My 401k allocation – September 2011

Managing finances effectively is an important part of a man’s responsibilities. If you can not support yourself and those in your care you are not living up to your potential.

The funds I need for short/mid term are mostly in liquid accounts right now earning practically nothing in interest. That’s ok because that is my emergency stash and the money is where it belongs based on my possible time horizon.

My 401k is where my current investment philosophy is best reflected. I like to manage my own future so do not follow the boiler plate recommended guidance. I tend to time things when I feel a broad move is in order but I typically wouldn’t do it with more than 50% of my portfolio since I am a long term bull and not hoarding gold and guns.

401k September 2011 % Breakdown

45% – Liquid Money Market Option

It has been earning nearly 4.5% per year but no I am not typically this conservative. I moved from fully invested near Dow 12,300 thinking it looked a bit overheated. It was up for a bit when I did this but overall the move has been a good one.

20% – S&P 500 Index

The actively managed SP 500 mirror under performs the index due to the higher fees so I decided to stick with the index and overall I am bullish long term (next 25-30 yrs) for S&P 500.

15% – Actively managed international fund

I do not believe international gives as much diversification as originally thought by others since markets seem to move together these days.  If I want true diversification at some point I will consider a commodity index fund.

10% – REIT fund

I started buying into the REIT fund due to the nice yields and so far they have performed very well for me.

5% each for mid cap/small cap index fund

Mid cap and small cap indexes were a bigger part of my portfolio before I moved more into cash and mid cap performed very well for me over the last year.

How are you managing your 401k asset mix?




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6 Responses to My 401k allocation – September 2011

  1. Big Bob says:

    Interesting breakdown.
    I do not actively manage my 401k so I follow the recommendations detailed from my employer’s plan.

    My international exposure is ~ 28% and small cap is 12%

  2. Paul S says:

    When do you think you will invest the rest of your cash?

    • MTK says:

      I do not have an exact range in mind but may buy in stages. Something like:

      10% DOW – 9500
      15% DOW – 8750
      20% – DOW 8250

  3. A.B. Dada says:

    Harry Browne opened my eyes using his Permanent Portfolio (this is back in 1997 or so?) and I’ve stuck to it pretty much 100% of the time:

    25% Cash
    25% Gold
    25% Bonds
    25% Dividend-bearing stocks

    Every year I adjust my portfolio to reflect a new 25% x 4 breakdown.

    The best return on investment is being debt free — not just financially, but peace of mind. That mortgage/college debt/credit card debt is killing most folks my age.

    • MTK says:

      That has been a pretty great mix for the last 10-15 yrs. Got a few questions for you:
      1. Is it pure cash or a money market type equivalent?
      My 401k has something called Stable Value which returns 4% every year and its slow and steady but has outperformed a lot over last 10 yrs vs other assets.

      2. Is the 25% gold a pure commodity fund or mix of gold stocks/funds?

      Agree with you 100% about debt being a burden. I got schooling paid for through a University employee benefit, and my undergrad from my own employer. I never keep credit card debt so my only debt is my mortgage and even at 4.5% or so its too big a portion of my take home pay.

  4. Jim B says:

    A. B. Dada found a great mentor. The main thing I learned from Browne, and the thing that makes it work decade after decade, is that gold, bonds, cash and stocks rarely ever go in the same direction at the same time.

    The rising tide raises all the other boats.

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