Critique my Portfolio, possibly too much cash?

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sksbog
Posts: 208
Joined: Wed Jun 20, 2012 9:14 pm

Critique my Portfolio, possibly too much cash?

Post by sksbog » Sat Jun 30, 2018 7:44 am

Him: 44
Her: 42
combined Income ~ 280K
Retirement: 1.09 Mil
600 K in VPS IRA , vanguard managed
Rest in Vanguard target retirement
73K in series I bonds bought over last 10 years
Investments: 98K
43,800 in Schwab SIP robo managed
46,700 in Three Fund portfolio [ Stocks 75% {domestic/int 60%, 40%} , bonds 25% ]
Vanguard Intermediate-Term Tax Exempt Fund Admiral VWITX
Vanguard Total International Stock Index Fund Admiral Shares VTIAX
Vanguard Total Stock Market Index Fund VTSAX
529 Plan
Age bsed vanguard fund
Cash/CDs: 340K
I wanted to keep aside emergency fund and possibly buying home in next 2 years and put current home as rental property. But it seems that keeping the opportunity cost of keeping too much cash is too high as compared to invest about 150K in three fund portfolio and just take a loan for buying a new home when ready. Welcome your thoughts here.

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BL
Posts: 8273
Joined: Sun Mar 01, 2009 2:28 pm

Re: Critique my Portfolio, possibly too much cash?

Post by BL » Sat Jun 30, 2018 8:08 am

Would you buy your current home as an investment for rental property? If not, why keep it? Maybe select something particularly suitable for a rental instead of an accidental rental property.

sksbog
Posts: 208
Joined: Wed Jun 20, 2012 9:14 pm

Re: Critique my Portfolio, possibly too much cash?

Post by sksbog » Sat Jun 30, 2018 8:45 am

Current loan balance is about 98 k. Was thinking of keeping the mortgage and renting it out when I buy home in a year or two. The rental income would cover the mortgage.

dbr
Posts: 27207
Joined: Sun Mar 04, 2007 9:50 am

Re: Critique my Portfolio, possibly too much cash?

Post by dbr » Sat Jun 30, 2018 8:52 am

Other people can chime in, but I suppose taking a loan can be viewed as a negative bond, and then it is up to you to decide how much risk you want to be taking for the return if the cash is invested in stocks or whatever. Taking a mortgage to invest the money in some fixed income of some kind I couldn't say.

If you do want the cash in a year or two, leave it alone. Otherwise that is too much cash.

sksbog
Posts: 208
Joined: Wed Jun 20, 2012 9:14 pm

Re: Critique my Portfolio, possibly too much cash?

Post by sksbog » Sat Jun 30, 2018 10:11 am

Thanks. The question is that should I invest 150k and reap 7-8 % return and take 150k loan when I buy house?

dbr
Posts: 27207
Joined: Sun Mar 04, 2007 9:50 am

Re: Critique my Portfolio, possibly too much cash?

Post by dbr » Sat Jun 30, 2018 10:32 am

sksbog wrote:
Sat Jun 30, 2018 10:11 am
Thanks. The question is that should I invest 150k and reap 7-8 % return and take 150k loan when I buy house?
Of course. That is a standard question many people have to decide. You can probably find many previous discussions as well.

The comment is that one does not reap 7-8% return. What one buys is a ticket to a lottery where the average outcome is 7%-8% return but the outcome you will actually get falls between maybe -90% return and maybe +200% return with various probabilities in between. That is what the comment how much risk you want to take means.

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