Creating and Implementing Your Investment Strategy – Part 5 – Determine Your Specific Mix of Equity Investments

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In Part 4 of this series, you were able to determine the %’s of international and US domestic investments that will make up the equity portion of your investment portfolio.
In this, Part 5, of this series, we will take a look at how funds should be further divided up within these broad domestic and international equity categories. 
Note: The numbers/strategy shown below is a mesh of the advice of the four books (all of which I would highly recommend reading) show below:
Additionally, the % breakdowns in the table correspond to a 70% domestic / 30% international split for the equity portion of your portfolio. Depending on the results that you were most comfortable with in Part 4, the %’s may need to be adjusted slightly.
Decision 2 – Determining Your Specific Mix of US Domestic Investments

The table below shows the recommended breakdown and categories of mutual fund investments needed to make up the domestic portion of your equity portfolio. I have also, for your convenience, listed the corresponding Vanguard index mutual funds that can be bought for your portfolio if you choose.

To find the overall percentages of your portfolio that each fund should contribute, simply multiply your overal equity allocation % (70% in this example) by the % allocation of the equity portion of your portfolio. This multiplication can be done to all of the funds with the exception of the REIT portion, which needs to make up 10-15% of your overall portfolio, increasing as you age.

Decision 3 – Determining Your Specific Mix of International Investments

The table below shows the recommended components to make up the international portion of your equity portfolio, based on a 30% international / 70% domestic equity split. It should be noted that in several of the books I referenced above, they suggest purchasing Large cap value, small cap, and small cap value international funds as well.

However, since these funds are not readily accessible through Fidelity and Vanguard, I avoid them (they are only available through DFA Fund Advisors).

In place of these categories, I use a Total International Stock Fund offered with low management fees through Vanguard.

You now have all of the technical tools needed to create your investment strategy. In Part 6 of this series, we will walk through putting all of the pieces together and finalizing your strategy!

Keep on learning!


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About the Author Jacob A Irwin

Hi folks! My name is Jacob. I am the owner and operator of My Personal Finance Journey. I started this blog in January of 2010 and have enjoyed the journey ever since. Since finishing up graduate school in Virginia in 2014, I have been working in biopharmaceutical development in Colorado. You can read more about me and this site here​. Please contact me if you have any questions!

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1 comment
Perdigón says July 21, 2015

Sorry, but I can´t see the mentioned table. Is it in another place?

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