New to Bogleheads; Please help with my Portfolio

[cobolt]

First off, I would like to say what a wonderfully knowledgeable group of people you bogleheads are! I’ve been lurking around the forum and feel not only is there a wealth of information, but that the people who respond are genuine and have a real love and respect for investing and making financially sound decisions, as well as guiding those who wish to do the same. Please keep up the great work!

Some background information:
Emergency funds: At least a year’s worth
Debt: None
Tax Filing Status: Single for 2012/Married Filing Jointly for 2013
Tax Rate: 25% Federal, 0% State
State of Residence: TX (intend to retire here)
Age:45
Desired Asset allocation: 40% total Stock Market, 30% Total International, 30% Total Bond Market

Savings: 300K cash

TSP $15K
G - 0%
F - 5%
C – 30%
S – 35%
I – 30%

*Plans are to buy a house this year, so some of the savings will go toward the down payment. Currently viewing homes in the 150K range.

Recently married; we’re both debtless and childless. I envision working at least another 20 years, so for this thread, I’m focused on my portfolio. I feel should be putting the cash I have in savings to work, as previously, I’ve been hesitant to do so. I contribute 7% to Traditional TSP and get the 5% govt match. I’ve kept low allocations in the G and F Funds because I felt I started investing too late in life and needed to "catch up." I’ve read most of the topics on the TSP Talk forum and many people don’t care for the G fund or say it’s a waste fund, which is another reason I‘ve not put much in it. I’ve done some reading on this forum and have the wiki article on the G Fund so I am reconsidering, but remain unsure. Additionally, due to some of the TSP Roth’s limitations, I want to open a Roth IRA with Vanguard soon, before April 15th.

My questions are:

1) What funds do I pick for the Roth? Initially I was going with the Wellington and max the $5K for 2012 / 5.5K for 2013 all at once, but after reading this forum, I’m rethinking the Wellington Fund and leaning toward the 3 fund portfolio strategy. I understand that the three fund strategy is comprised of: Total Stock Market Index, Total International Stock Market Index, and Total Bond Market Index funds, but I don’t know whether to treat both the TSP and the VG Roth IRA as one portfolio, or to have three funds in each account. I’m still a bit unclear as to the pros and cons of either approach.

2) I plan to increase my TSP contribution, but would like to know how to best re-allocate my TSP funds? I anticipate I will need a way to shore up the shortcomings of the I Fund.

3) I’m not sure if my desired asset allocation is “age appropriate” (ha ha) because, as I said, I feel I came along late to investing in favor of saving. So if someone feels that 70/30 stocks/bonds isn’t quite right, please let me know.

4) Are target funds something I should consider? Previously, I’ve written them off.

5) Once I fund my Roth and max the TSP, I will still have some cash sitting in the bank, earning zippo. What is the best way to address this issue?

I would like a simple strategy to start out with, if possible. I don’t plan to tinker much with these funds (just buy, rebalance, and hold). I don’t think I want to do any involved trading , and I don’t plan withdrawing funds.

I thank all contributors in advance for their consideration, and I look forward to hearing your feedback.

[Twins Fan]

Congrats on getting married!!

Your portfolio is overall, or all of the accounts/funds/plans that you have. And, now that you're married it also includes all of his/her accounts/funds/plans. You can have the same or similar three funds in each account, or you can split them up with different funds in different accounts. Since you mentioned extra cash, you might start thinking about taxable investing. That opens up another deal of which fund goes where.

I'm not familiar with the TSP plan. But, I know many here are. And, from what I've read it's one of the better plans out there as far as low costs and funds to choose from.

I'd say your allocation of 70/30 is fine. That comes down to what you're comfortable with. You say you have 20 more years to work, you're just getting started, and the total value of your portfolio is still small, so I don't think that's too aggressive.

If you want simple, as you say, the Target Retirement funds are about the simplest out there... the 3 fund all in 1. Look into the LifeStratedy funds aslo. However, if you start investing in a taxable account, then they are not so ideal because of the bond portion in them. You will have to come up with an overall plan.

Cash doing nothing... you say you have $300K in savings (is that just yours, or yours and his/hers savings?) and you're looking at buying a house in the $150K range. I'd say paying cash for a house would be the best way to put some of that money to work. Sure interest rates are low now, but why pay any interest if you don't have to? Also, is the $300K separate from your emergency fund or are they one in the same? If separate, then you might start thinking about taxable investing with that money, after buying a house.

Max out your TSP contributions per year, max out the Roth each year, pay cash for a house, then start thinking about taxable, keep it simple, and enjoy life.

Overall, I'd say you're in a very good position even though you're "late to the party". I'm also late to the party being almost 40 and recently started investing/retirement plan/getting finances in order, and I would love to be in your shoes. I did it the opposite of you... I have a couple divorces in my past, kids, and a couple of houses/mortgages currently. Try playing "catch up" that way.

[Peter Foley]

First, welcome to the forum (as a poster)
If you want a broad range of responses from individuals who are not in the TSP plan, you might want to explain what each of the letter funds is. I'm not able to suggest what you might do with a Roth because I don't know how the rest of your funds are invested.

[hoppy08520]

Before thinking about which funds to choose in TSP or IRA, how much of that $300K are you going to invest into retirement savings in a taxable investment account? Do you want to buy the house in cash? What about fiancee's retirement assets? If you wind up investing $150k or more of the cash into mutual funds then the bulk of that should be in US and International funds, which would mean your TSP and IRA will wind up being all in Bonds as you're better off from a tax perspective to hold bonds in tax-sheltered accounts.

[Grt2bOutdoors]

You live in Texas - I believe that state offers a "homestead" rule. Cash offers no such protection. Therefore, if you purchase the home outright, not only do you save on interest expense, but in the event of a lawsuit, they can't take your home either. Now, that truly is the "best of both worlds".

[cobolt]

Thank you all for your responses! I hope I can address the holes in my initial post.

Twins Fan and hoppy 08520: The 300K is solely my savings and separate from emergency funds. We are hesitant to pay cash for the home, (although it has crossed my mind) mainly because we're not sure of our job stability. He is a contractor and his contract is year-to-year. I am a federal employee, and although that would usually mean security, since I work for the nasty DOD and we seem to be everyone's whipping boy, that stability comes into question. Husband has a miltary retirement, so in the worst case scenario if one or both of us were to lose our jobs, we could still keep the house payments going, but I would rather keep some of the savings for a cushion. Having been laid off after 40 and now making much less than I was previous to that, being unemployed (and looked over because you're ove 40--and we all know it happens) has me gunshy and is a bit of a reality for me. I would hate to pay half that 300K for a home in cash and for us both to be unemployed with the only income being his retirement. I know that is the doomsday worst case scenario, but I think in this economy and job market, it's a prudent notion.

Peter Foley: As for the TSP, the funds are as follows:

0%- G Fund (Govt Securities)
5%- F Fund (Government, corporate, and mortgage-backed bonds)
30%- C Fund (Stocks of large and medium-sized U.S. companies)
35%- S Fund (Stocks of small to medium-sized U.S. companies (not included in the C Fund)
30%- I Fund ( International stocks of 21 developed countries--Excludes Canada and emerging markets)
0%- L Fund (Lifecyle fund that is Invested in the G, F, C, S, and I Funds)

Grt2bOutdoors: You are correct in that Texas offers a homestead rule; however, we're not sure that we want to retire in this particular part of Texas when the time comes. We'd probably opt for something more in the country, meaning, we don't see this being our last or retirement home.

Again, thank you all for your responses so far and keep them coming. It gets me thinking! I am learning so much by reading the articles and posts. I can't tell you how much I appreciate ya'll.

[hoppy08520]

cobolt, I think your question #5 should come first, as the others are dependent on the answer to #5. You have up to $200,000 or more to invest. You have $15,000 in TSP and you could put $21,000 in IRAs. Therefore, there's no sense in trying to figure out what you should put into your TSP and IRAs until you figure out how much of that $300,000 you want to put into the market.

For example, suppose you were to put $200,000 of the cash into funds in a taxable account, plus plow $21,000 into your IRA ($5,000 toward a 2012 tax year contribution and $5,500 toward 2013 tax-year contribution, for each of you). Assuming a 70/30 stock/bond allocation, with 3/7th of stocks in international, then I'd recommend the following:

Taxable
40.0% Vanguard Total US Stock Market Index Fund
30.0% Vanguard Total International Stock Market Index Fund
14.7% Vanguard Intermediate Term Tax Exempt bonds (VWIUX)

His IRA
4.4% Vanguard Total Bond Market Index Fund

Her IRA
4.4% Vanguard Total Bond Market Index Fund

TSP
6.4% G Fund

For the bonds in taxable, you might also want to consider I Bonds or EE Bonds. The reason to hold exclusively bonds in your tax-advantaged accounts is because that asset class is not as tax-efficient as Total US Stock and Total International Stock.

Moving forward, you should contribute the max to your IRAs and TSP; if you can't swing that with your current income, then sell part of your taxable investments so you can contribute to the max; consider this a transfer from taxable investments to tax-advantaged investments. To get the full $17,5000 in your TSP for tax-year 2013, you'll need to do some calculations to figure out how much you need to contribute each pay period through the rest of the year to get the max. Don't hit the max too early or you'll miss out on matching contributions, BTW. See TSP page in wiki for more details on this.

Since all your ongoing contributions will be in the TSP and IRAs, which currently is all bonds, before too long and depending on what happens in the market, you might wind up with too much bonds for your desired AA. You can delay this date some by NOT reinvesting the bond dividends in taxable, and instead directing those dividends to more purchases of the stock funds. I'd recommend you not auto-reinvest dividends in the taxable accounts; use the dividends for periodic re-balancing between the three funds in the taxable account. If you do get too much bonds, then to keep in balance, you could sell some of the bond fund in taxable to purchase more stocks and bring your allocations back into balance, or start adding stock funds into your TSP and IRAs. But, given your big head start in the taxable account, I don't think you'll need to worry about this for a little while. In five years or so, you might have enough bonds in the TSP and IRAs that you might get to the point where you've sold down all the bonds in your taxable account. At that point, you will need to start adding stock funds, probably in your IRAs (so you can use more TSP space for G Fund, if you elect to do that).

Why G Fund? In spite of detractors, there is a role for the G Fund in most portfolios. See wiki page on "G Fund" for more info. Even if you're divided, I think that holding just over 20% of your bond allocation in G Fund (which is what the portfolio above looks like) is not excessive.

Finally, since your husband is a contractor, see if he can open a solo 401(k). That could enable you to get more of your taxable investments into tax-advantaged accounts.

[Twins Fan]

Cobalt, I kind of see your concern about paying cash for the home, but then I don't see it also. If your worst case scenario came true and one or both of you were out of work, you still have your emergency fund (which you say is separate), hubby's pension coming in, unemployment benefits(?)........ and no house payment, how much income do you need until you find work again? With no rent or mortgage payment the emergency fund should last even longer.

If you're worried about job stability, as in you guys may move around, then I can understand. But, then you should probably keep renting if mobility is a concern. If you plan on staying put, I think paying cash for the house is the best route, as far as the housing part of the plan. JMHO

And, if the $300K is all yours, what's new hubby bringing to the table? Make him chip in some towards the house also.

[cobolt]

Thanks for the replies.
Twins Fan: I know what you mean. I see and don't see my concerns also. Maybe this is how I got myself in this situation in the first place (being cash heavy). I'm not sure how much income we would need until we found work again. My fear would be that we wouldn't find work again. We are paid fairly well for the area we live in; however, if he or I lost our jobs, there is no way we could match that income again and stay here. We really like the area but feel a bit pressured to buy a house. We're experiencing an influx of oil boom activity and population growth, which is starting to put a strain on the housing and services market, making it more expensive to rent and frankly, to buy a house. We're afraid we could be priced out of the housing market in a year or so. Land is already hard to come by, purchase-wise. On the other hand, with the influx then property values rise (as do taxes) and if we had to sell at some point, we wouldn't have a problem doing it, so that is where buying cash makes sense. I think I'm just afraid to let go of that money and not have it if the world comes crashing.

Hubby is bringing about 20K to the table, but part of that will be going to a gas efficient car. Right now he drives an old pickup that is just eating us away in gas costs. He wants to pay for the car outright and I think it's a prudent purchase.

hoppy08520: I understand what you're saying. I'll have to think about your suggestion. I would probably part with 150K - 200K of the savings. For certain, I want 100K in reserves. I understand your rationale for putting the bond funds where they are (in the TSP and Roth IRA) but it just looks strange. I know I have to look at the overall picture. I tend to get myopic in my views at times!

I know some people advocate for the TSP Roth as well or instead of a Roth IRA, but it is with it's limitations, although the cost savings are there. I guess I need to weigh if the cost savings outweigh the restrictions.

Thank you all again. I know I was probably stating my case backwards to front, and I feel a bit more confused and stressed than I was before, mainly because I do probably need to focus on what to do with the cash as that will dictate what to do with everything else.

[hoppy08520]

I understand your rationale for putting the bond funds where they are (in the TSP and Roth IRA) but it just looks strange. I know I have to look at the overall picture. I tend to get myopic in my views at times!

It's very common for investors to look at each account (and often at each fund in each account) in isolation, when what really matters is the "overall picture" as you described it.

This often leads to people putting together a mini-portfolio in each and every account, which means you often wind up making some compromises. One such compromise would be holding a lot of bonds in a taxable account when you don't really need to if you can hold those bonds in tax-advantaged accounts.

Forgetting about this account-centric thinking is hard to do at first because you ask yourself, "Why would I be 100% in bonds in my IRA?!" or "Why would I put 100% of my 401(k) in just a US stock fund!?! What if the market goes down??" You can't think that way. You need to think about your total portfolio. On this same theme, if you have all your US stocks in one fund in one account, and the US stock market goes down 30%, you don't panic and scream, "My fund lost 30%! Time to sell!" Looking at all your holding, maybe International is down only 10%, and bonds might be up 5%, so in this case your total portfolio is really just down around 15% or so. Rather than selling in this case, you might do some rebalancing to bring your overall allocation back to its desired range.

[cobolt]

hoppy08520 Forgetting about this account-centric thinking is hard to do at first because you ask yourself, "Why would I be 100% in bonds in my IRA?!" or "Why would I put 100% of my 401(k) in just a US stock fund!?! What if the market goes down??" You can't think that way. You need to think about your total portfolio. On this same theme, if you have all your US stocks in one fund in one account, and the US stock market goes down 30%, you don't panic and scream, "My fund lost 30%! Time to sell!" Looking at all your holding, maybe International is down only 10%, and bonds might be up 5%, so in this case your total portfolio is really just down around 15% or so. Rather than selling in this case, you might do some rebalancing to bring your overall allocation back to its desired range.

Oh this made me LOL because you know that's what is going through my mind! I suppose visually it's easier for people to have mini portfolios, that way, something is down, something else is up, but you're not seeing it in isolation, so you're not so freaked out! So I just need to remember to have three monitors on my desk and view them all at the same time and I should be okay!

All joking aside, really...thank you for your patience and understanding, and mostly your feedback. I'm still taking it all in.

[retiredjg]

cobolt, we generally encourage couples to look at all their retirement accounts as one portfolio. That way, you can use the best that each person's plan has to offer. With your marriage being recent, the two of you may not be thinking "ours" yet. You may still be thinking "mine" and "not mine".

There is no reason to avoid using target funds at either the TSP or at Vanguard. Ignore the date in the name and pick the fund that has the 70/30 ratio that you are interested. However, since you will have a taxable account and since the target funds are not a good choice for that location, you may wish to use individual funds instead.

You plan catch up by saving more money, not by taking more risk. However, while 70/30 is aggressive for your age, it is not in the nuts category, at least until after age 50. At that point, you should be adding more bonds.

It is true that most government employees are not impressed with the G Fund. That's because they are just looking at return. What they should consider is return for the amount of risk taken. The G Fund is as close to riskless as you can get. The G Fund gets a great return for the amount of risk taken. That's why the G Fund is considered a good choice around here.

[Twins Fan]

Thanks for the replies.
Twins Fan: I know what you mean. I see and don't see my concerns also. Maybe this is how I got myself in this situation in the first place (being cash heavy). I'm not sure how much income we would need until we found work again. My fear would be that we wouldn't find work again. We are paid fairly well for the area we live in; however, if he or I lost our jobs, there is no way we could match that income again and stay here. We really like the area but feel a bit pressured to buy a house. We're experiencing an influx of oil boom activity and population growth, which is starting to put a strain on the housing and services market, making it more expensive to rent and frankly, to buy a house. We're afraid we could be priced out of the housing market in a year or so. Land is already hard to come by, purchase-wise. On the other hand, with the influx then property values rise (as do taxes) and if we had to sell at some point, we wouldn't have a problem doing it, so that is where buying cash makes sense. I think I'm just afraid to let go of that money and not have it if the world comes crashing.

Hubby is bringing about 20K to the table, but part of that will be going to a gas efficient car. Right now he drives an old pickup that is just eating us away in gas costs. He wants to pay for the car outright and I think it's a prudent purchase.

That's the beauty of having a paid off home though. IF the world crashed down, you don't need to "match" your prior pay rate. As long as you can pay property taxes, homeowners insurance, keep the lights on, keep the water running, and feed end clothe yourselves, you're golden. Hubby's pension probably covers most or all of that anyway? Hubby being a contractor home repairs are probably a cinch for you guys, as in he can probably do it himself or he has a connection to get it done.

If you were to both lose your jobs, what would be your biggest concern? Being able to make the mortgage/rent payment, right? Well, what if you didn't have one and lost your jobs?

Not that I'm trying to talk you into paying cash for a house. But, it's really about the "safest" thing you can do with some if your cash. Of course, opinions may vary there, but that's mine for what it's worth.

I agree that paying cash for a car better on fuel is a smart thing to do.

You say you have a years worth of emergency funds that is separate from the large chunk of cash. How much is the EF, if you don't mind sharing?

[Peter Foley]

To answer some of your questions: You wrote:

My questions are:

1) What funds do I pick for the Roth? Initially I was going with the Wellington and max the $5K for 2012 / 5.5K for 2013 all at once, but after reading this forum, I’m rethinking the Wellington Fund and leaning toward the 3 fund portfolio strategy. I understand that the three fund strategy is comprised of: Total Stock Market Index, Total International Stock Market Index, and Total Bond Market Index funds, but I don’t know whether to treat both the TSP and the VG Roth IRA as one portfolio, or to have three funds in each account. I’m still a bit unclear as to the pros and cons of either approach.

There are two basic approaches to portfolio construction while keeping tax efficiency and asset allocation/rebalancing in mind. One approach is the all-in-one fund approach where the rebalancing is done for you, the other is to select specific fund classes to achieve desired diversification. TSP lends itself to the second approach. That being the case you should use TSP for your bond allocation, and keep your equities in taxable. Wellington is a balanced fund so it isn't a good fit with the rest of what you have. I would suggest total stock market for your Roth.
2) I plan to increase my TSP contribution, but would like to know how to best re-allocate my TSP funds? I anticipate I will need a way to shore up the shortcomings of the I Fund.
See above. You should also decide what you want to do with your taxable first. You can then use F,C,S and I to create your desired AA.
3) I’m not sure if my desired asset allocation is “age appropriate” (ha ha) because, as I said, I feel I came along late to investing in favor of saving. So if someone feels that 70/30 stocks/bonds isn’t quite right, please let me know.
I would advise 60/40 because you will both (hopefully) have pensions and you have less need to take risk.

4) Are target funds something I should consider? Previously, I’ve written them off.
Target funds are fine, by themselves. You should either go that route entirely or go the do-it-yourself AA route that you are currently following.

5) Once I fund my Roth and max the TSP, I will still have some cash sitting in the bank, earning zippo. What is the best way to address this issue?
Set up an account with Vanguard, Fidelity or Schwab (all have low cost options) and invest these funds in equity mutual funds like the Total Stock Market or the Total International. Then, as mentioned, use the C, S, and I to get to your desired AA percentage and US/Int'l balance.

I would like a simple strategy to start out with, if possible. I don’t plan to tinker much with these funds (just buy, rebalance, and hold). I don’t think I want to do any involved trading , and I don’t plan withdrawing funds.

You should be looking at this from a household perspective. As a newlywed (congrats by the way) I understand keeping finances a bit separate initially.

[cobolt]

I understand all the responses and they give me food for thought.
EF is about 50K
Hubby isn't a building contractor. He's a defense contractor.
There is a reason we're looking at investments separately, for now. I want to get the ball rolling in my corner now, and then he will follow.

[retiredjg]

Since we don't know how much of the taxable account will be invested, it is not possible to give you specific suggestions. However, something like what hoppy posted above is what I would suggest as well - fill the TSP and IRA(s) with bonds, hold the stocks in taxable, add muni's to taxable if needed to achieve your bond allocation.

[cobolt]

Since we don't know how much of the taxable account will be invested, it is not possible to give you specific suggestions. However, something like what hoppy posted above is what I would suggest as well - fill the TSP and IRA(s) with bonds, hold the stocks in taxable, add muni's to taxable if needed to achieve your bond allocation.

Okay, to get some workable equations, let's say that I am going to invest 150-200K in the taxable account.

[Default User BR]

I would not pay cash for a house. I would get one the low fixed-rate mortgages and invest the bulk of the cash. As far as protection from lawsuit, that's what insurance is for.


Brian

[retiredjg]

Okay, to get some workable equations, let's say that I am going to invest 150-200K in the taxable account.

Assuming you put money into the Roth IRA, the total portfolio would be $195.5k. You would change what you currently have to this below and then try to maintain it with contributions.

Taxable 89.5% 175k
40.0% Vanguard Total US Stock Market Index Fund
30.0% Vanguard Total International Stock Market Index Fund
19.5% Vanguard Intermediate Term Tax Exempt bonds (VWIUX) (or some could be held in CDs)

TSP 7.7% $15k
7.7% G Fund or F Fund (total bond market)

Her Roth IRA 2.8% $5.5k
2.8% Vanguard Total Bond Market Index Fund

This portfolio is 70% stock, 30% bonds/fixed, with 43% of the stocks (30% of the portfolio) in international.

I'm not sure if you plan to fund future years of the TSP and Roth IRA directly from your salary or if some of that is coming from the taxable account.

[YDNAL]

Age:45
Desired Asset allocation: 40% total Stock Market, 30% Total International, 30% Total Bond Market

Savings: 300K cash

TSP $15K
G - 0%
F - 5%
C – 30%
S – 35%
I – 30%

*Plans are to buy a house this year, so some of the savings will go toward the down payment. Currently viewing homes in the 150K range.

Recently married; we’re both debtless and childless. I envision working at least another 20 years, so for this thread, I’m focused on my portfolio....

Okay, to get some workable equations, let's say that I am going to invest 150-200K in the taxable account.

Cobolt, welcome to the Forum, and congratulations on your nuptials.

Your most important decision is how much to save - as a couple - over the next 20 years. As far as choosing investments, we spend waaaaaay too much time looking at the minutia behind Fund A vs. Fund A+B vs. Fund A+B+C.

Here's what I would do in your shoes.

1. Open Roth IRAs at Vanguard for both you and husband. Contribute $10K for 2012 and $11K for 2013. Purchase Vanguard LifeStrategy Growth Fund (VASGX) - 80/20 Stock/Bond allocation.
https://personal.vanguard.com/us/funds/ ... =INT#tab=2
2. In TSP, purchase Lifecycle (L2040) Fund - 80/20 Stock/Bond allocation.
https://www.tsp.gov/planparticipation/i ... unds.shtml
3. Open a Joint Account at Vanguard and purchase Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares (VWIUX) in Taxable with the remaining cash [after funding Roth IRAs].
4. The above gives you a less aggressive allocation initially than you said in the original post (70/30 Stocks/Bonds) since you now have $300K in Cash - there are psychological implications there to work through. Also, holding "balanced funds" in TSP and Roth IRAs gives you full diversification, no maintenance, and perhaps better-equip you to deal with Market fluctuations that may be the cause you to hold $300K in Cash.

Have you seen the reading list?
http://www.bogleheads.org/readbooks.htm/url

Good luck.

[cobolt]

Here's what I would do in your shoes.

1. Open Roth IRAs at Vanguard for both you and husband. Contribute $10K for 2012 and $11K for 2013. Purchase Vanguard LifeStrategy Growth Fund (VASGX) - 80/20 Stock/Bond allocation.
https://personal.vanguard.com/us/funds/ ... =INT#tab=2
2. In TSP, purchase Lifecycle (L2040) Fund - 80/20 Stock/Bond allocation.
https://www.tsp.gov/planparticipation/i ... unds.shtml
3. Open a Joint Account at Vanguard and purchase Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares (VWIUX) in Taxable with the remaining cash [after funding Roth IRAs].
4. The above gives you a less aggressive allocation initially than you said in the original post (70/30 Stocks/Bonds) since you now have $300K in Cash - there are psychological implications there to work through. Also, holding "balanced funds" in TSP and Roth IRAs gives you full diversification, no maintenance, and perhaps better-equip you to deal with Market fluctuations that may be the cause you to hold $300K in Cash.

Have you seen the reading list?
http://www.bogleheads.org/readbooks.htm/url

Good luck.

The only question I really have is how is an 80/20 Stock/Bond allocation initially than the 70/30? How does the cash play into that? I'm assuming the cash factor is what makes it less aggressive although it looks more aggressive?

I am doing some reading from the reading list. A great help and valuable tool! Thank you for your feedback!

[YDNAL]

The only question I really have is how is an 80/20 Stock/Bond allocation initially than the 70/30? How does the cash play into that? I'm assuming the cash factor is what makes it less aggressive although it looks more aggressive?

You need to look at ALL assets, not just 80/20 allocation on ONLY 22% of your Assets. It is simple math equations.

TSP $15K (9%)
Roths $21K (13%)
Taxable (say $150-$21) $129K (78%)

22% x 20% Bonds = 18% Bonds
78% x 100% Bonds = 78% Bonds (total 96% Bonds)

Basically, very little (4%) in Stocks until you determine you have appropriately selected the correct risk profile for your savings - after all, you have mostly Cash right now.

Like I said previously, most important is the level of new savings over the next 20 years. After, select the right Stock/Bonds split you need to meet your goals, and the split that you are able to sustain [stay the course] when the Stock Market takes a hard hit. When you have ascertained the proper risk profile, all it takes is to buy Stocks in Taxable with your tax-exempt Bonds.

[jwillis77373]

Cobalt,

Excellent question.

I'm not far off from you, minus the nuptials. I've never been married.

I recommend also that you look at all of your funds as one account and manage accordingly. Micro-managing individual accounts can be a time drain, and put simply, none of us are good at it.

You could try a program like a version of Quicken that aggregates all of your separate accounts into a single Portfolio view and helps you make adjustments based on goals. It walks you through what you should do in broad terms, more stocks, more bonds and leaves the details up to you.

Fidelity Netbenefits is often accessible to people who have a government or commercial 401k or 403b, it also helps you "see the big picture".

The Vanguard dashboard view of your accounts will also accept input about investments with other investing sources and give you a "big picture".

About the best input I could say is "set the course, and let it ride". You might also want to write a letter to yourself that states why you made the decisions you did and date it and put it in an envelope and then put it away. When something bad happens, or the News goes full tilt against fictionary wind mills, get the letter out and try to be objective -- has anything changed? But mostly ignore the noise.

The hardest time when investing, is the first move, in my case when picking a fund or funds and pushing the button to execute the purchase or sale. I hem and haw over it literally for weeks, and watch the stock market pitch and yaw.. with full knowledge that in the long run, it is still completely unpredictable and will make no difference. You can no better predict the future today than you will in 20 years.. only long trends count, and low costs.. that has been proven over and over again.

The worst thing is lost opportunity.. that's a certainty. If you really want to play the market in the short term.. invest half now and half later.. and learn from the experience. Either you will be correct and invest at the wrong times both times.. and it should encourage you not to try to time the market. Or you will be dead wrong, and you'll score big time.. which is the worst thing that could happen because you'll be encouraged to time the market and be confident you can predict the future.. a certainty that has been proven wrong. The average is half will be good half will be bad.. and you'll be satisfied no one can time the market.. so 75% of the time you'll learn something "good".

Houses; you seem to be thinking of it as an investment, and bostering that with details on the current housing market in your area -- I would be weary of that and really check with a realtor.. go visit one as if you had a house to sell and see what they say. Again, its like timing the market, we're all experts in fields we're not experts. Long term things sell, just don't keep buying houses, for the sake of plowing money into them as investments.. in general they don't gain in value over 3% (long term) hot markets have a tendency to cool off rapidly and swing to the other direction to compensate. If you have a family though with kids or parents to take care of.. that is a different equation.. be sure to consider all the variables. And the surest route to the poor house is buying for storage.. get rid of the junk, it does not save you money, and you can't afford that much emotional baggage, no one can.

Cars; I'd consider the Blue book trade in value. And the amount of trouble you've had with it in the last year. As a rule its easier to put up with what you own than what you don't. Sooner or later the Value versus Costs above operating costs like gas alone, in the last year will cross paths and that's a good time to start looking. Looking for bargains on Green and Electric vehicles don't really make much sense, unless you get a huge tax break for it and qualify for it. Personally I also consider the popularity on robbery statistics, popular models that get stolen are not a bargain. Models that have been in the news for safety issues probably affect their potential resale value (if you want to think about new vehicles). I find it hard to think about new vehicles based on costs. But also hard to think about used vehicles that aren't well documented based on risk. [ its never a good sign when someone says they are looking to save money on gas.. that kind of throws up a red flag.. a decision was made before that didn't go well.. and it might happen again ]

[xram]

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

good luck
xram

[cobolt]

The hardest time when investing, is the first move, in my case when picking a fund or funds and pushing the button to execute the purchase or sale. I hem and haw over it literally for weeks, and watch the stock market pitch and yaw.. with full knowledge that in the long run, it is still completely unpredictable and will make no difference. You can no better predict the future today than you will in 20 years.. only long trends count, and low costs.. that has been proven over and over again.

Houses; you seem to be thinking of it as an investment, and bostering that with details on the current housing market in your area -- I would be weary of that and really check with a realtor.. go visit one as if you had a house to sell and see what they say. Again, its like timing the market, we're all experts in fields we're not experts. Long term things sell, just don't keep buying houses, for the sake of plowing money into them as investments.. in general they don't gain in value over 3% (long term) hot markets have a tendency to cool off rapidly and swing to the other direction to compensate. If you have a family though with kids or parents to take care of.. that is a different equation.. be sure to consider all the variables. And the surest route to the poor house is buying for storage.. get rid of the junk, it does not save you money, and you can't afford that much emotional baggage, no one can.

I can definately identify with the hem and haw, start and stop. I think and rethink over and over. I get on the Vanguard site and am ready to click and then cancel. I just need to inform myself and do it! Thanks for verbalizing.

I am not looking at a house as in investment, thinking I'm going to dump it in a few years and buy another and another. If we can buy a house and stay in it through retirement, great. But this area is growing such that we may not want to do that. The plan as it stands now is to buy a house and hopefully stay in it until we retire.

I want to thank everyone for your helpful and thoughtful feedback. I'm going to do a bit more reading and then push the button. I will keep you all updated when I do. Again, thank you so much. You are a great group of folks!