May 27

Set It and Forget It - Almost

Tag: Beginning Investors, Portfolio Construction — Physlab @ 5:00 am

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If you are looking for a portfolio where you can “Set It and Forget It,” the recommendations below are about as close as you can get to accomplishing this goal. Here are the ETFs to consider.

  • VTI - 40% Total Stock Market Index
  • VEU - 35% All World ex. US Index
  • VWO - 15% Emerging Market Index
  • BND - 10% Total Bond Index

You might want to adjust the percentages for these four ETFs to match your situation. Whatever percentages you set, then apply the 35% limits discussed in an earlier post. Rebalance when an asset class is out of balance. Otherwise, do nothing.

Lowell Herr

Photograph: Afternoon sun off coast of Italy.

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7 Responses to “Set It and Forget It - Almost”

  1. nkaufman says:
    May 28th, 2008 at 5:42 am

    Lowell,
    VEU , Vanguard’s All World Index, has a certain amount of emerging market stocks (around 18% as I recall) in its basket of stocks. Do you account for that when you suggest an VWO (emerging markets) allocation of 15%? Also, in your spreadsheets, how do you account for VEU’s emerging markets portion?

    Thanks,
    Norm

  2. Physlab says:
    May 28th, 2008 at 8:51 am

    Norm,

    I do not use the All-World Index. Instead, I use VWO and EEM for emerging markets and VEU and EFA for the developed international markets.

    In the AA-Mosaic.xls spreadsheet, you will see a specific designation and allocation for emerging markets. You will find that in both the Holdings and Dashboard worksheets.

    Lowell

  3. nkaufman says:
    May 28th, 2008 at 2:47 pm

    >>Instead, I use VWO and EEM for emerging markets and VEU and EFA for the developed international markets<<
    Lowell,
    That was the question. VEU is more than just the developed international markets. Approximately 1/5th of it is emerging markets.

    Norm

  4. Physlab says:
    May 29th, 2008 at 6:26 am

    Norm,

    I don’t worry about VEU overlapping into the emerging market. If it is a concern, then one can reduce the percentage allocated to emerging markets.

    Lowell

  5. SoccerTaco says:
    May 29th, 2008 at 9:00 am

    >>Whatever percentages you set, then apply the 35% limits discussed in an earlier post.

    Lowell,

    I was not able to find the earlier post discussing the 35% limits. Do you know what day that blog entry was made?

    Thanks,
    Steve

  6. Physlab says:
    May 29th, 2008 at 1:21 pm

    “I was not able to find the earlier post discussing the 35% limits. Do you know what day that blog entry was made?”

    Steve,

    I’ve been working hard to get the Premium Content working on the blog. The 35% limit post is coming in a few days as I thought it might fit better as Premium material.

    Lowell

  7. Physlab says:
    May 29th, 2008 at 2:23 pm

    Steve,

    You will now find the 35% limit discussion on both Part I and Part II of the blog.

    Lowell

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