Portfolio Advice - Would be Grateful for your Help!

Have a question about your personal investments? No matter how simple or complex, you can ask it here.

Portfolio Advice - Would be Grateful for your Help!

Postby goodyear35 » Wed Mar 13, 2013 3:05 pm

Emergency funds: 2 years.
Debt: Mortgage of $770K @ 4.25%. No other debt.
Tax Filing Status: Married Filing Jointly
Tax Rate: 35% Federal (new rate will be 39.6%), 0% State
State of Residence: Florida
Age: 36
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 30% of stocks
Current Total Portfolio = $1,085,516.67 not including emergency funds
Current yearly gross income = $1MM+

Note: I am purposely leaving HER information out of this post because the money I am looking to invest is money I had prior to us being married (and is protected through a prenuptial agreement). I would do a separate post on our shared finances.

Current Retirement Assets

Taxable
92.12% $1MM cash (This money is now sitting as cash in a TD Ameritrade account - ready to invest)

His 401k at ADP ($24,296.70)
0.42% PIMCO Total Return Fund - Class A (PTTAX) (0.85%) $4,564.10
0.45% JPMorgan U.S. Equity Fund - Class A (JUEAX) (0.97%) $4,930.39
0.68% Alger Capital Appreciation Institutional Fund - Class I (ALARX) (1.19%) $7,341.04
0.23% Goldman Sachs Small Cap Value Fund - Class A (GSSMX) (1.36%) $2,522.81
0.45% Janus Triton Fund - Class S (JGMIX) (1.20%) $4,938.36

His Rollover IRA at Merrill Lynch ($61,219.97)
4.62% Apple Inc (AAPL) $50,126.15
0.95% McDonalds Corp (MCD) $10,287.47
0.08% Money Market $806.35
** NOTE ** I know I am going to receive heavy critism on my Rollover IRA because it's not diversified (completely understand). Just wanted to note that this account was roughly $40K in total until I bought AAPL at ~$260 per share.

Contributions

New annual Contributions
$17,500 his 401k + $6,000 company match. Total $23,500
$5,000 his Rollover IRA (Is this the max I am able to contribute?)
$0 taxable

Funds available in his 401k at ADP
Alger Capital Appreciation Institutional Fund - Class I (ALARX) (1.19%)
AllianzGI NFJ International Value Fund - Class A (AFJAX) (1.25%)
Goldman Sachs Small Cap Value Fund - Class A (GSSMX) (1.36%)
Janus Triton Fund - Class S (JGMIX) (1.20%)
JPMorgan U.S. Equity Fund - Class A (JUEAX) (0.97%)
PIMCO Total Return Fund - Class A (PTTAX) (0.85%)
Pioneer Equity Income Fund - Class A (PEQIX) (1.14%)
Principal MidCap Fund - Class R3 (PMBMX) (1.19%)
T. Rowe Price Retirement 2010 Fund - Class R (RRTAX) (1.11%)
T. Rowe Price Retirement 2015 Fund - Class R (RRTMX) (1.16%)
T. Rowe Price Retirement 2020 Fund - Class R (RRTBX) (1.20%)
T. Rowe Price Retirement 2025 Fund - Class R (RRTNX) (1.23%)
T. Rowe Price Retirement 2030 Fund - Class R (RRTCX) (1.25%)
T. Rowe Price Retirement 2035 Fund - Class R (RRTPX) (1.27%)
T. Rowe Price Retirement 2040 Fund - Class R (RRTDX) (1.28%)
T. Rowe Price Retirement 2045 Fund - Class R (RRTRX) (1.28%)
T. Rowe Price Retirement 2050 Fund - Class R (RRTFX) (1.28%)
T. Rowe Price Retirement 2055 Fund - Class R (RRTVX) (1.28%)
T. Rowe Price Retirement Income Fund - Class R (RRTIX) (1.07%)
Victory Established Value Fund - Class A (VETAX) (1.06%)
Virtus Foreign Opportunities Fund - Class A (JVIAX) (1.45%)


Here is my plan for the $1MM/cash in TD Ameritrade (92.12%)
45% Vanguard Total Stock Market ETF (VTI) (0.06%)
5% Vanguard REIT Index ETF (VNQ) (0.10%)
30% Vanguard Tax-Managed International Fund ETF Shares (VEA) (0.12%)
10% Vanguard Total Bond Market ETF (BND) (0.10%)
10% Vanguard Intermediate-Term Bond ETF (BIV) (0.11%)

Questions:
1. I am open to other suggestions on how the $1MM in my TD Ameritrade account is allocated. My thoughts were to go the ETF route since I am with TD Ameritrade to avoid the fees. If that is a wrong strategy, or there is a better strategy using other funds, I am all ears.

I have been following the forum for about a year and did read The Bogleheads Guide to Investing. I still don't feel like I know enough to do this on my own, however with the support of Bogleheads community, I definitely feel like I can. Obviously I will need some direction, and I appreciate all the help you guys and gals can provide to me.

Thank you!
goodyear35
 
Posts: 31
Joined: Wed Jan 18, 2012 1:58 pm

Re: Portfolio Advice - Would be Grateful for your Help!

Postby sometimesinvestor » Wed Mar 13, 2013 6:12 pm

In your taxable TD Ameritrade account I would suggest one or more of the Muni fund etfs mentioned in this articlehttp://etf.about.com/od/bondetfs ... d_ETFs.htm rather than the TBM.Why pay taxes now rather than far into the future. Similarly The Reit ETF might also be more appropriate for tax related reasons in your rollover IRA. On the other hand, something to think about would be a partial rollover (perhaps 10k per year into a Roth ira. Once you have taken the years to do that you could then at some point in the future do a " backdoor IRA" (check the wiki oorsearch this site for more info.That seems to me better than straight non deductable contributions to your IRA.
User avatar
sometimesinvestor
 
Posts: 894
Joined: Wed May 13, 2009 7:54 am

Re: Portfolio Advice - Would be Grateful for your Help!

Postby goodyear35 » Thu Mar 14, 2013 5:12 pm

sometimesinvestor wrote:In your taxable TD Ameritrade account I would suggest one or more of the Muni fund etfs mentioned in this articlehttp://etf.about.com/od/bondetfs ... d_ETFs.htm rather than the TBM.Why pay taxes now rather than far into the future. Similarly The Reit ETF might also be more appropriate for tax related reasons in your rollover IRA. On the other hand, something to think about would be a partial rollover (perhaps 10k per year into a Roth ira. Once you have taken the years to do that you could then at some point in the future do a " backdoor IRA" (check the wiki oorsearch this site for more info.That seems to me better than straight non deductable contributions to your IRA.



Thank you for your input. You are saying to put the Bond Funds in my Rollover IRA?

What about my overall portfolio suggestions on what to do with the cash that is in TD Ameritrade. Does that look like a solid plan?

Appreciate any more help I can get on this. Thanks
goodyear35
 
Posts: 31
Joined: Wed Jan 18, 2012 1:58 pm

Re: Portfolio Advice - Would be Grateful for your Help!

Postby xram » Thu Mar 14, 2013 5:20 pm

short video introduction to boglehead philosophy
http://www.bogleheads.org/wiki/Video:Bo ... philosophy

further info on tax-efficient fund placement
http://www.bogleheads.org/wiki/Principl ... _Placement
(there are some folks questioning the recommendations on the above page - http://thefinancebuff.com/tax-efficienc ... olute.html)

good luck
xram
VTI, VBR, VTWV, SCHH, VXUS, VEA, VWO, VSS, FM, VNQI, VBTLX, VFITX, SCHP, VWITX, IBONDS, EEBONDS, EF(EverBank), UTAH-529
xram
 
Posts: 779
Joined: Sat Sep 15, 2012 12:36 pm

Re: Portfolio Advice - Would be Grateful for your Help!

Postby goodyear35 » Thu Mar 14, 2013 6:23 pm

xram wrote:short video introduction to boglehead philosophy
http://www.bogleheads.org/wiki/Video:Bo ... philosophy

further info on tax-efficient fund placement
http://www.bogleheads.org/wiki/Principl ... _Placement
(there are some folks questioning the recommendations on the above page - http://thefinancebuff.com/tax-efficienc ... olute.html)

good luck
xram


Thanks xram. That helps with the bond question, but I am really looking for some advice on the strategy I have for the $1MM in cash in my TD Ameritrade account. Does the plan I laid out look solid? Or should I be looking at other funds?
goodyear35
 
Posts: 31
Joined: Wed Jan 18, 2012 1:58 pm

Re: Portfolio Advice - Would be Grateful for your Help!

Postby xram » Thu Mar 14, 2013 6:59 pm

goodyear35 wrote:
xram wrote:short video introduction to boglehead philosophy
http://www.bogleheads.org/wiki/Video:Bo ... philosophy

further info on tax-efficient fund placement
http://www.bogleheads.org/wiki/Principl ... _Placement
(there are some folks questioning the recommendations on the above page - http://thefinancebuff.com/tax-efficienc ... olute.html)

good luck
xram


Thanks xram. That helps with the bond question, but I am really looking for some advice on the strategy I have for the $1MM in cash in my TD Ameritrade account. Does the plan I laid out look solid? Or should I be looking at other funds?


I am too much of a beginner myself. There are lots of good people on here that will help more than I can. Good Luck.
In general, most of the folks on here will say that the following ETFs should be in tax-advantaged spaces rather than a taxable account (which is what I assume Ameritrade will be).

5% Vanguard REIT Index ETF (VNQ) (0.10%)
10% Vanguard Total Bond Market ETF (BND) (0.10%)
10% Vanguard Intermediate-Term Bond ETF (BIV) (0.11%)

a muni fund is good for a taxable account (see https://personal.vanguard.com/us/funds/ ... IntExt=INT)

There are lots and lots of really smart and all-around awesome people on here that you will be fortunate to hear from (i cant list them all but keep your fingers crossed for these stars: livesoft, grabiner, nisipirus, larry swedroe, rick ferri, taylor larimore, and LOTS and LOTS and LOTS and LOTS and LOTS of others...I am not on that list....good luck)

xram
VTI, VBR, VTWV, SCHH, VXUS, VEA, VWO, VSS, FM, VNQI, VBTLX, VFITX, SCHP, VWITX, IBONDS, EEBONDS, EF(EverBank), UTAH-529
xram
 
Posts: 779
Joined: Sat Sep 15, 2012 12:36 pm

Re: Portfolio Advice - Would be Grateful for your Help!

Postby goodyear35 » Fri Mar 15, 2013 1:01 pm

xram wrote:
goodyear35 wrote:
xram wrote:short video introduction to boglehead philosophy
http://www.bogleheads.org/wiki/Video:Bo ... philosophy

further info on tax-efficient fund placement
http://www.bogleheads.org/wiki/Principl ... _Placement
(there are some folks questioning the recommendations on the above page - http://thefinancebuff.com/tax-efficienc ... olute.html)

good luck
xram


Thanks xram. That helps with the bond question, but I am really looking for some advice on the strategy I have for the $1MM in cash in my TD Ameritrade account. Does the plan I laid out look solid? Or should I be looking at other funds?


I am too much of a beginner myself. There are lots of good people on here that will help more than I can. Good Luck.
In general, most of the folks on here will say that the following ETFs should be in tax-advantaged spaces rather than a taxable account (which is what I assume Ameritrade will be).

5% Vanguard REIT Index ETF (VNQ) (0.10%)
10% Vanguard Total Bond Market ETF (BND) (0.10%)
10% Vanguard Intermediate-Term Bond ETF (BIV) (0.11%)

a muni fund is good for a taxable account (see https://personal.vanguard.com/us/funds/ ... IntExt=INT)

There are lots and lots of really smart and all-around awesome people on here that you will be fortunate to hear from (i cant list them all but keep your fingers crossed for these stars: livesoft, grabiner, nisipirus, larry swedroe, rick ferri, taylor larimore, and LOTS and LOTS and LOTS and LOTS and LOTS of others...I am not on that list....good luck)

xram



Thank you again, xram.

Anyone else can chime in and let me know your thoughts on my portfolio strategy? And more specifically what I plan to do with the $1MM in TD Ameritrade.
goodyear35
 
Posts: 31
Joined: Wed Jan 18, 2012 1:58 pm

Thoughts and suggestions

Postby Taylor Larimore » Fri Mar 15, 2013 2:23 pm

Anyone else can chime in and let me know your thoughts on my portfolio strategy? And more specifically what I plan to do with the $1MM in TD Ameritrade.

Goodyear:

Your planned taxable portfolio:
Here is my plan for the $1MM/cash in TD Ameritrade (92.12%)
45% Vanguard Total Stock Market ETF (VTI) (0.06%)
5% Vanguard REIT Index ETF (VNQ) (0.10%)
30% Vanguard Tax-Managed International Fund ETF Shares (VEA) (0.12%)
10% Vanguard Total Bond Market ETF (BND) (0.10%)
10% Vanguard Intermediate-Term Bond ETF (BIV) (0.11%)


I like your planned portfolio very much. A few thoughts and suggestions:

* REITs are tax-inefficient and are best located in tax-advantaged accounts.
* Replace the two Taxable Bond ETFs with Vanguard Intermediate-Term Tax-Exempt (VWITX) bond fund.
* Your international stock allocation is 30% of your portfolio but 37% of stocks. Either percentage should be acceptable.
* Your Apple stock could be your worst investment if it make you overconfident in your stock-picking ability. :wink:

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
User avatar
Taylor Larimore
Advisory Board
 
Posts: 20096
Joined: Tue Feb 27, 2007 9:09 pm
Location: Miami FL

Re: Thoughts and suggestions

Postby goodyear35 » Fri Mar 15, 2013 4:50 pm

Taylor Larimore wrote:
Anyone else can chime in and let me know your thoughts on my portfolio strategy? And more specifically what I plan to do with the $1MM in TD Ameritrade.

Goodyear:

Your planned taxable portfolio:
Here is my plan for the $1MM/cash in TD Ameritrade (92.12%)
45% Vanguard Total Stock Market ETF (VTI) (0.06%)
5% Vanguard REIT Index ETF (VNQ) (0.10%)
30% Vanguard Tax-Managed International Fund ETF Shares (VEA) (0.12%)
10% Vanguard Total Bond Market ETF (BND) (0.10%)
10% Vanguard Intermediate-Term Bond ETF (BIV) (0.11%)


I like your planned portfolio very much. A few thoughts and suggestions:

* REITs are tax-inefficient and are best located in tax-advantaged accounts.
* Replace the two Taxable Bond ETFs with Vanguard Intermediate-Term Tax-Exempt (VWITX) bond fund.
* Your international stock allocation is 30% of your portfolio but 37% of stocks. Either percentage should be acceptable.
* Your Apple stock could be your worst investment if it make you overconfident in your stock-picking ability. :wink:

Best wishes.
Taylor



Thank you Taylor, this is exactly what I was looking for.

1. I will sell off everything in my tax advantaged Rollover IRA,including my AAPL stock :(
2. I will take out positions on REITs and possibly some Bonds in that same Rollover IRA.
3. I will reduce down my International stock allocation just a tad.

I think I should be good to go with that plan. Thanks again!
goodyear35
 
Posts: 31
Joined: Wed Jan 18, 2012 1:58 pm

Re: Portfolio Advice - Would be Grateful for your Help!

Postby Chan_va » Fri Mar 15, 2013 5:09 pm

Goodyear,

Nothing to add to Taylor's suggestion, but my comment is more on your 80/20 asset allocation. With an income of over $1MM a year, you have already won the game. If I were you, I would be a lot more conservative.

But hey, it all depends on what your future needs and plans are. But congrats on the great start.
User avatar
Chan_va
 
Posts: 517
Joined: Wed Dec 05, 2012 8:15 pm

Chan's wise advice

Postby Taylor Larimore » Fri Mar 15, 2013 9:49 pm

Goodyear:

Chan makes a good point.

My grandfather was a multi-millionaire invested almost entirely in stocks (on margin) in 1929. When the Dow plunged 89% during the Great Depression he became bankrupt.

As I am sure you know, Mr. Bogle suggests that our percentage in bonds should roughly equal our age.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
User avatar
Taylor Larimore
Advisory Board
 
Posts: 20096
Joined: Tue Feb 27, 2007 9:09 pm
Location: Miami FL

Re: Portfolio Advice - Would be Grateful for your Help!

Postby goodyear35 » Fri Mar 15, 2013 10:08 pm

Chan_va wrote:Goodyear,

Nothing to add to Taylor's suggestion, but my comment is more on your 80/20 asset allocation. With an income of over $1MM a year, you have already won the game. If I were you, I would be a lot more conservative.

But hey, it all depends on what your future needs and plans are. But congrats on the great start.


Good point Chan. I think I will up my bonds to 35% being I am 36y/o. I will reduce International by 5% and Total Stock by 5%.

Thank you all
goodyear35
 
Posts: 31
Joined: Wed Jan 18, 2012 1:58 pm

Re: Portfolio Advice - Would be Grateful for your Help!

Postby ourbrooks » Fri Mar 15, 2013 10:25 pm

Let me offer an opposing view to chan and Taylor Larrimore. You've got an awful lot of money for someone your age. My guess is that you work very hard and don't have much free time so that early retirement is an attractive option. Alternately, you might want to accumulate enough capital to start/buy your own business.

Suppose you leave your asset allocation where it is and the market goes down by 60%. Well, you can always delay taking early retirement or starting the business until it recovers. Your situation is very different from someone who might need the money at a particular time to pay the bills and, as long as you don't buy stocks on margin, it's different from Taylor Larrimore's grandfather.

The problem with the "age in bonds" rule is that John Bogle has never been very clear on how to interpret it; at one point, he suggested counting the present value of pensions and Social Security as "bonds." I don't think he's ever said anything about how to count your house or whether you should count your mortgage as a negative bond. Also, most of Bogle's insights have been backed up by other analyses and simulation studies; that's not the case with "age in bonds" or, for that matter, any other glidepath strategy. In fact, there's some evidence that "age in bonds" is actually riskier than a fixed allocation.
ourbrooks
 
Posts: 1174
Joined: Fri Nov 13, 2009 5:56 pm

Re: Portfolio Advice - Would be Grateful for your Help!

Postby goodyear35 » Fri Mar 15, 2013 11:10 pm

ourbrooks wrote:Let me offer an opposing view to chan and Taylor Larrimore. You've got an awful lot of money for someone your age. My guess is that you work very hard and don't have much free time so that early retirement is an attractive option. Alternately, you might want to accumulate enough capital to start/buy your own business.

Suppose you leave your asset allocation where it is and the market goes down by 60%. Well, you can always delay taking early retirement or starting the business until it recovers. Your situation is very different from someone who might need the money at a particular time to pay the bills and, as long as you don't buy stocks on margin, it's different from Taylor Larrimore's grandfather.

The problem with the "age in bonds" rule is that John Bogle has never been very clear on how to interpret it; at one point, he suggested counting the present value of pensions and Social Security as "bonds." I don't think he's ever said anything about how to count your house or whether you should count your mortgage as a negative bond. Also, most of Bogle's insights have been backed up by other analyses and simulation studies; that's not the case with "age in bonds" or, for that matter, any other glidepath strategy. In fact, there's some evidence that "age in bonds" is actually riskier than a fixed allocation.


You are definitely correct in that I work hard and have very little time. The reason for that is because I run 3-4 companies at any one time. To be honest, I left corporate world in 2008 and took a huge risk on myself. No backup plan, no savings, nothing. I succeeded but my health is the worst it's ever been. More anxiety and stress and I'm not sure my life is better for it. So in theory, I would like to retire by say age 40-45. When I say retire I mean running no businesses or running one small business. Or maybe even just doing something part time that makes money but doesn't stress me out. I appreciate you bringing up other options, because I definitely listen to everything I read and then digest it.

When you say age in bonds is actually riskier than a fixed position, do you mean that it's more risky to be in such a conservative investment, such as bonds?
goodyear35
 
Posts: 31
Joined: Wed Jan 18, 2012 1:58 pm

Re: Portfolio Advice - Would be Grateful for your Help!

Postby nydad » Fri Mar 15, 2013 11:45 pm

Hi -

One thing struck me in your post:

Current yearly gross income = $1MM+

New annual Contributions
$17,500 his 401k + $6,000 company match. Total $23,500
$5,000 his Rollover
0 taxable


Is the net income much lower, are you accounting for it elsewhere, or is there another plan for what to do with the extra income?
User avatar
nydad
 
Posts: 449
Joined: Wed Dec 01, 2010 12:10 pm

Re: Portfolio Advice - Would be Grateful for your Help!

Postby goodyear35 » Fri Mar 15, 2013 11:53 pm

nydad wrote:Hi -

One thing struck me in your post:

Current yearly gross income = $1MM+

New annual Contributions
$17,500 his 401k + $6,000 company match. Total $23,500
$5,000 his Rollover
0 taxable


Is the net income much lower, are you accounting for it elsewhere, or is there another plan for what to do with the extra income?


Yes. I am now married and have another set of finances with my wife. This represents my personsal assets prior to marriage only.
goodyear35
 
Posts: 31
Joined: Wed Jan 18, 2012 1:58 pm

Re: Portfolio Advice - Would be Grateful for your Help!

Postby goodyear35 » Fri Mar 22, 2013 12:44 pm

I just found out today that Vanguard Intermediate-Term Tax-Exempt (VWITX) fund is no longer available for purchase unless you were a prior investor in the fund:
http://blogs.barrons.com/focusonfunds/2 ... investors/

I now need to figure out where to put my 30% bond allocation.

It would be in a Taxable account, so I need something that is tax friendly. Also, I would need to be able to buy it through TD Ameritrade.

Thoughts on other options?
goodyear35
 
Posts: 31
Joined: Wed Jan 18, 2012 1:58 pm

Re: Portfolio Advice - Would be Grateful for your Help!

Postby goodyear35 » Mon Mar 25, 2013 4:05 pm

Guys/Gals, still look for advice on a good bond fund that is tax friendly, what about the one below in place of Vanguard Intermediate-Term Tax-Exempt (VWITX)?

Market Vectors Intermediate Municipal Index (ITM)
goodyear35
 
Posts: 31
Joined: Wed Jan 18, 2012 1:58 pm


Return to Investing - Help with Personal Investments

Who is online

Users browsing this forum: gtt561, midareff, ruralavalon, SecretAsianMan, StarbuxInvestor and 61 guests