FINALLY decided on a portfolio.

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FINALLY decided on a portfolio.

Postby surlygent » Tue Jan 29, 2013 6:01 pm

Thanks to everyone on this site for all the amazing advice and help. After lots of back and forth, and assessing my actual risk desire and overall long term management of a portfolio I have settled on the following:

20% - VTSAX - Vanguard Total Stock Admiral (split btwn taxable and SEP IRA)
20% - VSIAX - Vanguard Small-Cap Value Admiral (in SEP IRA)
40% - VTIAX - Vanguard Total International Admiral (in taxable)
20% - VBTLX - Vanguard Total Bond Admiral (in SEP IRA)

I am going with all mfunds so I can put future monthly contributions on autopilot and not have to look that often - can always switch to EFTs in the future if so desired.

After a lot of reading, I decided I wanted a bit of small-cap tilt but keep the portfolio as simple as possible, so since Total International includes small-cap and emerging, I decided adding a small-cap value component to my US allocation was the desired amount of additional risk/tilt with out any added complexity and it adds a value component that wanted.

The result I hope is a pretty well diversified and very easy to maintain/balance portfolio.

I am lump-summing in with current low 6 figure funds and then on automatic contributions from there.

Now to write an action plan down, sign it and stick to it!

Any additional last thoughts/advice???
surlygent
 
Posts: 17
Joined: 24 Jan 2013

Re: FINALLY decided on a portfolio.

Postby LFKB » Tue Jan 29, 2013 6:13 pm

surlygent wrote:Thanks to everyone on this site for all the amazing advice and help. After lots of back and forth, and assessing my actual risk desire and overall long term management of a portfolio I have settled on the following:

20% - VTSAX - Vanguard Total Stock Admiral (split btwn taxable and SEP IRA)
20% - VSIAX - Vanguard Small-Cap Value Admiral (in SEP IRA)
40% - VTIAX - Vanguard Total International Admiral (in taxable)
20% - VBTLX - Vanguard Total Bond Admiral (in SEP IRA)

I am going with all mfunds so I can put future monthly contributions on autopilot and not have to look that often - can always switch to EFTs in the future if so desired.

After a lot of reading, I decided I wanted a bit of small-cap tilt but keep the portfolio as simple as possible, so since Total International includes small-cap and emerging, I decided adding a small-cap value component to my US allocation was the desired amount of additional risk/tilt with out any added complexity and it adds a value component that wanted.

The result I hope is a pretty well diversified and very easy to maintain/balance portfolio.

I am lump-summing in with current low 6 figure funds and then on automatic contributions from there.

Now to write an action plan down, sign it and stick to it!

Any additional last thoughts/advice???


Looks good to me as long as two things are true: 1) You're young and 2) You don't plan on needing any of the money in taxable in the next 15 years.

You are 50/50 US/international, which I think is okay although most would recommend 20-40% of equities in International.

Also, I would recommend switching up what you hold in taxable. Right now, it looks like 80% of your taxable portfolio will be in Total International. Maybe split Total International between taxable and IRA so that your US/international mix of stocks is more consistent across taxable and retirement, in case you need to touch taxable prior to retirement. Obviously leave total bond in your IRA.
LFKB
 
Posts: 240
Joined: 24 Dec 2012

Re: FINALLY decided on a portfolio.

Postby surlygent » Tue Jan 29, 2013 6:19 pm

LFKB wrote:
Looks good to me as long as two things are true: 1) You're young and 2) You don't plan on needing any of the money in taxable in the next 15 years.

You are 50/50 US/international, which I think is okay although most would recommend 20-40% of equities in International.

Also, I would recommend switching up what you hold in taxable. Right now, it looks like 80% of your taxable portfolio will be in Total International. Maybe split Total International between taxable and IRA so that your US/international mix of stocks is more consistent across taxable and retirement, in case you need to touch taxable prior to retirement. Obviously leave total bond in your IRA.



Thanks for the good advice - I will start to split up my Total Int. btwn taxable/SEP moving forward, I assume I should keep small-cap value in the SEP?

I am 35 and not planning on needing the money for at least 15 years.
surlygent
 
Posts: 17
Joined: 24 Jan 2013

Re: FINALLY decided on a portfolio.

Postby LFKB » Tue Jan 29, 2013 6:37 pm

surlygent wrote:
LFKB wrote:
Looks good to me as long as two things are true: 1) You're young and 2) You don't plan on needing any of the money in taxable in the next 15 years.

You are 50/50 US/international, which I think is okay although most would recommend 20-40% of equities in International.

Also, I would recommend switching up what you hold in taxable. Right now, it looks like 80% of your taxable portfolio will be in Total International. Maybe split Total International between taxable and IRA so that your US/international mix of stocks is more consistent across taxable and retirement, in case you need to touch taxable prior to retirement. Obviously leave total bond in your IRA.



Thanks for the good advice - I will start to split up my Total Int. btwn taxable/SEP moving forward, I assume I should keep small-cap value in the SEP?

I am 35 and not planning on needing the money for at least 15 years.


No problem, If you don't need the money before retirement, I don't think it matters where you place your equities. My only point was that you might want to be more consistent between taxable and retirement with your equities in case you need the money before retirement. It would probably be easiest to just split Total Stock, Total International and Total Small Cap half and half between taxable and SEP IRA, if you have the flexibility to do that. Then put all your bonds in SEP IRA. I think in a perfect world it would look like this:

Taxable:
Total Stock: 12.5%
Small Cap: 12.5%
Total International: 25%
Total Bond: 0%

SEP IRA:
Total Stock: 7.5%
Small Cap: 7.5%
Total International: 15%
Total Bond: 20%

This way you have the same equity mix in taxable and retirement.
LFKB
 
Posts: 240
Joined: 24 Dec 2012

Re: FINALLY decided on a portfolio.

Postby surlygent » Tue Jan 29, 2013 7:23 pm

LFKB wrote:
No problem, If you don't need the money before retirement, I don't think it matters where you place your equities. My only point was that you might want to be more consistent between taxable and retirement with your equities in case you need the money before retirement. It would probably be easiest to just split Total Stock, Total International and Total Small Cap half and half between taxable and SEP IRA, if you have the flexibility to do that. Then put all your bonds in SEP IRA. I think in a perfect world it would look like this:

Taxable:
Total Stock: 12.5%
Small Cap: 12.5%
Total International: 25%
Total Bond: 0%

SEP IRA:
Total Stock: 7.5%
Small Cap: 7.5%
Total International: 15%
Total Bond: 20%

This way you have the same equity mix in taxable and retirement.



Its a good point, as I do hope/plan to retire around 55, so will need funds from my taxable before the IRA. Thanks!
surlygent
 
Posts: 17
Joined: 24 Jan 2013

Re: FINALLY decided on a portfolio.

Postby Elbowman » Tue Jan 29, 2013 7:42 pm

When it comes to tax efficiency, SCV is not terrible, but its also not as good as TSM or TISM. I'd consider keeping all of your SCV in tax advantaged space.
Elbowman
 
Posts: 269
Joined: 3 Apr 2012


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