Rebalancing my portfolio

You'd think a that finance professor would be monitoring his portfolio daily... however this prof usually has better things to do.  That said, I have to admit that I've been neglecting my portfolio.  But tonight I did a thorough bit of house keeping.  I also learned a few things along the way.

Like most academics my retirement money is with TIAA-CREF, although the basic ideas are the same regardless of provider.

I have two primary goals - first to get all expenses ratios to be under 10 bp or 0.1%, and second to rebalance to 80% equities, 20% bonds.   The first goal is no brainer.  The second goal will either seem horribly aggressive or way too conservative depending on your perspective.  



Here's what I found.

1. Some fees are surprisingly high
I discovered that I had quite a few funds in my account that had expense ratios of 0.40-0.50%.  But there are options in the plan that have expense ratios of less than 0.1%.   What was I thinking!!!   It might seem small, but cutting 0.3% from my expense ratios is a non-trivial amount.  I won't share the details, but let's just say that it would pay for dining out every week of the year.

2. The choices are not the same across plans
I have four plans.  Two from my prior employer and two from my current employer.  For both employers there is an optional plan and the main plan.  The optional plans have much more choice.  For example they contain bond index funds and international index funds.   The main plans have limited choices.

3. I needed to rebalance
I only had 3% in bonds - because I haven't rebalanced in years.  Therefore I rebalanced my current portfolio as follows:
S&P 500 Index TISPX 50%
Bond Index TIBFX 20%
International Index TCIEX 16%
Small Cap Index TISBX 14%

Because of the differing choices across the plans, these rebalancings can't be done evenly.  For example, one plan was rebalanced entirely into bonds because it was a plan that offered the low cost bond index fund.

4. I needed to change future allocations
I set up my future contributions as follows:
S&P 500 Index TISPX 50%
Bond Index TIBFX 15%
International Index  TCIEX 15%
Small Cap Index TISBX 20%

This isn't ideal - I'd like more in international, but the main plan from my employer doesn't offer the international index fund.  So I have to use the 403(b) - which is a smaller contribution.

Conclusion.

Grab a beer, glass of wine or your choice of beverage, sit down with a spreadsheet and take time to do a thorough inventory of your retirement portfolio.  Don't get hung up on choosing funds, instead focus on low cost funds that will deliver your desired stock/bond mix.

Note: despite my goal of getting all fees below 0.1%, I note that TIBFX has an expense ratio of 0.3%.