Need help picking Vanguard Index Funds.

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Jack Sparrow
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Need help picking Vanguard Index Funds.

Post by Jack Sparrow » Tue Feb 06, 2018 11:19 am

I apologize for not reading the " Asking Portfolio Questions", kinda jumped the gun. So I will try again. I did get the first one right in that I am not Captain Jack Sparrow although I am the proud owner of a 14 foot rowboat. So I will try and put this in the proper format.

Emergency Funds: Have them covered
Debt: None
Tax Filing Status: Married filing jointly
Tax Rate: Federal 20% State 0%
State of Residence: Illinois
Age: Me 64 Wife 63
Desired Asset allocations: 70% stocks / 20% bonds
Desired International allocation: 10%

I will say that I currently have the Vanguard Wellseley Income Fund VWIAX which is 2/3 bonds and would not mind using this fund for my bond exposure. Since I have current income via pensions and the wife's Social Security in the amount of high five figures annually I currently have no need to draw from any of my IRA's. But, I was thinking of a dividend paying index fund would be the way to draw funds down the road if needed.

Current retirement assets
Taxable: Edward Jones manages this account. 28% stocks (growth and Income) and 72% mutual funds.Total amount high 5 figures. I will be moving this account to Vanguard so any suggestions would be appreciated.

Me- Roth IRA at E Trade- All stocks, Activision, Disney, Net Flix and Costco are the largest holdings. Total amount low 6 figures.
Wife- Roth IRA at E Trade- All stocks, Alphabet Class A and C, Amazon, Berkshire Hathaway Class B and Cognex Corp. largest holdings. Total amount low 6 figures.
Total Roth IRA's- 19.8% of total retirement holdings.

Me- Inherited IRA at Edward Jones, Advisory Solutions manages the fund. I will be moving this IRA to Vanguard shortly. It is currently 82% mutual funds and 18% Exchange Traded Funds and Closed Funds. If you need the exact funds I will supply them. Total amount mid 5 figures. Any advice for Vanguard funds would be appreciated. 3.9% of retirement holdings.

Wife-Rollover IRA at Fidelity- All held in mutual funds. 9.3% of retirement holdings.
Wife- Traditional IRA at Fidelity- All held in mutual funds, 20% stocks, 80% bonds. Currently managed by Fidelity. 20.8% of retirement holdings
I did not state which funds the money was being held in as I intend to reallocate the money in Fidelity funds that best copy the Vanguard funds I select . Total amount for both IRA's, mid 6 figures. 20.8% of retirement holdings

Me- Brokerage IRA at Vanguard. Vanguard Extended Market Index(VEXAX) 6.4% of brokerage account. Vanguard Total Stock Market Index (VTSAX) 14.8% of brokerage account. Vanguard Wellesley Income Fund (VWIAX)10.4% of brokerage account. Settlement Fund 68.4% of brokerage account. 46.10 % of retirement holdings.

Total retirement holdings low 7 figures.
So, my questions are.
1. What Vanguard funds would you invest the taxable IRA in?
2. What Vanguard funds would you invest the "inherited IRA"?
3. How would you rebalance my brokerage account into 4 or 5 funds keeping in mind I have a high risk tolerance.

I sincerely appreciate all of you that took the time to respond to my original post and look forward to any future advice. If you have any questions please ask.
Sincerely, Captain Jack
Last edited by Jack Sparrow on Wed Feb 07, 2018 9:28 pm, edited 1 time in total.

livesoft
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Re: Need help picking Vanguard Index Funds.

Post by livesoft » Tue Feb 06, 2018 11:54 am

Normally people are requested to post in this format when asking portfolio advice:
viewtopic.php?f=1&t=6212 Hint: Dollar amounts are not so important, but percentages are.
If you do that, then you will probably get better replies than this one. :)
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Taylor Larimore
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Need more information

Post by Taylor Larimore » Tue Feb 06, 2018 12:27 pm

Captain Jack:

Welcome to the Bogleheads Forum!

We look forward to more information in the format requested by livesoft that is necessary to give you informed replies. For example, your desired overall asset-allocation between stocks and fixed-income is extremely important.

Best wishes
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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saltycaper
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Re: Need help picking Vanguard Index Funds.

Post by saltycaper » Tue Feb 06, 2018 1:16 pm

Jack Sparrow wrote:
Tue Feb 06, 2018 11:19 am

My questions are as follows:
1. Would you feel comfortable moving the wife's money also into Vanguard or would you leave it in Fidelity so as not to have all your eggs in one basket?
2. Would you invest the $489,707.00 at the same time or spread it out over a time frame? If so how much over how long.
3. I am looking for a total of 5 funds to invest in total. All low cost index funds with the exception of possibly VMIAX. No bond funds
I am a buy and hold guy with an above average risk tolerance as I do not need the money currently.
1) I prefer to keep assets at more than one place. You'll find a lot of discussion on this topic. Here's one search that turns up a bunch of old threads: https://www.google.com/search?sitesearc ... one+basket

2) I have trended toward investing it all at once. You'll find lots of old discussions on investing by dollar-cost averaging or lump sum: https://www.google.com/search?sitesearc ... mp+sum+dca

3) Why 5 funds? You should figure out what you want to invest in first and then pick the funds to achieve your desired investments. It might take five funds, or more, but it also might only take one fund.
Quod vitae sectabor iter?

Mors
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Re: Need help picking Vanguard Index Funds.

Post by Mors » Tue Feb 06, 2018 1:18 pm

1. Fidelity also has excellent index funds, it is perfectly fine not to move your wife's money.

2. Given that you are retired, you should probably not go riskier than 50/50 stocks bonds. You do not risk major losses in a potential correction by investing everything now with such an allocation. So I would suggest to invest everything at once.

3. You say no bonds (and probably mean no bond funds too). You cannot go 100% equities either though, since you lack the time to recuperate potential losses from a big drawdown. What is going to be the alternative then? Since you are not looking for income yet, there is no need to look for SPIAs. A high interest rate savings account or a 5-year CD ladder seem as the best alternatives.

I would keep it simple and suggest VTSAX and VTIAX for your stock allocations. If you feel like buying more funds, you could add VMNVX funded from VTSAX, VVIAX funded from both VTSAX and VTIAX and/or VEIEX funded from VTIAX. It is a wrong mind set though to set the number of funds before figuring out the underlying allocations. However, having an upper cap at 5 or 6 funds for easier management and to avoid overspecification is a good principle.

Finridge
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Re: Need help picking Vanguard Index Funds.

Post by Finridge » Tue Feb 06, 2018 10:36 pm

Jack Sparrow wrote:
Tue Feb 06, 2018 11:19 am

My questions are as follows:
1. Would you feel comfortable moving the wife's money also into Vanguard or would you leave it in Fidelity so as not to have all your eggs in one basket?
2. Would you invest the $489,707.00 at the same time or spread it out over a time frame? If so how much over how long.
3. I am looking for a total of 5 funds to invest in total. All low cost index funds with the exception of possibly VMIAX. No bond funds
I am a buy and hold guy with an above average risk tolerance as I do not need the money currently.
Thank you so much for your input will be looking forward to your replies.
Captain Jack
1. Leaving your wife's money at Fidelity is fine--but just make sure you put it into low cost index funds or ETFs.

2. I would invest it all right away. But see the discussion here and make up your own mind what works best for you: https://www.bogleheads.org/wiki/Dollar_ ... s_lump_sum and viewtopic.php?t=123543

3. Why are you looking for five funds? You can probably accomplish everything you need to with only three funds, or if you aren't going to buy bonds, with only two funds. Read this: https://www.bogleheads.org/wiki/Three-fund_portfolio

In your Vanguard portfolio, use these funds:
https://www.bogleheads.org/wiki/Three-fund_portfolio



In your Fidelity portfolio, use these funds:
https://www.bogleheads.org/wiki/Three-f ... head-style
Last edited by Finridge on Wed Feb 07, 2018 8:06 pm, edited 1 time in total.

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BolderBoy
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Re: Need help picking Vanguard Index Funds.

Post by BolderBoy » Tue Feb 06, 2018 11:46 pm

Jack Sparrow wrote:
Tue Feb 06, 2018 11:19 am
My questions are as follows:
1. Would you feel comfortable moving the wife's money also into Vanguard or would you leave it in Fidelity so as not to have all your eggs in one basket?
Opinions vary about this. I have all mine at Vanguard. Nothing wrong with spreading it around, just watch out for those expense ratios.
2. Would you invest the $489,707.00 at the same time or spread it out over a time frame? If so how much over how long.
Opinions vary. I do all my investing lump sum. If you decide to spread it out, get it all invested within 12 months - sooner if you can stomach it.
3. I am looking for a total of 5 funds to invest in total. All low cost index funds with the exception of possibly VMIAX. No bond funds
Really? At your age, no bond funds? Nerves of steel?
I am a buy and hold guy with an above average risk tolerance as I do not need the money currently.
But you can't tell the future. Shouldn't you hedge your bets a bit?
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

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bottlecap
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Re: Need help picking Vanguard Index Funds.

Post by bottlecap » Wed Feb 07, 2018 7:12 am

Vanguard only is fine.

Fidelity only is fine.

Fidelity/Vanguard is fine.

Find an allocation you are comfortable with and get it in.

Why 5 funds?

Why no bonds?

Why not a nice target retirement fund of some type?

JT

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ruralavalon
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Re: Need more information

Post by ruralavalon » Wed Feb 07, 2018 8:59 am

Taylor Larimore wrote:
Tue Feb 06, 2018 12:27 pm
Captain Jack:

Welcome to the Bogleheads Forum!

We look forward to more information in the format requested by livesoft that is necessary to give you informed replies. For example, your desired overall asset-allocation between stocks and fixed-income is extremely important.

Best wishes
Taylor
+ 1.

It's very hard to understand what investments you already have, so please recast in the suggested format. You can simply add to your original post using the edit button.

We need to know what investments you already have in order to suggest funds to use in the new accounts. In general it's better to coordinate investments among all accounts, rather than treat each account individually.


Jack Sparrow wrote:
Tue Feb 06, 2018 11:19 am
My questions are as follows:
1. Would you feel comfortable moving the wife's money also into Vanguard or would you leave it in Fidelity so as not to have all your eggs in one basket?
All of our accounts (a joint taxable account, 2 Roth IRAs, and a rollover IRA) are at Vanguard, and all of our funds are Vanguard funds. I like the convenience of having everything at one place.

Fidelity does have some good low expense ratio index funds, so her accounts could be left there if desired. This is just a matter of personal preference in my opinion.


Jack Sparrow wrote:2. Would you invest the $489,707.00 at the same time or spread it out over a time frame? If so how much over how long.
I always invested whenever I had money to invest. Investing it all in a lump sum has worked out better about 2/3 of the time, but there is no predicting whether this time will be the exception. For a pdf of Vanguard paper on the subject you could Google "Dollar-Cost Averaging Just Means Taking Your Risk Later".

A compromise solution is to invest a portion all at once, and the rest in stages. For example -- invest 50% in a lump sum, then 5% per month on a designated day every month for the next 10 months.


Jack Sparrow wrote:3. I am looking for a total of 5 funds to invest in total. All low cost index funds with the exception of possibly VMIAX. No bond funds
I am a buy and hold guy with an above average risk tolerance as I do not need the money currently.
Why 5 funds?

I see that you have $88k/yr retirement income from your pension and her Social Security, and have about $462k in bonds in other accounts, but can't understand what the total portfolio amounts to. Not seeing the big picture, I can't say what additional funds to use.

In general I favor use of very broadly diversified index funds with very low expense ratios, such as:
1) Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%;
2) Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11%; and
3) Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) ER 0.05%, or Vanguard Intermediate-term Bond Index Fund Admiral Shares (VBILX) ER 0.07%.

Will $88k/yr cover all of your annual expenses in retirement? Is your pension indexed for inflation?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

RRAAYY3
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Re: Need help picking Vanguard Index Funds.

Post by RRAAYY3 » Wed Feb 07, 2018 9:20 am

40% Total US index
40% Total Int’l Index
20% - fun

Jack Sparrow
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Re: Need help picking Vanguard Index Funds.

Post by Jack Sparrow » Wed Feb 07, 2018 9:31 pm

livesoft wrote:
Tue Feb 06, 2018 11:54 am
Normally people are requested to post in this format when asking portfolio advice:
viewtopic.php?f=1&t=6212 Hint: Dollar amounts are not so important, but percentages are.
If you do that, then you will probably get better replies than this one. :)
Hopefully, I got it right this time. :happy

Jack Sparrow
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Re: Need more information

Post by Jack Sparrow » Wed Feb 07, 2018 9:36 pm

Taylor Larimore wrote:
Tue Feb 06, 2018 12:27 pm
Captain Jack:

Welcome to the Bogleheads Forum!

We look forward to more information in the format requested by livesoft that is necessary to give you informed replies. For example, your desired overall asset-allocation between stocks and fixed-income is extremely important.

Best wishes
Taylor
Thank you Taylor. Please see my edited post and see if I am still missing information.
Thanks and Best Wishes to you.
Captain Jack :sharebeer

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Taylor Larimore
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PAS

Post by Taylor Larimore » Thu Feb 08, 2018 1:46 pm

Captain Jack:

Thank you for posting additional information.

In my opinion, you you should seek advice and assistance in transferring your accounts by using Vanguard Personal Advisor Services (PAS).

PAS is very inexpensive (0.3%) and you can drop it after you have benefited from their professional advice and have transferred your investments to Vanguard in the cheapest and most tax-efficient way.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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siamond
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Re: Need help picking Vanguard Index Funds.

Post by siamond » Thu Feb 08, 2018 2:02 pm

Captain Jack,

I know this has more international exposure than what you described, but the simplest way to approach this would be to move *everything* to the Vanguard LifeStrategy Growth Fund (VASGX). See here and here for more details. No need for any advisory service (including from Vanguard), automatic rebalancing, super low costs (ER 0.14%), you'll be free as a bird to enjoy retirement!

My own AA, as an early retiree, is actually pretty close to that. I do believe this is the best way to hedge your bets when your tolerance for volatility is high, as it should take care of mid/long-term risks much better than more 'conservative' asset allocations. I cannot emphasize enough how important it is to look at risks in a much broader manner than volatility.

Jack Sparrow
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Re: PAS

Post by Jack Sparrow » Thu Feb 08, 2018 7:48 pm

Taylor Larimore wrote:
Thu Feb 08, 2018 1:46 pm
Captain Jack:

Thank you for posting additional information.

In my opinion, you you should seek advice and assistance in transferring your accounts by using Vanguard Personal Advisor Services (PAS).

PAS is very inexpensive (0.3%) and you can drop it after you have benefited from their professional advice and have transferred your investments to Vanguard in the cheapest and most tax-efficient way.

Best wishes.
Taylor
Thank you. Your opinion is appreciated.

Jack Sparrow
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Re: Need help picking Vanguard Index Funds.

Post by Jack Sparrow » Thu Feb 08, 2018 7:49 pm

siamond wrote:
Thu Feb 08, 2018 2:02 pm
Captain Jack,

I know this has more international exposure than what you described, but the simplest way to approach this would be to move *everything* to the Vanguard LifeStrategy Growth Fund (VASGX). See here and here for more details. No need for any advisory service (including from Vanguard), automatic rebalancing, super low costs (ER 0.14%), you'll be free as a bird to enjoy retirement!

My own AA, as an early retiree, is actually pretty close to that. I do believe this is the best way to hedge your bets when your tolerance for volatility is high, as it should take care of mid/long-term risks much better than more 'conservative' asset allocations. I cannot emphasize enough how important it is to look at risks in a much broader manner than volatility.
Thank you . I will explore your suggestion along with others.

Wild Willie
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Re: Need help picking Vanguard Index Funds.

Post by Wild Willie » Tue Feb 13, 2018 9:59 am

My wife and I recently spoke with VG's PAS and we were pleasantly surprised. While the CFP came up with a very viable plan IMHO, we decided to "stay the course" with me directing our investments until I start drooling and wetting my pants. At that point, her second call (the first one will be to the nursing home) will be to VG to sign up for PAS. I feel perfectly comfortable that PAS will guide her in my absence, but we don't feel the need to pay for these services until it becomes necessary.

Tamalak
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Re: Need help picking Vanguard Index Funds.

Post by Tamalak » Tue Feb 13, 2018 10:09 am

VT and BND. You're welcome!

Jack Sparrow
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Re: Need help picking Vanguard Index Funds.

Post by Jack Sparrow » Sun Feb 25, 2018 9:50 pm

I appreciate all your replies. Thanks :sharebeer

Miriam2
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Re: Need help picking Vanguard Index Funds.

Post by Miriam2 » Mon Feb 26, 2018 10:26 pm

Jack Sparrow wrote: I will say that I currently have the Vanguard Wellseley Income Fund VWIAX which is 2/3 bonds and would not mind using this fund for my bond exposure. Since I have current income via pensions and the wife's Social Security in the amount of high five figures annually I currently have no need to draw from any of my IRA's. But, I was thinking of a dividend paying index fund would be the way to draw funds down the road if needed. . . . . .
Me- Brokerage IRA at Vanguard. Vanguard Extended Market Index(VEXAX) 6.4% of brokerage account. Vanguard Total Stock Market Index (VTSAX) 14.8% of brokerage account. Vanguard Wellesley Income Fund (VWIAX)10.4% of brokerage account. Settlement Fund 68.4% of brokerage account. 46.10 % of retirement holdings.
Many Bogleheads own Wellesley and love it, including me :happy , but the experts say it's not a tax efficient fund to have in your taxable brokerage account. It belongs in a tax deferred account. I think it's the same for funds that are dividend payers, such as Vanguard Dividend Growth (now closed to new investors) and Vanguard Dividend Appreciation Index.

See our wiki article on Tax-efficient Fund Placement for further explanation about this, as well as Grabiner's post here on tax efficient funds for a taxable account.

Run some searches through our google box to bring up other threads such as these on Wellesley and the dividend stock funds.
viewtopic.php?f=10&t=209617
viewtopic.php?f=1&t=199806
Jack Sparrow wrote:I am not Captain Jack Sparrow although I am the proud owner of a 14 foot rowboat.
Is it true that boats are buckets in the water into which you pour money :?: :D

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