Multi Account Re-balance Question

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Oak&Elm
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Multi Account Re-balance Question

Post by Oak&Elm » Tue Dec 04, 2018 9:18 am

As many do on this forum my DW and I have about 6 investment account's between work and personal. As per my IPS I allow myself to tweak with new money throughout the year but can only re-balance between Christmas and the end of of December. My IPS says to add a few % in bonds, with that would it be a mistake to hold 100% bonds (VBTLX - Total US Bond) in my DW account? The only reason I would do this is for the lower er of .04%. I would hold my stocks in other accounts, all of these would be tax advantaged. It seems a bit extreme but not if you consider all 6 accounts as the sum of the total. Does anyone else do this? BTW the other Total Bond Fund option I have is VBMFX with an er of .15%

J295
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Re: Multi Account Re-balance Question

Post by J295 » Tue Dec 04, 2018 9:20 am

That very modest expense differential would not impact my decision making process.

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goingup
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Re: Multi Account Re-balance Question

Post by goingup » Tue Dec 04, 2018 10:04 am

I know it's suggested to view all holdings as one portfolio. However, there is something rather unfair about having one spouse anchored with all bonds. I suggest a more equitable solution. As mentioned, the difference between .04% and .15% is minor.

megabad
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Re: Multi Account Re-balance Question

Post by megabad » Tue Dec 04, 2018 11:24 am

goingup wrote:
Tue Dec 04, 2018 10:04 am
I know it's suggested to view all holdings as one portfolio. However, there is something rather unfair about having one spouse anchored with all bonds. I suggest a more equitable solution. As mentioned, the difference between .04% and .15% is minor.
It is unfortunate that we have to think about things like this, but I also understand where you are coming from particularly when it comes to young marriages (or second marriages). In a very long marriage, personally I would lean toward just getting the lowest overall ER. If my marriage was shorter or newer, I might keep things a little more balanced.

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goingup
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Re: Multi Account Re-balance Question

Post by goingup » Tue Dec 04, 2018 11:38 am

megabad wrote:
Tue Dec 04, 2018 11:24 am
goingup wrote:
Tue Dec 04, 2018 10:04 am
I know it's suggested to view all holdings as one portfolio. However, there is something rather unfair about having one spouse anchored with all bonds. I suggest a more equitable solution. As mentioned, the difference between .04% and .15% is minor.
It is unfortunate that we have to think about things like this, but I also understand where you are coming from particularly when it comes to young marriages (or second marriages). In a very long marriage, personally I would lean toward just getting the lowest overall ER. If my marriage was shorter or newer, I might keep things a little more balanced.
I'm the financial planner in our 30 year union, but I still feel responsible for cultivating growth in all the retirement accounts. I'm not going to put myself in a position to say, at our year-end review, well my low-cost account gained 10% but your mediocre 401K plan lost 2% because you hold all the bonds. Not going to happen!

viz
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Re: Multi Account Re-balance Question

Post by viz » Tue Dec 04, 2018 8:15 pm

We have similar situation to OP and we look at the whole portfolio as one and not each individual account. It makes rebalancing simpler. In our case,
  • taxable has total market fund and ultra-short treasuries.
  • My 401K has total market and REITs
  • Spouse 401k has total bonds and international
  • both our roth's have SCV
Both our 401k and roth is with same provider & we have the same choices so ER is not a factor

her money is our money and my money is our money and that is how we have always operated & what matters is that our money is growing. + what happens when market crashes and her 401k outperforms OP's?

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Oak&Elm
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Re: Multi Account Re-balance Question

Post by Oak&Elm » Tue Dec 04, 2018 8:32 pm

Thanks for all the responses, we are like the last poster viz. We have been married almost 35 years and plan to stay that way. My only question was if you have an account with just bonds how do you realistically rebalance? Anyhow after today my bond allocation is a little closer to my desired AA, it all worked out in a ugly way.

viz
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Re: Multi Account Re-balance Question

Post by viz » Wed Dec 05, 2018 6:41 pm

Oak&Elm wrote:
Tue Dec 04, 2018 8:32 pm
Thanks for all the responses, we are like the last poster viz. We have been married almost 35 years and plan to stay that way. My only question was if you have an account with just bonds how do you realistically rebalance? Anyhow after today my bond allocation is a little closer to my desired AA, it all worked out in a ugly way.
Again, if you treat everything as one big account then when, in your wife's 401k has more money than your bond allocation calls for, you just add another asset class in that 401k account. I have a Google sheet to do the math for me.

Dandy
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Re: Multi Account Re-balance Question

Post by Dandy » Thu Dec 06, 2018 8:06 am

Within reason I suggest have a bit of both equities and fixed income in all accounts. You usually want some growth in all accounts and an all fixed income account has little prospect for growth other than additional contributions.

livesoft
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Re: Multi Account Re-balance Question

Post by livesoft » Thu Dec 06, 2018 8:11 am

We have a few accounts with only bonds in them. Those accounts are simple and need no transactions or even looking at since the monthly dividends are automatically re-invested.

We also have accounts that have only equities in them. Those accounts are simple and need no transactions since the quarterly dividends get automatically put in our checking account or re-invested.

One major account gets the rebalancing transactions. It is a tax-deferred account with both equities and bond funds. I have outlined all this in the following discussion: viewtopic.php?t=150267 where I also show that no spreadsheet is needed to do rebalancing.
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livesoft
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Re: Multi Account Re-balance Question

Post by livesoft » Thu Dec 06, 2018 8:14 am

Dandy wrote:
Thu Dec 06, 2018 8:06 am
Within reason I suggest have a bit of both equities and fixed income in all accounts. You usually want some growth in all accounts and an all fixed income account has little prospect for growth other than additional contributions.
I don't want growth in all accounts. I am doing Roth conversions piecemeal over the next few years and I would prefer that the source of the Roth conversions (tax-deferred accounts) have little growth, no growth, or even losses while the destination of the Roth conversions have tremendous growth and no losses.
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Dandy
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Re: Multi Account Re-balance Question

Post by Dandy » Thu Dec 06, 2018 9:20 am

I don't want growth in all accounts. I am doing Roth conversions piecemeal over the next few years and I would prefer that the source of the Roth conversions (tax-deferred accounts) have little growth, no growth, or even losses while the destination of the Roth conversions have tremendous growth and no losses.
Valid reason. I forgot to mention the equity negative growth possibility :oops:

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