Investment Plan Advice

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Topic Author
newbie_7
Posts: 20
Joined: Thu Sep 24, 2015 6:23 am

Investment Plan Advice

Post by newbie_7 » Thu Sep 24, 2015 6:33 am

Hi, I am getting started in building my full DIY investment plan. I have recently reached the point in my life where I am out of student debt, bought a house, have a sizable emergency fund, and am ready to start deploying extra capital into investments. I have started already with my 401k, but will be maxing a roth this year, and more next year. I have read a couple books on the subject: Boglehead’s Guide, Ferri Asset Allocation, Four Pillars. I am into finance, economics, geo-politics, psychology and other subjects related to investing. I understand the basics of modern economic theory and mechanics. I am a nerd when it comes to this. I plan to use index mutual funds (potentially with a couple DFA funds). I will research ETFs at some point, but am happy with the vanguard index funds.

Standard Questions
Emergency funds: Yes, I carry about 6 months in a 3% yield checking account and approximately 4 months in bullion.
Debt:
- 154k remaining on a 15-year home loan @ 3.375% – I pay 100 extra principal per month, and am over a year into payments
- 16k remaining on a car loan @ 0%, with roughly 2.75 years remaining
Tax Filing Status: Single
Tax Rate: 25% Federal, 4.25% State
State of Residence: MI
Age: 28
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 20-30% of stocks

Risk Profile
I plan to have a higher risk portfolio while I am young. I believe I am able to hold through rough market conditions. I do realize markets are cyclical in nature. Several years ago, I started building a bullion position for diversification of my emergency fund. I have held course, and still believe this is appropriate to hold. I believe a 50-60% loss in my portfolio would be handled similarly. I would view it as an opportunity to get a discount.

Current Retirement Assets
401k - 100% American Balanced Fund R-4 (RLBEX) (0.64%)

Contributions
$4000 401k (+$1000 maximum employer match)
$5500 Roth IRA – I will max this before year end
$4000 Undetermined – I plan to start investing an additional 4000/yr next year. I am unsure where I will put this currently, but am leaning towards a taxable account. This portion will likely increase each year.

Available 401k Funds
My employer is implementing a 401k change from American Funds to Empower Retirement. I will be implementing my new plan once the changeover occurs. The plan will have a 0.38% asset-based fee above the cost of the funds. This is disappointing, but it appears to be a standard to have such a fee for 401k plans at smaller companies.

American Funds American Balanced R6 RLBGX 0.29
Vanguard Target Retirement Income Inv VTINX 0.16
Vanguard Target Retirement 2010 Inv VTENX 0.16
Vanguard Target Retirement 2015 Inv VTXVX 0.16
Vanguard Target Retirement 2020 Inv VTWNX 0.16
Vanguard Target Retirement 2025 Inv VTTVX 0.17
Vanguard Target Retirement 2030 Inv VTHRX 0.17
Vanguard Target Retirement 2035 Inv VTTHX 0.18
Vanguard Target Retirement 2040 Inv VFORX 0.18
Vanguard Target Retirement 2045 Inv VTIVX 0.18
Vanguard Target Retirement 2050 Inv VFIFX 0.18
Vanguard Target Retirement 2055 Inv VFFVX 0.18
Vanguard Target Retirement 2060 Inv VTTSX 0.18
BlackRock High Yield Bond Instl BHYIX 0.62
Vanguard Inflation-Protected Secs Adm VAIPX 0.1
Western Asset Core Plus Bond IS WAPSX 0.43
Templeton Global Bond R6 FBNRX 0.43
Vanguard Energy Index Adm VENAX 0.51
Vanguard 500 Index Admiral VFIAX 0.05
Vanguard Mid Cap Index Adm VIMAX 0.09
Vanguard Mid-Cap Value Index Admiral VMVAX 0.09
Vanguard Small Cap Index Adm VSMAX 0.09
Vanguard Information Technology Idx Adm VITAX 0.12
American Funds New World R6 RNWGX 0.65
Oppenheimer Developing Markets Y ODVYX 1.03
American Funds Europacific Growth R6 RERGX 0.49
DFA International Small Cap Value I DISVX 0.68
DFA Global Equity I DGEIX 0.31
JPMorgan Disciplined Equity R6 JDEUX 0.35
TIAA-CREF Social Choice Eq Instl TISCX 0.18
American Funds AMCAP R6 RAFGX 0.37
Vanguard Equity-Income Adm VEIRX 0.2
Janus Enterprise N JDMNX 0.68
T. Rowe Price Diversified Sm Cap Growth PRDSX 0.85
DFA US Small Cap Value I DFSVX 0.52
Fidelity® Select Biotechnology FBIOX 0.74
DFA Real Estate Securities I DFREX 0.18
Franklin Utilities R6 FUFRX 0.48

Portfolio Ideas:
I plan on using my checking account as the primary fixed-income portion of my portfolio in the near term, and scaling into total bond index as my assets grow. I am open to increasing risk and going 80/20, but would probably have to scale into that risk-level as I plan on keeping my checking account fixed. I have been debating two portfolio strategies:

1. Simple portfolio – Some form of mix of the following, reallocated as my contributions grow to maintain get to a target 80/20 allocation. For simplicity, I would hold all-in-one funds and add a little sv tilt.

85% All-in-one, split as follows:
Roth IRA Vanguard Target Date 2025 VTTVX 0.18
401k DFA Global Equity DGEIX 0.31
5% 401k DFA Real Estate Securities I DFREX 0.18
5% 401k DFA US Small Cap Value I DFSVX 0.52
5% 401k DFA International Small Cap Value I DISVX 0.68

2. Slice and dice portfolio – Due to small size of my current portfolio, I would start with either the above “simple portfolio” or a more simple version of the following allocation. I would scale into the full allocation after several years. The method would be similar to one outlined by Bernstein in Four Pillars, using the example Young Yvonne portfolio.

Roth 20% Vanguard Total Bond Market Index Inv VBMFX 0.2
401k 12.0% Vanguard 500 Index Admiral VFIAX 0.05
Roth 12.0% Value Index Admiral Shares VVIAX 0.09
401k 5.0% Vanguard Mid Cap Index Adm VIMAX 0.09
401k 8.0% Vanguard Mid-Cap Value Index Admiral VMVAX 0.09
401k 5.0% Vanguard Small Cap Index Adm VSMAX 0.09
Roth 8.0% Vanguard Small Cap Value Index Admiral VSIAX 0.09
401k 7.0% DFA Real Estate Securities I DFREX 0.18
Roth 17.0% Vanguard Total Intl Stock Index Admiral VTIAX 0.14
401k 6.0% DFA International Small Cap Value I DISVX 0.68

This is the draft of the plans, subject to minor tweaks in weightings/funds.

Questions
1. Considering the 401k gives me access to DFA, it seems to be a decent idea to take advantage of the DFA offerings in it for the small marginal premium. What do you guys think?
2. I am mostly convinced it makes sense to tilt towards small value. I am somewhat convinced it makes sense to slice-and-dice. It seems Bernstein and Ferri both show historical mathematical examples of this potentially reducing standard deviation of the portfolio over a long-term horizon. However, I am not necessarily convinced it is worth the effort to slice/dice to the scale of my #2 hypothetical portfolio. Figuring out which accounts to hold the various classes in would make rebalancing much more complex. The simple version would have similar diversification benefits, but be easier to manage rebalancing across various account types. The Target Date fund and DFA global equity are similar enough, they would simplify rebalancing as I would treat them as essentially the same. I tend to think the simple variation would allow me to “set it and forget it,” which I also believe has some benefits. Right now, I lean towards simple.
3. Which type of account do you think I should use with the additional I plan on investing next year? With the 0.38% fee on the 401k, it more or less negates any potential tax advantage over the long-term. If I go taxable, the money is also more liquid and I have freedom in how I deploy it. It seems taxable is the way to go.

Any overall advice for my situation, beyond my questions, is also appreciated.

Thanks Everyone!

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in_reality
Posts: 4529
Joined: Fri Jul 12, 2013 6:13 am

Re: Investment Plan Advice

Post by in_reality » Fri Sep 25, 2015 3:27 am

newbie_7 wrote:
Contributions
$4000 401k (+$1000 maximum employer match)
$5500 Roth IRA – I will max this before year end
$4000 Undetermined – I plan to start investing an additional 4000/yr next year. I am unsure where I will put this currently, but am leaning towards a taxable account. This portion will likely increase each year.

Portfolio Ideas:
I plan on using my checking account as the primary fixed-income portion of my portfolio in the near term, and scaling into total bond index as my assets grow. I am open to increasing risk and going 80/20, but would probably have to scale into that risk-level as I plan on keeping my checking account fixed. I have been debating two portfolio strategies:

1. Simple portfolio – Some form of mix of the following, reallocated as my contributions grow to maintain get to a target 80/20 allocation. For simplicity, I would hold all-in-one funds and add a little sv tilt.

85% All-in-one, split as follows:
Roth IRA Vanguard Target Date 2025 VTTVX 0.18
401k DFA Global Equity DGEIX 0.31
5% 401k DFA Real Estate Securities I DFREX 0.18
5% 401k DFA US Small Cap Value I DFSVX 0.52
5% 401k DFA International Small Cap Value I DISVX 0.68
What % goes to DFA Global Equity? (or is that just a copy/paste mistake?)
At age 28, why Target Date 2025 VTTVX? You think your new contributions to stocks + the increasing allocation to bonds in the VTTVX glide path will keep your AA on track? Have you considered what the glide path will do to your allocation? It's here: https://investor.vanguard.com/mutual-fu ... rview/0304
newbie_7 wrote:
2. Slice and dice portfolio – Due to small size of my current portfolio, I would start with either the above “simple portfolio” or a more simple version of the following allocation. I would scale into the full allocation after several years. The method would be similar to one outlined by Bernstein in Four Pillars, using the example Young Yvonne portfolio.

Roth 20% Vanguard Total Bond Market Index Inv VBMFX 0.2
401k 12.0% Vanguard 500 Index Admiral VFIAX 0.05
Roth 12.0% Value Index Admiral Shares VVIAX 0.09
401k 5.0% Vanguard Mid Cap Index Adm VIMAX 0.09
401k 8.0% Vanguard Mid-Cap Value Index Admiral VMVAX 0.09
401k 5.0% Vanguard Small Cap Index Adm VSMAX 0.09
Roth 8.0% Vanguard Small Cap Value Index Admiral VSIAX 0.09
401k 7.0% DFA Real Estate Securities I DFREX 0.18
Roth 17.0% Vanguard Total Intl Stock Index Admiral VTIAX 0.14
401k 6.0% DFA International Small Cap Value I DISVX 0.68
If you do believe in DFA, and go taxable, why drop the DFA US Small Cap Value? Why not just include it, and shift VIMAX to taxable?
newbie_7 wrote: 1. Considering the 401k gives me access to DFA, it seems to be a decent idea to take advantage of the DFA offerings in it for the small marginal premium. What do you guys think?
I believe in value. Strictly speaking though, the only thing guaranteed is higher costs and you have to hope the premium shows up.
newbie_7 wrote: 2. I am mostly convinced it makes sense to tilt towards small value. I am somewhat convinced it makes sense to slice-and-dice. It seems Bernstein and Ferri both show historical mathematical examples of this potentially reducing standard deviation of the portfolio over a long-term horizon. However, I am not necessarily convinced it is worth the effort to slice/dice to the scale of my #2 hypothetical portfolio. Figuring out which accounts to hold the various classes in would make rebalancing much more complex. The simple version would have similar diversification benefits, but be easier to manage rebalancing across various account types. The Target Date fund and DFA global equity are similar enough, they would simplify rebalancing as I would treat them as essentially the same. I tend to think the simple variation would allow me to “set it and forget it,” which I also believe has some benefits. Right now, I lean towards simple.
My portfolio isn't so simple but I found it really easy to know where to add new contributions (and rebalance) by throwing a spreadsheet together (using the google finance function in it's spreadsheets to look up current prices). YMMV.
newbie_7 wrote: 3. Which type of account do you think I should use with the additional I plan on investing next year? With the 0.38% fee on the 401k, it more or less negates any potential tax advantage over the long-term. If I go taxable, the money is also more liquid and I have freedom in how I deploy it. It seems taxable is the way to go.
I don't know future tax rates.
I don't know if you will switch jobs and roll your 401k plan into somewhere else.

Topic Author
newbie_7
Posts: 20
Joined: Thu Sep 24, 2015 6:23 am

Re: Investment Plan Advice

Post by newbie_7 » Fri Sep 25, 2015 6:55 am

Thank you for the feedback in_reality!
What % goes to DFA Global Equity? (or is that just a copy/paste mistake?)
Sorry, the idea being 85% of my overall portfolio would be split between these two funds. The portion in my 401k would go to DFA, the portion in my roth to the Target Date. The portion in the 401k would be split with the other DFA funds. These would actually be nearly equal amounts for several years, since I: a. have a head start on the 401k, and b. with employer match add 5000 to 401k and 5500 to Roth IRA.
At age 28, why Target Date 2025 VTTVX?
My thought process here is to get some bond exposure. I would target 20% bonds after a couple more years, so I think the glide path would come close as the retirement accounts grow in proportion to my emergency fixed-income checking account. I think I could shift to another target date fund to adjust the bond exposure. Before I would need to do that, I think I could meet mininums for shares of numerous vanguard funds and shift into those for finer control.
I believe in value.
Does this mean you believe in DFA's value prop, or do you target the value factor yourself via Vanguard?
If you do believe in DFA, and go taxable, why drop the DFA US Small Cap Value? Why not just include it, and shift VIMAX to taxable?
This is a good idea. I am still on the fence with DFA. I have been up late the last few nights digging into the various opinions of DFA value over a vanilla index strategy. The FF model seems sound. An alternative to vanilla indexing, while remaining passive with low turnover, seems attractive. It would also be counter-party and strategy diversification. I really like Vanguard and believe in it's value, I am just not sure I would want deploy nearly all my retirement savings via one counter-party.
My portfolio isn't so simple but I found it really easy to know where to add new contributions (and rebalance) by throwing a spreadsheet together (using the google finance function in it's spreadsheets to look up current prices). YMMV.
How much time do you put into this each year? I have a similar spreadsheet on google mapping future contributions with this allocation. Thanks for the tip on the function. It doesn't seem too involved/complex to manage. What do you think of the way I have tilted towards size/value? It seems pretty aggressive, but age 28 is the time to be aggressive.
I don't know future tax rates.
I don't know if you will switch jobs and roll your 401k plan into somewhere else.
I don't know either of these. I believe future tax rates will be higher, historically taxes have trended up. I can lock in a known rate now. I am very happy with my current job and career outlook with the company. This situation could change. I also feel somewhat uncomfortable having a penalty wall between such a high proportion of my assets and myself. It limits what I could potentially do with the assets. If I were to hypothetically open my own consulting firm, or something along these lines, I could then invest this in myself. I could also further diversify into some assets that aren't easy to gain exposure to in a 401k/IRA. I am not saying I currently plan to do either, but my situation could change.

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in_reality
Posts: 4529
Joined: Fri Jul 12, 2013 6:13 am

Re: Investment Plan Advice

Post by in_reality » Fri Sep 25, 2015 8:42 am

newbie_7 wrote:
At age 28, why Target Date 2025 VTTVX?
My thought process here is to get some bond exposure. I would target 20% bonds after a couple more years, so I think the glide path would come close as the retirement accounts grow in proportion to my emergency fixed-income checking account. I think I could shift to another target date fund to adjust the bond exposure. Before I would need to do that, I think I could meet mininums for shares of numerous vanguard funds and shift into those for finer control.
It seems overly complicated to use multiple Target Date funds to get bond exposure. Wouldn't just using VBMFX be easier? Then if stocks crash, it's easy to just sell the bonds and rebalance into stocks.
newbie_7 wrote:
I believe in value.
Does this mean you believe in DFA's value prop, or do you target the value factor yourself via Vanguard?
I don't use either, and I am not the best one to help you decide DFA or Vanguard for that. I use Schwab's fundamental indexes that aren't as much of a sector tilt that traditional style value indexes tend to have. In any case, what will ultimately determine your success is how much you can contribute to your portfolio now as opposed to having the perfect plan. I think we could look at the numbers for hours and hours and not have a consensus on what is best. Any of those seem ok for a value tilt. You have to stick with it though and not sell if value underperforms for some years. Maybe many years.
newbie_7 wrote:
If you do believe in DFA, and go taxable, why drop the DFA US Small Cap Value? Why not just include it, and shift VIMAX to taxable?
This is a good idea. I am still on the fence with DFA. I have been up late the last few nights digging into the various opinions of DFA value over a vanilla index strategy. The FF model seems sound. An alternative to vanilla indexing, while remaining passive with low turnover, seems attractive. It would also be counter-party and strategy diversification. I really like Vanguard and believe in it's value, I am just not sure I would want deploy nearly all my retirement savings via one counter-party.
I think you could start a separate thread and ask people if they are comfortable with having all their money in Vanguard and there would be some people with really very enviable portfolios who are. Counter-party and strategy diversification makes sense to me too though.
newbie_7 wrote:
My portfolio isn't so simple but I found it really easy to know where to add new contributions (and rebalance) by throwing a spreadsheet together (using the google finance function in it's spreadsheets to look up current prices). YMMV.
How much time do you put into this each year? I have a similar spreadsheet on google mapping future contributions with this allocation. Thanks for the tip on the function. It doesn't seem too involved/complex to manage. What do you think of the way I have tilted towards size/value? It seems pretty aggressive, but age 28 is the time to be aggressive.
I spend more time commenting on other people's portfolios than I do managing my own.

I threw your ideas into instant x-ray:

idea 1:
18 . 19 . 16
10 . 10 . 7
9 . 7 . 4

idea 2:
18 . 18 . 14
15 . 13 . 7
7 . 6 . 3

The biggest difference I see is that #1 has 6% more allocated to international stocks and 6% less to bonds. If you want to be aggressive at this age, that might be a good thing as international valuations are lower than in the US.

Portfolio #1 seems much simpler, and has a better allocation I think. It's 0.04% more expensive.

Rupert
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Joined: Fri Aug 17, 2012 12:01 pm

Re: Investment Plan Advice

Post by Rupert » Fri Sep 25, 2015 9:06 am

Why do you believe future tax rates will be higher? Historically tax rates have not trended up. In 1979, the highest marginal tax rate was 70%. Today it is 39%. See the following chart: http://taxfoundation.org/sites/taxfound ... ominal.pdf. You might want to adjust your expectations accordingly.

Topic Author
newbie_7
Posts: 20
Joined: Thu Sep 24, 2015 6:23 am

Re: Investment Plan Advice

Post by newbie_7 » Fri Sep 25, 2015 10:20 am

Rupert wrote:Why do you believe future tax rates will be higher? Historically tax rates have not trended up. In 1979, the highest marginal tax rate was 70%. Today it is 39%. See the following chart: http://taxfoundation.org/sites/taxfound ... ominal.pdf. You might want to adjust your expectations accordingly.
Taxes are also are higher than they were in 1913. You are right though, in the past few decades the marginal brackets have been adjusted down.

In general, my belief stems from the fact that the government is taking out vast amounts of debt against future tax revenue. The economy is barely growing. The government has also promised largely unfunded retirement benefits and healthcare to an aging and obese/unhealthy population. Healthcare costs have skyrocketed. We have a concentrated group of the population now retiring and will be collecting more than is currently projected to be paid in or held in reserve. The landscape is increasingly socialist. Countries are starting to pivot away from the dollar as a reserve currency, a privilege that currently allows for much higher fiscal profligacy. I hope I am wrong in my assessment, but I don't see how this environment results in lower future taxes. You may not want to bank on the same trend from 1970-2003 continuing.

My overall strategy currently diversifies my tax risk across deferred, exempt, and - if I add it - taxable accounts. I think it is prudent to diversify this unknown and politically influenced exposure as I currently plan to do. In addition to the benefits of un-gated access to my taxable funds. The fact that my only tax deferred account option has a 0.38% asset-fee also makes this decision a bit easier, as this is essentially a 15-25% tax on a 30-40 year horizon.

ThisTimeItsDifferent
Posts: 247
Joined: Sat Jan 31, 2015 2:51 pm

Re: Investment Plan Advice

Post by ThisTimeItsDifferent » Fri Sep 25, 2015 10:32 am

Thanks for the link. Although the highest marginal rates were higher in the past (94% in 1945 only on amounts above 200,000 or 81.0%
$5,000,000 in 1941 or 63.0% above $1,000,000 in 1935 or 79.0% above $5,000,000 in 1936), those were on real amounts (and even nominal amounts) much higher than those at which today's higher rates take effect. More people (% of population) today are paying higher rates than people did back then, even if the highest rates were theoretically higher. You would have to multiply those $ amounts by (what, 20, 50, 100?) to get the current real $ at which those historical top rates took effect.

I agree it's prudent to tax diversify across deferred, Roth and taxable investments (the capital gains and dividends, and domestic/international) due to the potential of tax rate and law changes.

Rupert
Posts: 4122
Joined: Fri Aug 17, 2012 12:01 pm

Re: Investment Plan Advice

Post by Rupert » Fri Sep 25, 2015 10:36 am

ThisTimeItsDifferent wrote:Thanks for the link. Although the highest marginal rates were higher in the past (94% in 1945 only on amounts above 200,000 or 81.0%
$5,000,000 in 1941 or 63.0% above $1,000,000 in 1935 or 79.0% above $5,000,000 in 1936), those were on real amounts (and even nominal amounts) much higher than those at which today's higher rates take effect. More people (% of population) today are paying higher rates than people did back then, even if the highest rates were theoretically higher. You would have to multiply those $ amounts by (what, 20, 50, 100?) to get the current real $ at which those historical top rates took effect.

I agree it's prudent to tax diversify across deferred, Roth and taxable investments (the capital gains and dividends, and domestic/international) due to the potential of tax rate and law changes.
Here's a link to the same chart adjusted for inflation: http://taxfoundation.org/sites/taxfound ... justed.pdf

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in_reality
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Re: Investment Plan Advice

Post by in_reality » Fri Sep 25, 2015 11:27 am

If you are going to use taxable, I think you need another plan.

I'd recommend something like this:

401k (tilting)
5% DFA Real Estate Securities I DFREX 0.18
10% DFA US Small Cap Value I DFSVX 0.52
10% DFA International Small Cap Value I DISVX 0.68

ROTH (bonds + total market)
15% Vanguard Total Bond Market Index Inv VBMFX 0.2
[+ Vanguard total market US or INT depending on what you need]

TAXABLE (total market)
45% Vanguard Total US (some of this can go in the ROTH and some of this can go in the 401k using VFIAX which return wise is close)
15% Vanguard Total International

Advantages:
1) if you need to take money out say for a business or whatever, it's easier to do so. It's also easier to rebalance in a downturn. You can effectively sell the bonds in the ROTH, and switch it to stocks to rebalance. So if you want to someday sell say 70k in stocks and 30k in bonds (to keep your asset allocation), you sell 30k of bonds in the ROTH, buy 30k of stocks in the ROTH, and then sell 100k of the same stocks in taxable.

2) it's easy and you can focus on making money at your job

3) You can ease into it. If you have too much in your 401k to tilt it all to value, you can use Vanguard 500 Index Admiral VFIAX 0.05 as a surrogate for total US. They are pretty close and you are holding small value anyway.

I'm not sure if you want to tilt that hard to small value or if you want more in international, but you can easily adjust the %s, and maybe add a midcap value fund in the 401k or VVIAX in the ROTH.

As it is, those percentages are:

17 . 19 . 19
8 . 8 . 6
11 . 8 . 3

Disadvantage:

You don't have fixed income in the 401k, so if stocks tank, you have to use new money to get your small tilt back up to it's designated %. Not a big deal I think. If short on cash, put it in the 401k and rebalance using the bonds in the ROTH as I mentioned.

Hey, nice plan or what?!?
Last edited by in_reality on Fri Sep 25, 2015 11:49 am, edited 1 time in total.

Topic Author
newbie_7
Posts: 20
Joined: Thu Sep 24, 2015 6:23 am

Re: Investment Plan Advice

Post by newbie_7 » Fri Sep 25, 2015 11:49 am

in_reality wrote:If you are going to use taxable, I think you need another plan.

I'd recommend something like this:

401k (tilting)
DFA Real Estate Securities I DFREX 0.18
DFA US Small Cap Value I DFSVX 0.52
DFA International Small Cap Value I DISVX 0.68

ROTH (bonds + total market)
Vanguard Total Bond Market Index Inv VBMFX 0.2
[+ Vanguard total market US or INT depending on what you need]

TAXABLE (total market)
Vanguard Total US
Vanguard Total International

Advantages:
1) if you need to take money out say for a business or whatever, it's easier to do so. It's also easier to rebalance in a downturn. You can effectively sell the bonds in the ROTH, and switch it to stocks to rebalance. So if you want to someday sell say 70k in stocks and 30k in bonds (to keep your asset allocation), you sell 30k of bonds in the ROTH, buy 30k of stocks in the ROTH, and then sell 100k of stocks in taxable.

2) it's easy and you can focus on making money at your job

3) you can ease into it. If you have too much in your 401k to tilt it all to value, you can use Vanguard 500 Index Admiral VFIAX 0.05
I like this idea! I think it is simpler and scales better from where I am now, than the options I was looking at. I hadn't put enough thought into where the potential taxable contributions would go. I was waiting to see if anyone could convince me taxable isn't the way to go with the additional contributions. Right now, all my investments are in my 401k. It will only take a couple years for my roth and taxable accounts to grow past the 401k at currently planned contributions. I will put a spreadsheet together tonight, and get another hypothetical plan plan outlined following your suggestion.

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in_reality
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Re: Investment Plan Advice

Post by in_reality » Fri Sep 25, 2015 11:52 am

newbie_7 wrote: I was waiting to see if anyone could convince me taxable isn't the way to go with the additional contributions.
Somebody may still do that. I'm just saying if you go that route...

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