Going Bogle

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ohboy!
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Going Bogle

Post by ohboy! » Fri Jan 19, 2018 12:01 pm

I did it. Liquidated all my equity holdings in taxable solo 401k. I've started to take my positions in Ameritrade free ETF's. Any advice on balancing is appreciated.

SPDR Dow Jones Total Market (ETF) - 900 - 37.6%
Vanguard Small-Cap Value ETF - 30 - 4.9%
iShares FTSE NAREIT Real Est 50 Ind(ETF) - 100 - 5.6%

SPDR S&P World ex-US (ETF) - 700 - 28%
SPDR S&P Emerging Markets (ETF) - 150 - 7.4%
ISHARES Tr/Glb REIT ETF - 200 - 6.1%

SPDR Lehman Aggregate Bond (ETF) - 300 - 10.3%

Total taxable: $83k
Cash to spend or hold currently in 401k: $61k
2018 planned contribution: $50k

I have allocated 58% of my 401k into the funds above. Wondering if I should leave some in cash? I left my holdings in VBR because I had purchased it when Ameritrade offered commission free. Considered converting, but couldn't bring myself to pay the $6.95 to sell.

My current target is for US - 35%, US R/E - 5%, Intl - 40%, Intl R/E 5%, and bonds 10%.

I am thinking to leave 10% in cash for now. Is that sinful? I am 36 and will contribute another $50k for 2018, however my job future is not very stable. Perhaps 15-20% bonds? I like international exposure, and would like to put some emphasis on Tech. Is there a Bogle recommended Tech fund that is Ameritrade commission free?

bloom2708
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Re: Going Bogle

Post by bloom2708 » Fri Jan 19, 2018 1:25 pm

Start here. Go slow.

https://www.bogleheads.org/wiki/Boglehe ... philosophy

You need to push pause and develop a plan. Then follow the plan.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

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ohboy!
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Re: Going Bogle

Post by ohboy! » Fri Jan 19, 2018 1:41 pm

bloom2708 wrote:
Fri Jan 19, 2018 1:25 pm
Start here. Go slow.

https://www.bogleheads.org/wiki/Boglehe ... philosophy

You need to push pause and develop a plan. Then follow the plan.
I have read the wiki. Is there something I am saying that is outside of that philosophy?

bloom2708
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Location: Fargo, ND

Re: Going Bogle

Post by bloom2708 » Fri Jan 19, 2018 1:45 pm

ohboy! wrote:
Fri Jan 19, 2018 1:41 pm
bloom2708 wrote:
Fri Jan 19, 2018 1:25 pm
Start here. Go slow.

https://www.bogleheads.org/wiki/Boglehe ... philosophy

You need to push pause and develop a plan. Then follow the plan.
I have read the wiki. Is there something I am saying that is outside of that philosophy?
Well, yes. Your questions make me think that you do not have a plan. Money that is for the long term should be invested with your long term goals in mind. Asking to leave cash or what to buy makes me think you don't have a plan. I could be wrong.

Money to be spent in 1-5 years should not be in the market. Savings account, money market, CD. Do you have an Emergency Fund if your job is not stable?

What does your plan say to invest in? It doesn't have to be written down, but that tends to help keep you on course.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

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ohboy!
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Re: Going Bogle

Post by ohboy! » Fri Jan 19, 2018 2:00 pm

bloom2708 wrote:
Fri Jan 19, 2018 1:45 pm
ohboy! wrote:
Fri Jan 19, 2018 1:41 pm
bloom2708 wrote:
Fri Jan 19, 2018 1:25 pm
Start here. Go slow.

https://www.bogleheads.org/wiki/Boglehe ... philosophy

You need to push pause and develop a plan. Then follow the plan.
I have read the wiki. Is there something I am saying that is outside of that philosophy?
Well, yes. Your questions make me think that you do not have a plan. Money that is for the long term should be invested with your long term goals in mind. Asking to leave cash or what to buy makes me think you don't have a plan. I could be wrong.

Money to be spent in 1-5 years should not be in the market. Savings account, money market, CD. Do you have an Emergency Fund if your job is not stable?

What does your plan say to invest in? It doesn't have to be written down, but that tends to help keep you on course.
Thanks for clarifying. I am hoping to use this for retirement, it's a retirement account - solo 401k. I have an Emergency Cash fund of $20k. I have a low cost of living and high income currently. My income now is good, but I am self-employed and do not feel so secure about my career. If I felt more secure I feel like I would go with less bonds. I shouldn't have mentioned leaving cash in the account because I know that's anti-Bogle. The reason I have a large cash balance right now is that I have just liquidated all my silly stock picks and am putting it forward into a long-term plan. My thinking about the small cash holding (10%) though is that I have funded this account starting only in the past 3 years. The market being so high, I feel like I wouldn't mind having a little bit on the sideline and I can buy-in throughout the year with that. The reason for my thread is less about overall finance and more about using the right funds and allocations in those funds for a portfolio. Once I have the funds and allocations I will stay the course and continue investing as much as I can in this account.

Olemiss540
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Re: Going Bogle

Post by Olemiss540 » Fri Jan 19, 2018 5:46 pm

I say you get reinvested as quickly as possible. No need to try to market time and having a stockpile of cash will encourage that behavior.

Just set an asset allocation that you can set and forget and invest.

I highly recommend a target date funds if you have small or no taxable brockerage funds currently.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

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ohboy!
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Re: Going Bogle

Post by ohboy! » Sat Jan 20, 2018 1:10 pm

Olemiss540 wrote:
Fri Jan 19, 2018 5:46 pm
I say you get reinvested as quickly as possible. No need to try to market time and having a stockpile of cash will encourage that behavior.

Just set an asset allocation that you can set and forget and invest.

I highly recommend a target date funds if you have small or no taxable brockerage funds currently.
Target date fund? Any one in particular? I have already re-invested into the funds above. The $60k cash in the 401k is mostly from my maxed out contribution that I just deposited this week for 2017. I just want to be sure I have a good fund choice and allocation before pushing all the new $ in.

Olemiss540
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Re: Going Bogle

Post by Olemiss540 » Sat Jan 20, 2018 2:42 pm

How are your 2018 contributions broken up as in how much will be going to taxable versus 401k/IRAs?
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

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ohboy!
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Re: Going Bogle

Post by ohboy! » Sat Jan 20, 2018 3:31 pm

I think I should have described better.

All of my solo 401k is pre-tax, and in 2018 all of my contributions will be pre-tax. My income is > $200k for 2016, 2017, and 2018 and I am self-employed, so I am putting away the maximum. It is likely that in 5-10 years my income will be considerably lower, perhaps 0, and I can roll some funds over into Roth. This is my understanding, correct me if I'm wrong.

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Blister
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Location: Tennessee

Re: Going Bogle

Post by Blister » Sat Jan 20, 2018 4:00 pm

It looks like your Asset Allocation adds up to 95% I assume the other 5% is your cash holdings. Agree with the other posters that with an iffy job situation cash (emergency fund) should be held in CD's MMF or the like outside of your 401k. It doesn't make sense to me to hold cash reserves in a retirement account where you would pay significant penalties if you had to access it. Generally it is recommended at least 6 months of expenses in an emergency fund but you may want to hold at least 12 months.
Everthing works out in the end. If it doesn't then its not the end.

pkcrafter
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Re: Going Bogle

Post by pkcrafter » Sat Jan 20, 2018 6:20 pm

ohboy! wrote:
Sat Jan 20, 2018 3:31 pm
I think I should have described better.

All of my solo 401k is pre-tax, and in 2018 all of my contributions will be pre-tax. My income is > $200k for 2016, 2017, and 2018 and I am self-employed, so I am putting away the maximum. It is likely that in 5-10 years my income will be considerably lower, perhaps 0, and I can roll some funds over into Roth. This is my understanding, correct me if I'm wrong.
Sorry, but to clarify--
In your first post you wrote:
I did it. Liquidated all my equity holdings in taxable solo 401k.
Is the 401k pre-tax, after-tax, or some of both? I also assume Ameritrade is available through your Solo 401k. Is there an additional fee for that? No total international? You also have total market plus small caps, so that is an overweight, but fine if that was our goal.

Do the following funds listed in taxable solo 401k equal 58% of your portfolio and the remainder is in a non-401k taxable account. This is hard to follow because all assets in all accounts marked for retirement should equal 100%.

SPDR Dow Jones Total Market (ETF) - 900 - 37.6%
Vanguard Small-Cap Value ETF - 30 - 4.9%
iShares FTSE NAREIT Real Est 50 Ind(ETF) - 100 - 5.6%

SPDR S&P World ex-US (ETF) - 700 - 28%
SPDR S&P Emerging Markets (ETF) - 150 - 7.4%
ISHARES Tr/Glb REIT ETF - 200 - 6.1%

SPDR Lehman Aggregate Bond (ETF) - 300 - 10.3%
Total taxable: $83k
Cash to spend or hold currently in 401k: $61k
When you say total taxable you mention 401k again. You need to clarify 401k pre-tax, 401k after tax, and regular taxable account.

You need an emergency fund that is not in the 401k and not counted as part of the retirement portfolio.
2018 planned contribution: $50k
Excellent.

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.

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ohboy!
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Re: Going Bogle

Post by ohboy! » Sat Jan 20, 2018 7:49 pm

pkcrafter wrote:
Sat Jan 20, 2018 6:20 pm

Is the 401k pre-tax, after-tax, or some of both? I also assume Ameritrade is available through your Solo 401k. Is there an additional fee for that? No total international? You also have total market plus small caps, so that is an overweight, but fine if that was our goal.

Do the following funds listed in taxable solo 401k equal 58% of your portfolio and the remainder is in a non-401k taxable account. This is hard to follow because all assets in all accounts marked for retirement should equal 100%.
I clarified this a few posts above. All of my 401k is pre-tax, I have had high earnings the past 2.5 years and will continue to do so in 2018. After that, hard to say. Yes my entire solo 401k is at Ameritrade. That's why I am using their commission free ETF's.

I am using SPDR Total Market as my US equity instrument now, but previously I did get some VBR, amongst other things. I figured I might as well hold onto it.

I believe my totals do add up not including cash?
SPDR Dow Jones Total Market (ETF) - 900 - 37.6%
Vanguard Small-Cap Value ETF - 30 - 4.9%
(42.5% total portfolio in US)

SPDR S&P World ex-US (ETF) - 700 - 28%
SPDR S&P Emerging Markets (ETF) - 150 - 7.4%
(35.4% total portfolio in Intl)

ISHARES Tr/Glb REIT ETF - 200 - 6.1%
iShares FTSE NAREIT Real Est 50 Ind(ETF) - 100 - 5.6%
(11.7% in R/E both US and Intl)

SPDR Lehman Aggregate Bond (ETF) - 300 - 10.3%
(10.3% in bonds)

I see now my previous target didn't add up. My goal should be:
40% US, 40% Intl, 10% RE (Intl and US), 10% Bond

So I will put the remaining $60k ($6k held in cash previously, and $54k new funding) towards my current target. I just want to make sure that these are the best funds to use on Ameritrade to reach my goal. Sorry that I made a mess of this thread in the beginning. I hope my question is clear now.

I have 12 month emergency fund.

pkcrafter
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Re: Going Bogle

Post by pkcrafter » Sun Jan 21, 2018 10:58 am

ohboy! wrote:
Sat Jan 20, 2018 7:49 pm
pkcrafter wrote:
Sat Jan 20, 2018 6:20 pm

Is the 401k pre-tax, after-tax, or some of both? I also assume Ameritrade is available through your Solo 401k. Is there an additional fee for that? No total international? You also have total market plus small caps, so that is an overweight, but fine if that was our goal.

Do the following funds listed in taxable solo 401k equal 58% of your portfolio and the remainder is in a non-401k taxable account. This is hard to follow because all assets in all accounts marked for retirement should equal 100%.
I clarified this a few posts above. All of my 401k is pre-tax, I have had high earnings the past 2.5 years and will continue to do so in 2018. After that, hard to say. Yes my entire solo 401k is at Ameritrade. That's why I am using their commission free ETF's.

I am using SPDR Total Market as my US equity instrument now, but previously I did get some VBR, amongst other things. I figured I might as well hold onto it.

I believe my totals do add up not including cash?
SPDR Dow Jones Total Market (ETF) - 900 - 37.6%
Vanguard Small-Cap Value ETF - 30 - 4.9%
(42.5% total portfolio in US)

SPDR S&P World ex-US (ETF) - 700 - 28%
SPDR S&P Emerging Markets (ETF) - 150 - 7.4%
(35.4% total portfolio in Intl)

ISHARES Tr/Glb REIT ETF - 200 - 6.1%
iShares FTSE NAREIT Real Est 50 Ind(ETF) - 100 - 5.6%
(11.7% in R/E both US and Intl)

SPDR Lehman Aggregate Bond (ETF) - 300 - 10.3%
(10.3% in bonds)

I see now my previous target didn't add up. My goal should be:
40% US, 40% Intl, 10% RE (Intl and US), 10% Bond

So I will put the remaining $60k ($6k held in cash previously, and $54k new funding) towards my current target. I just want to make sure that these are the best funds to use on Ameritrade to reach my goal. Sorry that I made a mess of this thread in the beginning. I hope my question is clear now.

I have 12 month emergency fund.
Sorry for all the questions. I'm trying to help you understand your portfolio. You are clarifying and it's becoming clear.

You have 60k in cash in the 401k, so saying the AA is 90/10 isn't correct. You have to account for the cash. Your AA will be 90/10 when you actually invest the cash into your target portfolio.

In your first post you listed this: Total taxable: $83k

Is that for an emergence fund? You need about 4-5 months expenses for an emergency fund and it should not be invested.

90/10 is pretty aggressive, but whether it's too aggressive is up to you. As far as fund choices, you've done well.

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.

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ohboy!
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Re: Going Bogle

Post by ohboy! » Mon Jan 22, 2018 12:38 am

Thanks for helping Paul!

My emergency fund amount is not mentioned in my posts. It’s $50k, $45k in Ally no penalty CD, the rest buried in my grandmas back yard. Just kidding!! But really, my emergency fund is covered. The taxable I was referring to was my pre-tax 401k ETF holdings. Sorry I botched the terminology and numbers. I’m going in with my pre-tax 401k cash tomorrow, gonna raise all your portfolios with my buy orders! Thinking I will up my bond allocation to at least 15%. If you were 36 Paul, and unsure of job future, own a $200k duplex - no debt, and had $150k in pre-tax 401k, what would be your bond ratio?

Thanks for confirmation on fund picking.

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