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Posted by on June 13, 2007, 7:06 pm
Looking for someone to tell me what's wrong or right about this
picture.
>
> I recently used this "Morningstar X-Ray Analysis" feature on holdings
> across several institutions. Looking at top 90% of total investment, it
> shows me this:
>
> Percent Category YTD Return %
> of Tot
>
> 41 Cash
> 9 Large Blend 6
> 9 Large Growth 7
> 8 Foreign Large Growth 9
> 7 Intermediate-Term Bond 2
> 4 Large Growth 7
> 4 Large Value 7
> 4 Large Value 7
> 2 Europe Stock 11
> 2 Large Blend 8
>
> The cash is all in regular money market and CD's earning 5% interest,
> the rest is all mutual funds in IRA's (about 15% Roth, 85% traditional).
>
> Suppose for the next year the idea is to maintain roughly the status
> quo, although the cash percent could go down to maybe 35% and overall
> risk (growth potential) could go up a little. Tax bracket is currently
> 15% federal. Planning to convert maybe 5% of traditional IRA total to
> Roth IRA this year as long as it doesn't increase tax bracket.
>
> Is there any obvious way to juggle things around to reduce expenses or
> increase tax benefits?
>
> Would purchasing ETF's with either the cash or from within the IRA's (by
> selling mutual funds) have any particular advantage?
>
> For example, if there is going to be so much cash earning taxable
> interest, is there any point in also have money in a Trad. IRA bond fund?
>
> Does it cost more to have multiple funds in each category (for example,
> two "Large Blend", two "Large Growth", two "Large Value"?
>
> It says avg. mutual fund expense ratio is 0.69, then "expense ratio of
> similarly weighted hypothetical portfolio" is 1.35. What does this mean?
>
> TIA!
If you have 41% in Money Market you have way too much lazy money.
The Morningstar X-ray over-compartmentalizes but here's a simple
moderate-growth focus asset allocation plan
About 40% Large Cap (I like Value over Growth but that's me...Growth
should start doing better soon)
20% Mid-cap
10% Small Cap
20% Bond
10% Real estate
Keep enough cash in MMKT for emergency spending needs. If you have any
major expenses in next two years (wedding, school, vacation) put it in
a CD.
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