Comments on: Kiplinger’s Simple Long-Term Portfolio

By: Greg Retzloff

Greg Retzloff — Tue, 04 Nov 2008 22:48:25 +0000

With hindsight as of Nov. 4, 2008: All of these funds, with the exception of VGSIX, are relatively well-correlated. This portfolio needs more diversification. Remember that excessive downside portfolio volatility resulting overly-correlated assets will hurt long-term performance.
No exposure to intermediate bonds and short-term debt (money market or Treasury) is a BIG mistake, even in a longer term portfolio. A 15% exposure to these categories could both limit downside volatility and increse returns in the long run. Add 10% of Vanguard’s VBMFX and 5% VFISX at the expense of the equity portion. Try it yourself using Morningstar’s Portfolio Manager.

By: JEFF

JEFF — Tue, 26 Feb 2008 01:40:29 +0000

why not consider one of Vanguard’s target retirement funds?….theyve been often criticized for being too conservative…..thus, even though my expected retirement year is 2030, i invest in the Target Retirement 2040 fund, which gives me slightly more exposure to stocks vs the 2030 fund…

By: Chuck

Chuck — Sat, 23 Feb 2008 15:10:16 +0000

Though technically not a load, there is a 0.5% “Purchase Fee” associated with the Vanguard Emerging Market Stock Fund. It is paid directly to the fund according to Vanguard’s web site.

By: traineeinvestor

traineeinvestor — Sat, 23 Feb 2008 14:45:10 +0000

I would also query the use of an all stock portfolio. An allocation to bonds has been mentioned above. The other thing that is worth considering is an allocation to commodities through one of the ETFs (or similar) that track a basket of commodities.

By: JLP

JLP — Sat, 23 Feb 2008 01:14:04 +0000

Ryan,

Sorry if I was unclear.

When you go from an all-stock portfolio to the Vanguard STAR Fund, the STAR Fund does look conservative:

By: Ryan

Ryan — Sat, 23 Feb 2008 00:07:26 +0000

Shiwala, if you want to buy in a $3k min fund at 5% of your portfolio, you need a total portfolio of (3,000/.05)= 60k.

You can half the buy in by simply buying an int’l index instead of slicing and dicing the int’l to large cap and EM.

JLP, for a financial advisor, you really don’t define your terms. Vanguard STAR is conservative? For whom? A 20 year old investing for retirement? Probably. But the requisite “10 year time period” doesn’t mean a balanced fund is too conservative.

By: Fred

Fred — Fri, 22 Feb 2008 23:50:20 +0000

I guess the other question is why Kiplinger thinks an all-stock portfolio is appropriate for a 10-year horizon as opposed to one that includes some bonds. I’m not saying it’s wrong to go all-stock, I’d just like to understand the reasoning behind it.

By: shiwala

shiwala — Fri, 22 Feb 2008 23:21:12 +0000

Where do you get a required minimum of $60K to start if each of the funds only requires 3K? I rolled my 401K from my last job into three Vanguard funds (that’s all I could afford with the 3K minimums). I chose the 500 index, small-cap domestic, and mid-cap domestic and spread my money equally into each without really knowing what the heck I was doing. I’m young, so I was fine with the 100% stock mix. Would it be worth it for me to sell the mid cap domestic and get the international fund instead or should I just let it ride for now and buy into the international fund at a later time?

By: Requisite

Requisite — Fri, 22 Feb 2008 23:15:40 +0000

It seems a little heavy both on domestic stocks and REITs; I would’ve expected emering markets to be closer to 10% or 20%, and domestic stocks/REITS to be lower.

By: JLP

JLP — Fri, 22 Feb 2008 20:40:43 +0000

Jason,

Actually, I added that intro text after you asked your question. I meant to add the intro but forgot to.

Anyway, sorry for the confusion.