Managing My Asset Allocation between Different Accounts

Saturday, August 22, 2009 |

In term of asset allocation, the ideal thing is to have your asset allocation from your different accounts to reflect the true asset allocation. But it is a hard thing to do when you have to deal with 401k, 403b or 457 accounts that have limited selection. This discussion is trigger by the article on - When your 401(k) plan doesn't have everything you need.

We have four different accounts where we invest our money

  • Joint Vanguard Taxable account
  • His Vanguard Roth IRA account
  • Her Vanguard Roth IRA account
  • His 457b Retirement account

I decided that I am going to look at each account separately and handle it that way. It is not ideal solution, but I think I still can get good diversification without over complicating my asset allocation. I modified slightly from suggested Vanguard Portfolio. Here is my target asset allocation for each account:

Joint Vanguard Taxable Account

FundAsset ClassPercentage
Vanguard Tax Managed G&ILCB15%
Vanguard Value IndexLCV15%
Vanguard Tax Managed Small Cap IndexSCB15%
Vanguard Small Cap Value IndexSCV15%
Vanguard Tax Managed InternationalIntl LCB10%
Vanguard International Value IndexIntl LCV10%
Vanguard FTSE All-World ex-US Small-Cap Index FundIntl SCB10%
Vanguard Emerging Markets Stock IndexEM10%

For our joint taxable account, we invest in 60% US and 40% International. Yes, for some people, this is quite a lot of international equities. suggestion is actually 50-50 US-International. I feel comfortable with 60-40 US-International split. Again, remember that I am not financial expert and I do not even consult with financial professional for this asset allocation.

His or Her Roth IRA

FundAsset ClassPercentage
Vanguard 500 IndexLCB8.40%%
Vanguard Value IndexLCV8.40%
Vanguard Small Cap IndexSCB8.40%
Vanguard Small Cap Value IndexSCV8.40%
Vanguard Developed Market IndexIntl LCB7%
Vanguard International Value IndexIntl LCV7%
Vanguard FTSE All-World ex-US Small-Cap Index FundIntl SCB7%
Vanguard Emerging Markets Stock IndexEM7%
Vanguard Short Term TreasuryBond9%
Vanguard Intermediate Term TreasuryBond15%
Vanguard TIPSBond6%

Similar to Joint Taxable Account, we have 60-40 US-International split on the equity portion. And fixed income portion of our allocation total to 30%. This may seems high for someone in early 30s, but since we don't have any bonds outside our Roth IRA, from our total investments, our bonds allocation is actually rather small, around 15%.

His 457b Account

FundAsset ClassPercentage
Stock Index FundLCB30%
Extended Market FundMCB & SCB18%
EAFE Equity Index FundIntl LCB32%
Aggregate Bond Index FundBond20%

For my 457b account, as expected, the option is limited. There are other options available, but I feel this allocations is the best for me. I could have increase my extended market fund and decrease my stock index fund, thus moving toward my preference of small cap and value fund. However, I don't feel comfortable with that option for this account and funds selection. Also, you will notice 60-40 US-International split for the equity portion.


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