Request your help - new to self managed investments

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Topic Author
P&S Investing
Posts: 2
Joined: Fri Aug 17, 2018 4:16 pm

Request your help - new to self managed investments

Post by P&S Investing »

Hi All,

I am new to this forum and really appreciate any help with our current situation. We are a married couple (36/35) with a 1 year old daughter. We are money invested through Chase Private Client and have not been thrilled with the returns we are seeing versus the fees being paid. Outside of our Chase, we have multiple 401(k) accounts, NY 529 and other smaller real estate/startups investments.

We have been lucky enough to have capital we are looking to invest, but feel uncomfortable just putting into Chase given our history over the past year. Options we are looking at:

1. Betterment - Robo investments (.25 fees + other index fees + tax harvesting)
2. Vanguard Financial Planners - Robo investments plus access human planners (.30 fees + index fees + tax harvesting)
3. Vanguard Investing DIY - using our resources to invest in ETFs and mutual funds (only index fees + no tax harvesting)

We are leaning towards the 3rd option (mainly because of fees), but hesitant because of our lack of knowledge on rebalancing and tax harvesting. Based on our situation requesting your help and advice on the best course of action. Thank you all!
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retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: Request your help - new to self managed investments

Post by retiredjg »

Do #2 and then do #3. Work with Vanguard's PAS for several months to a year and then decide what to do. You may find you are ready to manage it yourself. If so, you can simply drop the service and keep the portfolio and manage it ourself.

Are you sure they do tax loss harvesting? I'm thinking they do not.
Topic Author
P&S Investing
Posts: 2
Joined: Fri Aug 17, 2018 4:16 pm

Re: Request your help - new to self managed investments

Post by P&S Investing »

Thanks for your feedback. Here is what I read on Vanguards tax harvesting from nerd wallet:

Tax-loss harvesting: The service is available here, but it isn’t automatic. Rather, tax-loss harvesting opportunities are approached on a client-by-client basis, which the company says is by design. Vanguard’s investment research shows that while tax-loss harvesting can be beneficial, it also carries risk. Clients who want daily monitoring for tax-loss harvesting opportunities may not be happy with this approach.

Vanguard does allocate assets across account types, optimizing for taxes. For example, tax-efficient investments will be placed in taxable accounts, and those that generate a tax burden will go into tax-sheltered retirement accounts, when the client has both types of account. This is similar to Betterment’s Tax-Coordinated Portfolio.
b42
Posts: 404
Joined: Thu Apr 11, 2013 7:00 pm

Re: Request your help - new to self managed investments

Post by b42 »

P&S, welcome to the forums!

Do you have any records of your tax-loss harvesting from your advisor? I'm curious because it would only apply to taxable accounts. So if the majority of your portfolio is in tax-advantaged accounts, the actual benefit would be relatively small.

If you can list the investments you have though Chase Private Client, that will help with the advice, because otherwise we don't know exactly what you are holding. It could be the case Chase has you in good funds. Do you know what they charge (AUM fee, hourly fee, etc.)?

If you can reformat your first post with the outline noted here, you will be able to get more detailed responses:

viewtopic.php?f=1&t=6212
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retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: Request your help - new to self managed investments

Post by retiredjg »

That is interesting information and does sound sort of Vanguardish. However, I have not seen any mention of tax loss harvesting in the PAS brochure or the web pages so if that is important to you, you need to find out for yourself for sure.

My guess is that if a PAS customer called up and said they would like to harvest some losses in a certain fund that Vanguard might accommodate that on an occasional basis...but that is just speculation on my part.

Tax loss harvesting is not a requirement for good investing. It is sort of icing on the cake. Vanguard is all about the cake. Not so much about the icing.
rkhusky
Posts: 17763
Joined: Thu Aug 18, 2011 8:09 pm

Re: Request your help - new to self managed investments

Post by rkhusky »

Your starting point should be the Vanguard Target Retirement funds, something in the TR 2040 - 2050 range. Use those either directly or as a guideline for purchasing the individual components. You should be able to articulate why you would want something other than the TR funds, i.e. you should learn enough about investing to have a rational reason for choosing something different.

The TR funds are great for tax advantaged accounts. They are not as tax efficient for taxable accounts, especially for those in higher tax brackets, but the simplicity may counter-balance that modest inefficiency. If you are in a high tax bracket, you may choose individual funds and swap out the taxable bond funds with tax exempt bond funds.

If you start with the TR funds in your tax advantaged accounts, you can replace them with something else at no cost later down the road, if you find that you want to take a more active role in portfolio management. Switching to something different in a taxable account may have tax consequences if you have substantial gains when you decide to make a change.

Using individual funds and optimizing over taxable and tax-advantaged accounts is the most tax efficient, but requires more work and investing knowledge. You will need to make the trade-offs between cost, simplicity and optimal portfolio construction.
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ruralavalon
Posts: 26351
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: Request your help - new to self managed investments

Post by ruralavalon »

Welcome to the forum :) .

P&S Investing wrote: Fri Aug 17, 2018 4:23 pm Hi All,

I am new to this forum and really appreciate any help with our current situation. We are a married couple (36/35) with a 1 year old daughter. We are money invested through Chase Private Client and have not been thrilled with the returns we are seeing versus the fees being paid. Outside of our Chase, we have multiple 401(k) accounts, NY 529 and other smaller real estate/startups investments.

We have been lucky enough to have capital we are looking to invest, but feel uncomfortable just putting into Chase given our history over the past year. Options we are looking at:

1. Betterment - Robo investments (.25 fees + other index fees + tax harvesting)
2. Vanguard Financial Planners - Robo investments plus access human planners (.30 fees + index fees + tax harvesting)
3. Vanguard Investing DIY - using our resources to invest in ETFs and mutual funds (only index fees + no tax harvesting)

We are leaning towards the 3rd option (mainly because of fees), but hesitant because of our lack of knowledge on rebalancing and tax harvesting. Based on our situation requesting your help and advice on the best course of action. Thank you all!
P&S Investing wrote: Sat Aug 18, 2018 7:32 am Thanks for your feedback. Here is what I read on Vanguards tax harvesting from nerd wallet:

Tax-loss harvesting: The service is available here, but it isn’t automatic. Rather, tax-loss harvesting opportunities are approached on a client-by-client basis, which the company says is by design. Vanguard’s investment research shows that while tax-loss harvesting can be beneficial, it also carries risk. Clients who want daily monitoring for tax-loss harvesting opportunities may not be happy with this approach.

Vanguard does allocate assets across account types, optimizing for taxes. For example, tax-efficient investments will be placed in taxable accounts, and those that generate a tax burden will go into tax-sheltered retirement accounts, when the client has both types of account. This is similar to Betterment’s Tax-Coordinated Portfolio.
I think that either Vanguard Personal Advisory Services (PAS) or DIY might be suitable for you. You could even start with Vanguard PAS and switch to DIY.

If you would like some specific DIY suggestions, please post your details in this format: "Asking Portfolio Questions". You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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