Portfolio Review Please

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rich137
Posts: 83
Joined: Thu Jan 31, 2008 6:36 pm

Portfolio Review Please

Post by rich137 »

Bogleheads,

Thank you for all the great information available on this forum! At this time I am a partner in a small business that I enjoy. I don’t see myself fully retiring for at least 10 years unless I develop health issues. My business income is down and the business is struggling to survive. My wife and I are not having problems making ends meet because I have other rental and buyout income coming in. The business will not support any 401K opportunities. My wife and I are eligible for regular IRA contributions of $6k per year and that is it. I would enjoy your comments and opinions.

Can you see anything I can do to improve my portfolio? I welcome any suggestions you can make.



Emergency funds = Yes, 6 months

Debt: None

Tax Filing Status: Married filing Jointly

Tax Rate: 33% Federal, 3.1% State (Pennsylvania)

Ages: 62 him, 61 her

Desired Asset allocation: 55/40/5

Intl allocation: 25% To 30%

Current portfolio (7 figures)



Taxable
42.6% Vanguard Total Stock Market index- Admiral (VTASX) (.07)
15.5% Vanguard All-World ex-US-Investors (VFWIX) (.40)
10.9% Vanguard PA LT Tax-Exempt Admiral (VPALX) (.08 )
8.8% Vanguard Short-Term Tax-Exempt-Admiral (VWSUX) (.12)
3.9% Vanguard PA Tax-Exempt Money Market Fund (VPTXX) (.17)


His IRA at Vanguard
14.5% Inflation protected securities-Admiral (VIPXS) (.11)

Her IRA at Vanguard
3.5% Inflation protected securities-Admiral (VIPXS) (.11)




Results
58.4% Stocks (73% Domestic and 27% International)
37.7% Bonds (52% TIPS and 48% Tax-Exempt Bonds)
3.9% Cash (3.9% Cash)
100%=Total of Entire Portfolio

Questions,

1. How can I improve my portfolio?
2. Should I rebalance now or wait?


Thank you for your help.

Rich
livesoft
Posts: 86079
Joined: Thu Mar 01, 2007 7:00 pm

Post by livesoft »

Welcome again. You asked the exact same questions 3 months ago.

1. Your portfolio is perfect as long as you like TotalStockMarket weights and do not wish to overweight (over the standard market weights that you have) small-cap and value. I personally think you can improve your portfolio by overweighting small-cap and value. This is all described in books such as Larry Swedroe's "The Only Guide to a Winning Investment Strategy You'll Ever Need" which is a very easy read.

2. It appears that you are very near your desired AA, so why would you consider rebalancing?
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rich137
Posts: 83
Joined: Thu Jan 31, 2008 6:36 pm

Post by rich137 »

Livesoft,

Thanks for the reply.

I agree that Larry’s book "The Only Guide to a Winning Investment Strategy You'll Ever Need" is one of the best books on the subject. I have read it and I refer to it often.

With all the knowledgeable people on the forum, I wanted to see if anyone could improve on what I think is a good portfolio.

Rich
DaveS
Posts: 1308
Joined: Fri Jun 15, 2007 9:42 am
Location: Reno, NV

Post by DaveS »

I don't feel comphy with the apx 13% short term tax free. The problem is that kind of fund is virtually guaranteed not to keep up with inflation. On the other hand if interest rates skyrocket you will be glad you were short. I suspect some of it is emergency reserve, but you might want to consider moving to the limited term tax exempt or intermediate tax exempt. For myself I would have a bit of small cap value, for example, VBR pays a fairly good dividend. But since your business is high risk, I can understand how you might want to reduce the risk of your investments.

I think most people "rebalance" to much. Once a year is fine. I do it twice a year but that is because my former business used to produce a spurt of cash in April and Oct. and I got into the habit of using it to rebalance then. Dave
livesoft
Posts: 86079
Joined: Thu Mar 01, 2007 7:00 pm

Post by livesoft »

rich137 wrote:.... I have read it and I refer to it often.

With all the knowledgeable people on the forum, I wanted to see if anyone could improve on what I think is a good portfolio.

Rich
So in that case, why not have some separate extra small cap and value assets? Remember, you asked how to improve your portfolio. The answer might be to follow the advice of the book. :)
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