happysteward wrote: ↑Tue Jan 09, 2018 7:58 pm
The goals we have agreed on are shown in red.
One of the areas I would specifically appreciate comments on is the makeup of his bond portfolio, I am considering moving some of the corporates into government bonds (VCIT to VBTLX). Thanks
AA is aggressive for his age, but I assume based on 2% withdraw rate, he's leaving it behind to you and/or others. What are their ages?
Given it's a taxable account, without knowing tax bracket, it's hard to say whether it makes more sense to be in higher yield taxable vs lower tax exempt. I'm guessing he'll do better in corporates, and he's diversified, so I wouldn't be in a hurry to move things around.
Also, without cost basis and tax consequences, it's hard to recommend any specific action. Unless there's some attachment, I would eliminate nuisance amounts like VRT and VZ, and then XOM and VOX. On the bond side, those high fee American Funds would be on the top of my list. Tax consequences may dictate if you act now or spread over some/many years. AMECX looks like a higher than needed expense fee active income fund that complicates matters (include 20% bonds and more cash plus some international).
Goes without saying that you should take the dividends in cash (i.e. not automatically reinvest) and either use the cash or redeploy it as needed to meet your goals.
BTW, I see 9% cash (goal 7-13%). What is the purpose of this? What is the return (only 4% EE Savings Bonds look good)? I'm don't understand why this is needed, and my inclination would be to lump all the cash into slightly higher return bonds (i.e Total Bond). What is the annual expense budget? I've read here some retirees like 1-3 years in cash, but CDs might yield more and may be safer.
I was looking to see where the Municipal bonds were and those look like the high fee TE bonds, so the tax consequences of selling those may be minimal, so he may be able to get out now. If he doesn't need TE, I'd switch those, maybe 50/50 Total Bond/Corporate Bonds. Do some math and figure out the after-tax yields to figure out which are better performing assets.
https://www.americanfunds.com/individua ... fund/amecx