Rollover and Investing Questions

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Joined: Mon Jul 15, 2013 3:40 pm

Rollover and Investing Questions

Post by TomD » Mon Jul 15, 2013 4:35 pm

I have not been on this site before but would like assistance in establishing my allocation in Vanguard funds. My major accounts have been with Raymond James for the last few years - that is until they managed to get me a 0.62 percent YTD return as of the end of June. I then transferred everything to Vanguard. I am 62 years old and will most likely work until I am 66 - that is if I can find a job as I have not been working for the last year. I am currently receiving a pension from an earlier job which has allowed me to survive without dipping too far into my investments.

I currently have $417,857.42 established in Vanguard funds and will transfer in another $23,000 when the funds become available. I spoke with a Vanguard financial advisor prior to transferring the funds and decided on the following allocation: 1) VBTLX - 40% Total Bond Admiral Shares; 2) 10% International bond funds; 3) VTSAX - 35% Total Stock Admiral Shares; and 4) 15% international stock.

My main concern is when should I transfer my funds and is the proposed allocation correct. For example, as part of the SEP IRA Brokerage account below, I held a number of stocks purchased by my Raymond James advisor. I just sold them with an effective date of July 8th - right before the rally. So I am really concerned about the timing of my transfers from here on in.

I have established the following Vanguard accounts:

1) A Brokerage account from a taxable account at RJ:

(a) Prime Money Market: $21,579.71 I will use this money for living expenses as needed this year.
(b) VTSMX - Total Stock Index Investor Shares: $36,186.49 This was held in my Raymond James account and I transferred it over. It was suggested that I hold this in a short term bond fund. Can you make a recommendation as to how to hold these taxable funds?

2) Traditional IRA - I rolled over an old 401K into the following allocation:

(a) Prime money market: $10,747.20. I intend to put this into international stock and bond funds.
(b) VBTLX - Total Bond Admiral Shares: $17,260.36
(c)VTSAX - Total Stock Admiral Shares: $15,421.86

3) SEP IRA Account

(a) Prime Money Account: $163,998.04
(b) VBTLX - Total Bond Admiral: $35,784.80
(c) VTSAX - Total Stock Admiral: $36,302.57

4) SEP IRA Brokerage Account - $80,576.39

(a) VWO - Vanguard VTSE emerging markets ETF: $5,956.50
(b) EFA- ISHARES MSCI EARE ETF: $12,036.00
(c) EPP - ISHARES MSCI PACIFIC EX Japan ETF: $13,498.65
(d) PCY - Powershares emerging markets sovereign debt ETF: $16,695.70
(e) CWB - SPDR Barclays Capital Convertible SECS ETF: $11,456.02
(f) JNK - SPDR Barclays Capital High Yield bond ETF: $10,329.62
(b) IPE - SPDR Series Trust Barclays Capital TIPS ETF: 10,603.90

Any suggestions would be greatly appreciated.

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Re: Rollover and Investing Questions

Post by Duckie » Mon Jul 15, 2013 11:50 pm

TomD, I am not a fan of ETFs so my proposal will be just funds. You are 62 and want an AA of 50% stocks, 50% bonds, with 30% of stocks in international. That breaks down to 35% US stocks, 15% international stocks, and 50% bonds (split US 80% / international 20%). Here are two possible retirement portfolios:

Portfolio #1
Traditional IRA at Vanguard -- $43K -- 12%
12% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.05%)

SEP IRA at Vanguard -- $317K -- 88%
23% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.05%)
15% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.16%)
40% (VBTLX) Vanguard Total Bond Market Index Fund Admiral Shares (0.10%)
10% (VTABX) Vanguard Total International Bond Index Fund Admiral Shares (0.20%)

Portfolio #2
Traditional IRA at Vanguard -- $43K -- 12%
12% (VTXVX) Vanguard Target Retirement 2015 Fund (0.16%)

SEP IRA at Vanguard -- $317K -- 88%
88% (VTXVX) Vanguard Target Retirement 2015 Fund (0.16%)

My comments/questions:
  • Portfolio #1 has the exact AA and is a little cheaper. Portfolio #2 is off a little but will get more conservative over time. It costs a little more but it's easier.
  • Can you combine the TIRA and the SEP IRA? If so it would make it even easier.
  • This assumes the entire taxable brokerage account is not part of the retirement portfolio but instead for other short-term purposes.
    • If you want to put the $36K into a short-term bond fund I recommend (VBIRX) Vanguard Short-Term Bond Index Fund Admiral Shares (0.10%).
    • You could also put part of it into 
I Savings Bonds through Treasury Direct.
Something to think about.

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