Thread: I fund how much is safe

You're probably a little light on the I fund. The I Fund is good for portfolio diversification because it non-correlates with the C&S Funds, i.e. often moves in the opposite direction and tends to smooth out your returns over time. Many experts recommend a 25% allocation to non-U.S. equities.

The Vanguard 2045 fund (designed for a person retiring in 2045) currently holds 70.8% total stock market (C&S Funds), 17.8 European/Pacific stock (I Fund), and 11% bonds (F Fund), and .4% cash. To date, it has returned 14.41% in 2004.

Note: my comments only apply to abuy-and-hold portfolio.

Anyone else think anything for this topic? I will be putting more in....ANYONE?:^

I agree that you should increase your allocation to the I fund. 25% seems reasonable over the long haul. But, you may want to consider that many around here (and elsewhere) think international stocks will have a very good year in 2005 as the dollar is expected to decline further. I am planning on keeping around 40-50% in I most of the time, at least until I see evidence that the dollar is rising. That being said keep in mind 1) I amnot an expert, and 2) I keep a pretty close eye on the market. If you just want to set an allocation then don't think about it, you may want to stick to the 20-30% range for the I fund.

mattdog240 wrote:

Anyone else think anything for this topic? I will be putting more in....ANYONE?:^

matt -
It's a tough call. I would say you want to be pretty aggressive since you have so many years to save. The I fund has done well the past two years and may do well again in the year or two, but it was the worst performing fund (G and F included) from 1994 to 2003. So if you buy and hold, which is what I assume you meant by "ride it out" you can expect lots of volatility with steep gains, and steep losses along the way.

That is one reason why I like to move my money around rather than stick with something in a long downtrend. But if I were a "buy and hold"er (which I'm not) I would put 10% to 30% in there depending on your tolerance forrisk.
Tom