I posted on 6/22/13 (viewtopic.php?f=1&t=118498
) and appreciated the input received. Shared it with my husband, particularly lhl12’s suggestion that we (1) consider as if all IRAs/Roths were my $ and (2) decide the asset allocation as if I were single. Husband agrees that the chances of running out of money in his lifetime (he’s 76) are hopefully nill, and expressed concern if a 25%/75% to 40%/60% conservative allocation would endanger my future financial security, as well as size of kids’ inheritance. I have good genes/health, so likely our portfolio (v.low 7 figures) might need to last 30 to 35 years.
I’ve run an unrealized gain/loss report of trust account holdings. Bottom line is if we sold all stk/fds except Vanguard Total Stock Market Idx Fd., we’d suffer an approx. $2,200 L.T. loss (Exelon should’ve been dumped long ago) and a $1,150 S.T. loss (we’re in the 25% federal (12% after deductions) and 5% IL tax brackets). I’ve read “Asset Allocation in Multiple Accounts,” “Lazy Porfolio,” and other articles. Now I’m back at you with a few more requests for comments:
(1) Questions as to a possbile 50%/50% allocation apportioned as follows
- 25% Vanguard Total Bond Market Index Fund (VBTLX)
- 25% Vanguard Short-Term Inflation-Protected Securities Index Fund (VTIP)
- 40% Vanguard Total Stock Market Index Fund (VTSAX)
- 10% Vanguard Total International Stock Index Fund (VTIAX)
I’m uncertain as to how to divvy up the 50% bond portion. Read concern among posters about the bond market (moving out of bonds, discussing different bond funds, etc.) and yet I know that Total Bond Market Index Fund is part of the 3-leg stool of funds. Thoughts?
Also wondering if an additional 5% portion to Vanguard REIT Index Fund (VGSLX) would be advisable at our stage in life. This would cut VTSAX to 35%.
As to future allocation, we tentatively plan to decrease equity/increase bonds by 5% every 5 yrs. (at 65, it'd be 45% stk./55% bds., etc.) until my age 80, when they'd change forever to 25% stk./75% bds. We also plan to check/rebalance every year in mid-January. Sound right?
(2) Designing portfolio across our account buckets
-- my 401, our IRAs (his/mine), Roth (his/mine) & family trust (taxable).
A. My 401K (1.5% of portfolio) has fairly good selections, the best of which are:
- PIMCO Total Return (PTTRX) 0.46%
- Vanguard 500 Index (VIFSX) 0.05%
- Vanguard Small Cap Index (VSISX) 0.10%
- Vanguard Total Int'l Stock (VTSGX) 0.16%
I need to fill the 401K bucket first, as it has the most limited choice of funds. Should I go with PIMCO, which is a bond fund so is well situated, yet bears the highest expense … OR go with 87% VIFSX & 13% VSISX (simulating Total Stock Mkt. Index), the cheapest ones? I don’t plan making future contributions (unmatched).
B. Next question is Roths (approx. 3% of portfolio): here again I see a difference of opinion as to whether to fill the bucket with bonds or equities. I don’t get why it’s best to fill it with bonds when there are no tax repercussions. We hope to pass the Roths on to heirs untouched. Yet just in case we need to tap it, I’m inclined to go 50% bonds and 50% Total Stock Market Index. We plan to continue making the max Roth contribs. as long as I'm working (approx. 3 yrs.).
C. After the Roths, I’d proceed to fill the IRAs with bonds, then with Total Stock Market Index. The taxable trust bucket would hold some Ttl. Stk. Market Index and all Total Int’l Stock Index. The trust bucket would continue holding US Savings Bonds and 3 I bonds (nearly 4% of portfolio).
We also have CDs in our IRAs and trust accounts getting 1.75% - 2% interest and expiring in 2015 -16 (a low 3 mo. penalty to break). Thoughts on breaking some/all CDs to invest in the Vanguard buckets?
(3) Double-checking for more thoughts on consolidating all holdings into Vanguard. They’re presently 4% w/Uncle Sam, 5% at Vanguard, 20% at banks
, and 71% at Scottrade. Opinions, please. I see merit in both consolidating down to 1 brokerage but also in moving much to Vanguard and keeping some at Scottrade (or another brokerage: open to changing).
That’s it for now. Your input, as always, is invaluable and most appreciated!