After signing up for the Ohio state sponsored 529 plan, I faced another decision. How would I allocate the money that I am investing each month? I wanted to choose index type funds for their low expense ratios and diversified approach, but I also wanted to be sure I had exposure in more than one market segment. For me, I’ve found that I’m most comfortable with exposure in the large cap, small cap and international areas. At this point, my daughter is only three so I have taken an aggressive approach to her investments. Here are the funds that I chose:
Vanguard Aggressive Growth index Portfolio
- Vanguard Total Stock Market Index Fund
- Vanguard Institutional Developed Markets Index Fund
Vanguard Developed Markets International Stock Index Option
- Vanguard European Stock Index Fund
- Vanguard Pacific Stock Index Fund
Vanguard Extended Market Index Option
- (Small and medium size US companies)
Here are some details about these funds in a .pdf format
After further review, I think I might have a bit too much exposure internationally, but I’ll probably let it go for awhile and see how things go. As a percentage of our total investment portfolio, our international exposure is pretty low. I just want to be sure that I have adequate funds in this account by the time my daughter goes to college.
I have the same 3 funds in roughly 1/3rd ratios.
And no, it’s not too high of an international stake. 50% domestic, 50% international is probably the optimal blend. Domestic and developed-international have roughly the same returns and risk/volatility. Add the two together and you have roughly the same returns with lower volatility. Why not do 50:50 then? Well I also overweight to Mid/Small (Extended Market) to capture the higher returns of smaller cap stocks. If they had an International Mid/Small option, then I would do 25% each of domestic large, domestic mid/small, intl large, intl mid/small.
Thanks for the info MossySF. It sounds like I’m pretty well covered then!