Personal Investments • Switching from TDFs to 100% equities at a young age

OP,

1) What is the size of your emergency fund?

I have 6 months of expenses covered

2) Are you lucky enough that you will not have any financial emergency that exceeded your emergency fund over 40 years?

3) Unless you can predict your future, how do you know that you are that lucky?

4) In a recession, many people will be unemployed and the stock and housing market crashes at the same time.

5) How do you know that you will not be unemployed in the coming recession?

6) It is not safe to be 100% stock even at a young age. Your portfolio is small and it will not take much unemployment in a recession to wipe you out.

7) Stay with your TDF. You have to survive in order to succeed.

These are all great points, again I have 26k in a TDF that will grow over the course of 40 years that will rebalance into a more conservative allocation, but through reading more articles on the topic, (namely https://www.whitecoatinvestor.com/100-stock-portfolio/) I've shifted away from 100% VTWAX going forward and instead am going towards 50% Vanguard TDF and 50% VTWAX.

That puts my asset allocation at roughly 95% stocks and bonds while I'm younger and shifts to be more conservative to 80/20 starting at 40, and continues growing more conservative going afterward.

I appreciate your point 7 of staying with my TDF, but does the approach above also make sense?

Statistics: Posted by grin — Sat May 04, 2024 7:37 am — Replies 24 — Views 1232

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