Evaluation of Portfolio

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RickBoglehead
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Evaluation of Portfolio

Post by RickBoglehead » Wed Oct 17, 2018 7:19 am

Content removed, review completed.
Last edited by RickBoglehead on Mon Nov 26, 2018 1:40 pm, edited 1 time in total.
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carolinaman
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Re: Evaluation of Portfolio

Post by carolinaman » Wed Oct 17, 2018 7:45 am

I recommend consolidating your bond holdings into one fund that covers the market at a low cost. VBILX is an excellent choice as it is 50% govt/treasury and 50% investment Grade corporate. You apparently do not have to worry about capital gains with bonds so this should be an easy thing to do and simplifies your portfolio. Performance should be about the same with probably less risk due to higher govt bond holdings. If you believe in International bonds, just keep that as is.

FWIW, 65% equity in retirement when your living expenses will be coming from your portfolio for about 7 years until age 70, seems aggressive. You have some good funds, but they are also aggressive funds which means higher risk and higher rewards. You may experience a greater drop in them than average risk funds. If you can live off your bond funds until SS kicks in, you may be ok.

There are plenty of Bogleheads with similar AA, but I wonder how many have weathered a bear market while in retirement with that high an equity allocation. Just my opinion.

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RickBoglehead
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Re: Evaluation of Portfolio

Post by RickBoglehead » Wed Oct 17, 2018 7:54 am

carolinaman wrote:
Wed Oct 17, 2018 7:45 am
I recommend consolidating your bond holdings into one fund that covers the market at a low cost. VBILX is an excellent choice as it is 50% govt/treasury and 50% investment Grade corporate. You apparently do not have to worry about capital gains with bonds so this should be an easy thing to do and simplifies your portfolio. Performance should be about the same with probably less risk due to higher govt bond holdings. If you believe in International bonds, just keep that as is.

FWIW, 65% equity in retirement when your living expenses will be coming from your portfolio for about 7 years until age 70, seems aggressive. You have some good funds, but they are also aggressive funds which means higher risk and higher rewards. You may experience a greater drop in them than average risk funds. If you can live off your bond funds until SS kicks in, you may be ok.

There are plenty of Bogleheads with similar AA, but I wonder how many have weathered a bear market while in retirement with that high an equity allocation. Just my opinion.
Thanks for the observations. Bond portfolio can provide roughly 7 years of spending which would fit exactly, assuming zero change over the next few years (and they should grow). Plan on reducing equity percentage as we enter retirement mostly by spending assets, with significant ROTH holdings that may not need to happen.
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RickBoglehead
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Re: Evaluation of Portfolio

Post by RickBoglehead » Fri Oct 19, 2018 5:44 am

On 10/18 I liquidated my Vanguard Short-Term Investment-Grade Admiral (VFSUX), Vanguard Intermediate-Term Investment Grade (VFICX), and Vanguard Total Bond Market Index Admiral (VBTLX) positions in my taxable account to TLH. They represented ~10% of my total portfolio.

I plan on maximizing Ally's 1% bonus, occupying much of these funds through at least 1/16/19.

Very interested in other portfolio recommendations.
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dcarste
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Re: Evaluation of Portfolio

Post by dcarste » Fri Oct 19, 2018 4:08 pm

Due to all those taxable gains and so much of a portion in your taxable accounts for stocks, even though it would be nice to simplify to 3 fund portfolio, the stock mutual funds you hold are very good and low expense. I'd just work on getting rid of IBM over time first and foremost and put into bonds. I wouldn't worry about your stock holdings in taxable, just trickle out of very long period of time due to capital gains, I don't think your mutual fund holdings will perform better or worse than if you were able to consolidate it into the total stock market index fund, your funds are really good and stuck with capital gains. so no issues there.

I see issues with how much you want in stock allocation, very aggressive for age, you should reduce risk so your retirement plans don't get thrown back a few years, if the market dumps just before retirement. I'd take every holding in tax deffered accounts and get them into bond index funds, short or long term that hold at least 50% treasuries, and a duration under 7. Then if that isn't enough to move your stock allocation down enough, trickle out some stock out of the taxable account, at most I'd say at your age 50% stocks if you follow Mr. Bogle, age in bonds.

I'd also be holding 8 to 12 months in cash at ally bank high yield savings accounts on top of 50% bonds.

Just me, but I wouldn't risk delaying retirement when you are already on track and rode one of the biggest bull markets with a pretty high stock allocation for your age. I'd consider yourself blessed, and move on. That's just me though. You made it, why risk? even 60% bonds. Sorry I couldn't say to move to 3 fund portfolio due to taxable gains, but those mutual funds and bond funds are great anyways I don't see any problems. It'll just take 10 years to simplify as you spread taxable gains out. But I'd pay up some capital gains this year and next to get to my higher bond allocation, first by all tax deffered in bonds, then rest from IBM, then from others if you still cant get to 50 or 60% Bonds (don't add any new long term bonds...and bond fund I'd just use total us bond market index for new bond purchases.

Good luck, a little complicated in your situation due to captial gains, but still yea a lot of funds, but they are good and cheap, and I don't see them performing better or worse than the total stock market index. I think first getting bond allocation up most important soon, and then just slowly as you have to sell to fund retirement just pay the capital gains.

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