHO the targeted funds tend to be way too conservative. I plan on my IRA's being 100% in stocks until about 15 years before I retire. Even the crash didn't hurt my index funds too bad because I was dollar cost averaging through it so very little of my index funds were purchased nears the highs. (Yes it would have been nice to have cashed out at the top!)

Some of the literature that I've seen says that you should plan as if you will live into your 90's. It is not unreasonable to expect money in the stock market to, on average, double (after inflation) every ten years or so. This would mean that a dollar invested in the stock market today might be worth around 64(inflation adjusted) dollars in 70 years when you are in your 90's. If you are lucky a bond find might double (after inflation) in something like 20 years. The same dollar may have only doubled four times in a bond fund after 70 years and be worth around 8 dollars. Compounding is great!

If you want some diversification from just owning corporate stocks you might check out the Vanguard REIT Index fund to get some real estate exposure instead of the bonds.

When your are deciding how to allocate your investments just remember that a large percentage of the large cap stocks earning cone from their foreign operations and sales. As I recall about 30% of the S&P 500 earning come from international sources so it is possible to end up having a high foreign exposure unintentionally.

Until you have a large amount in your IRA just investing in the total stock market index fund would be a reasonable thing to do and you wouldn't have to worry about rebalancing it each year.

Don't get me wrong, on a scale of one to ten of what 20 year olds are doing for financial planning you are right at the top.

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