Help Simplifying Portfolio

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Topic Author
innominate21
Posts: 15
Joined: Tue Sep 04, 2018 8:11 pm

Help Simplifying Portfolio

Post by innominate21 » Thu Sep 06, 2018 9:37 pm

Hello all

I started a couple of years back have left things on auto pilot for far too long and started a new job last year. At first all I was concerned about was putting money away in my retirement accounts but now I think I have too much cash on hand and I think it's time to start a taxable account. Thing is, now I'm all over the place and would like to simplify my portfolio to a three-fund but just need some (read: a lot of) help getting there.

Emergency Fund: Yes 6 months worth
Debt: None
Tax filing: Single
Tax rate: 3% State, 35% Federal
State: PA
Age: Early 30s
Desired asset allocation: 80% stocks/ 20% bonds
Desired international allocation: ?? % of stocks (30% sounds like a good number?)

Current retirement assets

Taxable - None

My 401K at Schwab - I didn’t set this up, I know this needs major changes
30% DFA US Core Equity 1 (DFEOX) (0.19) 6413.7
3% TIAA-CREF Large-Cap Gr Idx Inst (TILIX) (0.06)
8% Vanguard Value Index Adm (VVIAX) (0.05)
7% Vanguard Mid Cap Index Admiral (VIMAX) (0.05)
9% Vanguard Small Cap Value Index Admiral (VSIAX) (0.07)
10% DFA Emerging Markets Core Equity I (DFCEX) (0.53)
24% DFA International Core Equity I (DFIEX) (0.3)
3% Vanguard Real Estate Index Admiral (VGSLX) (0.12)
6% Vanguard Total Bond Market Index I (VBTIX) (0.04)

My 403b at Vanguard from former employer
Target Retirement 2045 Fund (VTVIX) (0.15)

Breakdown:
54.1% Vanguard Total Stock Market Index Fund Investor Shares
35.9% Vanguard Total International Stock Index Fund Investor Shares
7.1% Vanguard Total Bond Market II Index Fund Investor Shares**
2.9% Vanguard Total International Bond Index Fund Investor Shares

My Roth IRA at Wisebanyan - Thought it was a good idea at first given the auto-pilot
55.2% Vanguard Total Stock Market (VTI) (0.04)
29.4% Vanguard FTSE Developed Markets (VEA) (0.07)
6.5% Vanguard FTSE Emerging Markets (VWO) (0.14)
0.6% Vanguard REIT (VNQ) (0.12)
2.6% iShares Investment Grade Corporate Bond (LQD) (0.15)
2.3% Vanguard Intermediate Term Government Bond Index (VGIT) (0.07)
1.9% iShares Barclays TIPS Bond Fund (TIP) (0.2)
1.2% State Street Global Advisors Barclays Short Term High Yield Bond Index (SJNK) (0.4)
0.2% Vanguard Short-Term Corporate Bond (VCSH) (0.07)

I'm aware they total 100% for each category but given I think I need a major overhaul, I thought it best to leave it like that. For a breakdown (used Personal Capital):
Cash 1%
Bonds 8%
Intl Stocks 34%
U.S. Stocks 54%
Alternatives 3%

The total of all my accounts is about $80,000. My 403b makes up 54%. My 401k makes up 28%. My Roth IRA makes up 18%. I have about $150,000 sitting in a regular savings account and would only need about 10k for an emergency fund. So the rest could theoretically go to a taxable account.

Contributions: Able to contribute max to 401k, HSA (currently at $5500), and haven’t but will take advantage of the backdoor Roth IRA in the near future.

Available Funds

403b at Vanguard (Target Date Funds omitted)
DFA U.S. Targeted Value Portfolio Institutional Class (DFFVX) (0.37)
Invesco Global Real Estate Fund R5 Class (IGREX) (0.93)
MFS® Institutional International Equity Fund (MIEIX) (0.71)
PIMCO CommodityRealReturn Strategy Fund Institutional Class (PCRIX) (1.39)
PIMCO Total Return Fund Institutional Class (PTTRX) (0.55)
Vanguard 500 Index Fund Investor Shares (VFINX) (0.14)
Vanguard Emerging Markets Stock Index Fund Investor Shares (VEIEX) (0.32)
Vanguard FTSE Social Index Fund Investor Shares (VFTSX) (0.2)
Vanguard Federal Money Market Fund (VMFXX) (0.11)
Vanguard High-Yield Corporate Fund Investor Shares (VWEHX) (0.23)
Vanguard Inflation-Protected Securities Fund Investor Shares (VIPSX) (0.2)
Vanguard Intermediate-Term Treasury Fund Investor Shares (VFITX) (0.2)
Vanguard Mid-Cap Growth Fund (VMGRX) (0.36)
Vanguard Mid-Cap Index Fund Investor Shares (VIMSX) (0.17)
Vanguard Selected Value Fund (VASVX) (0.39)
Vanguard Small-Cap Index Fund Investor Shares (NAESX) (0.17)
Vanguard Total Bond Market Index Fund Investor Shares (VBMFX) (0.15)
Vanguard Total International Stock Index Fund Investor Shares (VGTSX) (0.17)
Vanguard U.S. Growth Fund Investor Shares (VWUSX) (0.43)
Vanguard Wellington Fund Investor Shares (VWELX) (0.25)
Vanguard Windsor Fund Investor Shares (VWNDX) (0.31)
Vanguard Windsor II Fund Investor Shares (VWNFX) (0.34)

401K at Schwab
Large Company
DFEOX - DFA US Core Equity 1 (0.19)
DFLVX - DFA US Large Cap Value (0.27)
SWPPX - Schwab S&P 500 Index (0.03)
SWTSX - Schwab Total Stock Market Index (0.03)
TILIX - TIAA-CREF Large-Cap Gr Idx Instl (0.06)
VVIAX - Vanguard Value Index Adm (0.05)
Small/Mid Co.
DFFVX - DFA US Targeted Value I (0.37)
SWSSX - Schwab Small Cap Index (0.05)
VIMAX - Vanguard Mid Cap Index Admiral (0.05)
VMGMX - Vanguard Mid-Cap Growth Index Admiral (0.07)
VSGAX - Vanguard Small Cap Growth Index Admiral (0.07)
VSIAX - Vanguard Small Cap Value Index Admiral (0.07)
Intl/Global
DFCEX - DFA Emerging Markets Core Equity (0.53)
DFIEX - DFA International Core Equity (0.3)
SWISX - Schwab International Index (0.06)
VEMAX - Vanguard Emerging Mkts Stock Idx Adm (0.14)
VTIAX - Vanguard Total Intl Stock Index Admiral (0.11)
Specialty
VGSLX - Vanguard Real Estate Index Admiral (0.12)
Bonds
SWRSX - Schwab Treasury Infl Protected Secs Idx (0.05)
VSIGX - Vanguard Intmdt-Term Trs Idx Admiral (0.07)
VBTIX - Vanguard Total Bond Market Index (0.04)
VTABX - Vanguard Total Intl Bd Idx Admiral (0.11)

Questions
1. How should optimize the 401K?
2. What should I do with the 403b?
3. From what I read, it sounds like Schwab is now the cheapest and I technically have a brokerage account with them already (I have their debit card with unlimited ATM reimbursements) so I'd likely go there to start my taxable account. I read the tax efficiency wiki and know that bonds do better in tax advantaged accounts so with 150k cash on hand and about 80k in retirement accounts, would it make sense to make my taxable and Roth IRA all stocks and change my 401k and 403bs to bonds?
4. I saw somewhere that someone recommended the 401k to be a representative split and when it comes time to rebalance, just do it within the 401k?
5. Should I withdraw the money in Wisebanyan and just start a Vanguard Roth IRA? It doesn't look like it's doing too badly but it does complicate things.

Happy to provide more information and I apologize if I'm not asking the right questions! I have no big purchases coming up and just feel my money would be better served in a taxable account but given how scattered I am, not sure how to pull the trigger. Any guidance would be appreciated!

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

Re: Help Simplifying Portfolio

Post by gostars » Fri Sep 07, 2018 12:03 am

Welcome to the forums.

Unless the current 401k plan charges AUM fees or doesn't accept rollovers, I would roll the 403b into the 401k. The fund options in the 401k are excellent and I don't see any particular need to keep separate accounts.

The money you have in taxable, is that solely for retirement, or are you planning to use it on a house or something? If it's not being used for retirement, keep it entirely separate. I'll provide some numbers here assuming that the $140k in taxable is for retirement.

Total Portfolio - $220k
401k - $57.6k
$44k - VBTIX
$13.6k - SWTSX

Roth IRA - $14.4k - I would move to Fidelity, Vanguard, or Schwab
$14.4k - total US stock market fund (FSKAX or FZROX at Fidelity, VTSAX at Vanguard, SWTSX at Schwab)

Taxable - $140k - prefer either Vanguard or whoever will give you the best bonus for moving in the cash and free ETF trades (Merrill Edge?)
$52.8k total international stock market fund (VTIAX at Vanguard, or IXUS or VXUS as an ETF)
$87.2k total US stock market fund (VTSAX at Vanguard, or VTI, ITOT, or SCHB as an ETF)


If you want to hold more real estate, swap some of the SWTSX in the 401k for VGSLX. If you think you might want to tax-loss harvest the total US stock market in taxable at some point in the future if there's a big decline, then it's probably best to have the Roth at either Fidelity or Schwab, because their mutual funds wouldn't have the potential of creating wash sales with VTSAX or any of the ETFs.

Topic Author
innominate21
Posts: 15
Joined: Tue Sep 04, 2018 8:11 pm

Re: Help Simplifying Portfolio

Post by innominate21 » Fri Sep 07, 2018 2:15 pm

Thanks a lot! The money is all for retirement. I'll follow this to a tee. I started the 403b rollover to 401k already. I've notified Wisebanyan that I'll be moving my funds. I don't quite get the wash sales point you made and how going with Vanguard would be an issue though?

If I did Schwab taxable and Schwab Roth IRA...would I still be at risk for wash sales?

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

Re: Help Simplifying Portfolio

Post by gostars » Fri Sep 07, 2018 4:17 pm

If you hold VTSAX in your Roth IRA, then hold VTI in taxable, those are substantially identical funds. If you make your Roth contribution for the year and buy VTSAX, then 2 weeks later the market craters and you want to tax-loss harvest the VTI, that would be a wash sale, and you would lose that much of the harvesting, and either have to take steps to avoid it (exchange all the VTSAX you just purchased into something else and then TLH the next day) or have a paperwork headache when you file taxes. Any hint of problems can be avoided by not owning funds that track the same index in both taxable and tax-advantaged. SWTSX and FSKAX track the Dow Jones U.S. Total Stock Market Index, which to the best of my knowledge isn't tracked by any of the good low-cost ETFs (VTI tracks a CRSP index, ITOT uses S&P, SCHB is a broad-market index rather than TSM), so they're perfect for holding in workplace plans and Roth IRA accounts. FZROX tracks a proprietary Fidelity index, so it's good too.

I'm not a huge fan of holding taxable at Schwab unless you can get them to cough up some free trades. I just hate paying commissions when there are multiple ways not to. Schwab doesn't have a commission-free total international stock market ETF, so you have to pay a commission for VXUS or IXUS, or split your international across their 3 ETFs (SCHF, SCHE, SCHC). Merrill Edge typically has a once a year promotion from mid-November to mid-December where they'll give you $500 and a bunch of free trades for bringing in $100k or more, and holding it there gives you platinum honors status at M-E and Bank of America, which has some nice perks (more free trades, free safe deposit box, boosted credit card rewards). Vanguard won't give you any bonuses, but they do now have free trades on almost every ETF in existence, plus their mutual funds are good for using in taxable.

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Duckie
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Location: California Bay Area

Re: Help Simplifying Portfolio

Post by Duckie » Fri Sep 07, 2018 6:25 pm

innominate21 wrote:Age: Early 30s
Desired asset allocation: 80% stocks/ 20% bonds
Desired international allocation: ?? % of stocks (30% sounds like a good number?)
That breaks down to 56% US stocks, 24% international stocks, and 20% bonds. Sounds reasonable.
403b at Vanguard
The best options are:
  • Vanguard 500 Index (VFINX) (0.14) -- Large caps, 80% of US stocks
  • Vanguard Total International Stock Index (VGTSX) (0.17) -- Complete international stocks
  • Vanguard Total Bond Market Index (VBMFX) (0.15) -- US bonds
401K at Schwab
The best options are:
  • SWTSX - Schwab Total Stock Market Index (0.03) -- Complete US stocks
  • VTIAX - Vanguard Total Intl Stock Index (0.11) -- Complete international stocks
  • VBTIX - Vanguard Total Bond Market Index (0.04) -- US bonds
How should optimize the 401K?
Look at it as part of the whole portfolio. See below.
What should I do with the 403b?
Find out if the 401k at Schwab will take incoming rollovers. The 401k has cheaper options. So roll the old 403b into the current 401k if possible. If not, see below.
From what I read, it sounds like Schwab is now the cheapest and I technically have a brokerage account with them already (I have their debit card with unlimited ATM reimbursements) so I'd likely go there to start my taxable account.
Fidelity is the cheapest now. But since you have the account at Schwab you might as well stay there. It doesn't have the best international options but it'll do.
I read the tax efficiency wiki and know that bonds do better in tax advantaged accounts so with 150k cash on hand and about 80k in retirement accounts, would it make sense to make my taxable and Roth IRA all stocks and change my 401k and 403bs to bonds?
Yes.
I saw somewhere that someone recommended the 401k to be a representative split and when it comes time to rebalance, just do it within the 401k?
You should mostly rebalance in your largest non-taxable account which will be your 401k at Schwab. In taxable turn off all automatic reinvestments. Send all dividends to your settlement account. Then manually reinvest to the appropriate fund taking your AA into account.
Should I withdraw the money in Wisebanyan and just start a Vanguard Roth IRA? It doesn't look like it's doing too badly but it does complicate things.
I'd move the Roth IRA to Vanguard or Fidelity. The WiseBanyan account definitely complicates things.
_________________________

The following portfolio example has an AA of 56/24/20. You could have:

Taxable at Schwab -- $150K -- 65%
56% (SWTSX) Schwab Total Stock Market Index Fund Select (0.03%)
9% (SWISX) Schwab International Index Fund Select (0.06%)

401k at Schwab -- $43K -- 19%
9% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)
10% (VBTIX) Vanguard Total Bond Market Index Fund Institutional Shares (0.04%)

Former 403b at Vanguard -- $22K -- 10%
10% (VBMFX) Vanguard Total Bond Market Index Fund Investor Shares (0.15%)

Roth IRA at Vanguard -- $15K -- 6%
6% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)

My comments:
  • This puts as much international into VTIAX because SWISX is only developed markets and is missing ~25% of international stocks (emerging markets, small caps, and Canada).
  • This avoids any potential washes in tax-loss harvesting.
  • As the 401k grows, the taxable international fund's portfolio percentage will decrease.
Something to think about.
Last edited by Duckie on Sat Sep 08, 2018 5:07 pm, edited 1 time in total.

Topic Author
innominate21
Posts: 15
Joined: Tue Sep 04, 2018 8:11 pm

Re: Help Simplifying Portfolio

Post by innominate21 » Fri Sep 07, 2018 8:45 pm

gostars wrote:
Fri Sep 07, 2018 4:17 pm
If you hold VTSAX in your Roth IRA, then hold VTI in taxable, those are substantially identical funds. If you make your Roth contribution for the year and buy VTSAX, then 2 weeks later the market craters and you want to tax-loss harvest the VTI, that would be a wash sale, and you would lose that much of the harvesting, and either have to take steps to avoid it...
That makes perfect sense. Thanks for explaining that!
I'm not a huge fan of holding taxable at Schwab unless you can get them to cough up some free trades. I just hate paying commissions when there are multiple ways not to. Schwab doesn't have a commission-free total international stock market ETF...
Completely sold on not going for Schwab for my taxable account. I did just mail in the paperwork to directly transfer my WiseBanyan Roth IRA into my newly created Schwab Roth IRA so at least my retirement accounts can be under one roof. There seems to be a lot of perks to Merrill Edge but it seems gimmicky? And I'd feel pressured to get that credit card (which I don't need) and use all that other stuff just to be maximizing my benefits and I'm going for simple here. But I do appreciate the run down, reading up on it was very interesting! It's definitely good to know my options!
Duckie wrote:
Fri Sep 07, 2018 6:25 pm
Fidelity is the cheapest now. But since you have the account at Schwab you might as well stay there. It doesn't have the best international options but it'll do.
Thanks a lot for your advice. I am able to roll over my 403b into my 401k and have started that process.

And I must not have read the most updated source as I do see that Fidelity is much cheaper and that as of last month they opened their zero expense ratio index funds (Total Market Index and International Index). I haven't settled on where to open my taxable account; I was sort of forced to have that brokerage account in order to get that debit card. Vanguard does seem to be the "easiest" choice but even with my 403b, I've had issues reaching them and to not be available on weekends (whereas Schwab is 24/7) seems archaic to me. If Schwab's international options are lacking, how does Fidelity stack up to Vanguard in that regard? Would it just make more sense to go with them?

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

Re: Help Simplifying Portfolio

Post by gostars » Fri Sep 07, 2018 9:20 pm

Roth at Schwab is perfectly fine.

I wouldn't call Merrill Edge gimmicky. It's not like they've giving you useless junk like pens and calendars and coffee mugs. The bump to 5.25% on gas and 3.5% on groceries and warehouse clubs is a big chunk of my spending, and the 1.75% on everything else is good enough that I haven't bothered with the Citi or Fidelity 2% cards. If they do ever decide to do away with the bonuses, I'll just move it somewhere else. Someone else will pay a bonus for a 6 figure transfer.

Fidelity is OK with free trades on the iShares ETFs (ITOT and IXUS), and they will give additional free trades for a transfer of that size. I would not hold their mutual funds in taxable; they do have some capital gains distributions that will cause more of a tax hit than you would take in ETFs or Vanguard mutual funds. I do like their CMA and am working to switch over to using that as my primary checking account. Probably doesn't matter to you since you're already using Schwab, but it's an available option if Schwab ever causes problems for you.

Topic Author
innominate21
Posts: 15
Joined: Tue Sep 04, 2018 8:11 pm

Re: Help Simplifying Portfolio

Post by innominate21 » Sat Sep 08, 2018 4:13 am

gostars wrote:
Fri Sep 07, 2018 9:20 pm
I wouldn't call Merrill Edge gimmicky. It's not like they've giving you useless junk like pens and calendars and coffee mugs. The bump to 5.25% on gas and 3.5% on groceries and warehouse clubs is a big chunk of my spending, and the 1.75% on everything else is good enough that I haven't bothered with the Citi or Fidelity 2% cards. If they do ever decide to do away with the bonuses, I'll just move it somewhere else. Someone else will pay a bonus for a 6 figure transfer.
Haha very true. That does sound incredibly useful and that's with the no annual fee card as well if I'm not mistaken. It just read like it's overcompensating for something (cost?) that I wouldn't find out until after I invested with them but you're right, if things changed, I could just leave. I did use to bank with Bank of America until I realized how little interest their savings account yielded compared to the likes of Ally Bank a few years back but I never had any (major) issues with them.
Taxable - $140k - prefer either Vanguard or whoever will give you the best bonus for moving in the cash and free ETF trades (Merrill Edge?)
$52.8k total international stock market fund (VTIAX at Vanguard, or IXUS or VXUS as an ETF)
$87.2k total US stock market fund (VTSAX at Vanguard, or VTI, ITOT, or SCHB as an ETF)
I imagine I'd have access to those Vanguard ETFs in Merrill Edge correct? Is there any downside with going with Merrill Edge and Vanguard ETFs (in terms of cost, etc) over Vanguard? And this is a silly question but a trade would be if I went from say VTI to SCHB right? How commonly do people need to trade if they're doing the 3-fund portfolio?

This is my last set of questions. You've been extremely helpful! Thanks again!

Culbretd
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Joined: Sat Mar 24, 2018 4:06 am

Re: Help Simplifying Portfolio

Post by Culbretd » Sat Sep 08, 2018 4:48 am

innominate21 wrote:
Sat Sep 08, 2018 4:13 am
gostars wrote:
Fri Sep 07, 2018 9:20 pm
I wouldn't call Merrill Edge gimmicky. It's not like they've giving you useless junk like pens and calendars and coffee mugs. The bump to 5.25% on gas and 3.5% on groceries and warehouse clubs is a big chunk of my spending, and the 1.75% on everything else is good enough that I haven't bothered with the Citi or Fidelity 2% cards. If they do ever decide to do away with the bonuses, I'll just move it somewhere else. Someone else will pay a bonus for a 6 figure transfer.
Haha very true. That does sound incredibly useful and that's with the no annual fee card as well if I'm not mistaken. It just read like it's overcompensating for something (cost?) that I wouldn't find out until after I invested with them but you're right, if things changed, I could just leave. I did use to bank with Bank of America until I realized how little interest their savings account yielded compared to the likes of Ally Bank a few years back but I never had any (major) issues with them.
Taxable - $140k - prefer either Vanguard or whoever will give you the best bonus for moving in the cash and free ETF trades (Merrill Edge?)
$52.8k total international stock market fund (VTIAX at Vanguard, or IXUS or VXUS as an ETF)
$87.2k total US stock market fund (VTSAX at Vanguard, or VTI, ITOT, or SCHB as an ETF)
I imagine I'd have access to those Vanguard ETFs in Merrill Edge correct? Is there any downside with going with Merrill Edge and Vanguard ETFs (in terms of cost, etc) over Vanguard? And this is a silly question but a trade would be if I went from say VTI to SCHB right? How commonly do people need to trade if they're doing the 3-fund portfolio?

This is my last set of questions. You've been extremely helpful! Thanks again!
Only downside is that ETF’s you have to purchase every month at Merrill Edge; which causes a lot of peaking at your account balances. Other than that there is no downside to buying ETF’s at Merrill Edge.

Topic Author
innominate21
Posts: 15
Joined: Tue Sep 04, 2018 8:11 pm

Re: Help Simplifying Portfolio

Post by innominate21 » Sat Sep 08, 2018 10:35 am

Culbretd wrote:
Sat Sep 08, 2018 4:48 am
Only downside is that ETF’s you have to purchase every month at Merrill Edge; which causes a lot of peaking at your account balances. Other than that there is no downside to buying ETF’s at Merrill Edge.
So there is no way to make it a set and forget type of account? Is that specifically with Merrill Edge or with all ETFs located anywhere? What happens if one forgets to re-purchase the ETF on any given month?

Lafder
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Location: East of the Rio Grande

Re: Help Simplifying Portfolio

Post by Lafder » Sat Sep 08, 2018 11:01 am

Please go back and edit your original post so the total % add up to 100%. Not as you have it per account.

This will really let you see the % of each holding and makes rebalancing and hitting your desired AA much easier since the % are comparable to each other.

It is fine to have just one holding in the smaller accounts and use the bigger accounts to hold all classes and do your rebalancing.

It also helps you see how tiny some of your holdings are and makes it easier to get rid of them.

lafder

Topic Author
innominate21
Posts: 15
Joined: Tue Sep 04, 2018 8:11 pm

Re: Help Simplifying Portfolio

Post by innominate21 » Sat Sep 08, 2018 11:32 am

Lafder wrote:
Sat Sep 08, 2018 11:01 am
Please go back and edit your original post so the total % add up to 100%. Not as you have it per account.

This will really let you see the % of each holding and makes rebalancing and hitting your desired AA much easier since the % are comparable to each other.

It is fine to have just one holding in the smaller accounts and use the bigger accounts to hold all classes and do your rebalancing.

It also helps you see how tiny some of your holdings are and makes it easier to get rid of them.

lafder
Thank you for taking the time to post. Given the overhaul I was planning on undertaking, going line by line through those holdings didn't seem to make much sense. And I've already started the process of rolling over my 403b from Vanguard to my Schwab 401K and have sent in the paperwork to do a direct transfer of my Roth IRA at WiseBanyan (whose holdings were out of my control anyway) to my newly created Schwab Roth IRA so tinkering with those line items now would make even less sense. I used Personal Capital to give an aggregate of where my holdings were based on my prior portfolio (in the OP) and it was closer to 90/10 than 80/20. I thank gostars and Duckie for the advice they gave to get me started on simplifying everything. I'm thinking my allocation and percentages will be very similar to what was suggested in the first post by gostars.

Culbretd
Posts: 116
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Re: Help Simplifying Portfolio

Post by Culbretd » Sat Sep 08, 2018 2:11 pm

innominate21 wrote:
Sat Sep 08, 2018 10:35 am
Culbretd wrote:
Sat Sep 08, 2018 4:48 am
Only downside is that ETF’s you have to purchase every month at Merrill Edge; which causes a lot of peaking at your account balances. Other than that there is no downside to buying ETF’s at Merrill Edge.
So there is no way to make it a set and forget type of account? Is that specifically with Merrill Edge or with all ETFs located anywhere? What happens if one forgets to re-purchase the ETF on any given month?
We have money transferred in on the 1st of every month to our Roth accounts and our Brokeage accout. If you forget to buy one month then you just simple buy twice as much next month. The money just sits there waiting for you to use.

There may be a way to set up automatic purchases of a set number of shares per ETF every month... like say the 1st of every month it would automatically buy 5 shares of VTI but I haven’t really looked. I like to pick which fund(s) I’m gonna buy that month so I can keep my allocation balanced at all times. You could always call and ask them this question as I have found there phone support to be really helpful and always patient (I’m not exactly computer savvy and they have no trouble walking me through things step by step).

I would personal prefer automatic investments in mutual funds but we get too many perks with Bank Of America checking and credit cards with the amount of money we keep between them and Merrill Edge so that is the biggest reason we stay with them instead of switching to Vanguard or someone else. Buying ETF’s has started to grow on me because they are generally bought/sold same day instead of just once at the end of the day.

Topic Author
innominate21
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Joined: Tue Sep 04, 2018 8:11 pm

Re: Help Simplifying Portfolio

Post by innominate21 » Sat Sep 08, 2018 4:16 pm

Culbretd wrote:
Sat Sep 08, 2018 2:11 pm
I would personal prefer automatic investments in mutual funds but we get too many perks with Bank Of America checking and credit cards with the amount of money we keep between them and Merrill Edge so that is the biggest reason we stay with them instead of switching to Vanguard or someone else. Buying ETF’s has started to grow on me because they are generally bought/sold same day instead of just once at the end of the day.
My understanding from the blitz of reading/google searches that I've done today is that lump sum investments is better for ETFs in taxable accounts.

https://www.whitecoatinvestor.com/12-ru ... g-account/

So correct me if I'm wrong but from what I read, it's not necessary to buy monthly and in a long term strategy, it may be better to say invest quarterly and just add the funds in the desired allocation? Or am I missing something? What about the bought/sold same day instead of once at the end of the day makes it so tedious? Is it the different types of orders? Isn't it possible to just stick with "market order" which would make it simpler?

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Duckie
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Re: Help Simplifying Portfolio

Post by Duckie » Sat Sep 08, 2018 5:06 pm

innominate21 wrote:I haven't settled on where to open my taxable account; I was sort of forced to have that brokerage account in order to get that debit card. Vanguard does seem to be the "easiest" choice but even with my 403b, I've had issues reaching them and to not be available on weekends (whereas Schwab is 24/7) seems archaic to me. If Schwab's international options are lacking, how does Fidelity stack up to Vanguard in that regard? Would it just make more sense to go with them?
I would pick Fidelity over Schwab because of their total market index funds (not the brand new ones, the older ones with a track record). In that case you could have:

Taxable at Fidelity -- $150K -- 65%
56% (FSKAX) Fidelity Total Market Index Fund (0.015%)
9% (FTIHX) Fidelity Total International Index Fund (0.06%)

401k at Schwab -- $65K -- 29% <-- Includes rollover from 403b.
9% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)
20% (VBTIX) Vanguard Total Bond Market Index Fund Institutional Shares (0.04%)

Roth IRA at Fidelity -- $15K -- 6%
6% (FTIHX) Fidelity Total International Index Fund (0.06%)

Culbretd
Posts: 116
Joined: Sat Mar 24, 2018 4:06 am

Re: Help Simplifying Portfolio

Post by Culbretd » Sat Sep 08, 2018 6:17 pm

innominate21 wrote:
Sat Sep 08, 2018 4:16 pm
Culbretd wrote:
Sat Sep 08, 2018 2:11 pm
I would personal prefer automatic investments in mutual funds but we get too many perks with Bank Of America checking and credit cards with the amount of money we keep between them and Merrill Edge so that is the biggest reason we stay with them instead of switching to Vanguard or someone else. Buying ETF’s has started to grow on me because they are generally bought/sold same day instead of just once at the end of the day.
My understanding from the blitz of reading/google searches that I've done today is that lump sum investments is better for ETFs in taxable accounts.

https://www.whitecoatinvestor.com/12-ru ... g-account/

So correct me if I'm wrong but from what I read, it's not necessary to buy monthly and in a long term strategy, it may be better to say invest quarterly and just add the funds in the desired allocation? Or am I missing something? What about the bought/sold same day instead of once at the end of the day makes it so tedious? Is it the different types of orders? Isn't it possible to just stick with "market order" which would make it simpler?

Hmm... first time I’ve seen that article and it does make sense. I’m fairly new to taxable investing and just recently started investing in a taxable account this year. I guess I was thinking along the lines of Dollar Cost Averaging or trying to get as close to it as I could and went with once a month to invest.

That article does give me something to think about for when I do need to tax loss harvest. Thanks for sharing that.

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

Re: Help Simplifying Portfolio

Post by gostars » Sat Sep 08, 2018 8:59 pm

In your original post you listed what your regular contributions were, and taxable wasn't in there. If you've got $140k to invest now, then invest it all and be done with it. If in the future you find you have some excess cash you would like to invest, then invest it at that time.

I would not use mutual funds at Schwab or Fidelity for taxable investing because they will have more tax drag than ETFs or Vanguard mutual funds.

You can buy Vanguard ETFs at Merrill Edge. With free trades from the transfer bonus or Platinum Honors status, there is no commission to do so. A lot of us who use ME hold Vanguard ETFs there. I have a big chunk of VOO (S&P 500) there, left over from the days before I found this place, and also most of my international holdings currently in VXUS.

Tax loss harvesting isn't something you do regularly, but it does happen. For example, the international market has been in the toilet for most of this year. Every time my international funds have lost over $1000 (nothing special about this number, just the point I picked to make it worth my time), I sell what I have and switch to another similar fund. I've done it twice so far this year. When the markets are going up, you may go years without doing it.

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