Please any advice? Asset allocation out of whack I think

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Topic Author
Bug
Posts: 3
Joined: Thu Jan 10, 2019 11:32 am

Please any advice? Asset allocation out of whack I think

Post by Bug » Fri Jan 11, 2019 7:01 pm

Hi everyone. What a great forum. I need some asset allocation advice. I’m 58 yrs old and single. Mortgage free and debt free with a primary residence worth about 300k. I own two other homes worth about 150k combined that I rent, but am thinking of selling those. Just tired of the landlord business. I was a realtor for 27 yrs. Since I retired from the business a few years ago.I’m currently making about 25k per year for the school Dist with my health ins 75% paid for. I live comfortably below my means by choice. All my funds are with vanguard except a 15k emergency fund. I will also get a very small pension when I retire along with ss when the time comes. Approx 8 yrs or so. I make max contributions to the Roth every year.


taxable account $325,500
Prime mm - 151k
Vg Tot stock index vtsax $177k

Roth IRA $208k
Mm- 7k
Vanguard div app. Vdadx 35k
Vg Tot stock index vtsax 45k
T Rowe price health sciences 50k
Akrex focus fund akrex 70k


Combined accounts total $536k
Vtsax 41%
Akrex13%
Mm29%
Vdadx 6.5%
T rowe price health science 9%

I know I should have bonds but what should they replace? I have no global either. I keep the money market just in case I want to buy a house to flip and I really don’t know where to invest it where it could stay somewhat liquid. Thanks in advance for any advice.

Also, the Bogleheads podcast has become my favorite

Bug

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nedsaid
Posts: 10933
Joined: Fri Nov 23, 2012 12:33 pm

Re: Please any advice? Asett allocation out of whack I think

Post by nedsaid » Sat Jan 12, 2019 10:14 am

You are about my age, I am age 59 and you are age 58. I recommend that you look at the Target Date Retirement 2025 funds for Vanguard, Fidelity, and T. Rowe Price. You can get good insight into the best thinking of the mutual fund industry They would recommend approximately 62% stocks and 38% bonds for someone your age. For example, Vanguard recommends 37% US Stocks, 25% International Stocks, 27% US Bonds, and 11% International Bonds. Vanguard will recommend more International investments than the other two. Last I checked, Fidelity has zero investment in International Bonds. That should give you a place for ideas.
A fool and his money are good for business.

james7777
Posts: 14
Joined: Fri Dec 18, 2015 8:29 pm

Re: Please any advice? Asset allocation out of whack I think

Post by james7777 » Sat Jan 12, 2019 1:32 pm

bug, Im your age and IMO you are taking way too much risk by having that ammount in stocks and no bonds. Im currently 52% bonds and 48% stocks and Im going to 30-40% stocks and 60%-70% bonds shortly. go here and put in SPY and AGG and look at your return %, worst years, and max drawdown for years 2004-2018...https://www.portfoliovisualizer.com/bac ... sisResults

from what I see the best allocation for anyone is 30-50% stocks and 50-70% bonds as far as a risk/reward ratio. Ill gladly give up 16% in returns to avoid a 30-55% loss of portfolio in any one year. the biggest bang for the buck is 30-50% stocks. ( I speak from experience, untill last month I was 100% stocks and lost lots of money way overestimating my risk tolerance) , NEVER will I go above 45-50% stocks)

Topic Author
Bug
Posts: 3
Joined: Thu Jan 10, 2019 11:32 am

Re: Please any advice? Asset allocation out of whack I think

Post by Bug » Sat Jan 12, 2019 3:06 pm

Thank you for the recommendations. When I do invest in bonds I’m wondering if all I need would be the vanguard total bond index for the bond portion of my portfolio just to simplify? And, is this a good time to invest in a bond fund. like I wrote earlier, I have never invested in bonds.

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nedsaid
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Joined: Fri Nov 23, 2012 12:33 pm

Re: Please any advice? Asset allocation out of whack I think

Post by nedsaid » Sat Jan 12, 2019 9:04 pm

Bug wrote:
Sat Jan 12, 2019 3:06 pm
Thank you for the recommendations. When I do invest in bonds I’m wondering if all I need would be the vanguard total bond index for the bond portion of my portfolio just to simplify? And, is this a good time to invest in a bond fund. like I wrote earlier, I have never invested in bonds.
The Vanguard Total Bond Market Index fund or Fidelity US Bond Index would be a great all-in-one bond investment. Also, FDIC insured Certificates of Deposit would be a good bond substitute as well.
A fool and his money are good for business.

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BL
Posts: 8559
Joined: Sun Mar 01, 2009 2:28 pm

Re: Please any advice? Asset allocation out of whack I think

Post by BL » Sun Jan 13, 2019 1:14 am

nedsaid wrote:
Sat Jan 12, 2019 9:04 pm
Bug wrote:
Sat Jan 12, 2019 3:06 pm
Thank you for the recommendations. When I do invest in bonds I’m wondering if all I need would be the vanguard total bond index for the bond portion of my portfolio just to simplify? And, is this a good time to invest in a bond fund. like I wrote earlier, I have never invested in bonds.
The Vanguard Total Bond Market Index fund or Fidelity US Bond Index would be a great all-in-one bond investment. Also, FDIC insured Certificates of Deposit would be a good bond substitute as well.
+1
I would add Vanguard's Prime Money Market; it is not FDIC insured, but has decent yield at 2.44% right now.
Maybe consider I-Bonds where you don't pay interest until you need to cash them in (or in 30 years).

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