Too risky?

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12ravens
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Too risky?

Post by 12ravens » Fri Oct 05, 2018 2:38 pm

57 years old, working full time, single. Have 220k in individual stocks, 160k in Vanguard index funds, 80k in 401k at work, 30k in CD, MM, and cash.
Figuring on at least 6-11 more years working, making around 90k a year.
I figure I've got time for Market dips (like this one) and recoveries before I retire.
Or do you think I'm too stock-heavy?

JBTX
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Re: Too risky?

Post by JBTX » Fri Oct 05, 2018 3:30 pm

12ravens wrote:
Fri Oct 05, 2018 2:38 pm
57 years old, working full time, single. Have 220k in individual stocks, 160k in Vanguard index funds, 80k in 401k at work, 30k in CD, MM, and cash.
Figuring on at least 6-11 more years working, making around 90k a year.
I figure I've got time for Market dips (like this one) and recoveries before I retire.
Or do you think I'm too stock-heavy?


Recommend you follow this format and you'll get more feedback.

viewtopic.php?f=1&t=6212

It is really impossible to answer your question with only the information you have provided.

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nisiprius
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Re: Too risky?

Post by nisiprius » Fri Oct 05, 2018 3:42 pm

I can't tell what your allocation to stocks and bonds is without knowing more about what "Vanguard index funds" these are, and what kinds of things you have chosen in your 401(k) plan. If those are all bond funds, then you're roughly 50/50 stocks/bonds. If, as I suspect, they are stock mutual funds, then you are close to 100% stocks. Investing in, say, the Vanguard 500 Index Fund or the Vanguard Total Stock Market Index Fund doesn't cut your risk all that much. It basically gets you down to the fundamental underlying risk of the stock market itself, which is quite high.

There's no objective measure of what is "too risky." You can only say whether your portfolio is too risky for you.

My feeling is that if you are asking strangers on the Internet whether your portfolio is too risky, something inside you might be telling you that it is too risky for you.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Flyer24
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Re: Too risky?

Post by Flyer24 » Fri Oct 05, 2018 3:45 pm

You are definitely too individual stock heavy.

lessismoreinvestor
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Re: Too risky?

Post by lessismoreinvestor » Fri Oct 05, 2018 4:14 pm

57 years old, working full time, single. Have 220k in individual stocks, 160k in Vanguard index funds, 80k in 401k at work, 30k in CD, MM, and cash.
Figuring on at least 6-11 more years working, making around 90k a year.
I figure I've got time for Market dips (like this one) and recoveries before I retire.
Or do you think I'm too stock-heavy?
So total nest egg you have 460k. All most half is in individual stocks. That is very risky. I recommend keeping that portion less than 10%. What to do about it? Well, I hope it is a lot of different stocks for diversification. If it is all one or two stocks that isn't good in my opinion. If you were to sell it may trigger capital gains tax as well depending on what type of account it is.

What are the index funds and 401k invested in? Any bonds?

At your age, a 60% stocks/ 40% bonds would be decently aggressive. You could talk me into 70 stock / 30 bonds for ultra aggressive.

Assuming you work 10 more years. 67 years old. I would like to see your portfolio at 800k to 1 million.

If you save $20,000k per year for the next 10 years and can make 5% investment return on your money then it would grow to about 1 million.

On a $1 million portfolio, you can take out 40K a year for rest of your life. Plus hopefully, social security will give you some. Maybe $36k per year. You would then be making around $76k which is 80% of your working salary. Not a bad retirement in my opinion.

You are on the right track but do require some more savings. Keep in mind if the market does bad it could potentially mean you need to save more, work longer, or live on less in retirement.

lessismoreinvestor

12ravens
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Re: Too risky?

Post by 12ravens » Mon Oct 08, 2018 7:48 pm

<t>Thanks for the replies. I have very little in bonds, it's true. I will respond with more details and specifics now that I know the way you prefer it, as soon as I can.
Sure appreciate the help.>

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Watty
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Re: Too risky?

Post by Watty » Mon Oct 08, 2018 8:01 pm

Just for comparison the Vanguard 2025 target date fund is about 65% stocks and 35% bonds.

https://investor.vanguard.com/mutual-fu ... file/VTTVX

delamer
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Re: Too risky?

Post by delamer » Mon Oct 08, 2018 8:15 pm

Another issue is how dependent you will be in your assets when you retire.

If you won’t need much money from your portfolio to cover your expenses, then you can be relatively more aggressive.

Freefallin
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Re: Too risky?

Post by Freefallin » Mon Oct 08, 2018 8:19 pm

It may be better to only have 5% to 10% in individual stocks and strive for more diversification.
"Pain is the touchstone of all growth." - Bill W.

12ravens
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Re: Too risky?

Post by 12ravens » Tue Oct 09, 2018 10:39 am

Ok, this is my breakdown:
Vanguard (all Index funds) IRA
Balanced- 23K
Dividend appreciation-22K
International growth- 23K
Large Cap- 21K
Mid Cap- 18K
Small Cap growth- 19K
I also have Vanguard U.S.Growth porfolio- 20K.
Also in Vanguard, (ROTH) Target retirement 13K

(Complete Total in Vanguard is 160K)

In my 401K at work I have about 82K,
56% in Large Cap
24% in Mid Cap
14% in Balanced
6% in Health care fund

I have about 220K in my individual brokerage stock portfolio, well diversified amongst about 35 different companies and diversified sectors.

I am putting away about 20K per year into my 401K.

Cash, CD and MM total about 30K

To be honest, I've shied away from Bonds because I don't understand them well (bad excuse, I know). Plus from what I've read, as interest rates rise, bond rates fall? It seems easier/safer to me to invest in a 1 or 2 year CD making 2.65% for my "safe" investment.

I don't need money for anything 'big' right now. Just working, trying to save as much as possible, knowing the market will go up and down, but over time, eventually up.

I hadn't meant to have so much in stocks, especially my individual brokerage portfolio, but I picked some winners and 2017 was a very good year!
Now, if I sell, I'd have the Capitol gains taxes. Aren't you supposed to buy and hold for the long term?

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Sandtrap
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Re: Too risky?

Post by Sandtrap » Tue Oct 09, 2018 10:54 am

1. Suggestions would be more "on target" if you do this to give your question better context.
You can edit your original post to include the data.
Asking Portfolio Questions
https://www.bogleheads.org/forum/viewt ... =1&t=6212

brief list of individual stocks.

2. Are you prepared to have your individual stocks drop by at least 50% with potential long term partial recovery?

3. A starter package to help you get an idea of the basic structure and how to formulate your IPS.

A lot of your questions will be answered (and more) here:

Bogle Philosophy
https://www.bogleheads.org/wiki/Bogleh ... hilosophy
Here are links to the wiki's "Getting Started" and "Investing Startup Kit" pages:
https://www.bogleheads.org/wiki/Getting_started
https://www.bogleheads.org/wiki/Bogleh ... rt-up_kit
Define General Investment Goals and Objectives (what is your plan?)
https://www.bogleheads.org/wiki/Invest ... statement
IPS Statement Worksheet PDF at Morningstar
http://news.morningstar.com/pdfs/inves ... pr2016.pdf
Outline of Investing
https://www.bogleheads.org/wiki/Outline_of_investing
Outline of Financial Planning (with links)
https://www.bogleheads.org/wiki/Outlin ... _planning
Funding Priority (what do I do first?)
https://www.bogleheads.org/wiki/Priori ... vestments
Tax Efficient Fund Placement
https://www.bogleheads.org/wiki/Tax-ef ... _placement

As for what is and is not risky, to you?

Risk Tolerance (what is your "sleep factor"?)
https://www.bogleheads.org/wiki/Risk_tolerance
Asset Allocation (what is right for you?)
https://www.bogleheads.org/wiki/Asset_allocation

j

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ruralavalon
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Location: Illinois

Re: Too risky?

Post by ruralavalon » Tue Oct 09, 2018 11:05 am

12ravens wrote:
Tue Oct 09, 2018 10:39 am
Ok, this is my breakdown:
Vanguard (all Index funds) IRA
Balanced- 23K
Dividend appreciation-22K
International growth- 23K
Large Cap- 21K
Mid Cap- 18K
Small Cap growth- 19K
I also have Vanguard U.S.Growth porfolio- 20K.
Also in Vanguard, (ROTH) Target retirement 13K

(Complete Total in Vanguard is 160K)

In my 401K at work I have about 82K,
56% in Large Cap
24% in Mid Cap
14% in Balanced
6% in Health care fund

I have about 220K in my individual brokerage stock portfolio, well diversified amongst about 35 different companies and diversified sectors.

I am putting away about 20K per year into my 401K.

Cash, CD and MM total about 30K

To be honest, I've shied away from Bonds because I don't understand them well (bad excuse, I know). Plus from what I've read, as interest rates rise, bond rates fall? It seems easier/safer to me to invest in a 1 or 2 year CD making 2.65% for my "safe" investment.

I don't need money for anything 'big' right now. Just working, trying to save as much as possible, knowing the market will go up and down, but over time, eventually up.

I hadn't meant to have so much in stocks, especially my individual brokerage portfolio, but I picked some winners and 2017 was a very good year!
Now, if I sell, I'd have the Capitol gains taxes. Aren't you supposed to buy and hold for the long term?
A little more information will be helpful.

In each account would you please give the fund names, tickers and expense ratios of the funds used?

What other funds are offered in your 401k, giving fund names, tickers and expense ratios?

Do you have any debt, if so what types, amounts and interest rates?

Want is your tax bracket, both federal and state? What is your tax filing status?

You can simply add this to your last post using the edit (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

. . . . .

Yes, in my opinion you are too stock heavy for age 57 and intending to retire in 6-11 years.

In my opinion you have too little in fixed income (bonds, CDs etc.), just part of the balanced fund, part of the target date fund, and the CDs. It looks like under 5% in fixed income, so over 95% in stocks.

It's important to have safer fixed income investments in your portfolio. Bond funds are the most commonly used fixed income investment. CDs are an acceptable fixed income investment, as are I-bonds.

You also have a very high percentage in individual stocks, around.d 46% of the total. Is there a capital loss in some? You could sell those without any income tax liability, and sell a other stocks with an equal dollar amount of gains also without incurring income tax liability. This could reduce your concentration in individual stocks.

You could also turn off any automatic reinvestment of dividends in your individual stocks, and use the cash to buy very tax-efficient stock index funds. This will stop the increase in your individual stocks.
Last edited by ruralavalon on Tue Oct 09, 2018 11:20 am, edited 1 time in total.

22twain
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Re: Too risky?

Post by 22twain » Tue Oct 09, 2018 11:19 am

delamer wrote:
Mon Oct 08, 2018 8:15 pm
Another issue is how dependent you will be in your assets when you retire.
That is,
(a) how much do you plan to spend each year in retirement, including taxes, Medicare or other health insurance, etc.?
(b) how much income will you receive from non-portfolio sources (pensions, Social Security, rental property)?
If you won’t need much money from your portfolio to cover your expenses, then you can be relatively more aggressive.
My investing princiPLEs do not include absolutely preserving princiPAL.

12ravens
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Joined: Tue Oct 02, 2018 12:08 pm

Re: Too risky?

Post by 12ravens » Thu Oct 11, 2018 5:06 pm

Great idea about stopping the DRIP on the stock portfolio. Done. Will slowly attempt to rebalance. Thanks so much for all of your help.

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