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Lazy Retirement ETF Portfolio

pogingolsen
New Visitor

Lazy Retirement ETF Portfolio

Hi All, I'm 39 years old. I have around 20k in Roth IRA and Brokerage account and 60k in 401k. I have started getting aggressive in investing and I have already maxed out my 401k at $19500. In my Roth IRA account, I'm looking to have a simple yet effective portfolio of ETFs. Here's what I'm thinking.

 

SPLG - 85%
SPMD - 10%
SPSM - 5%

 

My reasoning here is that I want to have a very minimal expense ratio and at the same time, being diversified. Then I am not looking to invest internationally since I don't quite like the expense ratio being at around .10% above. My game plan is every month, I will just put $500 to this Roth IRA with that allocation.

 

Does any have an idea for any drawback regarding this approach?

Message 1 of 5
4 REPLIES 4
iced
Valued Contributor

Re: Lazy Retirement ETF Portfolio


@pogingolsen wrote:

Hi All, I'm 39 years old. I have around 20k in Roth IRA and Brokerage account and 60k in 401k. I have started getting aggressive in investing and I have already maxed out my 401k at $19500. In my Roth IRA account, I'm looking to have a simple yet effective portfolio of ETFs. Here's what I'm thinking.

 

SPLG - 85%
SPMD - 10%
SPSM - 5%

 

My reasoning here is that I want to have a very minimal expense ratio and at the same time, being diversified. Then I am not looking to invest internationally since I don't quite like the expense ratio being at around .10% above. My game plan is every month, I will just put $500 to this Roth IRA with that allocation.

 

Does any have an idea for any drawback regarding this approach?


The biggest drawbacks I see you've already touched on -- you're 100% domestic stock. As your tolerance goes up, you can always add international. One REIT wouldn't be the worst thing in the world, but again your portfolio is still small and young and you have time to adjust and tune things.

 

One might also argue that, with the timelines you're looking to save, you can also be a little less heavy in large cap. The big-risk-big-reward plays of tomorrow are in today's small/mid cap markets and by staying heavy in large cap you're basically waiting for them to bust out before buying in. If I was only picking three general ETFs for a 25-year plan, I'd probably go 55/30/15 large/medium/small.

Message 2 of 5
Rjhartl
New Member

Re: Lazy Retirement ETF Portfolio

My recommendation is that you go 100% into an S&P 500 until you get much closer to retirement. My philosophy is "Concentrate for growth, diversify for safety". At 39 years old, it'll be a while before you can touch it, anyway. So focus on growth. Whatever's growing the fastest. US growth stocks, small cap value stocks, foreign stocks, emerging markets, whatever. But if you're being lazy, you can't go wrong with the US S&P. Maybe around 50-55ish, I'd go back over it and start spreading it around to diversify to 1) Lose the least possible and 2) Cover the spread wherever rates are growing. 

Message 3 of 5
PullingMeSoftly
Established Contributor

Re: Lazy Retirement ETF Portfolio

@pogingolsen You could simplify and just go with a total market index 80% and international 20%, instead of separating S&P 500 and mid/small caps.

 

Although I prefer mutual funds instead of etf's in a Roth, my allocation is:

FXAIX (S&P 500) 50%

FSMAX (Extended Market) 30%

FTIHX (Total International Index) 20%

 

Even though FSMAX allows me to dial up the mid/smalls, I'll likely switch to FSKAX total market for simplicity to not have to worry about rebalancing, etc.

 









Message 4 of 5
pogingolsen
New Visitor

Re: Lazy Retirement ETF Portfolio

Thank you every one for your replies! 

Message 5 of 5
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