Three Fund Portfolio Assitance

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jamesb89
Posts: 9
Joined: Wed Dec 14, 2016 11:00 am

Three Fund Portfolio Assitance

Post by jamesb89 » Wed May 16, 2018 1:03 pm

I like the theory of the Three Fund Portfolio but need some guidance within my 403B on how to make it happen. I would prefer to have everything in Vanguard except the guaranteed money which is at 3 percent. I am currently four years from retirement. My mortgage is paid off. No debt at present time. I have some emergency funds in a TD Bank money market. Here is what my 403b looks like:

Currently: The equities below are 66 percent of my plan.
American Growth Fund of America AGTHX
Eaton Vance Large Cap EHSTX
Prudential Jennison Small Company Fund Q PJSQX

Prudential Guaranteed Interest Account 34percent

Vanguard Choices:
Vanguard Emerging Markets Stock Index Fund Institutional VEMIX
Vanguard Explorer Fund Admiral VEXRX
Vanguard International Growth Fund Admiral VWILX
Vanguard Value Fund Investor VIVAX
Vanguard PRIMECAP Fund Admiral VPMAX
Vanguard Windsor Fund Admiral VWNEX

Fixed Income:
Vanguard Inflation Protected Securities Fund International VIPSX
Vanguard Total bond Market Index Fund Institutional VBTIX

Money Market:
Vanguard Federal Money Market Fund Investor

Gauranteed:
Prudential Guaranteed Interest Account
TIAA Traditional

Any advice would be appreciated. Thank you in advance.

chevca
Posts: 1496
Joined: Wed Jul 26, 2017 11:22 am

Re: Three Fund Portfolio Assitance

Post by chevca » Wed May 16, 2018 1:51 pm

What are the expense ratios? No plain old index funds on the stock side, even if not Vanguard?

PFInterest
Posts: 1269
Joined: Sun Jan 08, 2017 12:25 pm

Re: Three Fund Portfolio Assitance

Post by PFInterest » Wed May 16, 2018 1:52 pm

Will be a little tough with those vanguard funds.
Please edit all your options with ER%.

vineviz
Posts: 62
Joined: Tue May 15, 2018 1:55 pm

Re: Three Fund Portfolio Assitance

Post by vineviz » Wed May 16, 2018 3:19 pm

jamesb89 wrote:
Wed May 16, 2018 1:03 pm
I like the theory of the Three Fund Portfolio but need some guidance within my 403B on how to make it happen. I would prefer to have everything in Vanguard except the guaranteed money which is at 3 percent.
I'm assuming you intend to leave 33% of your portfolio in the Prudential Guaranteed Interest Account. Because it is an annuity and not a bond fund it doesn't lend itself well to replication with mutual funds, so the allocations will never be exactly right.

If that assumption is correct, though, (and given the investment options available to you) I'd personally consider an approach something like this.

44% Vanguard Value Index Inv (VIVAX)
33% Prudential Guaranteed Interest Account
23% Vanguard International Growth Adm (VWILX)

Obviously you should tweak the allocation according to your needs and risk tolerance. If you wanted less stock exposure you could add the Vanguard Total Bond Market Index fund, for instance.

Good luck!

Doctor Rhythm
Posts: 30
Joined: Mon Jan 22, 2018 3:55 am

Re: Three Fund Portfolio Assitance

Post by Doctor Rhythm » Wed May 16, 2018 5:24 pm

The Vanguard offerings aren't really ideal for someone who just wants 3 funds and is T-minus 4 years to retirement. They are too narrowly focused (either just growth or just value, or just small & mid cap) or too volatile (emerging markets). I don't think you could really cover all the bases adequately with 3 funds from this list.

Are you sure there aren't other (non-Vanguard) diversified index funds available through your plan.

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CyclingDuo
Posts: 1391
Joined: Fri Jan 06, 2017 9:07 am

Re: Three Fund Portfolio Assitance

Post by CyclingDuo » Thu May 17, 2018 3:55 am

jamesb89 wrote:
Wed May 16, 2018 1:03 pm
I like the theory of the Three Fund Portfolio but need some guidance within my 403B on how to make it happen. I would prefer to have everything in Vanguard except the guaranteed money which is at 3 percent. I am currently four years from retirement. My mortgage is paid off. No debt at present time. I have some emergency funds in a TD Bank money market. Here is what my 403b looks like:

Currently: The equities below are 66 percent of my plan.
American Growth Fund of America AGTHX
Eaton Vance Large Cap EHSTX
Prudential Jennison Small Company Fund Q PJSQX

Prudential Guaranteed Interest Account 34percent

Vanguard Choices:
Vanguard Emerging Markets Stock Index Fund Institutional VEMIX
Vanguard Explorer Fund Admiral VEXRX
Vanguard International Growth Fund Admiral VWILX
Vanguard Value Fund Investor VIVAX
Vanguard PRIMECAP Fund Admiral VPMAX
Vanguard Windsor Fund Admiral VWNEX

Fixed Income:
Vanguard Inflation Protected Securities Fund International VIPSX
Vanguard Total bond Market Index Fund Institutional VBTIX

Money Market:
Vanguard Federal Money Market Fund Investor

Gauranteed:
Prudential Guaranteed Interest Account
TIAA Traditional

Any advice would be appreciated. Thank you in advance.
Jamesb89, in one of your previous posts here at BH from last year, you also listed this as one of the available fund choices within your plan:

Vanguard Institutional Index Fund Institutional VINIX

Is that fund still available? If so, it is a great low cost S&P 500 index fund. Are there any other Vanguard funds available within your plan? Such as International, Small or Mid Cap, Extended Market?

If the Vanguard Institutional Index is still available in your plan, you could get very close to the Three Fund with these by piecing together the two international funds...

Vanguard Institutional Index Fund Institutional VINIX
Vanguard Total bond Market Index Fund Institutional VBTIX
Vanguard International Growth Fund Admiral VWILX
Vanguard Emerging Markets Stock Index Fund Institutional VEMIX

Even though the above would work fine, after you retire in 4 years you can roll your 403b over into an IRA at Vanguard or Fidelity and have access to all the lower cost index funds and ETF's.

indexonlyplease
Posts: 976
Joined: Thu Apr 30, 2015 12:30 pm
Location: Pembroke Pines, FL

Re: Three Fund Portfolio Assitance

Post by indexonlyplease » Thu May 17, 2018 6:00 am

Does your 403 offer something called the PCRA? This allow you to open a broker account within your 403 and invest in it. My example is Schwab.

I also use my stable value account for my fixed money (3.25%) in my 457 account. Good choice.

You should also list what funds you are invested in now. Maybe they are good enough until you retire. Then you can roll over your money somewhere else like Vanguard with more choices.

No debt awesome. The only way to retire.

jamesb89
Posts: 9
Joined: Wed Dec 14, 2016 11:00 am

Re: Three Fund Portfolio Assitance

Post by jamesb89 » Thu May 17, 2018 8:08 am

Thank you all for your responses/advice. The only other Equities offered in my 403b are the following:

American Funds EuroPacific Growth Fund R6
American Funds Growth Fund of America R6
American Funds New World R6
CREF Global Equiites R3
CREF Stock R3
Cohen & Shears Realty Shares

chevca
Posts: 1496
Joined: Wed Jul 26, 2017 11:22 am

Re: Three Fund Portfolio Assitance

Post by chevca » Thu May 17, 2018 10:59 am

The CREF Stock fund looks pretty good... about 70/30 US/INT. That and your stable value type fund would be three fund like, but in a simpler two funds. :happy

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CyclingDuo
Posts: 1391
Joined: Fri Jan 06, 2017 9:07 am

Re: Three Fund Portfolio Assitance

Post by CyclingDuo » Thu May 17, 2018 11:18 am

jamesb89 wrote:
Thu May 17, 2018 8:08 am
Thank you all for your responses/advice. The only other Equities offered in my 403b are the following:

American Funds EuroPacific Growth Fund R6
American Funds Growth Fund of America R6
American Funds New World R6
CREF Global Equiites R3
CREF Stock R3
Cohen & Shears Realty Shares
Hmmmm. What happened to the Vanguard Institutional Index Fund from last year? Did it get removed as an option from your plan?

Oh well, pretty easy to get the three fund portfolio for you using only 2 funds:

CREF Stock R3
Vanguard Total bond Market Index Fund Institutional VBTIX

From the Wiki: https://www.bogleheads.org/wiki/Three-fund_portfolio

TIAA annuities plans participants can create a three-fund portfolio with only two funds:[note 7]

Stock (70% Russell 3000 / 30% MSCI Allworld ex-US)
Bond (Barclays U.S. Aggregate Bond)

TIAA mutual fund (retail) participants can use:

Equity Index (TINRX)
Emerging Markets Stock Index (TEQKX)
Bond Index Fund (TBILX)

7. The Stock fund is comprised of 70% Total US Stock market, 30% total international (excluding US) market, which is 2/3 of a three-fund portfolio.

Doctor Rhythm
Posts: 30
Joined: Mon Jan 22, 2018 3:55 am

Re: Three Fund Portfolio Assitance

Post by Doctor Rhythm » Thu May 17, 2018 3:24 pm

Oh well, pretty easy to get the three fund portfolio for you using only 2 funds:

CREF Stock R3
Vanguard Total bond Market Index Fund Institutional VBTIX
Yes, agree that may be the simplest solution. The CREF fund is quite broad and has a roughly 70/30 between domestic and international stocks, which is sort of the middle ground compared to other portfolios. If you want more or less international exposure, you could add one of the Vanguard international or US stock funds to achieve your target allocation. Synopsis says its a mixture of indexed and active management, and the ER of 0.32% isn't great - though still much better than what you're paying now.

jamesb89
Posts: 9
Joined: Wed Dec 14, 2016 11:00 am

Re: Three Fund Portfolio Assitance

Post by jamesb89 » Fri May 18, 2018 6:32 am

My 403b still offers the Vanguard Institutional Index Fund .

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