Requesting Guidance/Advice for Rebalancing and De-Risking a 7-Figure Portfolio (TD Ameritrade)

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Topic Author
LunaTerrapin
Posts: 2
Joined: Sun Sep 02, 2018 6:23 pm

Requesting Guidance/Advice for Rebalancing and De-Risking a 7-Figure Portfolio (TD Ameritrade)

Post by LunaTerrapin » Sun Sep 02, 2018 8:01 pm

Hello Esteemed Bogleheads,

I currently have a tax-deferred account that is 100% in equities. It is valued at $1.1 million, and it is time to rebalance and de-risk. I am nearing retirement and am not comfortable with all of the stress that being so heavy in equities entails at this point.

I am going to start by taking 60% of the money ($660,000) and moving it into bond/fixed income mutual and index funds. Here are some questions I've developed, and I'd be grateful for any feedback or thoughts:

1. Bonds are a pretty new thing for me, though I'm familiar with the basic concepts (duration, maturity, coupon, etc.). A rising interest rate environment is not the ideal time to go into bonds, but I am thinking about just moving into short, intermediate, and long-term bond funds in equal amounts ($220,000 each). Would I be well-served to weight more of my funds to short-term bonds to be less vulnerable to rising interest rates at this time?
2. For now, I am going to be re-investing the dividends, and will not be needing the income from the bonds. However, when it does come time to retire, and I am interested in living off of the income from the bonds, am I correct in thinking that longer-term bonds generate more income, but at the risk of losing more of their value over the life of the fund?
3. What are some of you alls' high-level thoughts on government, corporate, and municipal debt at this time? The tax-exempt nature of munis is very appealing; what keeps people from investing all of their money in muni dent as opposed to Treasury? Is it just the slightly higher default risk?
4. What other big-picture, conceptual matters and issues am I missing at this point, or should have front-and-center in my strategy? Rebalancing is a major decision, and I want to make sure I'm establishing a firm foundation for financial well-being and peace of mind in the years ahead.
5. What are the top 4-5 data points I should be looking at when evaluating a bond fund? Right now, I have been noting the expense ratios, standard deviation, portfolio composition (agency, treasury, corp, muni, etc.), net assets, and risk rating.

Some of the funds I am considering:

Fidelity Total Bond (intermediate) FTBFX
PIMCO Long Duration Total Return Fund (long term) PLRAX
Baird Short Term Bond Investor (short term) BSBSX
Vanguard Long Term Bond Index (long) VBLTX
AB Global Bond Fund Class A ANAGX
Vanguard Short Term Bond index VBISX
American Century High Yield Municipal Fund Investor Class ABHYX
Fidelity Government Income Fund FGOVX

Thank you all for any advice or thoughts you might be able to spare; it is very much appreciated.

:sharebeer

PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: Requesting Guidance/Advice for Rebalancing and De-Risking a 7-Figure Portfolio (TD Ameritrade)

Post by PFInterest » Sun Sep 02, 2018 8:33 pm

That's a big swing. Not wrong, just big.
Intermediate term is all one generally needs.
I wouldn't pick any of those funds. Vanguard total bond is the gold standard. Where are these accounts located?

b42
Posts: 342
Joined: Thu Apr 11, 2013 7:00 pm

Re: Requesting Guidance/Advice for Rebalancing and De-Risking a 7-Figure Portfolio (TD Ameritrade)

Post by b42 » Sun Sep 02, 2018 8:38 pm

Welcome to the forums!

What are the current accounts you have and what are the holdings?

If everything is tax-deffered you can make moves without tax issues.

You may be better served with picking one bond fund right now before slicing and dicing into varying maturities.

Vanguard's Total Bond Fund Index is a good starting place. The tax-exempt minus don't make much sense in a tax-deferred account.

galectin
Posts: 262
Joined: Thu Jan 27, 2011 1:57 pm

Re: Requesting Guidance/Advice for Rebalancing and De-Risking a 7-Figure Portfolio (TD Ameritrade)

Post by galectin » Sun Sep 02, 2018 8:48 pm

Since you are at TD Ameritrade you should check out their commission-free ETF bond funds. You can get low ER funds in a variety of different durations. That is what my funds at TDA are in.

I agree with PFInterest in that intermediate-term bonds would be good. Read some of the recent threads on bond funds and duration in today's climate of rising interest rates.

Topic Author
LunaTerrapin
Posts: 2
Joined: Sun Sep 02, 2018 6:23 pm

Re: Requesting Guidance/Advice for Rebalancing and De-Risking a 7-Figure Portfolio (TD Ameritrade)

Post by LunaTerrapin » Sun Sep 02, 2018 10:26 pm

PFInterest wrote:
Sun Sep 02, 2018 8:33 pm
That's a big swing. Not wrong, just big.
Intermediate term is all one generally needs.
I wouldn't pick any of those funds. Vanguard total bond is the gold standard. Where are these accounts located?
Thanks for your response. These accounts are located in my tax-deferred IRA on TD Ameritrade.

gostars
Posts: 439
Joined: Mon Oct 09, 2017 7:53 pm

Re: Requesting Guidance/Advice for Rebalancing and De-Risking a 7-Figure Portfolio (TD Ameritrade)

Post by gostars » Sun Sep 02, 2018 11:30 pm

SPAB is the no-commission ETF equivalent of the Vanguard Total Bond Index fund available at TDA, and is a reasonable choice to use.

Personally, I'd rather move the whole thing to Fidelity, because I think they have the widest range and lowest cost options for tax-advantaged investing. FXNAX is the aggregate bond fund index, FIPDX for TIPS, FUMBX for short-term treasuries, and there are others available. If you're moving over a 7 figure portfolio, they'll also give you enough free trades to sell out of whatever you have without having to pay commissions, and will refund the transfer fee TDA will charge you if you call and ask them to. The fees may not amount to much, but why pay anything when you can instead pay nothing?

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