Bogleheads

[RustyShackleford]

I've been lurking here awhile, but only now is my spirit strong
enough to put the full horror of my existing portfolio on display
for public ridicule

I am 55yo, single, and semi-retired (some earnings, sporadic
and unreliable). My portfolio is roughly $1million. I believe
I can live comfortably off an initial WR of 4% (CPI adjusted
going forward) plus these sporadic earnings near-term and
Social Security long-term. Probably a little less than 4% would
be ok.

I have no emergency fund; I imagine the cash portion of my AA
can serve that purpose.

I have no debt.

My filing status is single. My federal rate tends to be 25%, but
may be down close to 15% for years aI have no income other
than investments. State rate (NC) is about 7%

Age: 55

I believe an appropriate AA for me is: stock 40%, bonds 40%,
cash 10%, other (real estate, commodities) 10%. With a 2/3
to 1/3 domestic/int'l split on equities. I am open to other
suggestions, however.

My current portfolio is as follows (percentages are of total egg, summing to 100%).
It's a mess. Please be gentle. And thanks in advance ... (I'm sorry the formatting
is so lame; the forum interface doesn't seem to care about my tabs).



6.25% APY CDs due 2-4 years 8.7% bond or cash ???


VANGUARD MUTUAL FUNDS
Wellesley Income Fund VWINX 6.0% balance conservative allocation
Prime Money Market Fund VMMXX 5.1% cash
High-Yield Corporate Fund VWEHX 1.1% bond intermediate
High-Yield Tax-Exempt Fund VWAHX 0.9% bond muni national intm

TAXABLE BROKERAGE ACCOUNT
American Fd Income Fund AMECX 1.8% balance moderate allocation
American Fd New Perspective ANWPX 3.7% stock foreign misc
T Rowe Price Health Sciences Fd PRHSX 0.4% stock mid growth
Energy Conversion ENER 0.3% stock small growth
Vanguard All-World ex-US ETF VEU 1.5% stock foreign large blend
Johnson&Johnson JNJ 0.4% stock large core
Pepsico PEP 0.7% stock large growth
Rambus RMBS 1.2% stock small growth
Loomis Sayles Global Bond LSGLX 1.0% bond world bond
Vanguard Total Bond Mkt ETF BND 3.7% bond intermediate
Vanguard Mid Cap ETF VO 0.7% stock mid blend
Vanguard Small Cap Growth ETF VBK 0.9% stock small growth
Vanguard Small Cap Value ETF VBR 1.4% stock small value
cash (liquid) 11.0%

TIAA-CREF After-Tax
Inst'l Growth & Income Fund TIIRX 2.8% stock large blend
Inst'l International Equity Fd TIERX 2.6% stock foreign large blend

401K
Fidelity Puritan Fund FPURX 3.5% balance moderate allocation

BROKERAGE TRADITIONAL IRA
Navios Maritime Holdings NM 0.5% stock small core
Intel INTC 0.2% stock large growth
Advanced Micro Devices AMD 0.1% stock mid growth
JP Morgan JPM 0.4% stock large value
Procter & Gamble PG 0.8% stock large growth
CVS Caremark CVS 0.4% stock large growth
American Century Int'l Bond BEGBX 0.9% bond world bond
iShares Lehman Aggregate Bond AGG 2.1% bond intermediate
KBW Regional Banking ETF KRE 0.4% stock small value
iPath DowJones AIG Commodity DJP 3.1% commodity
SLM Corp (expires 3/2017) OSM 2.3% bond inflation-linked
Vanguard REIT Index ETF VNQ 1.5% r'estate
SPDR DJ Int'l Real Estate ETF RWX 1.0% r'estate
ING Clarion Global Real Estate IGR 0.8% r'estate
streetTRACKS Gold Shares GLD 1.6% commodity
5-year TIPS due 4/2011 3.3% bond inflation-linked
10-year TIPS due 7/2017 3.3% bond inflation-linked
cash (liquid) 0.9%

BROKERAGE ROTH IRA
Vanguard Total Stock Mkt Index VTI 1.3% stock large blend
Vanguard All-World ex-US ETF VEU 1.2% stock foreign large blend
Vanguard Total Bond Mkt ETF BND 0.5% bond intermediate
cash 0.5%

TIAA-CREF 403(a)
TIAA Traditional 5.0% bond
S&P 500 Index TRSPX 2.3% stock large blend
Small-Cap Equity Retire Class TRSEX 1.0% stock small blend
CREF Inflation-Linked Bond 1.1% bond inflation-linked
CREF Bond Market 1.2% bond
TIAA Real Estate 2.9% real estate

I have not listed basis of stuff in taxable accounts. I think the only ones
large enough to give me pause in liquidating them would be the New Perspective
and the T'CREF Int'l fund.

Other comments ... I must keep the TIAA-CREF retirement account, in order
to receive retiree health insurance; but I'm open to trimming it down (remove
the TRSEX ?)

I'll probably roll the 401K to the T-IRA soon, when current contracting arrangement
(done as a W-2 employee of an agency) ends.

I like having Vanguard mutual fund account (to be able to get stuff like Wellesley,
bond funds) but also a brokerage accounts, to be able to add stuff like global
bond funds, buy individual TIPS, commodity stuff like DJP and GLD, that kind of thing.
I'd love to get rid of the TIAA-CREF Mutual funds, but the gain in the int'l one is
pretty big.

Thanks !!

[alec]

Wow. Looks like this is the breakdown of holdings:

Taxable: 56%
401(k): 4%
Trad IRA: 24%
Roth IRA: 3%
403: 14%

Is that about right?

[AlohaJoe]

Is your AA a "goal"? I ask because you say 10% cash (which still seems high to me) but you've actually got almost 20% in cash if I've summed it up right.

You appear to have a number of quasi-duplicated funds and a number of bonds in taxable accounts, as well.

[RustyShackleford]

[RustyShackleford]

[PiperWarrior]

How about something like this?

Taxable
3.7% American Fd New Perspective ANWPX stock foreign misc
2.6% Inst'l International Equity Fd TIERX stock foreign large blend
27% VTI Total Stock Market
6.7% VEU FTSE All-World ex-US
10.0% cash
5.9% BND Total Bond Market or a tax-exempt bond fund if it makes sense

Traditional IRA + planned 401(k) rollover
14.1% BND Total Bond Market
6.4% TIP Inflation Protected Securities
3.3% 5-year TIPS due 4/2011
3.3% 10-year TIPS due 7/2017

Roth IRA
3.5% VNQ REIT Index

TIAA-CREF 403(a)
6.5% TIAA Real Estate
7.0% CREF Inflation-Linked Bond

This adds up to:

27% domestic stocks
10% REIT
13% international stocks
20% nominal bonds
20% inflation protected securities
10% cash

ANWPX and TIERX appear to be a bit expensive. You might want to turn off reinvestment of dividends and capital gains and take them in cash, especially if you are in the withdrawal phase.

I wanted to hide cash in a tax-advantaged account to reduce non-qualified dividends, but I couldn't do so due to lack of space. Since cash has a lower yield than a bond fund, I put the entire cash in your taxable account.

If you want to put commodify, international real estate, etc, you can do so in your Roth IRA or Traditional IRA.

[RustyShackleford]

Thanks. So you are not a believer in having something like
Wellesley as a core holding for a retiree ?

[bolt]

[Midpack]

You could do a lot worse. What struck me first is just that it's way more complicated (far too many holdings) than necessary. I used to have more holdings but I've simplified and my 'egg' is about 2X the one you mention with a taxable account, a 401k and 4 IRA's --- and I have grand total of 10 holdings. I have all the major asset classes and relatively low correlation without the complexity.

I was going to work up something, but PW is a far better resource than I am and he's already done it. IMO you've just got a lot of timely, planned pruning and consolidating to do for the most part.
_________________
You only live once...

[PiperWarrior]

[alec]

[RustyShackleford]

Me again ...

Part of simplifying my portfolio, getting to something like
piperwarrior's most excellent proposal, would be to liquidate
some of the individual blue-chips I have in there (PEP, PG, JNJ,
JPM). One reads periodically that it's good to have some of these
rock-solid high-yielding individual stocks, but I kinda gather the
main point of this is to have some "value" stuff in there. So I wonder
if it makes sense to go ahead and sell them, but put a little "value"
tilt in my domestic equity with something like VTV or VYM. Not to mention a "small" tilt with something like VBR or VB.

Thanks again !

P.S. Some of the other individual issues like NM, ENER, RMBS are
"play" holdings, relics from previous employers, that kinda thing ...

[rorussell]

Pardon me for barging into this conversation, but I don't know how to move about this site very well.

I'm terribly interested in Midpacks statement that, "I have 10 holdings in all the major asset classes and relatively low correlation without the complexity."

What does "relatively low correlation" mean? What are the 10 asset classes that give you simplicity? Sounds like my dream allocation.

Bob

[Midpack]

[alec]

[RustyShackleford]

Folks, I posted my portfolio awhile back and had many excellent
suggestions. I didn't implement them all, because I don't like to
do anything suddenly with my money. Since then, many interesting
things have happened, most notably the collapse of stock values and
the fire-sale on TIPS a few months back. I'd like to post my
current portfolio, considerably streamlined from the originally-
posted one, but still in need of remediation, and solicit your
comments and suggestions.

My desired AA is equity 40%, bond 40%, real estate 10%, 5%
commodities, 5% cash; but I certainly welcome comments on the
appropriateness of this for a 56yo early/semi-retiree wanting to
spend 4% (inflation-adjusted going forward) of CURRENT (i.e.
second great depression) portfolio value ! With perhaps 60/40
domestic/foreign equity, and modest value and small tilts.

Right now I'm at 31% stock (VPGDX is 70% stock),
47% bond (VPGDX is 25% bond, and also calling the CDs
and TIAA Traditional to be bonds). My real estate is way below
target, but that's because I bailed on TIAA-RE for the well-predicted
dip; I'll re-enter whenever it looks right. Commodities (DJP+GLD)
are close to target, and of course cash is WAY heavy.

It's silly to have two each of international bond and int'l real-estate
funds, and I realize many may say it's silly to have 'em at all (at the
levels of allocation I have). I hate to sell 'em at current values, but
I guess I'd be moving the money to similarly-devalued assets.

Some of the minor holdings of individual stocks (RMBS, ENER, NM)
are sentimental and/or speculative "play" stocks. I should liquidate
'em ...

The money in TIAA-CREF needs to stay there (although it COULD be
legally rolled to the IRA), but of course the allocations can change.

Thanks much !

TAXABLE
Vanguard Total Stock Mkt VTI 6.33%
Vanguard All-World ex-US VEU 8.29%
Vanguard Small Cap Value VBR 1.46%
Vanguard High Dividend Yld VYM 3.74%
Vanguard Mgd Payout Growth&Dividend VPGDX 8.29%
Vanguard High-Yield Corporate Bond Fund VWEHX 1.07%
Vanguard High-Yield Tax-Ex Bond Fund VWAHX 1.30%
T Rowe Price Health Sciences Fund PRHSX 0.34%
Rambus RMBS 0.84%
Loomis Sayles Global Bond LSGLX 1.03%
6.25% APY CDs due Jan '10 thru Jan '12 12.32%
cash (money market) 8.87%

IRA
American Century Int'l Bond BEGBX 0.99%
SLM Corp (matures 2017) inflation-bond OSM 1.47%
TIPS (individual) 17.44%
Energy Conversion Devices ENER 0.33%
iPath DowJones AIG Commodity DJP 2.07%
streetTRACKS Gold Shares GLD 1.87%
Vanguard REIT Index ETF VNQ 0.81%
SPDR DJ Int'l Real Estate ETF RWX 0.57%
ING Clarion Global Real Estate IGR 0.25%
Navios Maritime Holdings NM 0.47%
CVS Caremark CVS 0.35%
KBW Regional Banking ETF KRE 0.25%

ROTH
Vanguard Total Stock Mkt Index VTI 1.34%
Vanguard All-World ex-US VEU 1.39%

TIAA-CREF (retirement annuities)
TIAA Traditional 6.67%
CREF Money Market 7.10%
CREF Inflation-Linked Bond 1.30%
CREF Bond Market 1.45%

[alec]

Hi again Rusty,

Since no one has graced you with a response, I'll wade in.

1) It appears that you can still move some bonds/cash into the tax deferred/free accounts and some equities into the taxable account. For example, move into the IRA or Roth VWEHX and LSGLX and move VTI, VEU, NM, CVS, KBW into taxable. Even though Larry and Rick "disagree" over whether to use HY bonds, I'm pretty sure they'd both agree that it is better to hold them in non-taxable account.

2)

[RustyShackleford]

Thanks Alec. Many of you suggestions I shall take to heart. A couple
I don't think make sense for me, so let me say why, and tell me if I'm
wrong. I'm not trying to be argumentative, just thinking out loud !

1. As far as using my Roth for tax-inefficient funds, I figure that since
Roth is so advantageous tax-wise (with tax-free growth and withdrawals)
that it makes sense to FILL it with investments that have the highest
long-term appreciation; hence just a simple blend of VTI and VEU (the
only reason I don't just go VT there is it makes it a little more complicated
to calculate the domestic/foreign split in my master spreadsheet). But
even so, I can certainly re-arrange my positions better for tax purposes.

Also, a minor book-keeping problem is the VGD bond funds are VERY
expensive ($50 transactions) to hold in my IRA (at a brokerage). So
I'd need to open yet another acc't a VGD IRA. But I wonder if I should
have either position - and you seem to say "no" in your proposal.
VWAHX because my income is low-bracket (at least 'til I get another
big contracting gig, which may never happen, and certainly won't
keep happening long-term), and VWEHX because so many smart
people don't believe in it.

2. Right you are. If I DO decide to keep the int'l RE and bond positions,
I'll consolidate to one or the other, but I've never been able to get a
clear consensus (for one of my positions in each category).

3. I'll read that article, thanks. Part of my reason for having these,
frankly, is that it's fun to "play" the market, trying to market time in and
out of positions. I know this is a horrific admission here; but I figure as
long as it's such small amounts (maybe 2% of my egg, total), it's
harmless enough and prevents me from engaging in such frivolity with
the bulk of my assets !

4. Good point. But how to re-arrange things ? Maybe, as you are
suggesting, make TIAA-RE my sole RE position, selling VNQ (and
maybe IGR and RWX, depending on the crack I come out on #2),
thus providing cash in IRA to buy more individual TIPS to replace
the TIAA Inflation-Linked Bond Fund. Hmmm. I wonder if it should
scare me to have TIAA-RE as my sole RE position ?!? Maybe that's a
good thing, given the near consensus (yes, I've read that massive
thread) that it's possible to market-time TIAA-RE.

6. I agonized long and hard over entering VPGDX. I did it to get access
to the market-neutral fund, and for the way it manages cash outflow for
a retiree. Probably stupid. Certainly stupid with 20/20 hindsight, given
I liquidated Wellesley to get into it

7. There are two compelling reasons for me to keep TIAA-CREF. One is
that any withdrawals are state-tax free; a lump-sum may be, but I can't
get a definitive answer on that one. The second is I get free state
employees' health insurance as long as I have a monthly payment from
TIAA-CREF; theoretically that could be $1/month, but I HATE to mess
with ANY possiblity of queering this remarkable benefit. And yes, I
think TIAA Trad is a pretty good fixed-income holding these days; in fact,
the last payment from my "TIAA payout annuity" I simply rolled back
into TIAA Trad !

Did I say "thanks" ?

[alec]

[RustyShackleford]

Hi, it's me again. I have implemented many of the suggestions
made in my "round two" last April. Here is where I am at now
(sorry about the formatting):

TAXABLE
Vanguard Total Stock Market Index 20.0%
Vanguard FTSE All-World ex-US Index 10.0%
Vanguard Value Index 2.5%
Vanguard Small Cap Value Index 2.3%
play stocks 2.5%
6.25% APY CDs due Jan '10 thru Jan '12 10.8%
Vanguard Total Bond Market 2.3%
cash 5.0%

IRA
SLM Corp inflation-linked bonds (ticker: OSM) 2.0%
individual Treasury TIPS 15.9%
PowerShares DBC Commodity Index 5.0%
Vanguard REIT Index 2.9%

ROTH
Vanguard Balanced Index Fund (60% stock/40% bond) 4.5%

TIAA-CREF RA
TIAA Traditional 5.8%
CREF Bond Market 1.4%
TIAA Real Estate 7.1%

To re-cap, I am a 56yp single early-retiree. My target AA is:
equities 40%, bonds 40%, RE 10%, commodity 5%, cash 5%.
For equities, I want something like 25-40% int'l, and a small
and value tilt. For bonds, I want roughly 50% inflation-linked.
I welcome comments on the appropriateness of these targets.

One continuing suggestion, that I continue to resist, is filling Roth
with tax-inefficient stuff; I feel that Roth is uniquely valuable and
that I want to go with a good growth/risk mix, hence the moderate
allocation fund VBINX.

This still leaves a fair amount of tax-inefficient stuff in TAXABLE,
but there's only room (the stock portion of VBINX) to move a small
amount of it into tax-sheltered anyhow. Plus, those CDs are earning
6.25% APY (Penfed !!), so it seems silly to disturb them !

Thanks !

[celia]

[Default User BR]

[Alex Frakt]

[MWCA]

I just want to comment. The title made me chuckle a bit.

[RustyShackleford]

Thank you Celia, Brian, and Alex. Some good ideas, some I'd
love more discussion on, some I appreciate but don't like ...
(I should have pointed out that my recent post isn't where I'm
literally at now, but where I plan to be in the short-term, after
running things by you all).

[celia]

[RustyShackleford]