What are you invested in? Target date funds, ETFs, individual stocks? Do you think of your portfolio as aggressive, neutral, or conservative?
It occured to me the other day in a discussion about lifestyle creep that a lot of discussions about retirement assume you earn at the 10- or 20-year historical average returns of the S&P500, but it would be very unusual to be 100% in the S&P500 for your entire working life. So, the effect of small changes in cash infusions (i.e. splurging on large but infrequent purchases) is lessened when you consider that most people will be invested more conservatively and real returns will be lower.
So what do you have setup?
Currently about 70% of my retirement account value is in a 401k, which is 100% in FFLDX, a Fidelity target retirement 2055 fund. I’m not as pleased with the returns on this. It says I’m up 11% 1Y but I frankly don’t believe it because it’s worth barely more than the cash that’s been put in to it in that time. Our fund picks for our 401k are kind of crap. The other 30% account value is in a Roth IRA, which I have distributed as:
55% FXAIX (FID S&P 500 ETF)
20% FSPSX (FID international ETF)
15% FSMAX (FID domestic whole market ETF)
10% FXNAX (FID bond ETF)
I would consider this overall rather neutral, maybe even conservative considering my age (31). What do you think?
More or less:
My only bonds are in my efund, which makes my portfolio quite aggressive.
So mine looks pretty similar to yours, but I have a little more international and no bonds. I’m guessing our portfolios perform similarly.
Edit: tax strategy
My after tax accounts are in international funds for the foreign tax credit, my Roth accounts are in US stocks (highest expected growth), and my pre-tax accounts fill in the gaps.
I don’t make enough to max 401k + Roth but if I ever get there I’ll have to remember the foreign vs. domestic note. From reading this thread I think I definitely need to phase out contributing to bonds for a while.
Bonds should reflect your risk tolerance and time horizon to retirement. The closer you are to retirement or the more nervous you’d get if the market has a significant downturn (say, >30% losses in a single year), the more bonds you should have.