Help with Invest Plan/Asset Allocation - roughly 2 milion

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shilpat
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Joined: Tue Oct 23, 2018 2:06 pm

Help with Invest Plan/Asset Allocation - roughly 2 milion

Post by shilpat » Tue Oct 23, 2018 2:53 pm

Hello,

We are trying to consolidate our finances, formalize investments and plan for retirement in late 50s. We are currently 43 years of age. I have recently started researching on bogleheads. I am still learning.

Vanguard Advisor has proposed a plan for us. Would love to get your input on the plan. I have tweaked the plan based on my research and would love input on the tweaked plan as well.

Many Thanks to this wonderful community!


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Duckie
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Re: Help with Invest Plan/Asset Allocation - roughly 2 milion

Post by Duckie » Tue Oct 23, 2018 6:27 pm

shilpat, welcome to the forum.
shilpat wrote:Vanguard Advisor has proposed a plan for us. Would love to get your input on the plan. I have tweaked the plan based on my research and would love input on the tweaked plan as well.
Unless there is some problem with fees, I would make it a lot simpler:

49% VTI/VTSAX -- Complete US stocks
6% Various US play stocks (optional)
21% VXUS/VTIAX -- Complete international stocks
20% BND/VBTLX -- US bonds
4% VWIUX -- Muni bonds (optional)

typical.investor
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Re: Help with Invest Plan/Asset Allocation - roughly 2 milion

Post by typical.investor » Tue Oct 23, 2018 8:20 pm

Honestly, I don't see all that much difference between the plans, and can't really predict which will do best going forward.

I think it comes down to one question. Do you want to continue the allocation to individual stocks? If you find it rewarding to follow Square and interesting to assess its prospects, then go with your plan. Your 6% of individual holdings are unlikely to materially change the results.

By the way, I like Apple and Microsoft too. Not included much in typical value funds (including DFA's), but actually pretty attractive and two of the top four holdings in Schwab's FNDX (large cap fundamental index).

Longest term, simpler may be better if the stock picker and portfolio designer passes away first. But in the meantime, live your life.

shilpat
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Joined: Tue Oct 23, 2018 2:06 pm

Re: Help with Invest Plan/Asset Allocation - roughly 2 milion

Post by shilpat » Wed Oct 24, 2018 12:41 pm

Duckie wrote:
Tue Oct 23, 2018 6:27 pm
shilpat, welcome to the forum.
shilpat wrote:Vanguard Advisor has proposed a plan for us. Would love to get your input on the plan. I have tweaked the plan based on my research and would love input on the tweaked plan as well.
Unless there is some problem with fees, I would make it a lot simpler:

49% VTI/VTSAX -- Complete US stocks
6% Various US play stocks (optional)
21% VXUS/VTIAX -- Complete international stocks
20% BND/VBTLX -- US bonds
4% VWIUX -- Muni bonds (optional)

Thanks Duckie!
Your suggestions are helpful. What do you think of:
- Not investing in long term bonds
- increasing the allocation towards international small cap via VSS
- You do not suggest International bonds in your suggestion? Can you explain your thinking?
- Given the rising interest rate env, should the focus be on short term bonds.
- Does it make sense to keep some cash in CDs?

MotoTrojan
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Joined: Wed Feb 01, 2017 8:39 pm

Re: Help with Invest Plan/Asset Allocation - roughly 2 milion

Post by MotoTrojan » Wed Oct 24, 2018 12:46 pm

Duckie wrote:
Tue Oct 23, 2018 6:27 pm
shilpat, welcome to the forum.
shilpat wrote:Vanguard Advisor has proposed a plan for us. Would love to get your input on the plan. I have tweaked the plan based on my research and would love input on the tweaked plan as well.
Unless there is some problem with fees, I would make it a lot simpler:

49% VTI/VTSAX -- Complete US stocks
6% Various US play stocks (optional)
21% VXUS/VTIAX -- Complete international stocks
20% BND/VBTLX -- US bonds
4% VWIUX -- Muni bonds (optional)
Agreed. Vanguard used to set people up in a simple 3-fund but I'd wager they were seeing to many people leaving PAS and doing things on their own. It is sad but it seems they are now doing the advisor tactic of building a portfolio that is similar to a 3-fund in performance/risk but looks more complicated.

Do you have tax-advantaged accounts? If so, I'd put the bonds there and also consider a small-value tilt (I prefer the S&P600 via VIOV/IJS) but otherwise Total US and Total International, along with some bonds, is all you need.

Also short term bonds do not make sense unless you have short term needs. Decreasing bond NAV means increased yield, which is good in the long run.

shilpat
Posts: 13
Joined: Tue Oct 23, 2018 2:06 pm

Re: Help with Invest Plan/Asset Allocation - roughly 2 milion

Post by shilpat » Wed Oct 24, 2018 12:47 pm

typical.investor wrote:
Tue Oct 23, 2018 8:20 pm
Honestly, I don't see all that much difference between the plans, and can't really predict which will do best going forward.

I think it comes down to one question. Do you want to continue the allocation to individual stocks? If you find it rewarding to follow Square and interesting to assess its prospects, then go with your plan. Your 6% of individual holdings are unlikely to materially change the results.

By the way, I like Apple and Microsoft too. Not included much in typical value funds (including DFA's), but actually pretty attractive and two of the top four holdings in Schwab's FNDX (large cap fundamental index).

Longest term, simpler may be better if the stock picker and portfolio designer passes away first. But in the meantime, live your life.

I am a big fan of MSFT and apple and believe can improve returns by investmenting in some solid stocks like these. Costco is another one I like.
The key differences I tried to do were:
- increase international small cap holding via VSS
- increase US small cap holdings via VBR
- contribute to VPMAX which is a managed ( and extremely successful) fund , closed to general investors for higher returns.
- Reduce allocation to Long term bonds to zero
Are these not worth the effort and is it better to go simple?

Another question I have is it preferable to focus on intermediate than short or long term bonds and why?

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