Ready to Take the Plunge - Am I doing my 4-fund portfolio right? (Dumbest Post Ever?)

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Messner8000
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Joined: Sun May 21, 2017 8:03 am

Ready to Take the Plunge - Am I doing my 4-fund portfolio right? (Dumbest Post Ever?)

Post by Messner8000 »

Alright, so after getting inspired on this website to be a DIY-er, I am ready to take the plunge. I have left my financial adviser, transferred my ROTH to a Vanguard account, and am ready to sell all my mutual funds with absurd expense ratios and individual stocks, and start my 4-fund portfolio. I have decided I want an 80/20 stock/bond split, and since I’m young (35) I have decided to take advantage of the smaller expense ratios and buy the individual funds myself (and rebalance annually) rather than just use the target retirement fund. I looked up the Target retirement fund with roughly a 80/20 split, and plan to just buy the appropriate level of admiral shares. So here’s my question. Let’s assume that I have 100,000 to invest (tomorrow). All I need to do is the following, right?

VTSAX: 48%, therefore, $48,000 in shares
VTIAX: 32%, therefore $32,000 in shares
VBTLX: 14%, therefore $14,000 in shares
VTABX: 12%, therefore $12,000 in shares
Am I missing something or is setting up your own funds (as opposed to using Target Retirement) as easy as that? I’m a bit nervous I’m missing something :happy

One last question. I actually have a bit less than 100,000 to invest (I just didn’t want to use exact numbers). If I’m say, 500 or 1000 dollars away from qualifying for admiral shares for the Total Bond Market Index Fund, is it a good idea to just up my percentage of that investment slightly to qualify for the lower expense ratios (.05% vs. .15%), even though it will change my desired AA buy a percentage point or so?

Thanks!
aggiegrad78
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Re: Ready to Take the Plunge - Am I doing my 4-fund portfolio right? (Dumbest Post Ever?)

Post by aggiegrad78 »

Smart move getting away from high fees!!! Your concept is right but your percentage for bonds adds up to 26% not 20%. You should have 12% in VBTLX and 8% in VTABX for a 60/40 split. I would always go with the lower fees and adjust percentages as needed.
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sam5
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Re: Ready to Take the Plunge - Am I doing my 4-fund portfolio right? (Dumbest Post Ever?)

Post by sam5 »

Welcome & congratulations on all of your progress so far.

You have chosen 4 good funds, though your percentages add to 106%. The 2 stock funds (48% + 32%) add up to the 80% that you chose for your asset allocation. The 2 bond funds (14% + 12%) add up to 26%. Reduce the amount for either total bond, international bond, or both so that you will be at 20% for the bond portion of the portfolio.
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22twain
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Re: Ready to Take the Plunge - Am I doing my 4-fund portfolio right? (Dumbest Post Ever?)

Post by 22twain »

International bonds are a rather new component of Vanguard's target retirement and other balanced funds. A lot of people here are skeptical about them and prefer to stick with a 3-fund portfolio using only domestic bonds (e.g. Total Bond Market). So I think it would be reasonable to replace the international bond slice with more Total Bond Market, if that would get you over the threshold for admiral shares. Later, after the bond slice has grown some, you can consider splitting some of it out into international bonds.
Help save endangered words! When you write "princiPLE", make sure you don't really mean "princiPAL"!
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Taylor Larimore
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Fund names?

Post by Taylor Larimore »

Messner8000:

To get the most replies it will be helpful if you edit your post to include fund names. Few of us have memorized ticker symbols.

Use the little edit box in the upper right corner of your window.

Thank you and best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
robertalpert
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Re: Ready to Take the Plunge - Am I doing my 4-fund portfolio right? (Dumbest Post Ever?)

Post by robertalpert »

If you have less than $50,000; then just use a LIFE STRATEGY growth fund which has an 80 / 20 allocation.

If you are investing at least $50,000; then you could use all admiral-class funds in a THREE-fund portfolio.

(correction) If you are investing at least $250,000; then you could use all admiral-class funds in a FOUR-fund portfolio.
(with international bond reduced to 4% of portfolio)


Alternatively you could use ETFs and invest in four-fund portfolio with less money. Substitute BNDX to replace VTIBX Total Int Bond Index
Last edited by robertalpert on Fri Jul 14, 2017 6:34 am, edited 4 times in total.
Topic Author
Messner8000
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Re: Ready to Take the Plunge - Am I doing my 4-fund portfolio right? (Dumbest Post Ever?)

Post by Messner8000 »

Thanks for the responses everyone. I can't believe I messed up the percentages...I guess it was a late night :) Thanks also for the thoughts about the International Bond Index Fund and decreasing that a small amount so I can get Admiral shares for the Total Bond Market Index Fund. That seems to make sense since it is such a small adjustment. This means I'll be going with:

Vanguard Total Stock Market Index Fund (VTSAX) (Admiral Shares) - 48%
Vanguard Total International Stock Index Fund (VTIAX) (Admiral Shares) - 32%
Total Bond Market Index Fund (VBTLX) (Admiral Shares): 16%
Vanguard Total International Bond Index Fund (VTIBX) (Investor Shares): 4%
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