I'm new to Bogleheads, so thanks for having me!
I additionally have a small but significant-for-me portfolio of cryptocurrency, which I have held over the past few years.
I have a high tolerance to risk in the form of short-term variance (see crypto), but this is my retirement account, so I want to make sure my choices make sense over the long term. My thinking with the setup above is to tilt small and foreign, in the hopes of catching greater long-term growth in those areas. Here are my questions for the bogleheads!
Does my execution of this idea make sense, or am I leaning too far into the riskier categories?
Would you recommend different allocations, or different funds that better suit moderately aggressive long-term growth?
What funds should I consider for international bond exposure?
Thank you so much for reading--I'd love to hear any input you might have! I'm pretty new to all this, and looking to learn more.
Last edited by pinecamp on Tue Sep 12, 2017 8:52 pm, edited 1 time in total.
From my perspective, your choices and allocations make sense. I can understand wanting a little bit of small cap tilt and a little bit of emerging markets, especially at a young age. I don't know much about the Schwab ETF's but I am going to assume they are low fee ETF's.
You're not going to get much feedback unless you list the fund names & expense ratios.
Not many people have memorized the thousands of mutual fund symbols yet.
I'm still working on the 10-15 Vanguard mutual funds symbols in my Roth IRA, Rollover IRA & taxable accounts.
Thanks so much for saying so--I've fixed the OP!
Bogleheads have yet to embrace intl bonds, so many would say zero in that category. Vanguard likes them a lot, but who is right remains to be seen.
If you wanted to make it easy on yourself you could probably just go "all-in" with one of Schwab's newer Target Index Funds. They're comprised of most all the Schwab ETFs you list. Since you're in your mid-20s, you could start with either the 2055 fund (SWYJX) or the 2060 fund (SWYNX). ER is 0.08%. This early on, the glide path looks to be about 90/10. I bet it would accomplish most of what you want with far fewer mouse clicks, plus since it's a mutual fund, you could set up automatic transfers - if you wanted.
My choices at Schwab are not too different from yours (allocation is, I'm retired). I went with ITOT instead of SCHB, and have not gone into international small cap.
I ended up going with PCY because it had a slightly higher YTM (4.95%) a B+ rating and is on Schwab select list so you get free trading.
If I were in my 20's ... Sorry lost my train of thought, oh yeah, I would lean towards picking a target index fund mentioned by investor997.
The rule here is we have to be nice to newbies or else.
No comments on that. See above.
I have a high tolerance to risk in the form of short-term variance (see crypto), but this is my retirement account, so I want to make sure my choices make sense over the long term. My thinking with the setup above is to tilt small and foreign, in the hopes of catching greater long-term growth in those areas.
You aren't tilted to foreign. You are tilted US which is at high valuations and has lower "expected" returns than international.
That said, US equites have positive "expected" real returns so don't hesitate to buy them. International stocks have higher "expected" returns because the market prices them that way for whatever reasons.
I don't view your equities as being too risky. Some will argue high valuation make US equities riskier. Other quote Bogle as saying international "NO!".
I put a calculator for Schwab ETFs here. https://docs.google.com/spreadsheets/d/ ... sp=sharing . anyone can edit the page, so log in to a google account and make your own copy if you want to use it. Sometimes Morninstar updates there pages and it stops working temporarily or they change their format and I have to notice and change the page though.
Another option is to go down the rabbit hole of factor investing and use value funds such as FNDC, FNDE, FNDA instead of SCHC, SCHE, and SCHA. But that really is a rabbit hole and if you are lucky maybe it will make a difference after a decade or so of underperformance. No guarantees. None.
There are strong differences here about how much international to hold and whether to go straight market cap or to tilt (even if only to small). Just pick a reasonable low cost index fund allocation and save money.
The target index funds are a great option too.
Local currency emerging market bonds have done well and many believe will continue to do so. Hedged International bonds seems similar to US ones except that inflation and rate hikes will be at a different timing from US ones, so you can have less volatility than being US bond only. No advice here really.
Anyway, I am thinking about moving $65k US holdings to emerging markets, and get close to global market capitilization for the US with an overweight on emerging markets. I couldn't imagine putting money in bitcoin though. Who is right? No idea.
Note: "expected" doesn't mean that things are guaranteed to turn out that way. It could very well not be the case.
I know Boglehead have had issues with SWAGX in the past so there are some concerns about SCHZ. Consider SCHR to replace the international bonds and/or some portion of SCHZ.
Thanks for the insight, everybody. After looking more closely at the target date funds, I realized they're allocated with a similar approach to my own--and probably with better reasons. I'll start off keeping things simple with SWYJX. Thank you all very much!