LTI seeking assessment

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RobertMoses
Posts: 5
Joined: Sun Mar 09, 2014 11:03 am

LTI seeking assessment

Post by RobertMoses » Sun Oct 15, 2017 8:42 pm

Long term married investor, both aged 40

VANGUARD
His IRA = $16k VTSAX
His ROTH = $48k VTSAX
Her IRA = $22k VBTLX, $37k VTIAX, $125k VTSAX
Her ROTH = $42k VTIAX, $22k VTSAX
Total Vanguard = $312k = $211k VTSAX (68%), $79k VTIAX (25%), $22k VBTLX (7%)

AMERICAN FUNDS
Her 401k = $24k RICEX (Longterm), $70k RLEBX (Balanced)

Total = $406k

QUESTIONS

1. It’s been awhile since I reblanced. Should I adjust the mix of domestic/international with Vanguard?

2. Since I starts with Vanguard in August 2013, our portfolio has returned 9.7% which I believe lags but md other index funds. Should I consider diversifying into other index funds (e.g. S&P) beyond the Total Stock Market funds we’re currently in?

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arcticpineapplecorp.
Posts: 2812
Joined: Tue Mar 06, 2012 9:22 pm

Re: LTI seeking assessment

Post by arcticpineapplecorp. » Sun Oct 15, 2017 9:01 pm

RobertMoses wrote:
Sun Oct 15, 2017 8:42 pm
Long term married investor, both aged 40

VANGUARD
His IRA = $16k VTSAX
His ROTH = $48k VTSAX
Her IRA = $22k VBTLX, $37k VTIAX, $125k VTSAX
Her ROTH = $42k VTIAX, $22k VTSAX
Total Vanguard = $312k = $211k VTSAX (68%), $79k VTIAX (25%), $22k VBTLX (7%)

AMERICAN FUNDS
Her 401k = $24k RICEX (Longterm), $70k RLEBX (Balanced)

Total = $406k

QUESTIONS

1. It’s been awhile since I reblanced. Should I adjust the mix of domestic/international with Vanguard?

2. Since I starts with Vanguard in August 2013, our portfolio has returned 9.7% which I believe lags but md other index funds. Should I consider diversifying into other index funds (e.g. S&P) beyond the Total Stock Market funds we’re currently in?
welcome to the forum.

2nd question first. VTSAX is the total stock market index fund. It is roughly comprised of:
80% S&P500 index fund (mostly large cap stocks)and
20% extended market index fund (small and mid cap stocks)

So seeing that you have the S&P500 index fund already in your VTSAX total stock market index fund, why would you think you'd be diversifying by additionally owning the S&P500 index fund? You already own it. The three funds VTSAX, VTIAX and VBLTX already give you all the diversification you need. The only thing missing is the total international bond market index fund. Whether or not that's needed is up for debate. It's included automatically in the target date funds vanguard offers, but many who hold the individual funds (like you do) don't usually feel the need. I leave that to your discretion/research.

1st question second. Your overall stock/bond ratio is 93/7. It looks like your international stocks make up around 26% of your overall stock. So your US to International stock ratios are 74/26. It's your choice if you want to rebalance that more to international. Many would not fault you, especially in light of international valuations being cheaper than U.S. stock valuations. Also the market cap weight of stocks for US/International is around 45/55 but most U.S. investors don't follow that anyway. You have to determine what percentages in U.S. to international stock you want and stick to it. You'll have to deal with currency risk of international stocks. You'll have to rebalance periodically (usually once a year is recommended).

What about the American funds? Looks like the ricex is 0.64% per year. Don't have time to find the expense ratio of rlebx but i'm sure others will chime in. Can you post all of your wife's 401k choices to see if ricex and rlebx are the best choices, lowest cost?
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

RobertMoses
Posts: 5
Joined: Sun Mar 09, 2014 11:03 am

Re: LTI seeking assessment

Post by RobertMoses » Sun Oct 15, 2017 9:29 pm

Funds available in her 401(k) – American Funds Portfolio Series
American Funds Balanced Portfolio (BLPAX) (.79% expense ratio)
American Funds Growth Portfolio (GWPAX) (.89% expense ratio)
American Funds Growth & Income Portfolio (GAIOX) (.80% expense ratio)
American Funds Income Portfolio (INPAX, .78% expense ratio)
American Funds Preservation Portfolio (PPVAX, .83 expense ratio)

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jmndu99
Posts: 341
Joined: Sun Jul 14, 2013 4:18 pm

Re: LTI seeking assessment

Post by jmndu99 » Sun Oct 15, 2017 9:50 pm

Welcome,

Does her 401 (k) have the option of a brokerage window?
If so, this may give her better (lower er) funds.

James

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arcticpineapplecorp.
Posts: 2812
Joined: Tue Mar 06, 2012 9:22 pm

Re: LTI seeking assessment

Post by arcticpineapplecorp. » Mon Oct 16, 2017 8:56 pm

jmndu99 wrote:
Sun Oct 15, 2017 9:50 pm
Welcome,

Does her 401 (k) have the option of a brokerage window?
If so, this may give her better (lower er) funds.

James
There may be additional fees to do this however. My 457 has a self directed brokerage but the additional fees were not worth it for me, but I have low cost funds available in my plan. Just know there might be additional fees to invest in funds outside your plan is all.

The balanced index fund you picked seems pretty good. It's a 60/40 fund. The Ricex appears to be a large/mega cap fund. It has 167 stocks and 13 bonds and 112 (other).

How did your wife come to decide on these two particular funds from all available? How did she determine the percentages 25% in ricex and 75% in rlebx? Just curious why these two funds and why those percentages?
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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