Recommendations ~ Newbie Young Investor ~ High Income

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Recommendations ~ Newbie Young Investor ~ High Income

Postby xGLORYx » Wed May 08, 2013 11:54 am

Hey Guys ....

I'm 27 and looking for some recommendations below. I'm a small business owner whose done quite well over the last few years, and I've finally realized I should probably start preparing for the future. I took advantage of the backdoor Roth IRA for 2012 along with having my wife do the same. I'm currently about 3/4 the way through "The Bogleheads' Guide to Investing" and I'm now just starting to fully grasp things. My old CPA didn't help much as far as tax understandings went. I certainly paid "My Fair Share" over the past several yeas, and wish I could have taken advantage of some tax sheltering, but I won't complain. I've fired him and moved on to someone that seems to know quite a bit more :)

I'm looking for recommendations :)

My info is below:

Balance Sheet:
Assets:
Checking Account: $64,000+
Savings Account: $750,000+
15+ Acre's Ready To Build: $160,000
Current Home: $90,000 in equity
2 Vehicles Paid For: $50,000
His Roth IRA: $5,133.xx
Her Roth IRA: $5,202.xx
Scottrade Account: $29,200.xx
Vanguard Money Market: $50,000 {Fresh and Ready to start}
Sons 529 Sav Acct: $6,355.xx

Liabilities:
Home Loan: $210,000 balance [3.5% @ 15 years with 13 years remaining]
Credit Card Debt: $0 ~ None
Car Loans: $0 ~ None
Student Loans: $0 ~ None

Income Statement:
Salaried Income (After Taxes) [Not including Bonuses]: $9500/month
Yearly Distributions (Before Tax): $200,000 - $300,000/yearly

Expenses:
Mortgage [3.5% ~ 15 year note]: $1,650/month
Insurance: $250/month to cover everything including Umbrella Policy
Property Tax: $134/month
Misc (Including Utilities/Kids/Groceries/Pets/etc...: $2,000.00

Money left over: Approx: $5,000/month not including distributions/bonuses.

Goal's: Retire by the age of 40. Live off passive income via my investments/rental properties. Goal ~ $12,000/month income doing nothing :D

I at one time had several rentals, but they were managed and well over 500 miles from me. I moved them because I couldn't keep up with everything, but plan to eventually get back in toe real estate at some point more locally. For name ~ rentals are sitting on the side.

My risk tolerance is relatively stout. I didn't get to where I am today quickly by being risk averse. Now that I've made a good amount of money ~ My risk tolerance has certainly gone down, but its not entirely tepid.

I'd probably say I'm at 70/30 currently, and would like your input on the best portfolio to start with. I'm going to start with $50,000 and move more money in bimonthly.

If there is anything else or info I can provide for better feedback, just let me know.

I did have 1) question ~ I've looked at quite a few of the different funds that Vanguard offers. Its hard for me to gain full understanding/knowledge of what the breakdown of the fund is (Stocks vs Bonds, etc...) Is there a site or a way to track what each fund is offering in the asset allocation?

Thanks guys & gals!
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Re: Recommendations ~ Newbie Young Investor ~ High Income

Postby xGLORYx » Wed May 08, 2013 1:58 pm

Bump :D

I'd like to add ~

I'm moving $250k in to an "Emergency" fund High Yield savings account. Will likely keep $300k to build a new house.
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Re: Recommendations ~ Newbie Young Investor ~ High Income

Postby xGLORYx » Wed May 08, 2013 6:41 pm

Shameless Bump ....
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Re: Recommendations ~ Newbie Young Investor ~ High Income

Postby Duckie » Wed May 08, 2013 7:20 pm

I'd probably say I'm at 70/30 currently, and would like your input on the best portfolio to start with. I'm going to start with $50,000 and move more money in bimonthly.

You want an AA of 70% stocks, 30% bonds, with unknown in international. I'll pick 30% of stocks in international. That breaks down to 49% US stocks, 21% international stocks, and 30% bonds. So something like:

49% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.05%)
21% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.16%)
30% (VBTLX) Vanguard Total Bond Market Index Fund Admiral Shares (0.10%)

But before you invest the $50K in a taxable account consider a small-business retirement plan. These plans allow you to defer more assets. Check out Small-business plans at Vanguard.

All assets for retirement are considered one big portfolio. That means any taxable assets for retirement purposes (the new $50K contribution and perhaps part of your Scottrade account), plus the Roth IRAs, plus the possible small-business plan are all included in the percentages.

Its hard for me to gain full understanding/knowledge of what the breakdown of the fund is (Stocks vs Bonds, etc...) Is there a site or a way to track what each fund is offering in the asset allocation?

Well, with Vanguard funds you just look at the bottom of the "Overview" page or go to the "Portfolio & Management" page. If you want more details, on the "Overview" page you can click on "Portfolio holdings". Morningstar also has information here as does Yahoo! Finance here.

If you want to see what your entire portfolio looks like use the free Morningstar Instant X-Ray calculator.

Just some possibilities.
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Re: Recommendations ~ Newbie Young Investor ~ High Income

Postby LadyGeek » Wed May 08, 2013 8:01 pm

FYI - I removed several posts which referred to xGLORYx's prior username, which I just changed. Please help answer his questions.
To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
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Re: Recommendations ~ Newbie Young Investor ~ High Income

Postby xGLORYx » Wed May 08, 2013 9:05 pm

Duckie wrote:
I'd probably say I'm at 70/30 currently, and would like your input on the best portfolio to start with. I'm going to start with $50,000 and move more money in bimonthly.

You want an AA of 70% stocks, 30% bonds, with unknown in international. I'll pick 30% of stocks in international. That breaks down to 49% US stocks, 21% international stocks, and 30% bonds. So something like:

49% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.05%)
21% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.16%)
30% (VBTLX) Vanguard Total Bond Market Index Fund Admiral Shares (0.10%)

But before you invest the $50K in a taxable account consider a small-business retirement plan. These plans allow you to defer more assets. Check out Small-business plans at Vanguard.

All assets for retirement are considered one big portfolio. That means any taxable assets for retirement purposes (the new $50K contribution and perhaps part of your Scottrade account), plus the Roth IRAs, plus the possible small-business plan are all included in the percentages.

Its hard for me to gain full understanding/knowledge of what the breakdown of the fund is (Stocks vs Bonds, etc...) Is there a site or a way to track what each fund is offering in the asset allocation?

Well, with Vanguard funds you just look at the bottom of the "Overview" page or go to the "Portfolio & Management" page. If you want more details, on the "Overview" page you can click on "Portfolio holdings". Morningstar also has information here as does Yahoo! Finance here.

If you want to see what your entire portfolio looks like use the free Morningstar Instant X-Ray calculator.

Just some possibilities.


Thanks Duckie! I'll certainly look in to those funds, as those are relatively close to what I believe would be ideal for me right now! I also appreciate the links to learn more about the funds in general.

Prior to setting up our Backdoor Roth's, I looked into several Small Business Retirement avenues. I'll take a look at them again ~ especially the SEP-IRA.

Thanks again Duckie! Hope to one day be able to pay it forward and participate and advise others like you have done for me! :) Until then, I'll keep studying, reading, & learning everything I can!
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Re: Recommendations ~ Newbie Young Investor ~ High Income

Postby LANDMAN » Wed May 08, 2013 10:19 pm

What kind of small business do you own/operate?
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Re: Recommendations ~ Newbie Young Investor ~ High Income

Postby xGLORYx » Thu May 09, 2013 9:42 am

LANDMAN wrote:What kind of small business do you own/operate?


A profitable one :wink: I have no desire to share what I do for a living as I don't find it relevant to this thread or this board :)
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Re: Recommendations ~ Newbie Young Investor ~ High Income

Postby T_in_ATL » Thu May 09, 2013 10:09 am

I believe that Duckie has given you a very good allocation, though unless I missed something it seems that quite a bit (more than 30%, anyway) of your investments may be in taxable accounts, correct? If that is the case, a tax-exempt bond fund might be more appropriate for any bonds held outside of a retirement account. Otherwise, the distributions would be taxed as ordinary income at your (I assume high) marginal rate. Depending on where you live, you might have the option for a good State muni fund and/or you might consider something like Vanguard's Intermediate Term Tax Exempt fund.
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Re: Recommendations ~ Newbie Young Investor ~ High Income

Postby Duckie » Thu May 09, 2013 6:15 pm

xGLORYx, if your Roth IRAs are your only tax-sheltered accounts and you want 30% bonds, you're going to have to put bonds in taxable. In that case (VWITX) Vanguard Intermediate-Term Tax-Exempt Fund Investor Shares (0.20%) and/or a state-specific tax-exempt fund will be appropriate. (TBM can still go in your Roth IRAs.) You could also buy 
I Savings Bonds and/or EE Savings Bonds through Treasury Direct.
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