What needs to be changed, Im lost?

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Topic Author
kclark
Posts: 3
Joined: Wed Sep 19, 2018 7:35 am

What needs to be changed, Im lost?

Post by kclark » Wed Jan 09, 2019 1:39 pm

I am 50 yrs old and max my Roth and will be doing catchup this year, so my breakdown to max out my $7000 for the year is paying $269.23 bi-weekly into 11 different Vanguard funds (im sure this is too many)?

VDADX - Vanguard Dividend Appreciation Index Fund Admiral Shares
VFIAX - Vanguard 500 Index Fund Admiral Shares
VGHCX - Vanguard Health Care Fund Investor Shares
VIGAX - Vanguard Growth Index Fund Admiral Shares
VLGSX - Vanguard Long-Term Treasury Index Fund Admiral Shares
VMGMX - Vanguard Mid-Cap Growth Index Fund Admiral
VMGRX - Vanguard Mid-Cap Growth Fund
VSGAX - Vanguard Small-Cap Growth Index Fund Admiral
VTSAX - Vanguard Total Stock Market Index Fund Admiral Shares
VTWSX - Vanguard Total World Stock Index Fund Investor Shares
VWUSX - Vanguard U.S. Growth Fund Investor Shares

I also have 3 Vanguard ETF's that are taxable that I force myself to DCA by buying 1 share each paycheck:
VBK - Vanguard Small Cap Growth
VOT - Vanguard Mid Cap Growth
MGK - Vanguard Mega Cap Growth

I feel like there is possibly too much overlap and not enough diversification, and I need to restructure SOMETHING in order to have better diversification. THIS IS WHERE IM LOST!

Aside from this I'm a Govt employee and max out my 401K/TSP contributing $19,000 along with doing $6000 catch up in addition. My allocation setup with my TSP looks weird because of changes I made to protect me when December downfall hit so therefore my stash is in 60%G/30%F/10%C, but am currently buying 70%C and 30%F in hopes of a rebound.

I do have an emergency fund with Capital One MM = $24,000 (6 months of my expenses)
I just recently got an Ally Investment account to buy stock but haven't dived into that yet because I feel something is missing with what I'm currently doing. Is there another step/area of investing I should be concentrating on besides what I have now?

bloom2708
Posts: 5237
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: What needs to be changed, Im lost?

Post by bloom2708 » Wed Jan 09, 2019 5:17 pm

Your Roth could have 1 or 2 funds.

VTWSX - Vanguard Total World Stock Index Fund Investor Shares

or

VTSAX - Vanguard Total Stock Market Index Fund Admiral Shares
VTIAX - Vanguard Total International Stock Market Index Fund Admiral

Many feel that 20 to 30% International (of your stock allocation) is fine. Total World holds a market weight holding of US and International all in one fund. Total US + Total International holds more stocks and the cost is a bit lower.

With the TSP you have the G fund. That is a great fund for your fixed income/bond portion. You don't say what your overall allocation is. Let's say you want to be 60/40 with 20% international.

Then if you look at your TSP + Roth + Taxable you want 48% US, 12% International and 40% Bond/fixed income.

Now it is like a mini-puzzle. Is your G fund balance ~40% of your total portfolio? If so, then taxable and Roth can be 100% stocks. If not, you can re-allocate a bit more to G fund and still leave Roth and Taxable as 100% stocks.

The 3 funds in taxable are all fine. You have the 3 components of the Total US market. Your percentages may not match the total market, but that probably isn't much of an issue. If you need more International to get to 12%, you could add Total International stock index to taxable.

Your gains/losses in those 3 funds would determine if you have a tax obligation if you sell (long or short term gains). No real reason to sell those at this point.

I would focus on exchanging funds (simplifying) in Roth and verifying your total portfolio percentages (whatever numbers you pick) are in line across your portfolio. Hopefully others add their thoughts.
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

Jack FFR1846
Posts: 8312
Joined: Tue Dec 31, 2013 7:05 am

Re: What needs to be changed, Im lost?

Post by Jack FFR1846 » Wed Jan 09, 2019 5:22 pm

All you need is VTSAX

Watch the JL Collins video taken last year at Google.

https://www.youtube.com/watch?v=T71ibcZAX3I
Bogle: Smart Beta is stupid

retiredjg
Posts: 34722
Joined: Thu Jan 10, 2008 12:56 pm

Re: What needs to be changed, Im lost?

Post by retiredjg » Wed Jan 09, 2019 5:35 pm

Is there another step/area of investing I should be concentrating on besides what I have now?
Yes, but it is not what you think.

Your statement that you sold to protect yourself in December indicates you are trying to time the market. It cannot be done successfully and reliably. Market timing will cause you to lose money. You will make more money if you stop doing it. Not even the professional can do it with any degree of reliability.

So what you did, in reality, is wait until your investments lost money and then you sold them. Now you are turning around and buying them again after the price has gone back up. This is called selling low and buying high. It is a huge investor mistake. Take some time to digest that. It is contrary to every instinct that investors have and it takes some time to realize it.

What to do instead? Invest in a stock to bond ratio that you can be satisfied with in the good times and the bad times as well. When the bad times come, you just keep buying. Don't sell, just keep buying. You will be buying assets at a lower price and you will reap the benefits when those cheap shares climb in value.

Here's a good place to get started understanding why market timing does not work.

https://www.bogleheads.org/wiki/Getting_started

Topic Author
kclark
Posts: 3
Joined: Wed Sep 19, 2018 7:35 am

Re: What needs to be changed, Im lost?

Post by kclark » Thu Jan 10, 2019 8:36 am

bloom2708 wrote:
Wed Jan 09, 2019 5:17 pm
Now it is like a mini-puzzle. Is your G fund balance ~40% of your total portfolio? If so, then taxable and Roth can be 100% stocks. If not, you can re-allocate a bit more to G fund and still leave Roth and Taxable as 100% stocks.

The 3 funds in taxable are all fine. You have the 3 components of the Total US market. Your percentages may not match the total market, but that probably isn't much of an issue. If you need more International to get to 12%, you could add Total International stock index to taxable.

Your gains/losses in those 3 funds would determine if you have a tax obligation if you sell (long or short term gains). No real reason to sell those at this point.

I would focus on exchanging funds (simplifying) in Roth and verifying your total portfolio percentages (whatever numbers you pick) are in line across your portfolio. Hopefully others add their thoughts.
No my G fund balance is 60% of my holdings (now), and just as you said, I plan to continue with the 3 EFT's in my taxable account.
Seems like the consensus is go with just 2 in my Roth: VTSAX & VTWSX, but what about capturing dividends in VDADX
(see my original post), I was thinking that something to have in a non-taxed Roth account?

bloom2708
Posts: 5237
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: What needs to be changed, Im lost?

Post by bloom2708 » Thu Jan 10, 2019 9:00 am

kclark wrote:
Thu Jan 10, 2019 8:36 am
No my G fund balance is 60% of my holdings (now), and just as you said, I plan to continue with the 3 EFT's in my taxable account.
Seems like the consensus is go with just 2 in my Roth: VTSAX & VTWSX, but what about capturing dividends in VDADX
(see my original post), I was thinking that something to have in a non-taxed Roth account?
Dividends are nothing magical. The price drops by the corresponding amount of the dividend. You do get additional fractional shares.

In taxable there is a tax effect because you pay tax on the dividends.

If the price is $100 and you get a $1 dividend, the price will be $99 + $1 dividend. If you re-invest, you have $100. If you spend the dividend, you have $99. Many good threads on dividends. Stock/fund prices are always moving so you might not even notice the decline in price.
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

GrowthSeeker
Posts: 293
Joined: Tue May 15, 2018 10:14 pm

Re: What needs to be changed, Im lost?

Post by GrowthSeeker » Thu Jan 10, 2019 9:17 am

When a stock or fund pays a 4% dividend in quarterly installments, and you automatically reinvest the dividends, it's a little like the stock or fund undergoes a 101:100 split every 3 months.
Just because you're paranoid doesn't mean they're NOT out to get you.

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