With the closing of my old 401k plan and the purchase of BRKB, I’ve had to rethink my entire portfolio allocation.
I was overexposed to international stuff before, like 50+% of the old 401k plan. The remaining money was in either an S&P500 index fund or a domestic large cap fund. Either way, all of it stank up the universe for the first half of 2008.
Now that my money is in BRKB, a US large cap company, I need to rethink where my money is going in my current 401k.
Currently, it’s about $4K since I started with my company in January. I’m not maxing out my contributions since I’m trying to pay down my credit card debt at the moment. That $4K is half in international funds, 10% company stock fund, 5% REIT, 5% dividend growth fund, and 5 and 10% slices to some international region specific funds, and some actively managed funds that I wouldn’t normally be able to buy since I don’t meet the minimum account balance. (But my 401k plan is large enough that they let us buy it anyway.)
Now that I’m completely out of an S&P index fund, and I don’t have an S&P500 specific fund, I’m now putting 40% of my ongoing contribution to a total stock market fund. I am also starting to put 5% of my post-tax salary into an employee stock purchasing plan which gets me a 5% discount. I don’t feel the need to stop buying into the stock fund as that is tax-sheltered. I will rethink that if my total company stock holdings are more than 10% of my entire investment portfolio, but that won’t be for a few years anyway.
Along with those two domestic stock investments, I am still putting 5% into a REIT and dividend fund, and small 5 and 10% slices to the same small places as before.
It’s not the most scientific way of doing things, but I’m ok with lots of risk.
The only cash I’m holding is in my rollover IRA for whatever was left over after buying the Berkshire shares and I’ll probably just sit on it till I find something else that’s good to buy.
One other thing I’ve noticed is that I’ve crossed the threshold mark of having over $25K in assets with one investment house. It doesn’t really gain me a whole lot since I don’t have enough to get a break on commissions, but if I was an active trader it would. (Which I’m really not. Like 5 trades a year.)
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About 50% of global stock market capitalization and 75%+ of economic activity is outside the US, so what’s the problem with allocating 50% ish to international stocks? Seems that now you are very overweight to the US? Which makes sense if you think the US will now bounce back after relative underperformance in recent years. (I’m extremely overweight to Australia so there’s nothing neccessarily wrong wih your new plan).
Nice strategy! I’m more of a buy it and leave it alone type though. We’ll see the market above 14k one day I’m sure.
I’m trying to decide on a new vanguard savings fund though soon