Portfolio Overhaul

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appleshampooid
Posts: 12
Joined: Mon Feb 12, 2018 3:26 pm

Portfolio Overhaul

Post by appleshampooid » Mon Feb 12, 2018 3:34 pm

Hi Bogleheads,

First time poster, have read here and there and general believer in the Bogle philosophy.

I am doing a portfolio overhaul for my wife and I. The good news is that we're in a pretty good position (IMO) and have generally invested in low-cost index funds over the years. But several years ago I read The Intelligent Asset Allocator by William Bernstein and got into a complicated slice-and-dice allocation in my portfolios (before we were married and combined finances), with 7 asset classes including bonds. I love the theory of diversifying across assets with negative correlation to reduce risk, but in today's global economy it starts to feel like a fool's errand. All stocks are strongly correlated, etc.

The more I read and learn, the less inclined I am to keep this up, given the small (if any) benefit over a simpler approach and the effort required to keep it all balanced. I am thinking of going for a very basic portfolio, built on VTSAX or equivalent and VBTLX or equivalent. I want to mostly set it and forget it, with occasional rebalancing of course, but it's much easier when your rebalancing consists of one exchange vs. 6 or 7. Why not an international fund for the standard 3-fund lazy portfolio? Ehhh. I kind of agree with jlcollinsnh on this subject; US companies are heavily invested internationally already. I like VTSAX as a one stop shop for equity.

We are spread out across all kinds of accounts. At my first job, we got our RSUs through Charles Schwab so I started there. I have the bulk of my assets still at Schwab, both trad and Roth IRAs that have accumluated all of my 401(k) rollovers throughout the years, plus a taxable account. These accounts are currently all in the slice-and-dice model described above, although the taxable account is all out of whack since last year we sold a ton of stock to buy our house, and I went for tax efficiency (losses and LT gains first) over maintaining the perfect allocation in the remaining funds.

My wife started out at Vanguard and went for the super simple approach - all straight into VFINX/VFIAX. She has the same at Vanguard as I have at Schwab, both trad and Roth IRAs and a taxable account. She also owns some US savings bonds (Series I and EE), all with decent interest rates (we dumped the lower rate ones to contribute to our down payment). I will consider this total as part of our bond allocation. I also have a Vanguard Roth IRA that I rolled over from an individual 401(k) I started there when I was self employed for a short time.

Lastly we each have our current company 401(k)s with Fidelity. Both plans offer decent low-cost fund options. Hers is currently 100% invested in a Wells Fargo target-date fund that has a .07% expense ratio, but there are some vanguard index funds available (VIIIX VMCPX VSCPX). My account also has target date funds, but from Fidelity with expense rations in the .7% range, WTF. Probably some actively managed funds in there. So I have a simplified slice and dice approach here with some large cap/small cap/international/bonds.

Now I could rollover my IRAs from Schwab to Vanguard, but I'm not sure if it's worth the hassle. The nice thing about Vanguard offering so many bargain-basement funds is that they have forced most of the competition to do the same. For VTSAX I would use SWTSX. For VBTLX I would use SWAGX. The flip side is that I do believe in Vanguard's mission of being an investor-owned company, so maybe I should just bite the bullet and roll everything but my taxable account over.

I will also try to account for tax advantages in my overhaul by holding the bond funds in one of our IRAs.

So I guess I just rambled on a lot there, basically I'm looking for any glaring errors in my approach. Am I doing anything supremely stupid, or does it look sound given my desires and assumptions, etc. Thanks for reading.
"If you aren't unhappy with part of your portfolio, you aren't diversified enough." -rudeboy

bloom2708
Posts: 4464
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Portfolio Overhaul

Post by bloom2708 » Mon Feb 12, 2018 4:34 pm

I think you are on the right track.

I would move to Vanguard for a clean start, the best funds and they are the only one I trust (over the long haul) to stay the course. Others may disagree.

I would recommend a 20% slice of Total International. (Unless you want to go with a LifeStrategy or TargetDate) fund approach that would already have the 4 horseman (Total US, Total Int, Total US Bond, Total Int Bond).

Here is why. At some point International will woop the pants on US for some period of time. Even a 20% stake will allow you to feel like you are participating in that sector. Now, if you both use a Target fund in your current 401k (that is what I use), then those numbers may be significant enough so you can just do Total US and Total US Bond in your Vanguard Roths and Rollover IRAs. In taxable, consider Int-Term Tax-Exempt Bond index.

We have our current 401ks. Everything else moves to Vanguard when we change jobs. It works. Others like Fidelity and Schwab and T. Rowe. Kind of like Ford, Chevy, Toyota, Lexus, etc. Favorites everywhere.

Plan the work. Work the plan. Good luck!
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

appleshampooid
Posts: 12
Joined: Mon Feb 12, 2018 3:26 pm

Re: Portfolio Overhaul

Post by appleshampooid » Mon Feb 12, 2018 4:45 pm

Thanks for the advice, I will reconsider some international exposure.

Also, my apologies for not reading the pinned posts in this forum regarding portfolio questions. I'll come back and add some of those point later where relevant.
"If you aren't unhappy with part of your portfolio, you aren't diversified enough." -rudeboy

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Watty
Posts: 13484
Joined: Wed Oct 10, 2007 3:55 pm

Re: Portfolio Overhaul

Post by Watty » Tue Feb 13, 2018 7:00 am

You might try doing another post in this suggested format(more or less) to get better responses.

viewtopic.php?f=1&t=6212

If you also give the fund names and not just their ticker symbols that will help get better responses too.

appleshampooid
Posts: 12
Joined: Mon Feb 12, 2018 3:26 pm

Re: Portfolio Overhaul

Post by appleshampooid » Tue Feb 13, 2018 8:28 am

Watty wrote:
Tue Feb 13, 2018 7:00 am
You might try doing another post in this suggested format(more or less) to get better responses.

viewtopic.php?f=1&t=6212

If you also give the fund names and not just their ticker symbols that will help get better responses too.
Thanks for the advice, holy cow this forum gets a lot of action!

I am going to provide more info, but already bloom2708 has me reconsidering international exposure. And I decided I should really sit down and write an investment policy statement. So once I have that done, I'll repost in the standard format including my IPS.
"If you aren't unhappy with part of your portfolio, you aren't diversified enough." -rudeboy

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