My asset allocation plan

I've been putting together an asset allocation plan for mine and Mrs. Dreamer's IRAs for a while now. We have a good amount socked away especially for investment, and it's best to make sure that your portfolio is balance all across the board.

First, my investment plan. I plan to take full advantage of any and all tax advantaged funds before opening a full brokerage account. Here's that plan: The idea is to start at the top, and contribute at the next level only if the previous level is maxed out.

1. 5% into 401(k) and TSP plans. The combination of tax savings and employee matching make these especially appealing. The 5% number keeps my tax bracket from accidentally crossing that borderline.
   
2. Roth IRAs. Both Mrs. Dreamer and I are very young (mid 20's), and the tax exempt growth is an unbeatable deal. Plus, putting after tax dollars in there is like putting an extra 15% on top of what I could have put from a traditional IRA. If our income ever breaks the income limit, we'd open a traditional IRA.
   
3. 529 plan. We don't have kids now, but we may in the future, and the earlier we start saving money for college, the better. We do have a niece whom we could give the money to if we decide not to have kids.
   
4. increase 401(k) and TSP up to 15%. If the day comes that I can max both Roth IRAs and have money left over, obviously I could be saving more in taxes from that money. 15% is the max for my 401(k)
   
5. increase TSP up to 100% (minus allotments). The max for TSP is 100%. I would need to determine how much would pay my SGLI (life insurance) and any other allotments, then contribute the rest to the tax deferred TSP.
   
6. Brokerage. If I've maxed all my retirement plans, tucked away money for college, and still have money to invest (wouldn't we all love that), THEN I'll look at a regular brokerage. Why pay capital gains and earnings taxes if you don't have to? If I ever reach this point, I'll gladly pay those taxes, but until then, I need every penny I can get.

Now, for the asset allocation plan. Much of the inspiration for my asset allocation comes from the investment advice provided at FundAdvice.com, combined with the advice of the investment advisors from USAA.

401(k): The 401(k) at my work just got a huge makeover, and it's much, much better. Before, there were no mid-cap or small-cap offerings, a majority of large-cap, some international, an S&P 500 index tracking fund, and some "balanced" (asset allocation) funds. They got rid of some of the large-cap in favor of a mid-cap value, mid-cap blend, and small cap value fund.

• 50% Fidelity International Discovery (FIGRX), International blended
  
• 10% Fidelity Equity Income (FEQIX, Large cap value
  
• 10% Fidelity US EQ Index Pool (no ticker), S&P 500 tracking fund, large cap blend
  
• 10% Columbia Acorn Z (ACRNX, Mid cap growth
  
• 15% Keeley Small Cap Value (KSCVX, Small cap value
  
• 5% Fidelity US Bond Index(FBIDX Intermediate Bonds

TSP: The TSP plan has a weird setup, but luckily, Paul Merriman had an artice about it that helped. Both Mrs Dreamer and I have a TSP account.

• Dreamer
  
  • 30% C fund (S&P 500 index)
    
  • 30% S fund (Wilshire 4500 index. Combining the S and C funds invests in the top 5000 companies in the US as a whole)
    
  • 40% I fund (International fund)
  
  
• Mrs. Dreamer
  
  • 10% F fund (Fixed income fund, tracks Lehman Brothers U.S. Aggregate bond index)
    
  • 10% G fund (special treasury securities specifically made for the TSP)
    
  • 24% C fund
    
  • 24% S fund
    
  • 32% I fund

Roth IRAs: For the purposes of asset allocation, both mine and Mrs Dreamer IRAs are included in the plan. This is the plan for overall funds we will hold.

• 10% Vanguard 500 Index (VFINX), Large cap blend
  
• 10% Vanguard Value Index (VIVAX), Large cap value
  
• 10% Vanguard Small Cap Index (NAESX), Small cap blend
  
• 10% Vanguard Small Cap Value (VISVX), Small cap value
  
• 10% Vanguard REIT Index (VGSIX), Real Estate Investment Trust (REIT)
  
• 10% Vanguard Vanguard Developed Markets Index (VDMIX), International large cap blend
  
• 10% Vanguard International Value (VTRIX), International large cap value
  
• 10% Vanguard Emerging Market Index (VEIEX), Emerging markets
  
• 10% Tocqueville International Value (TIVFX), International small cap value
  
• 10% T. Rowe Price International Discovery (PRIDX)

, International small cap growth

I estimate it will take about 5-6 years to set up this asset allocation plan. Once it's up though, I will only need to rebalance occasionally, and let the diversification work for me. Plus, once all the funds have their initial investment ($3000), I can either use dollar cost averaging for my remaining contributions until retirement, or use the yearly contribution to rebalance, depending on if I have the cash available all at once, or over a period.