'Won the Game' but is this portfolio too conservative?

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'Won the Game' but is this portfolio too conservative?

Postby Red-y » Sun Feb 10, 2013 2:48 am

Hello all--This site has been a tremendous help in starting me on a path away from bad investor behavior. Thanks for all you do. Here's my situation:

I immigrated to Canada 5 years ago after a corporate career in the US. I'm semi-retired and make about $10k/year at a seasonal job. My Social Security benefits will cover 80% of my basic living expenses when I start to collect in 11 years (at full retirement age).

I would have, admittedly, a lot of holdings with this proposed portfolio, but I lean towards the slice-and-dice approach and do have an IPS to keep things in check. FYI--no access to Admiral funds; I am at Fidelity because Vanguard will not hold accounts for Canadian residents.

Emergency funds: Six months of expenses, sitting in *yawn* ING Direct (or Capital 360 I guess it's called now)
Debt: $0
Tax Filing Status: Single although I have a common-law partner
Tax Rate: 15% Federal, 0% State
State of Residence: don't have one; I live in British Columbia, Canada
Age: 55
Desired Asset allocation: 30% stocks / 50% bonds / 10% commodities/REITS / 10% cash
Desired International allocation: greater than 50% of stocks

Portfolio size is high six-figures and 25 times my annual living expenses, which I have been tracking for the past 4 years to the penny with Microsoft Money. My planning requires the portfolio to survive another 40 years.

Proposed retirement asset mix and locations:

Taxable
1% cash (for current living expenses; I am 72(t)ing my tIRA and this gets replenished quarterly)

Traditional IRA
8% cash
8.5% Vanguard Dividend Appreciation VIG .13 (I know VTI is the traditional holding here, but I like the enhanced dividend/quality slant of this ETF)
2.8% Vanguard Small Cap Value VBR .21
3.3% Vanguard Real Estate VNQ .10
3.7% UBS Alerian MLP ETN MLPI .85 (unabashed yield-chasing)
5.6% Vanguard Total International VXUS .18
3.5% Vanguard Intl Real Estate VNQI .35
10.6% Vanguard ST Corp Bond VCSH .12
4.4% PowerShares Sr Bank Loan BKLN .76 (unabashed yield-chasing and protection from rising interest rates)
9.0% iShares TIPs TIP .20
9.0% Vanguard High Yield Bond VWEHX .23
9.0% Fidelity New Mkts Income FNMIX .87 (to be replaced with the Vanguard International Bond index ETF when available)
2.7% iPath Pure Beta Commod. BCM .75


Roth IRA
1% cash
2.4% WisdomTree Int''l SmCap Div DLS .58
3.5% WisdomTree EmergMkts Equity Inc DEM .63
3.5% WisdomTree EmergMkts SmCap Div DGS .64
8.0% Vanguard ST Corp Bond VCSH .12

Questions:
(1) Is the placement of the go-go potentially high reward EM and international SC correct in the Roth? I'll be needing to access funds from the Roth to supplement the 72(t) withdrawals from the traditional IRA, so the rest of the Roth is ultra-conservative as a balance.

(2) As an expatriate, I have to be concerned about the possibility of a falling US dollar eroding my purchasing power, thus my preference for a greater weight in international stocks. Morningstar X-ray says I'm at a 45/55 split between US and Foreign equities, so I'm happy with that. Any concerns or other thoughts?

(3) At age 55 with hopefully a long lifespan, I know I need a good helping of equities to combat inflation risk. But I really don't want to repeat the gut-churning drop in my portfolio I watched during the 2008-2009 turmoil. Have I dialed back the risk enough, but not too much? Like the title of the thread says, I think I've won the game and don't NEED to take a lot of risk.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby bertilak » Sun Feb 10, 2013 7:06 am

Having "won" the game, think about locking in that win by annuitizing enough of your investments to reach 100%, SS covering "only" 80%.

Since SS is indexed to inflation your investments need only return enough to keep the remaining 20% up with inflation. You could spend more on the annuity and have that indexed to inflation as well.

Now you can look at it in two ways:
  1. Go really conservative and never have a worry. Perhaps factor in a bit more to cover currency risk.
  2. Look to grow a big legacy by being more aggressively growth oriented. You can afford the risk because even with a substantial loss you will still have enough.
You have enough where that choice is available to you.
No-one really listens to anyone else, and if you try it sometime you will see why. | -- Mignon McLaughlin
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Re: 'Won the Game' but is this portfolio too conservative?

Postby Boglenaut » Sun Feb 10, 2013 8:16 am

Are you covered by the Canadian health system? Seems to me living expenses could get really high if not. But maybe that's why you have it so low.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby midareff » Sun Feb 10, 2013 9:03 am

Congratulations on your win. From one S&Dr to another..... are you sure those <3% and <4% higher cost and higher risk investments are going to make a measurable difference in your portfolios outcome? It has been wisely said that once you win the game it is time to stop playing. You may want to consider that.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby Red-y » Sun Feb 10, 2013 1:43 pm

Boglenaut wrote:Are you covered by the Canadian health system? Seems to me living expenses could get really high if not. But maybe that's why you have it so low.

Yes, fully covered since 90 days after moving here. I don't pay anything for doctors or hospitalizations; the monthly premiums for that coverage here in BC just went up to $66/month. For vision, dental, prescriptions, chiropractic etc. I am on my own.

I appreciate the suggestion on the annuity; I think I will have to seriously look into that when interest rates have gotten back to a more normal level.

midareff wrote:Congratulations on your win. From one S&Dr to another..... are you sure those <3% and <4% higher cost and higher risk investments are going to make a measurable difference in your portfolios outcome? It has been wisely said that once you win the game it is time to stop playing. You may want to consider that.


Wise counsel...I will consider it. Thanks!
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Re: 'Won the Game' but is this portfolio too conservative?

Postby soar » Sun Feb 10, 2013 3:35 pm

Red-y wrote:
Boglenaut wrote:Are you covered by the Canadian health system? Seems to me living expenses could get really high if not. But maybe that's why you have it so low.

Yes, fully covered since 90 days after moving here. I don't pay anything for doctors or hospitalizations; the monthly premiums for that coverage here in BC just went up to $66/month. For vision, dental, prescriptions, chiropractic etc. I am on my own.
Last edited by soar on Sat Oct 05, 2013 2:01 pm, edited 1 time in total.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby skibbi9 » Sun Feb 10, 2013 4:08 pm

too much in Int'l (and developing intl) seems like you're using the guise of protecting against USD fx instead of what seems as a chasing yield play. If you were worried about USD:CAD longterm rates wouldn't you look into a specific CAD:USD type fund, Oil/Energy (to play on canada's petro link currency) or into some canadian funds instead?
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Re: 'Won the Game' but is this portfolio too conservative?

Postby mindbogle » Sun Feb 10, 2013 4:51 pm

One potential danger of "slicing and dicing" like this is that risk exposures can be obscured by the complexity. You mentioned that your target allocation is 50% bonds, but as you kind of admitted in your post, your bond choices, apart from the tips and short-term corps, are on the risky side of the bond spectrum. And all but the tips have fairly high correlations to equities. If you held this portfolio through the great recession then you probably know what I am talking about.

I calculated your total portfolio risk (as proxied by stdev of annual return using mpt covariance analysis) and then compared that risk to several simple stock-bond-cash allocations. I used 10 years of return data from yahoo to calculate variances and correlations.

Your current portfolio: 12% volatility
A 60-30-10 stock-bond-cash portfolio: 12% volatility
A 40-50-10 stock-bond-cash portfolio: 8% volatility

The stock and bond allocations above were proxied by a world stock fund and total US bond fund. So your portfolio return volatility is more similar to a 60-30-10
stock-bond-cash portfolio, and almost 50% more volatile than a 40-50-10 stock-bond-cash portfolio.

I don't want to overstate the importance of mpt - it has many flaws. But I like to use it as a relative "indicator" of risk to keep me honest.

I am new to the forum and don't know if there is a convenient way for me to share the spreadsheet with my calcs, but if there is, I don't mind doing that if you want to see them.

I don't know how to answer your original question #3, but I do think if we have another 2008-2009 event that you will not get much help from your bonds. If you haven't already done it, you could run a simulation to see what happened to you current portfolio during the event. I strongly suspect that the results will wrench your gut! Good luck....
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Re: 'Won the Game' but is this portfolio too conservative?

Postby Red-y » Sun Feb 10, 2013 5:13 pm

skibbi9 wrote:too much in Int'l (and developing intl) seems like you're using the guise of protecting against USD fx instead of what seems as a chasing yield play. If you were worried about USD:CAD longterm rates wouldn't you look into a specific CAD:USD type fund, Oil/Energy (to play on canada's petro link currency) or into some canadian funds instead?

I'm starting to agree about the over-allocation to international and emerging mkts...I will reduce those to something more like 10-12% versus the 18%+ outlined above. I've held FXC (Currency Shares Canadian Dollar ER .40) and FICDX (Fidelity Canada ER .77) in the past...I'll revisit those or to go the index route, maybe look at EWC (iShares MSCI Canada Index ER .53). I'm hesitant to make sector bets with an oil/energy fund. But EWC would give me significant exposure to Canadian energy and materials names, plus extra helpings of the solid, safe, and boring Canadian banks.

orre wrote:
Red-y wrote:
Boglenaut wrote:Are you covered by the Canadian health system? Seems to me living expenses could get really high if not. But maybe that's why you have it so low.

Yes, fully covered since 90 days after moving here. I don't pay anything for doctors or hospitalizations; the monthly premiums for that coverage here in BC just went up to $66/month. For vision, dental, prescriptions, chiropractic etc. I am on my own.


How difficult was it to emigrate to Canada?

It wasn't too difficult for me, but then again I don't mind paperwork. It was time-consuming and had several thousand dollars of costs associated with it. About 4 months to gather required documents then 16 months to get a positive decision after the application was submitted. If you really want to know more, the place to go is http://www.cic.gc.ca

I mention the $66/month health care premium as a "reality check" for Americans who may have an irrational fear of socialized medicine. I have top-notch care that is sensibly rationed so that everyone can have it. I specifically chose to go to Canada because they speak English, drive on the right side of the road, and the national health care made it possible for me to be semi-retired at age 50. We do pay a lot of taxes...the lowest marginal rate in BC is 20.06%.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby retiredjg » Sun Feb 10, 2013 5:42 pm

Regarding SS. You mention a common law partner, but I suspect that the SS Administration would consider you single. It is my understanding that postponing your SS is a good idea for a couple (since it is likely that at least one person will live past the break even age) but that a single person pretty much gets the same amount (over the long run) no matter when SS is started (up to the break even age).

If you find the math works out that way for you as well, you might consider taking your SS at 62 instead of full retirement age. You should be finished with your 72(t) obligations by then and could start taking less from your nest egg.

I have no idea if this is a better idea than your current plan. I did the math for my situation and decided to take my SS at 62 because I have no guarantee of even living to 85 or 86 where it all seemed to break even for me.


Just out of curiosity, just how difficult is it to do the 72(t) thing? People seem to want to avoid that at all costs, but it seems to me it would not be difficult at all. Maybe an extra few lines on a tax return or something.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby Red-y » Sun Feb 10, 2013 6:27 pm

retiredjg wrote:Regarding SS. You mention a common law partner, but I suspect that the SS Administration would consider you single....
If you find the math works out that way for you as well, you might consider taking your SS at 62 instead of full retirement age. You should be finished with your 72(t) obligations by then and could start taking less from your nest egg.

I have no idea if this is a better idea than your current plan. I did the math for my situation and decided to take my SS at 62 because I have no guarantee of even living to 85 or 86 where it all seemed to break even for me.


Just out of curiosity, just how difficult is it to do the 72(t) thing? People seem to want to avoid that at all costs, but it seems to me it would not be difficult at all. Maybe an extra few lines on a tax return or something.

Yes, in the eyes of the Social Security Administration I am and will be Single, so unfortunately all the gyrations with spousal benefits, repayments, etc. are not available to me. I'll spend some more time crunching the numbers though to see if SS at 62 might help with the overall portfolio longevity. I was just blindly going by the near-universal advice to wait to start until FRA.

The 72(t) withdrawals were a piece of cake. I recommend looking at the information and calculators at http://www.72t.net . In my case, I chose the most conservative of the 3 withdrawal methods (life expectancy) because it was the simplest and still met my needs for income until I can make whatever IRA withdrawals I need after age 59 1/2. I'm lucky in that I have a Roth IRA of $150k with a $50k basis, so if the market tanks again and my 72(t) income falls too much, I can supplement with Roth withdrawals for the next 3.5 years. I deliberately started the 72(t) at age 54.5 so that after the required 5 years are up, I'm home free with penalty-free IRA withdrawals.

Fidelity has a form for requesting Automatic Withdrawals...I checked the box for SEPP Substantially Equal Periodic Payments, told them how often and where to draw the money from, and that was about it. I did send them a form for their records to document the plan...the basic outline of the form was copied from the http://www.72t.net site. Only paperwork hassle is that the 1099-R from Fidelity shows the distribution coded as type '1' -- early withdrawal, no known exception. To counteract that, I file Form 5329 Additional Taxes on Qualified Plans and say that the 1099-R distribution was from a SEPP. TurboTax spits this out for me and it's easy.

My after-tax investments are all gone because I built a house...you can imagine how that goes.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby retiredjg » Sun Feb 10, 2013 6:35 pm

Red-y wrote:Yes, in the eyes of the Social Security Administration I am and will be Single, so unfortunately all the gyrations with spousal benefits, repayments, etc. are not available to me. I'll spend some more time crunching the numbers though to see if SS at 62 might help with the overall portfolio longevity. I was just blindly going by the near-universal advice to wait to start until FRA.

Something that just occurred to me, if you do take your SS earlier and that results in withdrawing less from the nest egg from ages 62 to whatever, if you are survived by your partner, that would leave more money for him/her. If you postpone SS and take more from the nest egg, that might leave your partner with less of an inheritance (I'm making the assumption you are leaving the money to the partner if you die first).

I love BC. :D
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Re: 'Won the Game' but is this portfolio too conservative?

Postby retiredjg » Sun Feb 10, 2013 6:39 pm

Oh...your original question is whether your portfolio is too conservative. I don't think so. I probably would not go more conservative (now anyway) since you need a good chunk of stocks to maintain it for 40 years.

Are you counting that Vanguard High Yield Bond fund as stocks or bonds?
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Re: 'Won the Game' but is this portfolio too conservative?

Postby jwa » Sun Feb 10, 2013 7:12 pm

As for an annuity, everything I've read suggests waiting until you are at least in your 60's before purchasing one. I don't want to speak authoritatively on this as I'm no expert but it's not until this age or older that survivorship credits make it worthwhile - or so I've read. In fact, I sort of think waiting until one is in their 70's is the best strategy.

In your shoes, I'd wait a few more years to buy an annuity, if that is what you choose to do. Not only the increased survivorship credits but interest rates might even be higher then making the annuity cheaper.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby Red-y » Sun Feb 10, 2013 7:18 pm

retiredjg wrote:Are you counting that Vanguard High Yield Bond fund as stocks or bonds?

These days I'm counting the VWEHX as bonds...when it was 12% of my total portfolio, I counted it as stocks. Starting to categorize it in the equities column was one of the painful lessons of 2008-2009! Maybe I should follow what some folks on the Early Retirement forum do and count is as part bond / part stock.

mindbogle wrote:I calculated your total portfolio risk (as proxied by stdev of annual return using mpt covariance analysis) and then compared that risk to several simple stock-bond-cash allocations. I used 10 years of return data from yahoo to calculate variances and correlations.

Your current portfolio: 12% volatility
A 60-30-10 stock-bond-cash portfolio: 12% volatility
A 40-50-10 stock-bond-cash portfolio: 8% volatility

The stock and bond allocations above were proxied by a world stock fund and total US bond fund. So your portfolio return volatility is more similar to a 60-30-10
stock-bond-cash portfolio, and almost 50% more volatile than a 40-50-10 stock-bond-cash portfolio.


Yikes! This is truly eye-opening...thanks for running those numbers. It looks like my AA strategy is sound, but the execution is lacking. I will keep working at it. I have to say it's hard to transition to plain vanilla Bogle-ish index tracking without succumbing to the temptation to try to spice things up. Taking risks and sitting tight during wild market swings is what got me to where I am today, but you guys are starting to convince me of the virtue of simplicity.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby retiredjg » Sun Feb 10, 2013 8:07 pm

Red-y wrote:Taking risks and sitting tight during wild market swings is what got me to where I am today...

Ok, so you got lucky and the time was right for the positions you held and you had the ability to stick tight in the tough times. I'm glad it worked out for you. But during that time, if luck had not gone your way, you had another alternative - working another 10 or 20 years. If things go south now, you probably don't have that alternative now.

Once you are in the withdrawal phase, those wild market swings have a way of putting a dent in the future earning capacity of your portfolio. This is not the time to try to make a lot of money. This is the time to protect and preserve what you have. I don't think 40% stock and 60% bonds is a problem. But if you are counting the high yield bond on the bond side, you don't really have 60% bonds in my opinion. I'm not familiar with several of the other investments you have listed, but it makes me wonder if some of those are a little edgy as well.

Compare what you have to gain (maybe nothing in terms of nicer lifestyle) to what you could possibly lose. Pascal's wager and all that.

You learned by your own experience in the last crash to count the high yield bonds as stocks. You think it won't happen again, just like last time? Why did you switch back? What on earth were you thinking?
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Re: 'Won the Game' but is this portfolio too conservative?

Postby icefr » Mon Feb 11, 2013 3:10 am

Red-y wrote:I immigrated to Canada 5 years ago after a corporate career in the US. I'm semi-retired and make about $10k/year at a seasonal job. My Social Security benefits will cover 80% of my basic living expenses when I start to collect in 11 years (at full retirement age).

I would have, admittedly, a lot of holdings with this proposed portfolio, but I lean towards the slice-and-dice approach and do have an IPS to keep things in check. FYI--no access to Admiral funds; I am at Fidelity because Vanguard will not hold accounts for Canadian residents.


I'm a Canadian citizen with a corporate career in the US, considering whether I will stay here permanently or for as long as I'm working. I could easily move back to Canada from an immigration perspective, but my biggest concern is the size of a portfolio that I will have accumulated here by that time and the currency risk associated with that. I have a few questions for you:

1) Do you have much in the way of assets in Canada? I'm guessing not since you've only listed US assets here.
2) How did you get your 401(k) into a Traditional IRA? (I am under the impression that you can only roll over a 401(k) if you're a resident. Maybe that worked fine since you're also a US citizen.)
3) Did you ever consider trying to get your Roth and Traditional IRAs into a RRSP?
4) How does the Canadian government deal with your Roth and Traditional IRAs?
5) Are you able to trade freely in your US accounts while living in Canada?
6) Do you plan to take out Canadian citizenship?
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Re: 'Won the Game' but is this portfolio too conservative?

Postby Red-y » Mon Feb 11, 2013 1:02 pm

retiredjg wrote:
Red-y wrote:Taking risks and sitting tight during wild market swings is what got me to where I am today...

You learned by your own experience in the last crash to count the high yield bonds as stocks. You think it won't happen again, just like last time? Why did you switch back?

Since I'm upping my allocation to bonds and simultaneously adding a larger percentage of relatively safer bonds (TIPs, short-term, and floating rate) compared to what I have now, I thought that the high yield could go back in the bond column. I'll consider splitting the high yield 50/50 between counting as equities and counting as bonds. Or is there a percentage in high yield, say 5% of your portfolio, where they could be safely called bonds and will, if the SHTF again, only marginally add to damage being done?
Last edited by Red-y on Mon Feb 11, 2013 2:08 pm, edited 1 time in total.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby Red-y » Mon Feb 11, 2013 1:28 pm

icefr wrote:
I'm a Canadian citizen with a corporate career in the US, considering whether I will stay here permanently or for as long as I'm working. I could easily move back to Canada from an immigration perspective, but my biggest concern is the size of a portfolio that I will have accumulated here by that time and the currency risk associated with that. I have a few questions for you:


1) Do you have much in the way of assets in Canada? I'm guessing not since you've only listed US assets here.
I only have token amounts in GICs (Canadian equivalent to CDs) in an RRSP. My earnings from the seasonal work don't give me much room to contribute to an RRSP.
2) How did you get your 401(k) into a Traditional IRA? (I am under the impression that you can only roll over a 401(k) if you're a resident. Maybe that worked fine since you're also a US citizen.)
The 401(k) was rolled over to an IRA prior to leaving the US.
3) Did you ever consider trying to get your Roth and Traditional IRAs into a RRSP?
Yes, I looked into that. The deal-breaker is that the withdrawal from the traditional IRA would trigger a large tax bill. I live 2 1/2 hours from a US town with a Costco and other retail meccas. I actually spend a lot of US$ each year stocking up on cheaper groceries etc. We also have a private mailbox in the town and order lots of stuff on Amazon. So I deal with the currency risk in that way...spending the US$ in the US to maintain spending power, get goods cheaper, and not pay sales tax (MT).
4) How does the Canadian government deal with your Roth and Traditional IRAs?
The traditional IRA is a pension account and only withdrawals are taxable. The Roth earnings are tax-free in Canada if you've made an election with CRA to have them treated that way.
5) Are you able to trade freely in your US accounts while living in Canada?
Yes, because the accounts are with Fidelity. I was a long-time Vanguard customer but in 2008 they decided not to let Canadian residents add funds to or trade in their existing accounts. That would have made rebalancing impossible, so I switched to Fido. I think, but am not positive, that Schwab would allow trading in an account held by a Canadian resident. I strongly suggest you get everything rolled over where you want it and have full confidence you can continue trading your accounts BEFORE the move, if you decide to come back to Canada. There's a lot of good info on border crossing questions here: http://forums.serbinski.com/
6) Do you plan to take out Canadian citizenship?
Already swore my allegiance to the Queen in May 2012. :D I like the option of living in either country for as long as I want and still being able to go back to the other.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby retiredjg » Mon Feb 11, 2013 1:35 pm

I can't really help you with those questions. In the last crash, the High Yield Bond fund acted like a stock fund. The Total Bond Market didn't.

But if you believe the fund has some qualities that make it somewhat bond like, going half and half or reducing the allocation to 5% are both more reasonable than holding 9% and calling it a bond fund...because in the next crash, it's probably going to act like a stock fund again, don't you think?
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Re: 'Won the Game' but is this portfolio too conservative?

Postby retiredjg » Mon Feb 11, 2013 1:38 pm

Red-y wrote: That would have made rebalancing impossible, so I switched to Fido.

Fido now has an excellent array of Spartan Index funds available. Much better choices than when you made the switch. :D
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Re: 'Won the Game' but is this portfolio too conservative?

Postby Random Poster » Mon Feb 11, 2013 2:11 pm

Red-y wrote:I mention the $66/month health care premium as a "reality check" for Americans who may have an irrational fear of socialized medicine.


Just an observation, but Alberta does not (currently) charge a monthly health care premium (or, at least, I don't pay one).

To your original query, consider submitting your question to the weekly financial check-up people at the National Post and/or Globe and Mail. They occassionally do an article on a cross-border financial situation, and it might give you a more Canadian-centric view of your portfolio.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby Red-y » Mon Feb 11, 2013 2:14 pm

retiredjg wrote:I can't really help you with those questions. In the last crash, the High Yield Bond fund acted like a stock fund. The Total Bond Market didn't.

But if you believe the fund has some qualities that make it somewhat bond like, going half and half or reducing the allocation to 5% are both more reasonable than holding 9% and calling it a bond fund...because in the next crash, it's probably going to act like a stock fund again, don't you think?

I do think so, absolutely. I think dropping down to 5% is the way I'll go...makes the spreadsheet simpler and the M* X-ray more accurate.

retiredjg wrote:Fido now has an excellent array of Spartan Index funds available. Much better choices than when you made the switch. :D

I will definitely look at those...I'm still partial to Vanguard as evidenced by my ETF choices, but I know Fidelity is trying to be competitive on the expenses as well. Thanks for the tip.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby retiredjg » Mon Feb 11, 2013 2:22 pm

Red-y wrote:I will definitely look at those...I'm still partial to Vanguard as evidenced by my ETF choices, but I know Fidelity is trying to be competitive on the expenses as well. Thanks for the tip.

Since you'll have to pay a transaction fee each time you buy and each time you sell a Vanguard ETF, I'd switch to the Spartan mutual funds for as many positions as makes sense. Fido also has a fair list of no fee iShares ETFs.

With as many positions as you plan to hold, ETF fees could add up to a lot.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby Peculiar_Investor » Mon Feb 11, 2013 2:40 pm

Red-y wrote:There's a lot of good info on border crossing questions here: http://forums.serbinski.com/

Have you also discovered the Canadian based sister forum to BH, http://www.financialwebring.org/forum and our wiki, finiki, the Canadian financial Wiki?
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Re: 'Won the Game' but is this portfolio too conservative?

Postby Red-y » Tue Feb 12, 2013 4:59 pm

Just wanted to wrap this up and say thanks to everyone for all the help and suggestions. Here's what I'm planning to do for now...it's a bit simpler and definitely lower cost.

The target allocation is now 30 stocks / 53 bonds / 7 REIT / 10 cash

I reduced High Yield bond to 5%, switched to BSV instead of VCSH to go more conservative on the bonds, switched to a cheaper international bond ETF, eliminated the commodities position (I'll still buy silver Maple Leafs now and then, but that's more of a Doomsday Prepper thing), and eliminated the 2 WisdomTree emerging markets ETFs in favor of more VXUS and VSS, which already contain EM.

Taxable
1% cash (for current living expenses; I am 72(t)ing my tIRA and this gets replenished quarterly)

Traditional IRA

6% cash
8.5% Vanguard Dividend Appreciation VIG .13
3% Vanguard Small Cap Value VBR .21
3.5% UBS Alerian MLP ETN MLPI .85

3.5% Vanguard Real Estate VNQ .10
3.5% Vanguard Intl Real Estate VNQI .35

21 % Vanguard ST Bond BSV .11
9% Vanguard Short Term TIPs VTIP .20
9% PowerShares Sr Bank Loan BKLN .76
9% PowerShares Emerging Mkts Sovereign Debt PCY .50 (to be replaced with the Vanguard International Bond index ETF when available)
5% Vanguard High Yield Bond VWEHX .23

Roth IRA
3% cash
9% Vanguard Total International VXUS .18
3% Vanguard FTSE All World ex-US SmCap VSS .28
3% WisdomTree Int''l SmCap Div DLS .58
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Re: 'Won the Game' but is this portfolio too conservative?

Postby ResNullius » Tue Feb 12, 2013 5:22 pm

No offense intended, but I can see no reason at all for having so many funds. I would cut it down to 3 and not more than 5 funds, and I would keep them all with the same company for ease of paperwork. I know you've already decided to "slice and dice," but I think that's a needless and counterproductive investment strategy. Just my two cents. Good luck.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby bertilak » Tue Feb 12, 2013 6:35 pm

ResNullius wrote:No offense intended, but I can see no reason at all for having so many funds. I would cut it down to 3 and not more than 5 funds, and I would keep them all with the same company for ease of paperwork. I know you've already decided to "slice and dice," but I think that's a needless and counterproductive investment strategy. Just my two cents. Good luck.

Well, I wasn't going to say anything, but now that you bring it up it seems overly complicated to me as well.

When I see big complex allocations like this I get the feeling that the investor still doesn't have a real plan so is throwing everything into the pot and thinking "with all that, there must be a pony in there somewhere!"

But I come from the other end of the spectrum so may be biased. My IRA is 95% Wellington and 5% REITs, all dividends reinvested. My mother, who needs a more stable cash flow, I put 95% into Wellesely (not reinvested) and 5% cash. Like the OP I also have a traditional and a Roth IRA. I have Wellington in both.

I do agree that 3-5 funds is reasonable. I had 5 (plus cash) myself but I simplified greatly so my beneficiary would not have to understand some complicated slice and dice scheme. Would never happen! Imagine if the OP's beneficiary inherited that 14 fund (plus cash) portfolio. What would she (or he -- but it's almost always a she) do?
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Re: 'Won the Game' but is this portfolio too conservative?

Postby Easy Rhino » Tue Feb 12, 2013 6:39 pm

I would similarly recommend a portfolio where no fund is less than 5% of the total.

And I'd try to work in a bit of "Canadian bias" in to the portfolio, whether that be with bonds or stocks or both.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby Red-y » Tue Feb 12, 2013 6:57 pm

bertilak wrote:
ResNullius wrote:No offense intended, but I can see no reason at all for having so many funds. I would cut it down to 3 and not more than 5 funds, and I would keep them all with the same company for ease of paperwork. I know you've already decided to "slice and dice," but I think that's a needless and counterproductive investment strategy. Just my two cents. Good luck.

Well, I wasn't going to say anything, but now that you bring it up it seems overly complicated to me as well.
...
I do agree that 3-5 funds is reasonable. I had 5 (plus cash) myself but I simplified greatly so my beneficiary would not have to understand some complicated slice and dice scheme. Would never happen! Imagine if the OP's beneficiary inherited that 14 fund (plus cash) portfolio. What would she (or he -- but it's almost always a she) do?

ResNullius, bertilak,
I understand what you've said and appreciate your input. For me, having a variety of eggs in a variety of baskets lets me sleep better at night. I have a spreadsheet that I update once a month with the various fund/ETF values to see how everything is fitting re: the 30/53/7/10 target. My IPS calls for re-balancing twice a year, on my birthday and six months after. My IPS also directs that this portfolio be liquidated and transferred to a 50/50 mix of Wellesley and Vanguard Target Retirement Income fund (VTINX) if I should predecease my partner.
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Re: 'Won the Game' but is this portfolio too conservative?

Postby bertilak » Tue Feb 12, 2013 7:15 pm

Red-y wrote:My IPS also directs that this portfolio be liquidated and transferred to a 50/50 mix of Wellesley and Vanguard Target Retirement Income fund (VTINX) if I should predecease my partner.

A very well thought out provision!
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