Vanguard Personal Advisor service, or 3 fund portfolio

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modern hippy
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Vanguard Personal Advisor service, or 3 fund portfolio

Post by modern hippy » Tue Mar 07, 2017 7:22 am

Hello,

In about 60 days I will receive a bonus from my job, which will bring my Vanguard account to over $500K- which entitles me to a "dedicated" advisor, vs the pool that is provided at less than $500K in a managed account. In 2016 I paid $1,000 total in advisor fees.

My question is, should I put the bonus in my "managed" portfolio to get to the $500, or pull out the $145K I have in managed in VG Total Stock Index Fund and start my own "unmanaged" 3 fund portfolio?

Thank you for all your advice, I have been reading this blog for over a year or so. I am 57, have no major expenses, mortgage and car paid off, also another $500K in a 401K.

Thanks in advance!

bloom2708
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Re: Vanguard Personal Advisor service, or 3 fund portfolio

Post by bloom2708 » Tue Mar 07, 2017 5:45 pm

I think you should do it yourself. Keep the $1,000+ each year.

Set your asset allocation, set your mix of US to international, buy your 3 funds (Total US, Total Int and Total US Bond). Rebalance on your birthday.

You don't mention if the funds are tax-sheltered (IRA, Rollover IRA, Roth IRA) or taxable (not tax-sheltered).

If taxable and you are in the 25% tax bracket, substitute Int-Term Tax-Exempt bonds for Total US Bond. Use Total US Bond in tax-sheltered accounts if possible.

So our 3 fund is really a 4 fund. Total US, Total Int, Total US Bond (Rollover IRAs and Roth IRAs) and Int-Term Tax-Exempt Bond index in taxable.

Keep reading threads and learning up on different topics. So much to learn! Good luck!
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

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FiveK
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Re: Vanguard Personal Advisor service, or 3 fund portfolio

Post by FiveK » Wed Mar 08, 2017 1:00 am

modern hippy wrote:My question is, should I put the bonus in my "managed" portfolio to get to the $500, or pull out the $145K I have in managed in VG Total Stock Index Fund and start my own "unmanaged" 3 fund portfolio?
How well do you understand the reasoning that led to the asset allocation you currently have*?
How well do you think you could "stay the course" on that asset allocation despite large market swings?

The extent to which "very well" is the answer to those questions is ~the likelihood you will do just fine on your own - and vice versa.

*This does assume Vanguard has you in a reasonable asset allocation now.

VaR
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Re: Vanguard Personal Advisor service, or 3 fund portfolio

Post by VaR » Wed Mar 08, 2017 2:04 am

modern hippy wrote:In 2016 I paid $1,000 total in advisor fees.

or pull out the $145K I have in managed in VG Total Stock Index Fund

How is it that you paid $1000 in advisor fees with only $145k in assets under management?

I actually recommend that you continue with Vanguard Personal Advisor Services until you have confidence that you want to do this on your own. If you are looking to this board to provide you confidence, then you're not ready.

modern hippy
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Re: Vanguard Personal Advisor service, or 3 fund portfolio

Post by modern hippy » Wed Mar 08, 2017 7:10 am

How is it that you paid $1000 in advisor fees with only $145k in assets under management?

I actually recommend that you continue with Vanguard Personal Advisor Services until you have confidence that you want to do this on your own. If you are looking to this board to provide you confidence, then you're not ready.


The $145K is only a portion in my managed portfolio, but the portion I am considering moving to unmanaged. I am thinking of having both, a managed and unmanned portfolio @ Vanguard. Thank you for your advice~ I appreciate it.

modern hippy
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Re: Vanguard Personal Advisor service, or 3 fund portfolio

Post by modern hippy » Wed Mar 08, 2017 7:13 am

bloom2708 wrote:I think you should do it yourself. Keep the $1,000+ each year.

Set your asset allocation, set your mix of US to international, buy your 3 funds (Total US, Total Int and Total US Bond). Rebalance on your birthday.

You don't mention if the funds are tax-sheltered (IRA, Rollover IRA, Roth IRA) or taxable (not tax-sheltered).

If taxable and you are in the 25% tax bracket, substitute Int-Term Tax-Exempt bonds for Total US Bond. Use Total US Bond in tax-sheltered accounts if possible.

So our 3 fund is really a 4 fund. Total US, Total Int, Total US Bond (Rollover IRAs and Roth IRAs) and Int-Term Tax-Exempt Bond index in taxable.

Keep reading threads and learning up on different topics. So much to learn! Good luck!


Since I have a 401K I am not eligible for an IRA @ Vanguard, so my managed is all taxable. I do have a back door roth, but can only contribute $6500 annually.

rakornacki1
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Re: Vanguard Personal Advisor service, or 3 fund portfolio

Post by rakornacki1 » Wed Mar 08, 2017 7:47 am

I would suggest that IF you feel relatively confident in your own ability to manage your portfolio that you save these expenses and manage your investments yourself.
Following Bogleheads.org is great source of personal investment advice and you can access it as frequently as you like.
Good luck & great profits!

modern hippy
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Re: Vanguard Personal Advisor service, or 3 fund portfolio

Post by modern hippy » Thu Mar 09, 2017 7:19 am

rakornacki1 wrote:I would suggest that IF you feel relatively confident in your own ability to manage your portfolio that you save these expenses and manage your investments yourself.
Following Bogleheads.org is great source of personal investment advice and you can access it as frequently as you like.
Good luck & great profits!

Thank you for your advice

pyld76
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Re: Vanguard Personal Advisor service, or 3 fund portfolio

Post by pyld76 » Thu Mar 09, 2017 9:48 am

I would not have assets at VG that aren't under PAS if you choose to go that route. Ergo, either let the advisor help you create your asset allocation, or don't, but don't try to split the baby. It's possible that one or the other of you may make a move unexpectedly and upset the proverbial applecart.

That said, if you feel like you are capable of managing a three/four fund portfolio and have the discipline to do so across all market conditions (you can stay the course without help) then by all means--manage your own and pocket the advisory fees.

If, however, you don't feel that way, stick with PAS. Presumably you chose the advisory route in the first instance for a reason. If that was because of a knowledge gap that has been filled, make the change. If it was for other reasons (notably behavioral) then keep yourself in PAS.

modern hippy
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Re: Vanguard Personal Advisor service, or 3 fund portfolio

Post by modern hippy » Thu Mar 09, 2017 9:06 pm

pyld76 wrote:I would not have assets at VG that aren't under PAS if you choose to go that route. Ergo, either let the advisor help you create your asset allocation, or don't, but don't try to split the baby. It's possible that one or the other of you may make a move unexpectedly and upset the proverbial applecart.

That said, if you feel like you are capable of managing a three/four fund portfolio and have the discipline to do so across all market conditions (you can stay the course without help) then by all means--manage your own and pocket the advisory fees.

If, however, you don't feel that way, stick with PAS. Presumably you chose the advisory route in the first instance for a reason. If that was because of a knowledge gap that has been filled, make the change. If it was for other reasons (notably behavioral) then keep yourself in PAS.


Understood! Yes the knowledge gap is filled, I think I would be fine with a 3/4 fund portfolio and have the discipline to do so. Which four would you recommend for $500K?

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FiveK
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Re: Vanguard Personal Advisor service, or 3 fund portfolio

Post by FiveK » Thu Mar 09, 2017 9:44 pm

modern hippy wrote:Which four would you recommend for $500K?
See Three-fund portfolio - Bogleheads for some ideas.

pyld76
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Re: Vanguard Personal Advisor service, or 3 fund portfolio

Post by pyld76 » Thu Mar 09, 2017 11:12 pm

modern hippy wrote:Understood! Yes the knowledge gap is filled, I think I would be fine with a 3/4 fund portfolio and have the discipline to do so. Which four would you recommend for $500K?


Spend some time looking at this URL https://www.bogleheads.org/wiki/Lazy_portfolios and ignore everything with >4 funds.

Without more detail (check the posting about "asking portfolio questions" at the top of the forum--https://www.bogleheads.org/forum/viewtopic.php?f=1&t=6212) it's tough to give an answer that does your question justice. That said: I personally have a soft spot for Rick Ferri's "core four" (or, a three funder plus REITs). (or, total stock admiral, total bond admiral, total intl stock admiral, and REIT admiral).

dbr
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Re: Vanguard Personal Advisor service, or 3 fund portfolio

Post by dbr » Fri Mar 10, 2017 8:53 am

Which four would be three. The three are total US stock, international stock, and any high quality, low cost, intermediate duration bond index or closet index fund you draw out of a fishbowl. Trying to debate beyond that defeats the whole purpose of adopting a three/four fund selection. In fact positing "four" defeats the purpose.

If you want to go crazy there is already sufficient material concerning "how much international" and "what should my bond allocation be."

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