How Should I Invest My Husband's Retirement $ - 75K?

[rj_molly]

I am hoping someone can offer advice about how to invest my husband's retirement funds. My husband has very little involvement in our finances or interest in how his retirement money is invested. He is the ultimate “invest it and forget it” type of investor! My husband has a 401k distribution in the amount of 75K that has been rolled over to an IRA. He is 38 yrs old and this is all the money he has saved for retirement (so far). It falls on me to decide how to best invest his money.

In my own retirement portfolio I have index funds that are split roughly 1/3 bonds, 1/3 international stocks, 1/3 US stocks. I also have a small holding of gold and an REIT in a Roth that equals 10% of my total portfolio.

My goal for my husband's retirement is something complimentary to my retirement investments. My husband says he is interested in growth, but I know he would be extremely upset if his investments lost 40% or more of their value (if I told him in the event that ever happened, because he does not track his investments).

I am considering:

1) Wellington Admiral shares and Vanguard Total International Stock ETF for some international exposure.
or
2) Vanguard LifeStrategy Moderate Growth Fund

What is your opinion on this? I really am open to feedback, other ideas and suggestions. Thanks!

Updated:
We are in our 30's with no children.

6 months worth of expenses in an emergency fund.

Retirement Holdings. We have no investments in taxable accounts.
ME:
Roth IRA:
VNQ Vanguard REIT - 8% of my total portfolio
GLD - 2% of my total portfolio

SEP IRA:
Bonds: 30% of my total portfolio, evenly split between AGG and TIP
International: 30% of total portfolio VEU (if I was buying today I would go with Vanguard Total International Stock ETF instead)
US: 30% of total portfolio is in VTI

Husband:
75K in cash in a rollover IRA

[edawg]

At 38, the various "lazy investor" threads will do a better job of mixes of funds to pursue. General mix will favor US, Int'l and REIT stocks to bonds, but don't neglect to dollar cost average into the bond funds for when the next 2008 comes along (probably in 10 years if history is any judge so don't hurry with interest rates rising)...

Reading between the lines, the biggest question is why does he feel so disconnected from his retirement planning? Do you hold your prowess on finances over his head or does he have some past family experience where investing didn't work well? Speaking from personal spousal experience (I'm male and she's the spender in our case), many folks fear investing and find excuses to delay making decisions. Or worst case, they "live for today" and spend it and assume some windfall will pull their assets out of the fire someday...

Hopefully you could get your husband to read one of the easy to digest, but great books on financial planning (e.g., Ron Blue, Mastering Your Money or Dave Ramsey books) and then let him "own" some of the process. "Joiners" tend to do better than "Splitters" in the long run and I was able to get my wife seriously with the program after finding ways to avoid "the lecture" about money.

May peace (and teamwork on how to grow old and assets together) be with you!

[retiredjg]

What is your opinion on this? I really am open to feedback, other ideas and suggestions. Thanks!

Welcome to the forum!

To get an answer that actually applies to your situation, you need to provide more information. See the link below called "Asking Portfolio Questions". The closer you follow that format, the better and more reliable the suggestions will be.

You can use the edit button and add information to your original post. Post again to let people know you have updated your information.

[cjcerny]

Consider a Vanguard target retirement date fund.

[Easy Rhino]

if you two are planning on retire together, then you should treat all your retirement savings as one coordinated portfolio. You will, unfortunately, need to get his buy in on whatever you come up with.

[Random Musings]

I am considering:

1) Wellington Admiral shares and Vanguard Total International Stock ETF for some international exposure.
or
2) Vanguard LifeStrategy Moderate Growth Fund

What is your opinion on this? I really am open to feedback, other ideas and suggestions. Thanks!

From the original OP, it almost seems like "his" money is for "his" retirement and you have to decide how to invest "his" money.

The OP also has their "own" retirement portfolio.

Is this the case? Or should your combined assets be truly treated as one portfolio?

RM

[ruralavalon]

He is 38 yrs old and this is all the money he has saved for retirement (so far). It falls on me to decide how to best invest his money.

In my own retirement portfolio I have index funds that are split roughly 1/3 bonds, 1/3 international stocks, 1/3 US stocks.

Not a bad allocation for him too at age 38, although I would use more U.S. equity and less internatonal. I would suggest these funds:
Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX);
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX);
Vanguard Total International Stock Index Fund Admiral Shares (VTIAX).

[Aptenodytes]

I would just mirror your current portfolio (minus the gold). Your portfolio is very reasonable, you seem savvy, so just manage his money the way you would your own and you'll be OK.

Note that if you are rational and if you are savvy (both seem true), then there's a fundamental limit to how differently your husband can invest his money anyway. If he does something like 50% equities, then your rational response is to shift your holdings to a greater equity percentage so that the combined portfolio is 2/3 equities. If both spouses were active investors there'd be an iterative process whose outcome would depend on the relative shares of the combined portfolio -- e.g. the smaller investor may go all the way to the asset they prefer more. But in your case you are the only active investor so you can effectively avoid that.

Another way of putting the matter is that there's no shortcut that avoids having the two of you come up with a combined approach to risk and return.

Sorry, I realize I'm overthinking this a bit.

[bertilak]

rj_molly,

Strategy:

• Look at all of your investments as a single portfolio.
• Establish a plan, primarily an Asset Allocation, for the whole portfolio. Look at the Wiki's Investment Policy Statement (IPS) to see other aspects of a plan.
• Educate yourself, starting with the books and authors listed in the wiki. You might want your husband to read Mike Piper's Investing Made Simple ... in 100 Pages or Less. Leave a few of the other books lying around and he might even get interested! After all, it is an interesting topic, especially if you get into the history of things. (Nothing like a bit of perspective!)

Tactics:

These are of no use if you don't have a strategic plan!

• You will need to figure out how and when to add new money to the portfolio taking into account that it is spread across more than one account.
• To best achieve your AA and perhaps other aspects of your plan you will need look at what investments are available in each account.
• Consider concentrating different parts of your AA in different accounts to help you reach the require minimum investments. Take into consideration having a large enough sum to upgrade to fund classes with lower expense ratios. This applies to Vanguard funds and perhaps other fund families.
• Avoid investing in single stocks. I say this because you referred to "an" REIT (singular). A diversified REIT fund would be better. You want property-owing RETTs, not mortgage REITS. Among property-owning REITs there are many kinds: residential, commercial. Commercial itself has many specialties. Again, a diversified fund is best.

The Most Important Things:

1. Save, save, save.
2. Invest safely in broad market stock and bond funds with low expense ratios. You can refine this as you gain knowledge and experience.

More specific advice on any of the above topics can be had here as you progress to the point of needing that advice.

[GregLee]

My husband has very little involvement in our finances or interest in how his retirement money is invested.

And why should he be involved? It sounds like you are a very capable investment manager. My wife is, similarly, completely uninterested in our retirement funds -- if the market value of our portfolio goes up, she doesn't mind me telling her, but when it's down, she's "I didn't need to know that."

In your summary, I didn't notice any mention of tax management -- which sort of investments you keep in IRAs, or maybe some tax-free municipal bonds/funds in taxed accounts. Someday, in around a decade, you'll probably want to develop an actual retirement budget: where you will live, how much you can spend each month, what your SS payments will be, and that sort of thing. It's probably too early to worry about that, now.

[rj_molly]

I think my question was poorly worded. A better way to have worded it would have been: these are our holdings (see update in original post). My husband has 75k available to be invested for retirement. Where should we put the money?

We do plan on retiring together. Before we got together my husband had saved nothing for retirement. I filled out all the 401K paperwork for him and had him sign it. Within a little over 3 yrs the money in his retirement account has grown to 75K. He says that he trusts me and knows I will do a good job with the money. He really doesn't want to be involved with how the money is invested. I feel a tremendous amount of pressure to invest that money well for our future.

That is why I am looking for feedback and advice on how to best invest our money so we can have a secure retirement (together).

[Aptenodytes]

I think my question was poorly worded. A better way to have worded it would have been: these are our holdings (see update in original post). My husband has 75k available to be invested for retirement. Where should we put the money?

I'm confused now but wasn't before.

Why would you not put the $75K in the exact same funds you have your current portfolio? Why are you sure of the current portfolio but unsure of the 75K? My original suggestion to invest the new the same way you are investing the old still makes sense to me.

Are you asking for a critique of your original portfolio, before the 75K? It seems reasonable to me.

I'm still not getting something here. You put careful thought into an asset allocation strategy. Now you have some additional money to put into it. You don't need to start thinking from scratch -- the thinking you did earlier still applies and guides how the 75K is invested.

[retiredjg]

That is why I am looking for feedback and advice on how to best invest our money so we can have a secure retirement (together).

The information provided does not help us to help you because we don't know what percentage of the total assets the $75k represents.

However, you already know how to spread a portfolio out over several different accounts. Just add one more account (a rollover IRA) into the mix and fill it with something simple since it will not be getting more contributions. Maybe a bond fund - then adjust the rest of the joint portfolio for the stock to bond ratio that you jointly agree on.

If he wants his money separate, fill His Rollover IRA with a target retirement fund that has the appropriate stock to bond ratio (ignore the date in the name). Or use the lifestrategy fund with the closest stock to bond ratio. Or use Wellington plus some international if you want.

If you prefer using Vanguard's Total International in your SEP, just exchange to it. There is no reason to keep VEU if it is not your preferred fund.

The elephant in the room is "what about his new 401k?" It should also be thrown into this mix, but I don't think you have mentioned what is happening there.

It's a bit curious that you are asking your question about what to do with the money. You already know how to do this. You know how to do it well as evidenced by your own investments. Why is this $75k throwing you for a loop? Just do the same thing you would do if you suddenly discovered a long lost rollover IRA that belongs to you. If there is some reason to keep his and her money separate, just do whatever you would do if the money were yours.

[ruralavalon]

ME:
. . . .
SEP IRA:
. . . .
International: 30% of total portfolio VEU (if I was buying today I would go with Vanguard Total International Stock ETF instead)

Then go ahead and switch to the Vanguard Total International Stock ETF, there is no downside to switching and on the plus side Total International is more diversified.

I agree with the others, for his rollover IRA go ahead and use the same core allocation:
$25k, Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) or ETF = BND;
$25k,Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) or ETF = VTI;
$25k, Vanguard Total International Stock Index Fund Admiral Shares (VTIAX), or ETF = VXUS.

[Random Musings]

Thanks. Now that you have cleared it up, if your risk needs are what your investments are at, I would go:

30/30/10 (REIT's)/30 Bond

With respect to your 2% gold holding, that allocation will have very little impact on portfolio performance. Ye' old rule of thumb is around 5%.

RM