Portfolio Review Request - ReadyInvestor

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Readyinvestor
Posts: 39
Joined: Wed Sep 06, 2017 9:00 am

Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Mon Sep 18, 2017 8:16 pm

Hello all and good evening.
First post. I have read through your forum, wiki, books etc as thoroughly as possible.
Please let me know if I have not met the mark for format. I don't want to waste anyone's time here.

I am currently with w/ a broker/planner, and I just cannot get my head around why I have / need so many funds.
I have read Bogle, Swenson, some Bernstein, the Boglehead investing book, Robbins (Tony), Peter Mallouk and others.

I would really appreciate your take on what I have right now - I have 12 (60)-17 (65) years of work left before I retire and plan to stay the course. All the risk surveys I take say I can tolerate risk, but I am not sure I can live with 100% stocks. Probably something around 30-40% bonds and 60-70% stocks.

Mr. Bogle's 2 fund portfolio looks nice but I think I am closer to something like:
60/40
40% (Total Bond Market)
34% (Total Stock Market)
20% (Total Intl)
6% (REIT)


Emergency funds: Paying car debt so we have a $2000 EF right now en route to $24k (3mos expenses).
Debt: $8700 car debt (2%), 330,000 mortgage (3.5% fixed)
Tax Filing Status: Married Filing Jointly w/ 2 kids
Tax Rate: 15% Federal in 2016, 0% State (no state income tax) (Military)
State of Residence: WA
His Age: 47 US Navy
Her Age: 39 Homemaker
Desired Asset allocation: 70% stocks / 30% bonds (Don’t need money for at least 12 years (60) but more like 15-17. All the risk tolerance surveys have me at 100% stocks. I will to “stay the course” but keep coming back to the number of 70/30 bonds based on the Boglehead and Bogle books (especially his conservative “age in bonds” advice.)
Desired International allocation: 20% of stocks (I have seen 20-40% numbers, I keep coming back to 20%). Would like some emerging market and REIT too for diversification (a la David Swenson)
Size of portfolio – low six figures.

Current retirement assets
Taxable (Expense Ratio=0.24% from Personal Capital though LGILX is 0.76)
48% DEPOSIT ACCOUNTS ???? ????
32% LAUDUS U.S. LARGE CAP LGILX ER 0.76
20% FIRST TR PORTFOLIOS ???? ????

HIS 401K (US GOVT THRIFT SAVINGS PLAN) (Overall avg TSP ER 0.027 – 0.038%)
Company match? No.
15% G Fund – Government Securities
15% F Fund – Fixed income index
25% C Fund Common Stock Index
25% S Fund Small Cap Index
20% I Fund International Index

See description of TSP Funds below.

HIS IRA AT SCHWAB (ER from Personal Capital Dashboard = 0.49% - Combined?)

ETFs
5% ALPS SECTOR DIVIDEND SDOG ER 0.40
5% GUGGENHEIM S&P 500 EQUAL RSP ER 0.20
4% ISHARE EDGE MSCI MIN VOL EFAV ER 0.20
6% ISHARES CORE US AGG ER 0.05
5% POWERSHARES QQQ TRUST QQQ ER 0.20
7% POWERSHARES S&P 500 LOW SPLV ER 0.25
4% POWERSHARES S&P 500 DIV NOBL ER 0.35
2% SCHWAB FUNDAMENTAL US FNDA ER 0.25
11% SCHWAB US BROAD MARKET SCHB ER 0.03
5% SPDR S&P DIVIDEND ETF SDY ER 0.35

MUTUAL FUNDS
14% AMERICAN CENTURY EQUITY TWEIX ER 0.94%
12% AMERICAN FD BALANCED FD BALFX ER 0.66%
3% BLUEROCK TOTAL INCM AND TIPRX ER 1.95%
5% COGNIOS MKT NEUTRAL LG COBMX ER 1.96%
8% PARNASSUS MID CAP FUND PARMX ER 0.99%

HER ALLIANZ FIXED INDEX ANNUITY (CONTRACT DATE MAY 2016)
49.21% MoSum-S&P 500 Index
50.79% MoSum-Nasdaq 100 Index
-- I can change this each year before May26th.
-- Surrender fee is 10% 1st year (=$4-5000)
2016 = 10%
2017 = 9%
2018 = 8%

KIDS – I have floundered here – i have an ESA for them and about $15k in for each in a taxable account because i cannot decide on a 529 plan or if that’s even the right choice.

Kid One (Age 8):

ESA (ER = 0.09%)
Schwab S&P 500 index fund SWPPX ER 0.09

Taxable account (ER=0.29%)
First Eagle Global Fund SGENX ER 1.1%
Schwab S&P 500 Index Fund SWPPX ER 0.03

Kid Two (Age 6):

ESA (ER=0.09%)
Schwab S&P 500 index fund SWPPX ER 0.09

Taxable account (ER=0.29%)
First Eagle Global Fund SGENX ER 1.1%
Schwab S&P 500 Index Fund SWPPX ER 0.03

FOREVER GI BILL
• 36 months of benefits and 36 months of housing allowance = 1 x 4yr education. (4 9-month school years)
• Tuition at public state school for 4 9-month periods (could go 365day/yr for 3 yrs)=max $21,000/school yr Total 84,000.
• Housing allowance (E5 w/ dependents) = $2250/month or 4 9-month periods $20,250/school yr Total $81000
• I can use it all for one kid or divide it up among kids, wife and me. Can be used for Bachelor or towards Masters, etc.
• Example: Princeton cost $62,000/year
a. GI Bill tuition - $21,000
b. Housing allowance – 20,250
c. Yellow Ribbon Program – 16,000
d. Total so far = 57,250
e. Total out of pocket expense = 4,750


Contributions
New annual Contributions
$1200 his 401k (also specify any employer matching contributions)
$4800 his IRA/Roth IRA
$4800 her IRA/Roth IRA
$0 taxable (for retirement, not short term goals)

Available funds

FUNDS AVAILABLE IN HIS TSP 401(K)
G FUND -- The G Fund's investment objective is to produce a rate of return that is higher than inflation while avoiding exposure to credit (default) risk and market price fluctuations. The G Fund invests exclusively in a nonmarketable short-term U.S. Treasury security that is specially issued to the TSP. The earnings consist entirely of interest income on the security.

F FUND -- The F Fund's investment objective is to match the performance of the Bloomberg Barclays U.S. Aggregate Bond Index, a broad index representing the U.S. bond market. The F Fund assets are held in a separate account and managed to track the Bloomberg Barclays U.S. Aggregate Bond Index. This broad index includes U.S. Government, mortgage-backed, corporate, and foreign government (issued in the U.S.) sectors of the U.S. bond market. The earnings consist of interest income on the securities and gains (or losses) in the value of the securities.

C Fund – S&P 500

S Fund – Small cap fund

I Fund -- The I Fund's investment objective is to match the performance of the MSCI EAFE (Europe, Australasia, Far East) Index. The I Fund invests in a stock index fund that fully replicates the MSCI EAFE (Europe, Australasia, Far East) Index. The earnings consist of gains (or losses) in the price of stocks, dividend income, and change in the relative value of currencies.

FUNDS AVAILABLE IN HER ALLIANZ FIXED INDEX ANNUITY (Can change this before 26 May 2018

S&P 500
Nasdaq 100 index
Blended index
Russell 2000 index
Barclays US Dynamic Balance Index II w/cap
Barclays US Dynamic Balance Index II w/spread
PIMCO Tactical Balanced Index w /cap
PIMCO Tactical Balanced Index w /spread

Questions/Issues:
1. I don’t know what to put in his taxed account and what to put in his Roth IRA (bonds and equities).
2. I don’t know if HER FIXED INDEX annuity was a good move or what to do with it now that I have it. Contract date is May 2016 so we are 1.5 years into a 10 year surrender period (i.e., if we withdrew right now we would incur a 8-9% surrender fee.
3. The college money is mostly from grandparents so I do not want to lose it. (Our "parent" plan for college so far:)We are willing to pay for a state school education that leads to a job (maybe).
4. If I stay in the military 4 more years I can transfer my educational benefits to the kids and wife (I am at 23 yrs service but forgot to do this a long time ago – ugh.). That equals 36 months of school or up to $40k per year so I don’t know if it’s worth it to stay in until I have 27 years service.
5. If I retire next year my retirement pay is $65k/year. If I retire at 27k it’s $77k / year.
6. I am currently with Schwab and happy with them --- but like the low expense ratio of the Vanguard Admiralty funds.

ALLOCATION:
* Please make sure that percentages add up to 100% across all of your accounts, not within each account
-- Answer: I don’t know how to do this. My Personal Capital dashboard says I am allocated the following way:
Cash 16.42%
Intl Bonds 0.53%
U.S. Bonds 7.35%
Intl Stocks 7.85%
U.S. Stocks 59.62%
Alternatives 2.46%
Uncategorized 5.77%

Thank you all :sharebeer

Best regards, RI

retiredjg
Posts: 33854
Joined: Thu Jan 10, 2008 12:56 pm

Re: Portfolio Review Request - ReadyInvestor

Post by retiredjg » Tue Sep 19, 2017 7:38 am

Readyinvestor, welcome to the forum! We'll need a little help from you before going much further.

Readyinvestor wrote:
Mon Sep 18, 2017 8:16 pm
Desired International allocation: 20% of stocks (I have seen 20-40% numbers, I keep coming back to 20%).
The discussions of 20% to 40% mean 20% to 40% of the stock allocation. If you use a 70% stock allocation, that would be 14% to 28% of your portfolio. With that in mind, what do you want in your portfolio?

Current retirement assets
We need all the accounts (taxable, TSP IRA, etc. but not the college savings) to add up to 100% together, not 100% each. The way you have posted the information we don't know the relative size of your accounts. If you don't see how to do that, tell us how large each account is and someone will help you out.

b]HIS IRA AT SCHWAB [/b](ER from Personal Capital Dashboard = 0.49% - Combined?)

ETFs
5% ALPS SECTOR DIVIDEND SDOG ER 0.40
5% GUGGENHEIM S&P 500 EQUAL RSP ER 0.20
4% ISHARE EDGE MSCI MIN VOL EFAV ER 0.20
6% ISHARES CORE US AGG ER 0.05
5% POWERSHARES QQQ TRUST QQQ ER 0.20
7% POWERSHARES S&P 500 LOW SPLV ER 0.25
4% POWERSHARES S&P 500 DIV NOBL ER 0.35
2% SCHWAB FUNDAMENTAL US FNDA ER 0.25
11% SCHWAB US BROAD MARKET SCHB ER 0.03
5% SPDR S&P DIVIDEND ETF SDY ER 0.35

MUTUAL FUNDS
14% AMERICAN CENTURY EQUITY TWEIX ER 0.94%
12% AMERICAN FD BALANCED FD BALFX ER 0.66%
3% BLUEROCK TOTAL INCM AND TIPRX ER 1.95%
5% COGNIOS MKT NEUTRAL LG COBMX ER 1.96%
8% PARNASSUS MID CAP FUND PARMX ER 0.99%
You are correct. This is dumb.

KIDS – I have floundered here – i have an ESA for them and about $15k in for each in a taxable account because i cannot decide on a 529 plan or if that’s even the right choice.
There is a place for 529 accounts, but not everybody thinks they are the best option. You might want to ask this question separately.

FUNDS AVAILABLE IN HER ALLIANZ FIXED INDEX ANNUITY
Is this annuity in an IRA?

Lafder
Posts: 3794
Joined: Sat Aug 03, 2013 7:56 pm
Location: East of the Rio Grande

Re: Portfolio Review Request - ReadyInvestor

Post by Lafder » Tue Sep 19, 2017 8:20 am

Go back and edit your post so each account % is of the total, not per account. It makes a huge difference in how you analyze your holdings since some accounts are tiny compared to others. Such as, if a holding is listed as 50% as you have it now, if 50% of a tiny account, it could be much less than 1% of a bigger account. So as listed, your % are confusing :shock:

Add up the total of all of your accounts (retirement and taxable) not including emergency fund. (Emergency fund is separate and should be cash)

Then take the smaller account balances and divide by the total to get % of total each holding is.

For example : Add up all of your accounts = TOTAL of ALL ACCOUNTS . Lets call this TOTAL

See below for HIS 401K. What is the total balance of this account ? Lets call that HIS 401k

HIS 401K (US GOVT THRIFT SAVINGS PLAN)
15% G Fund – Government Securities
15% F Fund – Fixed income index
25% C Fund Common Stock Index
25% S Fund Small Cap Index
20% I Fund International Index

So take HIS 401k balance and divide by TOTAL to get the % his 401k is.

Then once you get that % of TOTAL that is HIS 401K you can multiply by

0.15 = % of total that is G Fund
0.15 = % of total that is F Fund
0.25 = % of total that is C Fund
0.25 = % of total that is S Fund
0.20 = % of total that is I Fund

Then do the same thing for each account. You only need to know Total balance of all accounts, and balance of the individual account to get the % of total that account is. Then the % of that account that is each holding to get the % of total.

Sorry if it is confusing to follow.

I can help if you can post the total balance, and balance per account. Or if you can post the total balance and balance of each holding.

By converting to % of total you will really be able to see how TINY some of the holdings are and why it could make sense to consolidate.

If you prefer not to post account totals that is fine. But do the calculations that convert each holding to % of total and post that.

You have most of the pieces you need. Just add or use the TOTAL of all accounts, and balance per account to calculate.

lafder

Readyinvestor
Posts: 39
Joined: Wed Sep 06, 2017 9:00 am

Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Wed Sep 20, 2017 5:29 pm

To the two previous replies: Thank you! I am working on the corrections and will repost. I worked it a bunch today --- and it's frustrating --- because when I try to research to figure out what a particular investment is I cannot understand what I find --- like the words trust, portfolio, blend, growth, etc. ack! I am trying to give an allocation etc but I don't know what to call a S&P and then there are different versions!

So I am simplifying to US stock, bond, cash, intl and REIT. For example, somewhere in my portfolio I have a small small portion of intl bonds. Then I have a huge chunk of cash in one I thought was fully invested.

I am so glad I found this site, really appreciate your help and cannot wait to simplify my holdings so I can get back to focusing on family and work. This is wearing me thin.

Thank you again.

Vr/ RI

retiredjg
Posts: 33854
Joined: Thu Jan 10, 2008 12:56 pm

Re: Portfolio Review Request - ReadyInvestor

Post by retiredjg » Wed Sep 20, 2017 5:59 pm

Can't you just give us the name of what you own and a ticker symbol if one is given?

Don't worry about the funds in the IRA or the TSP - we already know what that stuff is.

Yes, it is frustrating, but you will learn a lot by doing this.

Readyinvestor
Posts: 39
Joined: Wed Sep 06, 2017 9:00 am

Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Wed Sep 20, 2017 9:19 pm

Okay - I think I have answered all the questions and am reposting here - I tried to figure out how I am allocated bonds / stocks and then the % of each type of allocation --- US stocks, INTL, bonds, REIT but I admit I could not figure out what some were. I have checked the % listed below and I am w/I a few hundreds of 100%. I also deleted out the education stuff. My desired INT'LL stock is 14%. The annuity for HER is in a ROTH IRA (Is my preposition correct? ugh). Thank you all. Vr RI

Emergency funds: Paying car debt so we have a $2000 EF right now en route to $24k (3mos expenses).
Debt: $8700 car debt (2%), 330,000 mortgage (3.5% fixed)

Tax Filing Status: Married Filing Jointly w/ 2 kids
Tax Rate: 15% Federal in 2016, 0% State (no state income tax) (Military)
State of Residence: WA
His Age: 47 US Navy
Her Age: 39 Homemaker

Desired Asset allocation: 70% stocks / 30% bonds (Don’t need money for at least 12 years (60) but more like 15-17. All the risk tolerance surveys have me at 100% stocks. I will to “stay the course” but keep coming back to the number of 70/30 bonds based on the Boglehead and Bogle books (especially his conservative “age in bonds” advice.)

Desired International allocation: 14% of stocks (I have seen 14-28% numbers, I keep coming back to 20%). Would like some emerging market and REIT too for diversification (a la David Swenson)
Size of portfolio – low six figures.

Current retirement assets
Taxable (22.28% of portfolio)
10.69% CASH NA NA
7.13% LAUDUS U.S. LARGE CAP LGILX ER 0.76
4.46% FIRST TR PORTFOLIOS ???? ????

HIS 401K (US GOVT THRIFT SAVINGS PLAN) (Overall avg TSP ER 0.027 – 0.038%) (12.72% of portfolio)
Company match? No.
1.9% G Fund – Government Securities
1.9% F Fund – Fixed income index
3.18% C Fund Common Stock Index
3.18% S Fund Small Cap Index
2.54% I Fund International Index

HIS IRA AT SCHWAB (33.83% of portfolio)

ETFs
1.69% ALPS SECTOR DIVIDEND SDOG ER 0.40
1.69% GUGGENHEIM S&P 500 EQUAL RSP ER 0.20
1.57% ISHARE EDGE MSCI MIN VOL EFAV ER 0.20
2.12% ISHARES CORE US AGG ER 0.05
1.91% POWERSHARES QQQ TRUST QQQ ER 0.20
2.47% POWERSHARES S&P 500 LOW SPLV ER 0.25
1.49% POWERSHARES S&P 500 DIV NOBL ER 0.35
0.71% SCHWAB FUNDAMENTAL US FNDA ER 0.25
3.99% SCHWAB US BROAD MARKET SCHB ER 0.03
1.62% SPDR S&P DIVIDEND ETF SDY ER 0.35

MUTUAL FUNDS
4.97% AMERICAN CENTURY EQUITY TWEIX ER 0.94%
4.17% AMERICAN FD BALANCED FD BALFX ER 0.66%
1.12% BLUEROCK TOTAL INCM AND TIPRX ER 1.95%
1.69% COGNIOS MKT NEUTRAL LG COBMX ER 1.96%
2.61% PARNASSUS MID CAP FUND PARMX ER 0.99%

HER ROTH IRA ALLIANZ FIXED INDEX ANNUITY (CONTRACT DATE MAY 2016) (31.13% of portfolio)
15.32% MoSum-S&P 500 Index
15.81% MoSum-Nasdaq 100 Index

-- I can change this each year before May26th.
-- Surrender fee is 10% 1st year (=$4-5000)
2016 = 10%
2017 = 9%
2018 = 8%

Contributions

New annual Contributions
$1200 his 401k (also specify any employer matching contributions)
$4800 his IRA/Roth IRA
$4800 her IRA/Roth IRA
$0 taxable (for retirement, not short term goals)

Available funds

FUNDS AVAILABLE IN HIS TSP 401(K)
G FUND -- The G Fund's investment objective is to produce a rate of return that is higher than inflation while avoiding exposure to credit (default) risk and market price fluctuations. The G Fund invests exclusively in a nonmarketable short-term U.S. Treasury security that is specially issued to the TSP. The earnings consist entirely of interest income on the security.

F FUND -- The F Fund's investment objective is to match the performance of the Bloomberg Barclays U.S. Aggregate Bond Index, a broad index representing the U.S. bond market. The F Fund assets are held in a separate account and managed to track the Bloomberg Barclays U.S. Aggregate Bond Index. This broad index includes U.S. Government, mortgage-backed, corporate, and foreign government (issued in the U.S.) sectors of the U.S. bond market. The earnings consist of interest income on the securities and gains (or losses) in the value of the securities.

C Fund – S&P 500

S Fund – Small cap fund

I Fund -- The I Fund's investment objective is to match the performance of the MSCI EAFE (Europe, Australasia, Far East) Index. The I Fund invests in a stock index fund that fully replicates the MSCI EAFE (Europe, Australasia, Far East) Index. The earnings consist of gains (or losses) in the price of stocks, dividend income, and change in the relative value of currencies.

FUNDS AVAILABLE IN HER ALLIANZ FIXED INDEX ANNUITY
Fund name (ticker symbol) (expense ratio)
S&P 500
Nasdaq 100 index
Blended index
Russell 2000 index
Barclays US Dynamic Balance Index II w/cap
Barclays US Dynamic Balance Index II w/spread
PIMCO Tactical Balanced Index w /cap
PIMCO Tactical Balanced Index w /spread

Questions/Issues:
1. I don’t know what to put in the taxed account and what to put in my Roth IRA (bonds and equities).
2. I don’t know if HER annuity was a good move or what to do with it now that I have it. It is a FIXED INDEX ANNUITY. Contract date is May 2016 so we are 1.5 years into a 10 year surrender period (i.e., if we withdrew right now we would incur a 8-9% surrender fee.

Readyinvestor
Posts: 39
Joined: Wed Sep 06, 2017 9:00 am

Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Thu Sep 21, 2017 5:19 am

Retiredjg and Lafder, Thank you for helping me along this far. I hope I am getting after your questions. Vr RI

Lafder
Posts: 3794
Joined: Sat Aug 03, 2013 7:56 pm
Location: East of the Rio Grande

Re: Portfolio Review Request - ReadyInvestor

Post by Lafder » Thu Sep 21, 2017 9:05 am

Great job converting to % of total.

It really lets you see how tiny and insignificant the smaller holdings are which will make it easier to make changes :)

I will take a deeper look when I can. We can help you simplify for sure.

lafder

Lafder
Posts: 3794
Joined: Sat Aug 03, 2013 7:56 pm
Location: East of the Rio Grande

Re: Portfolio Review Request - ReadyInvestor

Post by Lafder » Sat Sep 23, 2017 11:07 am

Emergency funds: Paying car debt so we have a $2000 EF right now en route to $24k (3mos expenses).
Debt: $8700 car debt (2%), 330,000 mortgage (3.5% fixed)

((I have a car loan too. I will be glad when it is paid off.))

Tax Filing Status: Married Filing Jointly w/ 2 kids
Tax Rate: 15% Federal in 2016, 0% State (no state income tax) (Military)
State of Residence: WA
His Age: 47 US Navy
Her Age: 39 Homemaker

Desired Asset allocation: 70% stocks / 30% bonds (Don’t need money for at least 12 years (60) but more like 15-17. All the risk tolerance surveys have me at 100% stocks. I will to “stay the course” but keep coming back to the number of 70/30 bonds based on the Boglehead and Bogle books (especially his conservative “age in bonds” advice.)

((There is a rec for age down to age - 15 in bonds or so. So at 70/30 you are close to that range especially if you look at your average age with your spouse. We were 80/20 until our late 40's. You have to think about how bad you will feel in the next crash. The more stock you have the bigger the total balance will fall. A 50% drop in the market requires a 100%gain to get back to where it started. The more bonds you have ,the less a stock market crash will drop your total. I think 70/30 is reasonable for your ages. We are average age 50 and I aim for 65/35. But we are closer to 70/30 since stocks have grown faster than bonds. I am trying to rebalance by directing ongoing investments to bonds. I just don't like the feeling of selling to rebalance, so I try to avoid that. This a personal anxiety of my own, though shared by many))

Desired International allocation: 14% of stocks (I have seen 14-28% numbers, I keep coming back to 20%).

((I don't know where you are getting 14-28%. There are recs from 0%- 50% of stocks should be International. Vanguard used to use 20-40%which is how I chose 30%. But VG raised their recs to 30-50% in the past few years. Bogle and Buffett have said 0% International is fine. And some folks advocate 50%. If you choose all in one funds they choose for you. I have been trying to nudge our % above 30% but don't plan higher than 40%))

Would like some emerging market and REIT too for diversification (a la David Swenson)

((This is a matter of personal taste. I try to keep it more simple with a 3 fund portfolio. There are many descriptions on the site of the simplicity and performance of a three fund. But yes many people like REITs and emerging markets. Here is a link about 3 fund that is pretty convincing. viewtopic.php?f=10&t=88005 ))


Current retirement assets
Taxable (22.28% of portfolio)
10.69% CASH NA NA
7.13% LAUDUS U.S. LARGE CAP LGILX ER 0.76
4.46% FIRST TR PORTFOLIOS ???? ????

((What is your cost basis on the taxable investments. At 0.76%, almost 1% of profits are taken off the top each year of the laudus fund. Who knows about the other. You can find lower cost options to hold for the long term))

HIS 401K (US GOVT THRIFT SAVINGS PLAN) (Overall avg TSP ER 0.027 – 0.038%) (12.72% of portfolio)
Company match? No.
1.9% G Fund – Government Securities
1.9% F Fund – Fixed income index
3.18% C Fund Common Stock Index
3.18% S Fund Small Cap Index
2.54% I Fund International Index

((Too many holdings here. It is ok to hold 1 or 2 funds here. You can keep it simple and just hold total stock, and total international stock here, plus or minus bonds. And use the IRA below for more bonds))

HIS IRA AT SCHWAB (33.83% of portfolio)

ETFs
1.69% ALPS SECTOR DIVIDEND SDOG ER 0.40
1.69% GUGGENHEIM S&P 500 EQUAL RSP ER 0.20
1.57% ISHARE EDGE MSCI MIN VOL EFAV ER 0.20
2.12% ISHARES CORE US AGG ER 0.05 ((Nice low ER))
1.91% POWERSHARES QQQ TRUST QQQ ER 0.20
2.47% POWERSHARES S&P 500 LOW SPLV ER 0.25
1.49% POWERSHARES S&P 500 DIV NOBL ER 0.35
0.71% SCHWAB FUNDAMENTAL US FNDA ER 0.25
3.99% SCHWAB US BROAD MARKET SCHB ER 0.03 ((Nice low ER))
1.62% SPDR S&P DIVIDEND ETF SDY ER 0.35

MUTUAL FUNDS ((ERs too high, I would sell all))
4.97% AMERICAN CENTURY EQUITY TWEIX ER 0.94%
4.17% AMERICAN FD BALANCED FD BALFX ER 0.66%
1.12% BLUEROCK TOTAL INCM AND TIPRX ER 1.95%
1.69% COGNIOS MKT NEUTRAL LG COBMX ER 1.96%
2.61% PARNASSUS MID CAP FUND PARMX ER 0.99%

((The ERs in the mutual funds above are all too high. I would simplify this IRA to low cost total stock, total International stock, and total bond. Each account you have does not have to match your overall AA. You can keep smaller accounts with 1 or 2 holdings, and use larger accounts to rebalance in. What mutual fund options are there or ETFs with ERs that are 0.0x ?))

HER ROTH IRA ALLIANZ FIXED INDEX ANNUITY (CONTRACT DATE MAY 2016) (31.13% of portfolio)
15.32% MoSum-S&P 500 Index
15.81% MoSum-Nasdaq 100 Index

-- I can change this each year before May26th.
-- Surrender fee is 10% 1st year (=$4-5000)
2016 = 10%
2017 = 9%
2018 = 8%

((I am not good at assessing annuities, others can be more helpful. What are the ongoing fees? If more than 3% you will pay yourself back on fees in less than 3 years to pay the surrender bs fee))

Contributions

New annual Contributions
$1200 his 401k (also specify any employer matching contributions)
$4800 his IRA/Roth IRA
$4800 her IRA/Roth IRA
$0 taxable (for retirement, not short term goals)

((Can you do 5500 each to the Roths ?))

Available funds

FUNDS AVAILABLE IN HER ALLIANZ FIXED INDEX ANNUITY
Fund name (ticker symbol) (expense ratio)
S&P 500
Nasdaq 100 index
Blended index
Russell 2000 index
Barclays US Dynamic Balance Index II w/cap
Barclays US Dynamic Balance Index II w/spread
PIMCO Tactical Balanced Index w /cap
PIMCO Tactical Balanced Index w /spread

((It is so frustrating that they make it so hard to find the expenses and fees. They must be free then, right? Of course not. They must be listed somewhere))

Questions/Issues:
1. I don’t know what to put in the taxed account and what to put in my Roth IRA (bonds and equities).

((Here is a link. In general, put bonds in retirement accounts. https://www.bogleheads.org/wiki/Tax-eff ... _placement ))

2. I don’t know if HER annuity was a good move or what to do with it now that I have it. It is a FIXED INDEX ANNUITY. Contract date is May 2016 so we are 1.5 years into a 10 year surrender period (i.e., if we withdrew right now we would incur a 8-9% surrender fee.

((Consider a new post titled about helping you with an annuity and post it with as many details you have. Folks can help guide you as to what factors you need to make a financial decision about this. Annuity sales folks are very persuasive about what a good deal for you they are.))

lafder

NancyABQ
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Re: Portfolio Review Request - ReadyInvestor

Post by NancyABQ » Sat Sep 23, 2017 12:20 pm

Readyinvestor wrote:
Mon Sep 18, 2017 8:16 pm
Hello all and good evening.
First post. I have read through your forum, wiki, books etc as thoroughly as possible.
Please let me know if I have not met the mark for format. I don't want to waste anyone's time here.

I am currently with w/ a broker/planner, and I just cannot get my head around why I have / need so many funds.
I have read Bogle, Swenson, some Bernstein, the Boglehead investing book, Robbins (Tony), Peter Mallouk and others.

...
Current retirement assets
Taxable (Expense Ratio=0.24% from Personal Capital though LGILX is 0.76)
48% DEPOSIT ACCOUNTS ???? ????
32% LAUDUS U.S. LARGE CAP LGILX ER 0.76
20% FIRST TR PORTFOLIOS ???? ????
Might "FIRST TR PORTFOLIOS" be something like this: "FIRST TRUST FINANCIALS SELECT PORTFOLIO SERIES 53 TERM 11/30/2017 CASH SEMI-ANNUAL". If so, those could be something called Unit Investment Trusts (UITs). Those are fixed term investments (generally 2 years) with high front end fees -- like 2.5% or so... I do not recommend them for many reasons. If you have a broker who is putting you in stuff like that, then I think you need to get away from that broker.

If it is UITs, you don't necessarily need to sell them right away. The ones I am familiar with are sector investments (the one I list above would be the financial sector). You have probably already paid the fees. But you should let them mature and make sure not to let your money be reinvested in these.

Or that might not be what they are at all, but you really need to find out more information about those Taxable holdings. Your broker owes you a better description than that on your statement!

Also, get a statement from your broker that includes Cost Basis and "Unrealized Capital Gains" so you will know how much capital gain/loss is involved in your taxable accounts.

Edit: Spelling
Last edited by NancyABQ on Sat Sep 23, 2017 9:54 pm, edited 1 time in total.

Readyinvestor
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Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Sat Sep 23, 2017 4:02 pm

NancyABQ - Thank you. I am going to dig into that taxable account. I don't understand it well enough.

Lafder - Thank you for all of your comments and recommendations.
1. Read and digested cmts about bonds and stocks. For AA, I think I will start with 70% Stock / 30% bonds but might still go 60/40 and see how we can stomach that.

2. Thinking INTL will be 25% of my stocks --- the 14-28% was me trying to say what part of the overall portfolio the INTL would represent. I was at 30% but am thinking I could take 5% of that and put it towards the REIT index - I just like Real Estate. Should I reconsider since we have a $365k house (Owe $330k)? I read a bunch of the article on the 3 fund portfolios today and in the past.

3. I don't have answers for my taxable account --- NancyABQ asked too. I don't understand how I am set up here and I don't like it. Frustrating. This is exactly why I have finally taken so much interest taking this over --- thanks to all of you Bogleheads!

4. For my TSP account I will put it back to just two funds --- C and I. I was trying to allocate and diversify!

5. New Questions: The TSP has the option of regular TSP and TSP Roth. We are going to max our normal ROTH IRAs (5500 x 2). I know I can put 18,000/yr in reg TSP.
-- I think I should stop doing that and fully fund the ROTH TSP, right?
-- Second question - the contribution towards reg ROTH IRA does not count towards ROTH TSP contribution limits right?
-- Reminder - I am in a 15% tax bracket right now so better to do ROTH TSP?

6. HIS ROTH IRA - Going to completely redo this shooting for ER less than 0.20.
Leaning towards:
15% Bonds (Intermediate)
15% TIPS
45% Total Stock Market
20% Intl
5% REIT

7. I will ask our broker your's and NancyABQ's questions and post a separate question to the forum for help.

8. We are going to start doing 5500 to both roths soonest. Car is almost paid for. Then we will build the Emergency Fund with the car payment money -- but going to carve off a little of that to finish out funding the roths. Once EF is good we can shift that money to max out TSP (18000) and then the ESAs x 2.

9. I can dig more on the fees for the annuity offerings.

10. Where to put the bonds, etc - tax advantaged acct or taxed. I have read both sides of the argument. Not sure. Will keep reading.

Thank you again for the time you put into our portfolio. I am grateful.
Best, RI

Readyinvestor
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Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Wed Sep 27, 2017 9:38 pm

NancyABQ - Still digging on your questions but I did ask the broker to stop reinvesting the earnings/dividends (not sure that is the right words). He told me that is why almost 50% of the account is in cash because he was waiting to talk with me on how to proceed.

Lafder - I have been crushed at home and work but did find out that the annuity has reoccurring fees of less than 1% ... so not 3% as discussed in your post so that is good. I am still going to post a separate question when I can and work on that as req'd after I get my roth and my taxable account situated into a 3 - fund account.

QUESTION FOR ALL: I feel bad having my broker re-situate all of our stuff just so I can let him go --- I plan to tell him that is what I am going to do. I think honesty is the best policy. Should I even bother or just head down to a local Schwab office, cut off his access and work with a local Schwab guy to re-situate our portfolio so I can move on managing it myself. Thoughts?

QUESTION FOR ALL: How do I tag you? @Lafder?

Thanks. Vr/ RI

Lafder
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Re: Portfolio Review Request - ReadyInvestor

Post by Lafder » Wed Sep 27, 2017 10:06 pm

Is the bulk of your current $ that you have control of at Schwab now?

What is your arrangement with the broker/planner ? Are you paying them a set annual fee ?

I have an "advisor" at Fidelity, but he has no access to my accounts and makes no changes on them. He contacts me and asks if he can help. But I have not needed him yet due to the help at Bogleheads.

If the money is already at Schwab, it seems reasonable to me to talk to the advisor and let them know you want to switch to a low cost self managed funds. Can he help you set it up without fees? If no, you should be able to make all of the changes online yourself. If you have some kind of management agreement with him you need to end it.

If it is a % of holdings, maybe he can walk you through the changes in holdings then end the management ?

I would take the time here to list out what your new fund plans are so we can take a peek. Then you can print out and bring to the advisor to help you make the changes and end the relationship in person.

Maybe they will be available in some capacity at no fee ?

I would make sure they have no future access to making changes in your account. You should be the only one making changes on your account.

lafder

Readyinvestor
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Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Thu Sep 28, 2017 10:24 pm

Lafder wrote:
Wed Sep 27, 2017 10:06 pm
Is the bulk of your current $ that you have control of at Schwab now?

*** Yes, everything except wifes ROTH IRA / Annuity - Which I will post a separate question for***

What is your arrangement with the broker/planner ? Are you paying them a set annual fee ?
*** The arrangement is AUM - he takes 1.35% per year --- minimum $1500.

I have an "advisor" at Fidelity, but he has no access to my accounts and makes no changes on them. He contacts me and asks if he can help. But I have not needed him yet due to the help at Bogleheads.

***He has power of attorney to make changes and trades. Things are rough right now between us and he is not making anymore changes. I went on a rampage reading and learning earlier this year - Unshakeable, Money Master The Came, Peter Mallouks book, Bogle books, Boglehead investing book, William Bernstein, 2nd Grader Punks Wallstreet and the list goes on. I am fed up. ***

If the money is already at Schwab, it seems reasonable to me to talk to the advisor and let them know you want to switch to a low cost self managed funds. Can he help you set it up without fees? If no, you should be able to make all of the changes online yourself. If you have some kind of management agreement with him you need to end it.
***I have a telcon w/ him tomorrow. I keep asking questions and they don't know what to do with me - I won't do a self directed with them. I will let him go tomorrow and figure out how to situate my stuff. If he says the right thing and offers to help me into a 3 fund arrangement I might be fine to let him help - I MOSTLY WANT HELP making sure i don't screw us up selling things at the wrong time --- like the UIT in my taxable acct ***

If it is a % of holdings, maybe he can walk you through the changes in holdings then end the management ?
***This is what I am thinking***

I would take the time here to list out what your new fund plans are so we can take a peek. Then you can print out and bring to the advisor to help you make the changes and end the relationship in person.
***We are capable of being frugle long term --- I was trying to determine my timeline for investing. Age 47. 48 in feb. That's 17 years to 65 and I was thinking today that I might be able to extend that window to 75 and 27 years of investing (i feel we are behind) because we have no debt, will keep it that way and can live off of our Navy pension, social security and possibly an additional govt pension if i go federal employee for 5, 10 or 15 years after the navy (current plan is that or corp america). Also we are trying to pay off our house so we can rent it out some day --- that's 4 streams of income:
Navy
Federal retirement
Social security
Home rental - 2500/month
*** IRA --- defer as long as possible to compound interest.
I am confident we will be find -- i just say all that because I am trying to figure out our allocation - I was at 70 stock / 30 bonds which i thought was good but now thinking 60 stocks / 40 stocks because i want to be conservative when it comes to 40% market drop - I react well to home intruders on coke (really) but not sure about the market ---- THINKING i will be fine since i feel like i have trained myself well and now i have this site. hooyah.***
My age 47, wifey 39 --- (86/2)-15= 28 ---> so 70/30 should be okay.

*** My plan is this --- every account set up the same way except kids taxable accounts (because i did not chose 529s) and not sure how to allocate the ESAs.
Emergency fund: Start with 3 months (my employment is very secure), build to 6mos,then9 then 1 year.

His Taxable acct:
30% total bond (I am at schwab but was thinking i would pay the transaction fee to get the admiral funds at Vanguard) --- pls advise.
50% total market
20% total intl
(I want to do 5% REIT but would like y'all's advice.)

His ROTH IRA
Same

His TSP 401K
Pls advise if I should stop funding the TSP/401k and instead fund the TSP ROTH.
30% bond fund (F or G)
XX% C Fund (Large Cap S&P 500) (Pls advise how to best approximate total stock market with C and S)
XX% S Fund (Small Cap)
20% I fund (INTL)

Her ROTH IRA (Her annuity has a reoccurring 1% fee and I can stop making the payments any time ---- and I suppose open a ROTH IRA w/ Schwab and start funding that).
(Hypothetical ROTH IRA not annuity)
Same allocation as His Roth)


Maybe they will be available in some capacity at no fee ?
*** I don't want to work with them any more. Done. ***

I would make sure they have no future access to making changes in your account. You should be the only one making changes on your account.
***I agree. This is the way I am going to go. Thank you for all of your help.***

lafder

NancyABQ
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Re: Portfolio Review Request - ReadyInvestor

Post by NancyABQ » Thu Sep 28, 2017 11:08 pm

Readyinvestor wrote:
Thu Sep 28, 2017 10:24 pm
Lafder wrote:
Wed Sep 27, 2017 10:06 pm

If the money is already at Schwab, it seems reasonable to me to talk to the advisor and let them know you want to switch to a low cost self managed funds. Can he help you set it up without fees? If no, you should be able to make all of the changes online yourself. If you have some kind of management agreement with him you need to end it.
***I have a telcon w/ him tomorrow. I keep asking questions and they don't know what to do with me - I won't do a self directed with them. I will let him go tomorrow and figure out how to situate my stuff. If he says the right thing and offers to help me into a 3 fund arrangement I might be fine to let him help - I MOSTLY WANT HELP making sure i don't screw us up selling things at the wrong time --- like the UIT in my taxable acct ***
If those First Trust holdings are UITs, I wouldn't panic about them. If they are like the ones I am familiar with, they will mature on their own, probably 2 years after they started. At that point you will be "forced" to realize any capital gains/losses (one of the reasons I don't like them -- you end up getting a taxable event every time they mature). And you have already paid the fees on them. So just letting them ride until they mature isn't necessarily the worst thing. On the other hand if they currently have a loss, and you want to sell to offset some other gains or whatever, that is something to consider.

If you can find out the full name of these holdings, that would really help. The maturity date is either right in the name, or easy to find from the First Trust web site/google.

Lafder
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Re: Portfolio Review Request - ReadyInvestor

Post by Lafder » Thu Sep 28, 2017 11:22 pm

If you are sure you want to leave Schwab, call VG or Fidelity and tell them you want to move funds to them and they can "pull" the funds to them so you do not even need to speak with your current advisor or let them know your plans.

There may be some fees, but sometimes they can be waived to get the money moved to the new place.

It is easier to pull the money to the new place than push it from the old.

At a quick glance your proposed portfolio looks good.

I like VG and Fidelity. Both have low cost funds, but you have to make sure you get the low cost index funds since both have so many offerings.

lafder

Readyinvestor
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Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Fri Sep 29, 2017 5:11 am

Lafder wrote:
Thu Sep 28, 2017 11:22 pm
If you are sure you want to leave Schwab, call VG or Fidelity and tell them you want to move funds to them and they can "pull" the funds to them so you do not even need to speak with your current advisor or let them know your plans.
Thank you for your note. I will clarify. For now, I am fine with Schwab. My advisor and his firm simply hole my money there. So, once we part ways with the ABC Wealth Building Company, I will work with Schwab to get things situated.

Readyinvestor
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Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Fri Sep 29, 2017 5:34 am

NancyABQ wrote:
Thu Sep 28, 2017 11:08 pm
Readyinvestor wrote:
Thu Sep 28, 2017 10:24 pm
Lafder wrote:
Wed Sep 27, 2017 10:06 pm

From Lafder: If those First Trust holdings are UITs, I wouldn't panic about them. If they are like the ones I am familiar with, they will mature on their own, probably 2 years after they started. At that point you will be "forced" to realize any capital gains/losses (one of the reasons I don't like them -- you end up getting a taxable event every time they mature). And you have already paid the fees on them. So just letting them ride until they mature isn't necessarily the worst thing. On the other hand if they currently have a loss, and you want to sell to offset some other gains or whatever, that is something to consider.

If you can find out the full name of these holdings, that would really help. The maturity date is either right in the name, or easy to find from the First Trust web site/google.
Between your cmts and those of NancyABQ and reading the statements (over and over), I think this is what I have. I will get the most recent statement and give the full names. I do see the word "matured" on some of the entries. To the advisor's credit (?) I don't have any loses except for all of the high ERs of my funds and these cap gain expenses. More to follow. Vr RI

retiredjg
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Re: Portfolio Review Request - ReadyInvestor

Post by retiredjg » Fri Sep 29, 2017 5:54 am

It is not necessary or even desirable to set up every account the same. For example, if you want REIT it should go in IRA/Roth IRA because it is a poor choice for a taxable account and not available in the TSP.

Also, it is not necessary to have 30% bonds in each account - all your bonds could be in the TSP if you wanted.

The other thing is you should not buy Vanguard funds at Schwab because of the transaction fees. Instead, Schwab does have a limited list of their own index mutual funds and they sell (transaction free) a nice selection of iShares ETFs. The point is to have low cost index funds or ETFS, not to have only Vanguard products. If you really want the Vanguard products, you need to move your money to Vanguard (although some are transaction free at TD Ameritrade).

I think you might be a little too worried that you are "behind". You will have pension money and SS and you already have a good start on your own retirement amount. It seems to me you can relax a little bit about all this.

Readyinvestor
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Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Fri Sep 29, 2017 8:34 pm

retiredjg wrote:
Fri Sep 29, 2017 5:54 am
It is not necessary or even desirable to set up every account the same. For example, if you want REIT it should go in IRA/Roth IRA because it is a poor choice for a taxable account and not available in the TSP.

Also, it is not necessary to have 30% bonds in each account - all your bonds could be in the TSP if you wanted.

The other thing is you should not buy Vanguard funds at Schwab because of the transaction fees. Instead, Schwab does have a limited list of their own index mutual funds and they sell (transaction free) a nice selection of iShares ETFs. The point is to have low cost index funds or ETFS, not to have only Vanguard products. If you really want the Vanguard products, you need to move your money to Vanguard (although some are transaction free at TD Ameritrade).

I think you might be a little too worried that you are "behind". You will have pension money and SS and you already have a good start on your own retirement amount. It seems to me you can relax a little bit about all this.
Retiredjg, Thank you for your response and advice. i appreciate it. I will take the suggestions about bonds to TSP, REIT to ROTH IRA, chilling out, and buying Schwab funds onboard. In the research I did earlier today - I came to the same conclusions about funds choice - Schwab. I will get to work figuring out how much I need to put in each account - ie total market, total intl and total bond.

Question - We will be way short of being able to fully fund the TSP this year --- ie 1200 bucks invested compared to the 18000 max. Should I consider taking money out of the taxable account to fund TSP this year.

Question - Should I be contributing to the traditional TSP (401k) or to the ROTH TSP? I have always preferred paying the taxes now since I am in the military, no income tax and paying about 15% federal.

Thank you.

Vr RI

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Re: Portfolio Review Request - ReadyInvestor

Post by pkcrafter » Fri Sep 29, 2017 9:52 pm

Readyinvestor wrote:
I am currently with w/ a broker/planner, and I just cannot get my head around why I have / need so many funds.
Simple, the advisor wants to give you the illusion of complexity and dependence on him. :oops: What would uneducated investors say if the advisor only put them in 3 funds? They would say, I pay you all that money and that's all you do?

Probably best if you continue with this thread instead of starting a new one.

QUESTION FOR ALL: How do I tag you? @Lafder?
Not sure I understand your question.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Nearly A Moose
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Re: Portfolio Review Request - ReadyInvestor

Post by Nearly A Moose » Sat Sep 30, 2017 2:44 am

You're getting great guidance from lafder as usual, so keep working with him. A couple thoughts to add:

No need to rush with the fund changes, even over you've left your advisor. I was there a year and a half ago, so I can relay to the idea that you want to fix everything right away. But it's not like your funds will all collapse over the financial advisor is out of the picture. So you can take your time, especially with the taxable account. You want to be deliberate there so you don't pay more taxes than you need to. A key part is figuring out what you have in terms of short and long term gains/losses. Once you get that, you can post it to this thread, and people will help you prioritise things. Conventional wisdom is to sell anything with a loss right away. You'll then need to analyze whether it makes sense to realize all the gains immediately as well. In your enviable tax bracket, perhaps it will.

I get the intuitive thinking behind making your accounts mirror each other, but I'd encourage you not to filter that approach. I think it actually overcomplicates things. It makes you hold more funds overall and leads to potentially non-optimal tax situations. Here are some thoughts on how to think about it:
-figure out your desired overall allocation
-now, figure out whether any of your accounts have especially good or bad options that might push you one way or another. For example, the tsp has the G fund, which is unique. If you like that fund, then by necessity you need to put some amount of your bond holdings in the tsp. By contrast, I think the tsp I fund is viewed as not the most comprehensive international fund (although certainly serviceable). I think your other account accounts give you lots of flexibility, but if for example, you have a 401k with lousy choices for bond funds, then that tells you not to put your bond allocation there if you can avoid it.
-conventional wisdom is to put total stock market type funds in taxable accounts and bond funds in tax deferred accounts, if you're using both. But at your favorable tax rates, it's probably worth running numbers on both options. I keep all my bonds in tax deferred accounts, except for some tax-free minus that are for a short term savings goal.
-reits are pretty ugly from a tax standpoint and go best in a tax preferred account. Roths are probably best. I keep my reit holding in my wife's Roth IRA.

If you feel like you're behind, remember the values of your pension. If you use the 4% withdrawal rate, a $65k pension is the equivalent of a right $1.6M account.

I like 529s, but that's in part because I'm desperate for tax protection. I don't know enough about the gi bill benefits to analyze that. But it seems that benefits may be worth pursuing.

Finally, thank you for your service.
-
Pardon typos, I'm probably using my fat thumbs on a tiny phone.

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Re: Portfolio Review Request - ReadyInvestor

Post by retiredjg » Sat Sep 30, 2017 6:21 am

Readyinvestor wrote:
Fri Sep 29, 2017 8:34 pm
Retiredjg, Thank you for your response and advice. i appreciate it. I will take the suggestions about bonds to TSP, REIT to ROTH IRA, chilling out, and buying Schwab funds onboard. In the research I did earlier today - I came to the same conclusions about funds choice - Schwab. I will get to work figuring out how much I need to put in each account - ie total market, total intl and total bond.
Note that the Schwab International mutual fund is like the I Fund in the TSP - they are both "developed markets" funds. They do not include Canada, the emerging markets, and there are no small cap stocks. Some people, not all, think it is important to use a real "total" international index. Schwab should have something like that available in an ETF (either their own or iShares).

Question - We will be way short of being able to fully fund the TSP this year --- ie 1200 bucks invested compared to the 18000 max. Should I consider taking money out of the taxable account to fund TSP this year.
Unless the money in the taxable account is for a specific goal such as a home downpayment, it is always more important to fill the TSP first. I would sell things in taxable to fill the TSP but keep in mind that might trigger some taxes. It could be a balancing act - sell just enough to stay in the 15% bracket (where your long term capital gains are taxed at 0%) and put it in the TSP.
Question - Should I be contributing to the traditional TSP (401k) or to the ROTH TSP? I have always preferred paying the taxes now since I am in the military, no income tax and paying about 15% federal.
No state tax is an argument for Roth TSP since it is possible you will move into a state with income tax later in life. Having a pension is also an argument for Roth TSP. But using traditional TSP lowers your income so this could also come into that balancing act between how much you sell in taxable to fill the TSP.

I'd probably use some of both but I don't think it would hurt you to use mostly Roth TSP.

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Re: Portfolio Review Request - ReadyInvestor

Post by Nords » Sat Sep 30, 2017 12:11 pm

Readyinvestor wrote:
Fri Sep 29, 2017 8:34 pm
Question - Should I be contributing to the traditional TSP (401k) or to the ROTH TSP? I have always preferred paying the taxes now since I am in the military, no income tax and paying about 15% federal.
Hi, RI, I wrote the book on military personal finance. I frequently see questions like yours.

You're right about the Roth TSP. Pay the taxes now. (The Roth TSP is much more convenient for withdrawals later in life, too.) Up to the ranks of E-6 and O-2, many servicemembers pay no taxes at all due to the Earned Income Tax Credit and other tax credits.
Readyinvestor wrote:
Fri Sep 29, 2017 8:34 pm
Question - We will be way short of being able to fully fund the TSP this year --- ie 1200 bucks invested compared to the 18000 max. Should I consider taking money out of the taxable account to fund TSP this year.
Yes-- You should consider moving funds from a taxable account to maximize your Roth TSP contribution. You'd want to do this in a tax-efficient manner (zero income tax or zero capital gains tax) but the key is to make the most of the TSP. Once you leave the military you can't contribute to your military TSP account anymore.

One way to do this would be to set your Roth TSP contribution as high as you can in myPay. (Services vary but you should be able to set it to 60%-65%. DFAS reserves the rest for income-tax withholding.) While you might not hit $18K this year, you'll do your best while you're spending down your taxable accounts for your living expenses.

If you're eligible for the Blended Retirement System (less than 12 years of service by 31 December 2017) then you absolutely want to contribute at least 5% of your base pay to the Roth TSP in order to receive the full DoD 5% match. You're contributing your part to the Roth TSP to minimize your taxes, while DoD is required by BRS law to contribute their match to the traditional TSP.
* | * | Please see my profile. I don't read every post, so please PM or e-mail me to get my attention.

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Re: Portfolio Review Request - ReadyInvestor

Post by Lafder » Sun Oct 01, 2017 9:44 am

I agree I would max contributions to TSP for the rest of the year, even if it meant needing to pull $ from taxable savings to cover living expenses. I like to max tax advantaged space and you were making changes in your holdings anyway :)
lafder

Readyinvestor
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Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Tue Oct 03, 2017 4:35 am

pkcrafter wrote:
Fri Sep 29, 2017 9:52 pm
Readyinvestor wrote:
I am currently with w/ a broker/planner, and I just cannot get my head around why I have / need so many funds.
Simple, the advisor wants to give you the illusion of complexity and dependence on him. :oops: What would uneducated investors say if the advisor only put them in 3 funds? They would say, I pay you all that money and that's all you do?

Probably best if you continue with this thread instead of starting a new one.

QUESTION FOR ALL: How do I tag you? @Lafder?
Not sure I understand your question.

Paul
pkcrafter (Paul), Thank for your comment. When I said tag I was thinking Facebook, Instagram, etc - I had not yet learned the quote "" function for the form. I wanted to ensure you were being informed of my response to your advice, etc. Cheers, RI

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Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Tue Oct 03, 2017 4:44 am

Nearly A Moose wrote:
Sat Sep 30, 2017 2:44 am
You're getting great guidance from lafder as usual, so keep working with him. A couple thoughts to add:

No need to rush with the fund changes, even over you've left your advisor. I was there a year and a half ago, so I can relay to the idea that you want to fix everything right away.

I get the intuitive thinking behind making your accounts mirror each other, but I'd encourage you not to follow that approach. I think it actually overcomplicates things.

If you feel like you're behind, remember the values of your pension. If you use the 4% withdrawal rate, a $65k pension is the equivalent of a right $1.6M account.

I like 529s, but that's in part because I'm desperate for tax protection. I don't know enough about the gi bill benefits to analyze that. But it seems that benefits may be worth pursuing.

Finally, thank you for your service.
-
Nearly a Moose, I have read your post a couple of times. Good stuff here. Thank you.
- ok, sounds like mirroring the accts is not good. I drew up a new plan yesterday. Got it.
- I will look at where to put the bonds, etc. I still don't fully understand the difference btwn G and F in TSP. Will keep reading.
- Thanks for the thoughts on the pension and it's value - Btwn you and the others I am feeling better about this each day.
- You are welcome - the years have gone by very fast! You are for what you do on this site. I very glad I found the Bogleheads. It really fits me!
Vr RI

Readyinvestor
Posts: 39
Joined: Wed Sep 06, 2017 9:00 am

Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Tue Oct 03, 2017 4:52 am

retiredjg wrote:
Sat Sep 30, 2017 6:21 am

Note that the Schwab International mutual fund is like the I Fund in the TSP - they are both "developed markets" funds. They do not include Canada, the emerging markets, and there are no small cap stocks. Some people, not all, think it is important to use a real "total" international index. Schwab should have something like that available in an ETF (either their own or iShares).

Unless the money in the taxable account is for a specific goal such as a home downpayment, it is always more important to fill the TSP first. I would sell things in taxable to fill the TSP but keep in mind that might trigger some taxes. It could be a balancing act - sell just enough to stay in the 15% bracket (where your long term capital gains are taxed at 0%) and put it in the TSP.

I'd probably use some of both but I don't think it would hurt you to use mostly Roth TSP.
Thank you, Retiredjg. Still digesting all of this and figuring out how to implement. Cheers, RI

Readyinvestor
Posts: 39
Joined: Wed Sep 06, 2017 9:00 am

Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Tue Oct 03, 2017 4:54 am

Nords wrote:
Sat Sep 30, 2017 12:11 pm

Hi, RI, I wrote the book on military personal finance. I frequently see questions like yours.

You're right about the Roth TSP. Pay the taxes now. (The Roth TSP is much more convenient for withdrawals later in life, too.) Up to the ranks of E-6 and O-2, many servicemembers pay no taxes at all due to the Earned Income Tax Credit and other tax credits.
Nords, Thank you for all of this digesting. Cheers,RI

Nearly A Moose
Posts: 877
Joined: Fri Apr 22, 2016 5:28 pm

Re: Portfolio Review Request - ReadyInvestor

Post by Nearly A Moose » Tue Oct 03, 2017 8:56 am

Readyinvestor wrote:
Tue Oct 03, 2017 4:44 am
Nearly A Moose wrote:
Sat Sep 30, 2017 2:44 am
You're getting great guidance from lafder as usual, so keep working with him. A couple thoughts to add:

No need to rush with the fund changes, even over you've left your advisor. I was there a year and a half ago, so I can relay to the idea that you want to fix everything right away.

I get the intuitive thinking behind making your accounts mirror each other, but I'd encourage you not to follow that approach. I think it actually overcomplicates things.

If you feel like you're behind, remember the values of your pension. If you use the 4% withdrawal rate, a $65k pension is the equivalent of a right $1.6M account.

I like 529s, but that's in part because I'm desperate for tax protection. I don't know enough about the gi bill benefits to analyze that. But it seems that benefits may be worth pursuing.

Finally, thank you for your service.
-
Nearly a Moose, I have read your post a couple of times. Good stuff here. Thank you.
- ok, sounds like mirroring the accts is not good. I drew up a new plan yesterday. Got it.
- I will look at where to put the bonds, etc. I still don't fully understand the difference btwn G and F in TSP. Will keep reading.
- Thanks for the thoughts on the pension and it's value - Btwn you and the others I am feeling better about this each day.
- You are welcome - the years have gone by very fast! You are for what you do on this site. I very glad I found the Bogleheads. It really fits me!
Vr RI
The short answer comparing G and F funds. F fund is essentially a total bond fund. I forget the average duration, but it's probably 5-7 years or so. So it pays higher interest than G fund, but it's susceptible to the value of the shares fluctuating based on interest rates. As a rough rule of thumb, expect a bond fund's value to drop by a percentage equal to the average duration of the fund for every percent increase in interest rates. So, if the fund's duration is 5 years and rates go up 1%, the value of the fund should drop by 5%. But remember that it will continue to pray (now higher) interest, so eventually your holding will catch up to where it was and then grow more quickly because of the higher rate.

The G fund is different in that it's rate is tied to a government rate (I forget which one) and is updated every day or week or so. But importantly, the fund's value can never go down because of the way the fund is designed. It is totally unique the TSP. It's essentially a short-term bond fund with 0 duration, so nineu of the risk of the value fluctuating. But, it pays less. As I understand it, it is an excellent deal on a risk-adjusted basis, but that doesn't mean it gives the highest overall return.

Someone can swoop in and explain this much more finely than I can. And if you search there forum, you'll find plenty of discussions about it.

I'm (rather, my wife is) currently in the G fund, although I'm considering moving to the F fund because I have a very long time horizon. I picked it when I first set up my portfolio because I wasnt sure which to pick and I wanted to see what the g fund did.
Pardon typos, I'm probably using my fat thumbs on a tiny phone.

Readyinvestor
Posts: 39
Joined: Wed Sep 06, 2017 9:00 am

Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Sun Oct 22, 2017 9:37 pm

Emergency funds: $2000 EF right now en route to $24k (3mos expenses).
Debt: $8700 car debt (2%) (finish Jan 2018), 330,000 mortgage (3.5% fixed)(25 yrs left)
Tax Filing Status: Married Filing Jointly w/ 2 kids
Tax Rate: 15% Federal in 2016, 0% State (no state income tax) (Military)
State of Residence: WA
His Age: 47 US Navy
Her Age: 39 Homemaker
Desired Asset allocation: 70% stocks / 30% bonds (Don’t need money for at least 12 years (60) but more like 18-20 (65-67yrs old).
Desired International allocation: 20% of portfolio or 14% of stocks. 5% REIT.
Size of portfolio – low six figures.

New Plan 22 Oct 2017. Request your review.

1. QUESTION: I can post separately to ask what to do with wife’s fixed index annuity (e.g., stop funding, start ROTH IRA? ).

2. Per advice rcvd here on BH, I understand that (my) his TSP and (Wife) her Roth Annuity should each have some of the bonds – i.e., I should not have her (retirement account) all stocks and mine all bonds (For now I have bonds in my ROTH IRA and TSP (total 13.5% of AA) to quickly get my AA closer to 70/30 – There is a Barclay bond fund for her Annuity that I can change IVO Apr 2018).

3. QUESTION: Planning to use Schwab funds since I am with Schwab – 4 funds – do I use ETF or Mutual Funds?
a. Total Bond
b. Total US
c. Total Intl
d. Total REIT

4. Allocation is 30% Bonds / 70 Equities
a. 30% Bond
b. 45% US Stock
c. 5% REIT (Or what about Large Value? Small Value?)
d. 20% Int’ll

5. QUESTION: How quickly may I start selling off everything in my Roth IRA? Right away correct since no taxes will be incurred?

6. QUESTON: For LAUDUS U.S. LARGE CAP (LGILX) in taxable, I need to make sure I have held over one year before selling, correct?

7. Funds I am planning to use – again, ETFs or Mutual Funds?
- US Broad Market ETF (SCHB)
- International Equity Index ETF (SCHF)
- U. S. Aggregate Bond Index ETF (SCHZ)
- Schwab U.S. REIT ETF (SCHH)

- Schwab Total Stock Market Index (SWTSX)
- Schwab International Index (SWISX)
- Schwab U.S. Aggregate Bond Index Fund (SWAGX)

Here goes:
HIS TAXABLE (20% OF PORTFOLIO)
- If I don’t take the $15,000 in cash for TSP (ref question #8 above) this could be all Int’ll stock - Several of you have made the case for me to fill out my TSP with this 15,000 vice leaving in taxable account.

20% SWISX

HIS ROTH IRA (34% OF PORTFOLIO)
I just started contributing to TSP Roth, but so far have all in TSP 401k side.
8% SWAGX (Bond)
21% SWTSX (Total US Stock)
5% SCHH (REIT)

HIS TSP-401K/TSP-ROTH (12% OF PORTFOLIO)

12% Bonds (F Fund)

HER ROTH IRA ALLIANZ FIXED INDEX ANNUITY (34% OF PORTFOLIO) (PLAN TO POST FOR ADVICE ON THIS)
10% Barclay bonds
24% S&P 500 fund


Her Roth IRA (Does not exist yet)
I can open this for her if I decide to stop funding ANNUITY and wait out the surrender period depending on what my post asking for advice yields.

-------------------------------------------------------------------------------------------------------------------

• For the kids’ ESAs, I will contribute $2000/year. Kids are 8 and 6. How do I allocate here?
• For the kids’ taxable account (since I cannot decide on 529k or not, ugh, help, advise pls.), I was thinking 20% bond / 80% Stock. Good? I am currently teaching the 8 yr old about compounding and investing (ref 2nd Grader beats wall street book).

McGilicutty
Posts: 150
Joined: Tue Dec 13, 2016 5:24 pm

Re: Portfolio Review Request - ReadyInvestor

Post by McGilicutty » Sun Oct 22, 2017 9:57 pm

ERs for tickers mentioned in OP's latest post obtained from Yahoo! Finance:

(SCHB) Schwab US Broad Market ETF -- 0.03% ER
(SCHF) Schwab International Equity ETF -- 0.08% ER
(SCHZ) Schwab US Aggregate Bond ETF -- 0.05% ER
(SCHH) Schwab US REIT ETF -- 0.07% ER
(SWTSX) Schwab Total Stock Market Index -- 0.09% ER
(SWISX) Schwab International Index -- 0.19% ER
(SWAGX) Schwab US Aggregate Bond Index -- 0.00% ER

Note that Yahoo! is reporting a 0% ER for SWAGX but Morningstar is reporting 0.04%.

McGilicutty
Posts: 150
Joined: Tue Dec 13, 2016 5:24 pm

Re: Portfolio Review Request - ReadyInvestor

Post by McGilicutty » Sun Oct 22, 2017 10:20 pm

McGilicutty wrote:
Sun Oct 22, 2017 9:57 pm
ERs for tickers mentioned in OP's latest post obtained from Yahoo! Finance:

(SCHB) Schwab US Broad Market ETF -- 0.03% ER
(SCHF) Schwab International Equity ETF -- 0.08% ER
(SCHZ) Schwab US Aggregate Bond ETF -- 0.05% ER
(SCHH) Schwab US REIT ETF -- 0.07% ER
(SWTSX) Schwab Total Stock Market Index -- 0.09% ER
(SWISX) Schwab International Index -- 0.19% ER
(SWAGX) Schwab US Aggregate Bond Index -- 0.00% ER

Note that Yahoo! is reporting a 0% ER for SWAGX but Morningstar is reporting 0.04%.
There were some other discrepancies between Yahoo! and Morningstar. From Morningstar:

SCHF -- 0.06% ER
SCHZ -- 0.04% ER
SWTSX -- 0.03% ER
SWISX -- 0.06% ER

Lafder
Posts: 3794
Joined: Sat Aug 03, 2013 7:56 pm
Location: East of the Rio Grande

Re: Portfolio Review Request - ReadyInvestor

Post by Lafder » Sun Oct 22, 2017 10:51 pm

Desired Asset allocation: 70% stocks / 30% bonds

Desired International allocation: 20% of portfolio or 14% of stocks. 5% REIT.

((Your number above is funky. 20% of Portfolio would be 28.5% of your stocks. This is a reasonable number. Note REIT is usually counted as part of your stock portion, Some think 5% is too small of a number to make a difference. Is it really worth the hassle of the extra category to you? It may be. Also note that "total stock market" index funds have some REITs in them already. I used to have a separate REIT category and sold low after 2008 before I found Bogleheads...........))

New Plan 22 Oct 2017. Request your review.

1. QUESTION: I can post separately to ask what to do with wife’s fixed index annuity (e.g., stop funding, start ROTH IRA? ).
((Yes post separately about the annuity. Roths are generally good since you never pay tax on them again))

2. Per advice rcvd here on BH, I understand that (my) his TSP and (Wife) her Roth Annuity should each have some of the bonds – i.e., I should not have her (retirement account) all stocks and mine all bonds (For now I have bonds in my ROTH IRA and TSP (total 13.5% of AA) to quickly get my AA closer to 70/30 – There is a Barclay bond fund for her Annuity that I can change IVO Apr 2018).

((Yes bonds should be in a retirement account, until your taxable account is a big enough percent you need some bonds there. I would have bonds in the biggest 2 accounts. You want room to rebalance in the event of a big crash. Even though it is not necessary to keep his and her accounts at the same AA, I think there should be some symmetry so that the performances are closer to each other than if all bonds are just in his or hers))

3. QUESTION: Planning to use Schwab funds since I am with Schwab – 4 funds – do I use ETF or Mutual Funds?

((There are many discussions on this. I find the ordering steps for buying and selling ETFs much more complicated since you have to deal with share prices. I know at Fidelity and VG the cost of mutual funds if your balance is high enough is the same as for ETFs. So since there was not a cost savings, it was not worth the extra steps to me. Mutual fund orders can be put in at any time, and just for a dollar amount. Some ETFs you can only even put orders in when markets are open. Which is not when I have free time. Also there are spreads and calls and limit orders (I may be saying these wrong, they are just what I recall since I have never used ETFs other than helping a relative sell some). Some people prefer ETFs and perhaps they will speak up. My understanding is that it is just a slightly different packaging to own the same funds, with more rules for buying and selling = more things to fill out on the online order forms))

4. Allocation is 30% Bonds / 70 Equities
a. 30% Bond
b. 45% US Stock
c. 5% REIT (Or what about Large Value? Small Value?)
d. 20% Int’ll

((Yes this matches what you said you wanted. If you believe Boglehead theory of buying the market, do not be tempted for "value" stocks since that means someone is picking which stocks to hold in the "value" fund, and that is stock picking. KISS with the basic Index Funds. If you are unsure about REIT, I would move that 5% to either the total stock market, or to your bond fund))

5. QUESTION: How quickly may I start selling off everything in my Roth IRA? Right away correct since no taxes will be incurred
((Sure. Just be clear the $ is still in the Roth. Do not forget you may have magical thinking the market will go up the day after you sell, and crash the moment after you buy! I protected myself by trying my hardest to ignore market fluctuations while my money was in transit between funds and to never look up what the market did during that time))

6. QUESTON: For LAUDUS U.S. LARGE CAP (LGILX) in taxable, I need to make sure I have held over one year before selling, correct?
((Sure for long term capital gains. But since the amount that this effects may be small, it may or may not be worth holding that long. You should be able to figure that out by looking up your cost basis and long and short term gains. There may be an advantage to making the changes in one fell swoop and paying the slight extra tax, if it is slight. It could be worth waiting if big.))

7. Funds I am planning to use – again, ETFs or Mutual Funds? ((I would go with the mutual fnds))
- Schwab Total Stock Market Index (SWTSX)
- Schwab International Index (SWISX)
- Schwab U.S. Aggregate Bond Index Fund (SWAGX)

Here goes:
HIS TAXABLE (20% OF PORTFOLIO)
- If I don’t take the $15,000 in cash for TSP (ref question #8 above) this could be all Int’ll stock - Several of you have made the case for me to fill out my TSP with this 15,000 vice leaving in taxable account.
20% SWISX
((Can you max your TSP by setting contributions to their max the rest of this year? Then perhaps leave some of this as cash in case you need it for living expenses))

HIS ROTH IRA (34% OF PORTFOLIO)
I just started contributing to TSP Roth, but so far have all in TSP 401k side.
8% SWAGX (Bond)
21% SWTSX (Total US Stock)
5% SCHH (REIT)

((The disadvantage to Roth 401k is it uses up your maximum allowed contribution. If you use the traditional 401k you get it as a pretax deduction. If you can afford it, can you max traditional 401k, and do Back door Roths too ? That way you max your pretax contribution and get some Roths. If you can not max both, it could be good to have some Roth 401k))

HIS TSP-401K/TSP-ROTH (12% OF PORTFOLIO)

12% Bonds (F Fund)
((Ok, you can always do some rebalancing here and buy stocks if needed))

HER ROTH IRA ALLIANZ FIXED INDEX ANNUITY (34% OF PORTFOLIO) (PLAN TO POST FOR ADVICE ON THIS)
10% Barclay bonds
24% S&P 500 fund
((Looks fine and yes get extra info))

Her Roth IRA (Does not exist yet)
I can open this for her if I decide to stop funding ANNUITY and wait out the surrender period depending on what my post asking for advice yields.
((I would fund this rather than the annuity if you have to make a choice since you will have full control and can find lower cost options))

-------------------------------------------------------------------------------------------------------------------

• For the kids’ ESAs, I will contribute $2000/year. Kids are 8 and 6. How do I allocate here?
• For the kids’ taxable account (since I cannot decide on 529k or not, ugh, help, advise pls.), I was thinking 20% bond / 80% Stock. Good? I am currently teaching the 8 yr old about compounding and investing (ref 2nd Grader beats wall street book).

((Look up the costs associated with 529s. I could never decide and never seemed to have enough extra $$to make significant contributions so we never did 529s. Some states allow a state tax deduction, you said you already do not have state income tax. One of my issues with 529s are the ongoing fees. I say max your and your wife's retirement accounts first. Then if you have extra, add to taxable savings that can be used for any purpose down the road. Keep in mind if the house can be paid off early, you can fund school expenses with ongoing income that would have gone to mortgage. We did not do a great job of saving specifically for our kids' schools. But we paid for private school along the way and planned to pay for college as we go too (limited to less costly in state schools). As far as allocating, at their ages I would be aggressive at 100%stocks or no less than 80/20.. Vanguard has tax advantaged funds and life strategy aggressive funds, I would think Schwab has equivalents))

lafder
(I am a she. Someone had said I was a he somewhere in the posts, Not that it matters............but interesting how hard it is to know much of the time unless a specific reference is made))

NancyABQ
Posts: 227
Joined: Thu Aug 18, 2016 3:37 pm

Re: Portfolio Review Request - ReadyInvestor

Post by NancyABQ » Sun Oct 22, 2017 11:21 pm

Readyinvestor wrote:
Sun Oct 22, 2017 9:37 pm

3. QUESTION: Planning to use Schwab funds since I am with Schwab – 4 funds – do I use ETF or Mutual Funds?
a. Total Bond
b. Total US
c. Total Intl
d. Total REIT
...
7. Funds I am planning to use – again, ETFs or Mutual Funds?
- US Broad Market ETF (SCHB)
- International Equity Index ETF (SCHF)
- U. S. Aggregate Bond Index ETF (SCHZ)
- Schwab U.S. REIT ETF (SCHH)

- Schwab Total Stock Market Index (SWTSX)
- Schwab International Index (SWISX)
- Schwab U.S. Aggregate Bond Index Fund (SWAGX)
I am a Schwab investor also. Here are my thoughts:

I like ETFs. They trade like stocks, and I already knew how to trade stocks, so ETFs are no problem for me.

The ones you mention above are the ones I use. What I do is have all ETFs in an account, and one mutual fund. Since you have to buy whole shares for ETFs you will end up with some odd cash. I use the mutual fund to get that odd cash fully invested.

I think for Index funds, ETFs and Mutual Funds, are basically the same, except I believe a mutual fund can throw off some realized capital gains, which an ETF will not do, so that's a further reason to use ETFs in a taxable account. But this effect with an index fund should be small, so if you prefer mutual funds, just use those.

In the IRAs, I just have dividends reinvest automatically (note: except if I have a fund that is also in taxable -- I don't auto-reinvest those dividends in order to not mess up Tax Loss Harvesting). In my taxable account I don't reinvest dividends automatically, so that I can choose for myself where to invest them, with tax loss harvesting and/or rebalancing in mind. If you don't want to mess with those details, just have all dividends reinvest automatically.

For international, in addition to SCHF I include some SCHC and SCHE (International Small Cap and Emerging Markets) to get more coverage on those.

Personally, I also like VCSH (Vanguard Short Term Corporate Bond Fund) as it has nice returns and is pretty stable (less interest rate sensitivity and slightly higher risk than SCHZ). You can buy this at Schwab for $4.95/trade -- I haven't actually paid that fee yet because I got some free trades, but when I do have to eventually pay to trade it, the cost is minor. You would pay (I think) $75/trade to buy Vanguard mutual funds (no fee to sell) and can't get the Admiral funds, so if any Vanguard funds do appeal to you, you should look to their ETFs.

Nearly A Moose
Posts: 877
Joined: Fri Apr 22, 2016 5:28 pm

Re: Portfolio Review Request - ReadyInvestor

Post by Nearly A Moose » Mon Oct 23, 2017 11:27 am

Lafder wrote:
Sun Oct 22, 2017 10:51 pm

(I am a she. Someone had said I was a he somewhere in the posts, Not that it matters............but interesting how hard it is to know much of the time unless a specific reference is made))
That would be me, very sorry about that. I try not to gender stereotype on this forum, and I genuinely thought I learned you were a "he" at some point along the way. No offense or assumptions intended. Pronouns on anonymous Internet forums are hard!

-Moose
Pardon typos, I'm probably using my fat thumbs on a tiny phone.

Readyinvestor
Posts: 39
Joined: Wed Sep 06, 2017 9:00 am

Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Mon Oct 23, 2017 8:04 pm

NancyABQ wrote:
Sun Oct 22, 2017 11:21 pm
I am a Schwab investor also. Here are my thoughts:

I like ETFs. They trade like stocks, and I already knew how to trade stocks, so ETFs are no problem for me.

The ones you mention above are the ones I use. What I do is have all ETFs in an account, and one mutual fund. Since you have to buy whole shares for ETFs you will end up with some odd cash. I use the mutual fund to get that odd cash fully invested.

I think for Index funds, ETFs and Mutual Funds, are basically the same, except I believe a mutual fund can throw off some realized capital gains, which an ETF will not do, so that's a further reason to use ETFs in a taxable account. But this effect with an index fund should be small, so if you prefer mutual funds, just use those.

In the IRAs, I just have dividends reinvest automatically (note: except if I have a fund that is also in taxable -- I don't auto-reinvest those dividends in order to not mess up Tax Loss Harvesting). In my taxable account I don't reinvest dividends automatically, so that I can choose for myself where to invest them, with tax loss harvesting and/or rebalancing in mind. If you don't want to mess with those details, just have all dividends reinvest automatically.

For international, in addition to SCHF I include some SCHC and SCHE (International Small Cap and Emerging Markets) to get more coverage on those.

Personally, I also like VCSH (Vanguard Short Term Corporate Bond Fund) as it has nice returns and is pretty stable (less interest rate sensitivity and slightly higher risk than SCHZ). You can buy this at Schwab for $4.95/trade -- I haven't actually paid that fee yet because I got some free trades, but when I do have to eventually pay to trade it, the cost is minor. You would pay (I think) $75/trade to buy Vanguard mutual funds (no fee to sell) and can't get the Admiral funds, so if any Vanguard funds do appeal to you, you should look to their ETFs.
Nancyabq, Thank you for your reply. All good info. Best, RI

Readyinvestor
Posts: 39
Joined: Wed Sep 06, 2017 9:00 am

Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Mon Oct 23, 2017 8:54 pm

Lafder wrote:
Sun Oct 22, 2017 10:51 pm
Desired Asset allocation: 70% stocks / 30% bonds
a. 30% Bond
b. 50% US Stock
c. 20% Int’ll

Funds I am planning to use – mutual funds:
- Schwab Total Stock Market Index (SWTSX)
- Schwab International Index (SWISX)
- Schwab U.S. Aggregate Bond Index Fund (SWAGX)
lafder - Great post. Thank you.

1. I cut the REIT out for now. I like real estate, but I want to understand it better before I move on. Thx.
2. Taxable Account Cash to TSP - I increased my contributions today to nearly max my TSP by year end. Thanks for getting me over the hump - My grandpa went in on the 3rd wave on Iwo Jima -I have always wanted to make sure I honor his inheritance. This will do it. THx.
3. Int'll stocks - I don't know why I mess that up - my number is 20% of portfolio ... period which is 28.5% of my total stock allocation of 70% - did I get it?
4. Tonight's iteration of the plan has in each of our 3 retirement account - Roth, TSP and Annuity Roth - about 10% each. Taxable is now Int'll (10% of portfolio).
5. I will use the mutual funds.
6. No value funds for me. No REITs. KISS.
7. I am not sure what this means, "Do not forget you may have magical thinking the market will go up the day" --- magical thinking? I am just going to make the trades and get it over with so I can start thinking about something else. If it goes down, I still have to stay the course for 20-40 yrs!
8. Copy all on kids' account - still thinking about this - thinking "tax advantaged funds and life strategy aggressive funds"
9. Annuity - I like the idea of stopping payment and funding a Roth IRA @ Schwab. Yes.
10. I didn't really understand "
((The disadvantage to Roth 401k is it uses up your maximum allowed contribution."
We are each going to max a Roth IRA (11,000). Next year we will max out the TSP (18,000).
What maximum allowed contribution is Roth TSP using? I think I can contribute up to 18,000 whether it's part TSP 401k or TSP Roth, right?
For example-$8000 to TSP Roth and 10000 to TSP 401k? Or are the TSP Roth contributions counting towards my Roth IRA limit of 5500? So confused.
11. Below is my next go @ it.

To All, pls be direct if I am making this too complicated....as this time around I ended up w some small percentages - making it more difficult to balance in 2-3 years? But I did create some symmetry. Ugh.

MONDAY 23 OCT Next Version:

HIS ROTH IRA (34% OF PORTFOLIO)
10.2% SWAGX
17% SWTSX
6.8% SWISX

HIS TSP-401K (22% OF PORTFOLIO)
9.6% F Fund (bonds)
7.4% C Fund (large caps)
1.8% S Fund (small caps
3.2% I Fund (int'll)
I did a 4:1 split for C and S to represent total market.

HIS TAXABLE (10% OF PORTFOLIO)
- I will use some of this cash so I can max out contribution to TSP with our paycheck.
10% SWISX

HER ROTH IRA ALLIANZ FIXED INDEX ANNUITY (34% OF PORTFOLIO)
10.2% Barclay bonds
23.8% S&P 500 fund

Her Roth IRA (Stop payment on annuity and start this acct)

Thank you again. I really appreciate it.

Sincerely and best, RI

Readyinvestor
Posts: 39
Joined: Wed Sep 06, 2017 9:00 am

Re: Portfolio Review Request - ReadyInvestor

Post by Readyinvestor » Mon Oct 23, 2017 8:56 pm

McGilicutty wrote:
Sun Oct 22, 2017 10:20 pm
McGilicutty wrote:
Sun Oct 22, 2017 9:57 pm
ERs for tickers mentioned in OP's latest post obtained from Yahoo! Finance:

(SCHB) Schwab US Broad Market ETF -- 0.03% ER
(SCHF) Schwab International Equity ETF -- 0.08% ER
(SCHZ) Schwab US Aggregate Bond ETF -- 0.05% ER
(SCHH) Schwab US REIT ETF -- 0.07% ER
(SWTSX) Schwab Total Stock Market Index -- 0.09% ER
(SWISX) Schwab International Index -- 0.19% ER
(SWAGX) Schwab US Aggregate Bond Index -- 0.00% ER

Note that Yahoo! is reporting a 0% ER for SWAGX but Morningstar is reporting 0.04%.
There were some other discrepancies between Yahoo! and Morningstar. From Morningstar:

SCHF -- 0.06% ER
SCHZ -- 0.04% ER
SWTSX -- 0.03% ER
SWISX -- 0.06% ER
McGilicutty - Thank you for posting. I will go with the mutual funds. Vr RI

Lafder
Posts: 3794
Joined: Sat Aug 03, 2013 7:56 pm
Location: East of the Rio Grande

Re: Portfolio Review Request - ReadyInvestor

Post by Lafder » Tue Oct 24, 2017 9:53 pm

1. I cut the REIT out for now. I like real estate, but I want to understand it better before I move on. Thx.
((KISS, nice. You do have some REIT in total stock market :)))

2. Taxable Account Cash to TSP - I increased my contributions today to nearly max my TSP by year end. Thanks for getting me over the hump - My grandpa went in on the 3rd wave on Iwo Jima -I have always wanted to make sure I honor his inheritance. This will do it. THx.
((Nice))

3. Int'll stocks - I don't know why I mess that up - my number is 20% of portfolio ... period which is 28.5% of my total stock allocation of 70% - did I get it?
((That is what my calculator says too :)))

4. Tonight's iteration of the plan has in each of our 3 retirement account - Roth, TSP and Annuity Roth - about 10% each. Taxable is now Int'll (10% of portfolio).
((OK))

5. I will use the mutual funds.
((I find them much easier :)))

6. No value funds for me. No REITs. KISS.
((If in doubt, reread Taylor's 3 fund thread. It is such a nice reminder of why the simplicity of a 3 fund beats the others on average over time. Yes I do still feel a pull towards sector investing from time to time))

7. I am not sure what this means, "Do not forget you may have magical thinking the market will go up the day" --- magical thinking? I am just going to make the trades and get it over with so I can start thinking about something else. If it goes down, I still have to stay the course for 20-40 yrs!
((I meant that I have "magical thinking" that if I sell some of my holdings, it will have a magical effect on the market and the share prices will go up just after I sell. I also believe that if I buy, that will have the magical influence of causing the price to drop. Basically just a reminder you may worry or have regrets after any selling or buying. Stay the course as you are planning. Maybe you are just way less anxious about these transactions than I am :0))

8. Copy all on kids' account - still thinking about this - thinking "tax advantaged funds and life strategy aggressive funds"
((KISS. I prefer to keep investments in the parents names just in case you need them over the years. Check 539 options, it may be worth it))

9. Annuity - I like the idea of stopping payment and funding a Roth IRA @ Schwab. Yes. ((:)))

10. I didn't really understand "
((The disadvantage to Roth 401k is it uses up your maximum allowed contribution."
We are each going to max a Roth IRA (11,000). Next year we will max out the TSP (18,000).
What maximum allowed contribution is Roth TSP using? I think I can contribute up to 18,000 whether it's part TSP 401k or TSP Roth, right?
((You seem to get it. The back door or direct Roth I believe is in addition to your TSP limits. Your TSP max is 18k (24k the year you turn 50 I believe), that includes the Roth and non Roth portion. So if you use any of that TSP Roth space it decreases the amount of pretax money you can put into the TSP. It is separate from your back door Roth as far as I know (hopefully someone will correct me if I am wrong). SO you can do 18 k in any combo of TSP Roth or TSP non Roth, plus the 5500 out of TSP Roth. Depending on your current income it could be worth doing all pretax in your TSP for the tax deduction now, plus the non TSP Roths if you can afford to max it all. There are many discussions on this site about Roth or non Roth. I have always thought maxing pretax first makes the most sense))

For example-$8000 to TSP Roth and 10000 to TSP 401k? Or are the TSP Roth contributions counting towards my Roth IRA limit of 5500? So confused. ((I meant just to your TSP limits))

11. Below is my next go @ it.

To All, pls be direct if I am making this too complicated....as this time around I ended up w some small percentages - making it more difficult to balance in 2-3 years? But I did create some symmetry. Ugh.

MONDAY 23 OCT Next Version:

HIS ROTH IRA (34% OF PORTFOLIO)
10.2% SWAGX
17% SWTSX
6.8% SWISX

HIS TSP-401K (22% OF PORTFOLIO)
9.6% F Fund (bonds)
7.4% C Fund (large caps)
1.8% S Fund (small caps
3.2% I Fund (int'll)
I did a 4:1 split for C and S to represent total market.
((Perhaps just do large cap for simplicity til the balances grow. Total stock market is like 80% large cap anyway))

HIS TAXABLE (10% OF PORTFOLIO)
- I will use some of this cash so I can max out contribution to TSP with our paycheck.
10% SWISX

HER ROTH IRA ALLIANZ FIXED INDEX ANNUITY (34% OF PORTFOLIO)
10.2% Barclay bonds
23.8% S&P 500 fund

Her Roth IRA (Stop payment on annuity and start this acct)
((Yes))

Thank you again. I really appreciate it.
((Hopefully it helps ! I find that if someone writes something I agree with it just feels right and even as I keep reading and looking for other perspectives, if it all falls together and makes sense, it is close to as good as it can be. Keep it as simple as possible and stick to your AA and plan. Come and read here if there are big market fluctuations and it will help you stick to your plan. Great job organizing and simplifying your holdings!))

lafder

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