Please Be Brutally Honest...

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mikepeetz84
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Joined: Sun Feb 26, 2017 1:43 pm

Please Be Brutally Honest...

Post by mikepeetz84 » Sun Mar 11, 2018 10:15 pm

Hello everyone! After about a year or more of trying to figure out a AA that I am comftorable with I have finally made up a AA.(I know that is pathetic it took me so long).

About ME: 33years old Married Wife Does Not Work

Annual Gross Income: $90,000(last year)

Age of Retirement: 55

Annual Pension at retirement if retired right now: $21,600

Annual Rental Property Income After Retirement (Net): $24,000 (Investment Property will be Paid off by Retirement)

Employer 401a plan will not be accessible until 59 1/2

Employer 401a plan Current Balance $65,180 CONTRIBUTE MAX A YEAR $5,500

CURRENT Allocation in Employer: 100% stocks

60% Vanguard Institutional Index Fund
20% Vanguard Small-Cap Index Fund
20% Vanguard International Index Fund

PLANED CHANGE to Employer AA: 75% Stock/25%Bonds

Equities: US 65%/International 35%

US Stocks:65%(of stock allocation)

Vanguard Institutional Index Fund: 60%...$19,065
Vanguard Small Cap Index Fund 40%......$12,711

International Stocks:35% (of stock allocation)

Vanguard International Index Fund: 100%...$17,109

US Bonds: 25%(of total assets)

Vanguard Total Bond Market Index Fund:100%... $16,295

I am treating My 401a as a separate investment than my 2 Roth IRAS because I do not want to use any of the other funds that my 401a has but my AA is the Same 75/25 just different funds kinda.

Roth Iras Combined Total Value:$36,798 MAX OUT MY ROTH AND SPOSAL ROTH EACH YEAR TOTALING $11,000 PER YEAR $5,500 EACH

#1 Roth IRA Current AA: Vanguard Target Date Fund 2060 $18,535

#2 Roth IRA Current AA: Vanguard Target Date Fund 2060 $18,263

PLANED CHANGE to Roth IRA's Both IRA's Treated as one Big AA: 75% Stocks ($27,598)/25%Bonds($9,200)


Equities:US 65%/ International 35%

US Stocks:65% (of stock allocation)$17,939

50% ....Vanguard S&P 500 Index Fund:$8,969......(ROTH #1)
25%.....Vanguard Mid-Cap Value Index Fund:$4,484.....(ROTH #1)
25%.....Vanguard S&P 600 Small Cap ETF: $4,484.....(or closest dollar amount to full share)........(ROTH #1)

International Stocks: 35%(total stock allocation)$9,659

75%....Vanguard International Index Fund:$7,245 ($628 Held In Roth #1 as ETF, The rest held in FUND in ROTH #2)
25%...Vanguard All world Ex US Small Cap Index ETF: $2,414 ........(ROTH #2)

Bonds: 100% US (25% total Assets)$9,200

30%....Vanguard Intermediate Term Index Fund ETF: $1,550 (ROTH #2)........($2,760 After allocation is corrected)
60%...Vanguard Short Term Bond Index Fund:$4,650( ROTH #2)........($5,520 After allocation is corrected)
10%...Vanguard Hi-Yield Corporate Bond Index Fund:$3,000 (ROTH #2).......($920 after allocation is corrected)
I know the Bond percentages do not add up but I have to put $3,000 in the High Yield Bond Fund to open it. I will have a higher than desired Allocation until I can transfer money out of the fund and add to the other bond funds to get correct Allocation/color]

Taxable Account: $202.....I plan to put $10,000 annually in taxable starting this year undecided on what to hold in this account


YOUR THOUGHTS PLEASE!

bubbadog
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Re: Please Be Brutally Honest...

Post by bubbadog » Sun Mar 11, 2018 10:51 pm

How do you know what your net rental income will be in 22 years? I have a hard time believing you can be that accurate that far in the future.

Why not just do a simple three fund portfolio of VG total stock, total bond, and international across all accounts and keep things simple?

mikepeetz84
Posts: 27
Joined: Sun Feb 26, 2017 1:43 pm

Re: Please Be Brutally Honest...

Post by mikepeetz84 » Sun Mar 11, 2018 11:03 pm

bubbadog wrote:
Sun Mar 11, 2018 10:51 pm
How do you know what your net rental income will be in 22 years?

That is what I would Net right now if I were to pay the house off in full. I know it could be More/less(hope fully not less) but it is just a estimate.And that is after property tax and hazard Ins.

Why not just do a simple three fund portfolio of VG total stock, total bond, and international across all accounts and keep things simple?
I don't like the lack of small Cap exposure or Value in the TSM and I wanted to have Small Cap and Value a part of my portfolio in US and International.

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steve roy
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Re: Please Be Brutally Honest...

Post by steve roy » Sun Mar 11, 2018 11:05 pm

Given your age, my advice would be: 65% LifeStrategy Moderate Growth (60/40) and 35% Wellington (Admiral shares ... and also 60/40 but domestic equities.)

Two funds ... with a large cap value tilt. Broad diversification. Simplicity. You could always get fancier and more complicated, but your results could well end up worse. Plus this AA is easy to manage.

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mhadden1
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Location: North Alabama

Re: Please Be Brutally Honest...

Post by mhadden1 » Sun Mar 11, 2018 11:10 pm

Many of the leading lights of portfolio help on the forum will prefer your info in a different format.

You can reformat your post (edit button top right of your post) to use the format here:
Asking Portfolio Questions.

My guess is that this will result in many high quality responses.
Oh I can't, can I? That's what they said to Thomas Edison, mighty inventor, Thomas Lindberg, mighty flyer,and Thomas Shefsky, mighty like a rose.

PFInterest
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Re: Please Be Brutally Honest...

Post by PFInterest » Sun Mar 11, 2018 11:12 pm

mikepeetz84 wrote:
Sun Mar 11, 2018 11:03 pm
bubbadog wrote:
Sun Mar 11, 2018 10:51 pm
How do you know what your net rental income will be in 22 years?

That is what I would Net right now if I were to pay the house off in full. I know it could be More/less(hope fully not less) but it is just a estimate.And that is after property tax and hazard Ins.

Why not just do a simple three fund portfolio of VG total stock, total bond, and international across all accounts and keep things simple?
I don't like the lack of small Cap exposure or Value in the TSM and I wanted to have Small Cap and Value a part of my portfolio in US and International.
You do know TSM has the market weight of SC.

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Watty
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Re: Please Be Brutally Honest...

Post by Watty » Sun Mar 11, 2018 11:15 pm

mikepeetz84 wrote:
Sun Mar 11, 2018 10:15 pm


About ME: 33years old Married Wife Does Not Work

Annual Gross Income: $90,000(last year)

Age of Retirement: 55

...
PLANED CHANGE to Employer AA: 75% Stock/25%Bonds
.....
Roth Iras Combined Total Value:$36,798 MAX OUT MY ROTH AND SPOSAL ROTH EACH YEAR TOTALING $11,000 PER YEAR $5,500 EACH
75% stocks is reasonable for someone with 22 years until they retire and maybe a bit conservative which is OK if that is what you want. For comparison the Vanguard 2040 fund is 85% stocks.

https://personal.vanguard.com/us/funds/ ... irect=true

It was not clear but do you have a seperate emergency fund and reserves for your rental property? If not then you should have seperate accounts for those that you consider separate from your retirement asset allocation. If you have college savings for any kids those would also be tracked separately.

What are your marginal Federal and State tax brackets? You are likely eligible to make deductible IRA contributions instead of the Roth contributions so you might want to reconsider that choice if you are in the 12% or higher federal tax bracket. Under the current tax laws a couple can have over $100K in retirement income and still be in the 12% federal tax bracket so you may not be in a high retirement tax bracket.

https://www.irs.gov/retirement-plans/ir ... ion-limits

https://www.bogleheads.org/wiki/Traditional_versus_Roth

What is your housing situation and will you still have a mortgage when your retire at 55? If so then some prepayments might put you on track to have it paid off by the time you are 55.

Will you get Social Security in addition to your pension? (Some government pensions are instead of Social Security.)

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Sandtrap
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Location: Hawaii😀 Northern AZ.😳 Retired.

Re: Please Be Brutally Honest...

Post by Sandtrap » Sun Mar 11, 2018 11:18 pm

Welcome.
Thanks for posting. You're asking good questions and have worked hard on your format.

However.Please edit your post in the format suggested.

1 Include the fund names, tickers, and expense ratio, and either amount or percentage of total.
2 ***Please list the funds available to you, not just the ones you have, so alternate choices can be suggested. Not all plans have all funds available.
j :D

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bottlecap
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Location: Tennessee

Re: Please Be Brutally Honest...

Post by bottlecap » Mon Mar 12, 2018 7:07 am

Welcome! Your plan looks fine to me.

JT

letsgobobby
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Re: Please Be Brutally Honest...

Post by letsgobobby » Mon Mar 12, 2018 9:07 am

Future is unknowable but it's good to have a plan, and yours is reasonable.

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goingup
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Re: Please Be Brutally Honest...

Post by goingup » Mon Mar 12, 2018 9:23 am

mikepeetz84-
To be very honest, I'm having difficulty understanding your current portfolio and proposed changes. Might just be my eyes. :confused

Target Funds are composed by experts and prevent investors from overthinking their portfolio holdings. Personally, I'd just leave the Roths in TFs. But I favor minimal tinkering and simplicity.

But, it is great to have a plan you can stick to, no matter the ups and downs of the market. Good luck. :beer

GmanJeff
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Re: Please Be Brutally Honest...

Post by GmanJeff » Mon Mar 12, 2018 9:24 am

Your plan looks fine for what it is, a asset allocation in the abstract and nothing more.

If you're planning for retirement, you might find it useful to more fully develop a plan which incorporates not only your asset allocation, but your best estimates for future income and expenses, and your desired income and anticipated expenses in retirement. Doing this can help inform your asset allocation, since selecting the optimum risk/return approach there depends to some extent on what you see your needs being in the future and what assets you think you will have to address them. For example, if your expected pension, social security, and rental property income will likely be sufficient for your anticipated expenses (including any mortgage on your primary residence, taxes, health care, long-term care if needed, etc) you could be more conservative in your asset allocation now, reducing risk in return for likely lower returns. On the other hand, if you think you'll need a higher amount of investment income in retirement, you'll need to apply a asset allocation strategy which is likely to achieve the returns you need even if that will come with a higher level of risk.

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LadyGeek
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Re: Please Be Brutally Honest...

Post by LadyGeek » Mon Mar 12, 2018 3:47 pm

mikepeetz84 - Your creative color scheme is difficult to read. Plain text (no added colors) actually works best. If you want to emphasize a point, do it sparingly and it stick with bold, italic, or underline. Thanks.
goingup wrote:
Mon Mar 12, 2018 9:23 am
mikepeetz84-
To be very honest, I'm having difficulty understanding your current portfolio and proposed changes. Might just be my eyes. :confused
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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weltschmerz
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Re: Please Be Brutally Honest...

Post by weltschmerz » Mon Mar 12, 2018 9:15 pm

OP, your situation looks good, you have rental property income, and you are working to max out your IRAs. In 20 years, when you have a 7-figure portfolio, you will look back at this post fondly and laugh at statements like "I have to put $3,000 in the High Yield Bond Fund to open it". Keep is simple!

KlangFool
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Re: Please Be Brutally Honest...

Post by KlangFool » Mon Mar 12, 2018 9:31 pm

mikepeetz84 wrote:
Sun Mar 11, 2018 10:15 pm

Annual Rental Property Income After Retirement (Net): $24,000 (Investment Property will be Paid off by Retirement)
mikepeetz84,

1) Why do you think that the return on investment (ROI) of the rental property is good?

2) What is your current annual expense?

3) What is your retirement expense?

4) Do you qualify for social security?

KlangFool

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Nestegg_User
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Re: Please Be Brutally Honest...

Post by Nestegg_User » Mon Mar 12, 2018 9:57 pm

To be brutally honest- -
at 33, with decades to go - -
==> you don’t know if your pension will be there, or if it’s there if the COLA will exist
==> we have a hard enough time figuring out health insurance in five years; twenty plus- fagitaboutit
==> at 33, you won’t know if you have advancement potential or are plateaued; nor will you know what might happen to your health (and thus, income) or if you get “right-sized”

SO, spend your time optimizing your income potential now and SAVE AS MUCH AS YOU CAN!

at early 30’s, a 75% equity allocation is normal ; no problem with the Roth having high equity level, you have decades for growth

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mhadden1
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Location: North Alabama

Re: Please Be Brutally Honest...

Post by mhadden1 » Mon Mar 12, 2018 10:15 pm

Nestegg_User wrote:
Mon Mar 12, 2018 9:57 pm

==> at 33, you won’t know if you have advancement potential or are plateaued;

nor will you know what might happen to your health (and thus, income)

or if you get “right-sized”
For me at age 60 I can look back and say

1) Hmmm, plateaued :(

2) Health just fine :happy

3) Right-sized, Nope, dodged the bullet.

Two outta three ain't bad!
Oh I can't, can I? That's what they said to Thomas Edison, mighty inventor, Thomas Lindberg, mighty flyer,and Thomas Shefsky, mighty like a rose.

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Nestegg_User
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Re: Please Be Brutally Honest...

Post by Nestegg_User » Mon Mar 12, 2018 10:43 pm

mhadden1 wrote:
Mon Mar 12, 2018 10:15 pm
Nestegg_User wrote:
Mon Mar 12, 2018 9:57 pm

==> at 33, you won’t know if you have advancement potential or are plateaued;

nor will you know what might happen to your health (and thus, income)

or if you get “right-sized”
For me at age 60 I can look back and say

1) Hmmm, plateaued :(
for me, got a few bumps before plateauing, spouse had a few more. we got lucky— being in the 33% bracket for income in a MCOL area allowed us to put quite a bit away
2) Health just fine :happy
well let’s just say I’m not a complete idiot- - some parts are missing (replaced)
3) Right-sized, Nope, dodged the bullet.
I didn’t have too much problem, only early in career when the one company filed for Chapter 11; spouse had to reapply way too many times, even with the same company. Fortunately , we were able to leave on our terms... the craziness got worse after we left in both our former places.
Two outta three ain't bad!

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