We know your age (30), which tends towards a more aggressive stock concentration (often 80% or more), but we don’t know your risk-tolerance (typically posters have to do an exercise or two to figure this out for themselves). Subsequently nobody on this board should say that your allocations look good or bad for you, since none of us know your risk-tolerance.
You kind of listed a desired/target asset allocation when you said “I am looking to do a 35% US/35% International/25% bonds/5% cash”, but then you said “I can be convinced that my bond allocation is too high.” Nobody should be trying to convince you that your AA is right or wrong; you need to figure that out for yourself as it’s related to your personal risk-tolerance. I would suggest you verify the AA listed above is right for you by doing one or both of the exercises below.
Control Your Risk
1) Read the Wiki article for Assessing Risk Tolerance, take the Vanguard Investor Questionnaire, then tailor the asset allocation (AA) that was recommended by the quiz based on your knowledge of your personal risk tolerance having read the Wiki article.
2) Alternatively (or in addition to), ask “How much of a drop in portfolio value as a % of total value can I handle?” cut that % in half to get standard deviation, then lookup that std. dev. on the X-Axis of the chart below, and finally scan up to see what AA that corresponds to. As an example, if you can only stomach a -24% drop in portfolio value, that’s a ±12% std. dev, which corresponds to an AA of 60/40. The return you get is an average and you’ll get what you get with your unique sequence of returns (there’s a lot of variance in outcomes due to the associated volatility of stocks so it probably will NOT be the average, but something more or less).
a. For a long time-frame (>10 years) AAs below 20% stock are dominated (red dots) by another AA with similar risk but higher reward (blue dots).
b. The dotted line represents a hypothetical linear risk-reward from 100% stocks down to 100% bonds; the historical risk-reward curve has an improvement for risk-adjusted return due to the lack of correlation between stocks & bonds.
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If that AA you listed actually turns out to be appropriate for you, then here’s an example layout of the 3-Fund Portfolio that adheres to Tax-Efficient Fund Placement and also avoids Wash Sales might look like this (these ETFs could be swapped for similar ETFs or mutual funds based on whatever funds/ETFs you prefer or have available):
Edit: I forgot the $11K of I-Bonds in Taxable, but you should be able to figure out how to add that in (and move some bonds in 401k to cash, and move some cash in Taxable to VTI & VEA).
If it turns out that your AA is different from the target you originally listed it should be fairly easy for you to adjust the proposed layout above using the template below.
A template spreadsheet (not your data) to help with asset allocation assessment and rebalance planning is linked below. Make a copy in your local GoogleSheets space to edit (or download to your local machine if you have Excel). It should only take about 10-20 minutes once a year to update your balances and plan a shuffle among funds if any deltas are off by more than ±5% (or whatever your personal rebalance threshold is).
Asset Allocation Sheet
