Personal Investments • Is psychology the only reason to not stick with 80-20 asset allocation?

...my retirement savings are invested in Vanguard’s target date 2045 fund. I’m thinking of switching to pure funds (US stock index, international stock index, and bond index) to have more control over the asset allocation

That's reasonable. I'd go even further to say it's preferable in order to meet your retirement saving/spending needs.

From what I’ve read, 83-17 is a very aggressive asset allocation for someone my age. (For instance, my age in bonds would suggest a roughly 55-45 allocation.) I took the Vanguard risk tolerance quiz and it also suggested an 80-20 allocation for me.

The main aspect these rules of thumb and Vanguard's quiz consider is your psychological ability to not capitulate and panic sell during a downturn.

That is important; however, I suggest you model how much money you will need in your portfolio during retirement to support your spending expectation and how your selected asset allocation makes achieving this more or less likely. Use these two tools to model this.
https://tpawplanner.com/
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viewtopic.php?t=120430

Statistics: Posted by dogagility — Sat Dec 14, 2024 10:52 am — Replies 42 — Views 2901

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