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<blockquote data-quote="mountaingoat" data-source="post: 493372" data-attributes="member: 1250"><p>All good advice. With a 30-40 year time horizon, my suggestion would be to go 100% equities. 25% each in Large-Cap Index, Small-Cap Index, Mid-Cap Index, and International Index. Rebalancing at least once a year forces you to sell your good performers and buy the not-as-good performers. Each Index rises at a different pace and by rebalancing, you are locking in your gains with one fund and purchasing the others that have not risen as much.</p><p></p><p>Another thing to think about - you mentioned that you planned to purchase a house. That goal has a different time horizon than your retirement. Since you mentioned mid-20's as your age, let us assume that you will be purchasing in your early 30's, which would give you about a 5-6 year horizon. And, you do not want to be as risky with that shorter timeframe as you would be with your retirement. For this goal, I would suggest a bond fund that is less risky than equities, and will return you 3-4%. </p><p></p><p>Also remember that with the house, the more money that you put down initially, the less that you will pay in interest over time. Aim for at least 20% down so that you avoid PMI (it's an insurance payment if you have <20% down) when you purchase your house.</p></blockquote><p></p>
[QUOTE="mountaingoat, post: 493372, member: 1250"] All good advice. With a 30-40 year time horizon, my suggestion would be to go 100% equities. 25% each in Large-Cap Index, Small-Cap Index, Mid-Cap Index, and International Index. Rebalancing at least once a year forces you to sell your good performers and buy the not-as-good performers. Each Index rises at a different pace and by rebalancing, you are locking in your gains with one fund and purchasing the others that have not risen as much. Another thing to think about - you mentioned that you planned to purchase a house. That goal has a different time horizon than your retirement. Since you mentioned mid-20's as your age, let us assume that you will be purchasing in your early 30's, which would give you about a 5-6 year horizon. And, you do not want to be as risky with that shorter timeframe as you would be with your retirement. For this goal, I would suggest a bond fund that is less risky than equities, and will return you 3-4%. Also remember that with the house, the more money that you put down initially, the less that you will pay in interest over time. Aim for at least 20% down so that you avoid PMI (it's an insurance payment if you have <20% down) when you purchase your house. [/QUOTE]
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