Return visitor in need of a little assistance

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Robo
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Joined: Fri May 13, 2016 9:25 pm

Return visitor in need of a little assistance

Post by Robo » Thu May 18, 2017 12:37 pm

I originally posted about a year ago and received fantastic assistance from this forum in setting up my portfolio. I have kept reading recommended books, websites and this forum and feel much more educated.

To recap:
Emergency funds: 6 months of expenses
Debt: home mortgage mid six figures 30 yr fixed 3.5%
Tax filing status: Married filing jointly
Tax Rate: 35% federal 0% state
Age: 39 yo physician
Size of current portfolio: low seven figures
Additionally: have ownership stake in medical practice and invested in a few commercial real estate deals

Portfolio: Asset Allocation around 80 % equity (30 % international), 20 % bond

His IRA/Her IRA/Roth IRA/401k: Vanguard 2030 TDR

Taxable: VWITX, VTSAX, VFWAX

Questions:

I am having a difficult time behaviorally and mathematically trying to figure out the best AA to feel like Im growing my nest egg to fund what is hopefully a long retirement but also preserving an already decent amount of savings. Im certainly not trying to play catch up and Im saving a decent amount each year, but I truly dont know if I want to work 10 -15 more years or 25 years ( I know even the forum cant help me with this issue). I have many friends in the wealth management and hedge fund industry and have read a lot about preservation of wealth, risk parity models, all weather portfolio's etc. I am a firm believer in low cost index investing but cant help feeling exposed by the amount of stocks I have but also unenthusiastic about bonds. I believe in the concept of trying to find multiple asset classes with differing correlations but don't feel like having more than a few funds to rebalance, and dont really have a good grasp of commodities, gold etc. Im not worried that I will sell when the markets tank but am worried that I will feel like shit seeing a monstrous decline in my wealth.

Possible portfolio changes?

1. Do nothing and stop worrying
2. Increase bond allocation to between 30-40 %
3. Adding some tilt to small cap value and increasing my bond percentages?
4. I read several of Larry Swedroe's books and think the LP is great in theory but I know I dont have the guts to do it and I find factor based investing interesting and compelling but too complicated

I know that much of this is just personal risk tolerance and willingness/need to take risk but people on this forum are helpful and dont mind stating strong opinions so please offer anything that you think may be helpful. My goal is to find an AA and portfolio that I will feel gives me enough upside potential and downside protection. Thanks in advance

livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: Return visitor in need of a little assistance

Post by livesoft » Thu May 18, 2017 12:40 pm

Do nothing and stop worrying.

See you next year. :)
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alaskantraveler
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Re: Return visitor in need of a little assistance

Post by alaskantraveler » Thu May 18, 2017 12:49 pm

As you get older, and your need to take risk reduces because the size of your nest egg has increased you could consider increasing your bond allocation. for someone your age, 30% bonds is not unreasonable.

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ruralavalon
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Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Return visitor in need of a little assistance

Post by ruralavalon » Thu May 18, 2017 12:54 pm

livesoft wrote:Do nothing and stop worrying.

See you next year. :)

Good advice, that's my first choice.

Second choice is increase your bond allocation to 30% or 40%, and then stop worrying.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

aristotelian
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Re: Return visitor in need of a little assistance

Post by aristotelian » Thu May 18, 2017 2:32 pm

If you are risk averse, you really should not be 80/20 at age 39. You have plenty of income as a doctor in the 35% tax bracket. There is no need to take excessive risk nor to mess around with factor investing. Concentrate on your savings rate and staying away from "lifestyle inflation". As long as your portfolio stays ahead of inflation you should be able to retire comfortably whenever you decide it is time.

Bonds may not look very attractive right now, but from a market timing perspective it is certainly a good time to rebalance out of stock (of course, it was a better time two days ago). Personally, I would be considering 60/40. Someone with your income should not need to worry about the market tanking, particularly if you are prone to stress and you know you will "feel like shit" when the inevitable happens.

retiredjg
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Joined: Thu Jan 10, 2008 12:56 pm

Re: Return visitor in need of a little assistance

Post by retiredjg » Thu May 18, 2017 3:17 pm

My read of your post is that you have more in stocks than you are comfortable with, but don't want to put your money into bonds. You are looking for other choices.

The bad news is that the other choices are either riskier or cost more. I think you should add to your bond allocation. That is how you preserve your wealth.

Robo
Posts: 24
Joined: Fri May 13, 2016 9:25 pm

Re: Return visitor in need of a little assistance

Post by Robo » Thu May 18, 2017 8:00 pm

Thanks for all your replies. All excellent points. Livesoft "see you next year" gave me a laugh. So true.
Seems like adding a little more to bonds and moving on may make the most sense

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BolderBoy
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Location: Colorado

Re: Return visitor in need of a little assistance

Post by BolderBoy » Fri May 19, 2017 9:23 am

Robo wrote:Thanks for all your replies. All excellent points. Livesoft "see you next year" gave me a laugh. So true.
Seems like adding a little more to bonds and moving on may make the most sense

Yes, go to 30% bonds and "see you next year."
“Where you stand, depends on where you sit” - Rufus Miles | "Never underestimate one's capacity to overestimate one's abilities"

bloom2708
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Location: Fargo, ND

Re: Return visitor in need of a little assistance

Post by bloom2708 » Fri May 19, 2017 9:26 am

BolderBoy wrote:
Robo wrote:Thanks for all your replies. All excellent points. Livesoft "see you next year" gave me a laugh. So true.
Seems like adding a little more to bonds and moving on may make the most sense

Yes, go to 30% bonds and "see you next year."


+1 Move to 30% bonds. This seems very reasonable for "near 40".
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead | | Want to buy something? Watch this first: https://vimeo.com/41152287

BlackStrat
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Re: Return visitor in need of a little assistance

Post by BlackStrat » Fri May 19, 2017 9:31 am

Remember that you can do it any way you'd like; you don't necessarily have to take an immediate 10% plunge to get to 30%.

Do it in smaller increments over the course of the year
(then you can second guess it and determine how much you saved/gained/lost with that approach :happy )

Robo
Posts: 24
Joined: Fri May 13, 2016 9:25 pm

Re: Return visitor in need of a little assistance

Post by Robo » Sat May 20, 2017 7:05 am

Thanks again for the replies. Very helpful

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midareff
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Location: Biscayne Bay, South Florida

Re: Return visitor in need of a little assistance

Post by midareff » Sat May 20, 2017 7:49 am

ruralavalon wrote:
livesoft wrote:Do nothing and stop worrying.

See you next year. :)

Good advice, that's my first choice.

Second choice is increase your bond allocation to 30% or 40%, and then stop worrying.



Agree... both are sound reasonable choices.

Jack FFR1846
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Joined: Tue Dec 31, 2013 7:05 am

Re: Return visitor in need of a little assistance

Post by Jack FFR1846 » Sat May 20, 2017 7:58 am

Here's a step by step plan:

1) Rebalance to 60/40

2) Set up auto investing with a 60/40 AA

3) Write down some random numbers/letters. This will be your new password. Change the password. Throw away the paper.

4) A year from now, call up wherever you have your investments to reset your password so you can rebalance. Repeat step #1 if needed, #3 and #4.

Keep in mind that Fidelity's survey of 401k accounts found that the investors who did far better than anyone else, by far were......dead. So think of every single change you make as losing more money.
Bogle: Smart Beta is stupid

Robo
Posts: 24
Joined: Fri May 13, 2016 9:25 pm

Re: Return visitor in need of a little assistance

Post by Robo » Sat May 20, 2017 12:55 pm

I probably don't need help forgetting my password but point is well taken

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