Long Time Lurker - Portfolio Analysis

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Topic Author
Bogleman2
Posts: 4
Joined: Mon Jan 28, 2019 8:12 pm

Long Time Lurker - Portfolio Analysis

Post by Bogleman2 » Tue Mar 12, 2019 9:48 pm

Long time, first time.

Looking for some opinions about my portfolio. I don't use a financial advisor, so I've been winging it solo for a long time.



Emergency funds: More than 12 months of expenses
Debt: 30 year fixed rate mortgage $725,000 at 3.25% (House value $1.6M)
Tax Filing Status: Married Filing Jointly
Tax Rate: 20% Federal, 0% State
State of Residence: TN
Age: Him 47, Her 53
Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: 20% of stocks

Desired Retirement Age 60 for each of us
Combined Annual Income $450,000


Current retirement assets $2.2M

Taxable
21.3% cash (Vanguard Prime Money Market Fund)

His 401k
12.2% Vanguard Institutional Target Retirement 2035 Fund (VITFX) (0.09%)
Company match 4.5%

His Rollover IRA at Vanguard
2.7% Vanguard Mid-Cap Index Fund Admiral (VIMAX) (0.05%)
2.9% Vanguard Small-Cap Index Fund Admiral (VSMAX) (0.05%)
5.9% Vanguard Total International Stock Index Admiral (VTIAX) (0.11%)
15.7% Vanguard Total Stock Market Index Admiral (VTSAX) (0.04%)


Her 401k
1.4% Blackrock MSCI ACWI Ex-US IMI Index - M (0.11%)
1.6% Vanguard Extended Market (VIEIX) (0.06%)
8.8% Blackrock Equity Index T (S&P 500) (0.03%)
Company match is 4%


Her Rollover IRA at Vanguard
4.1% Vanguard Extended Market Index Admiral (VEXAX) (0.08%)
2.0% Vanguard Mid-Cap Index Fund Admiral (VIMAX) (0.05%)
4.7% Vanguard PRIMECAP Fund Admiral (VPMAX) (0.31%)
2.1% Vanguard Small-Cap Index Fund Admiral (VSMAX) (0.05%)
4.5% Vanguard Total International Stock Index Fund Admiral (VTIAX) (0.11%)
10.1% Vanguard Total Stock Market Index Fund Admiral (VTSAX) (0.04%)



Contributions

New annual Contributions
$19,000 his 401k (Employer match is about $6,000)
$19,000 her 401k (Employer match is about $7,000)
$6,000 her 401k Catch Up (Employer match is about $2,000)

$Variable taxable (Based on needs and fluctuating income)


Questions:
1. With a projection of $150K+ in annual expenses, is it possible to retire at 60?

2. Is my asset allocation appropriate, as we have been at 100% stocks through almost all of our investing lives?

Flyer24
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Re: Long Time Lurker - Portfolio Analysis

Post by Flyer24 » Tue Mar 12, 2019 10:54 pm

Way too aggressive for your age and assets in my humble opinion. I would be closer to 75/25 or 70/30 at a minimum.

miket29
Posts: 136
Joined: Tue Jun 20, 2017 9:07 pm

Re: Long Time Lurker - Portfolio Analysis

Post by miket29 » Tue Mar 12, 2019 11:08 pm

If you want to retire in a little over 10 years you are taking a lot of risk with that much in the market. Read https://awealthofcommonsense.com/2014/0 ... portfolio/ to see about 10 year rolling returns (you can probably find more updated numbers, but the gist is the same).

Why not save more money, putting it into index funds in a taxable account? You are saving $45K on an income of $450K, I think it could easily be $100K per year or $150K per year if you were really motivated to build up funds for retirement; people looking for FIRE save an even higher percentage than that.

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2pedals
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Joined: Wed Dec 31, 2014 12:31 pm

Re: Long Time Lurker - Portfolio Analysis

Post by 2pedals » Tue Mar 12, 2019 11:59 pm

Will your 30 year house loan be paid in full before age 60? Do you plan to retire in a 1.6+ million house? Do you have any kids that may want to go to college? Do you have a pension?

Off the cuff I say no. Your lifestyle is a bit rich with a savings of 2.2M and an income of 450k.

Topic Author
Bogleman2
Posts: 4
Joined: Mon Jan 28, 2019 8:12 pm

Re: Long Time Lurker - Portfolio Analysis

Post by Bogleman2 » Wed Mar 13, 2019 1:00 pm

2pedals wrote:
Tue Mar 12, 2019 11:59 pm
Will your 30 year house loan be paid in full before age 60? Do you plan to retire in a 1.6+ million house? Do you have any kids that may want to go to college? Do you have a pension?

Off the cuff I say no. Your lifestyle is a bit rich with a savings of 2.2M and an income of 450k.
Thank you for the reply.

The house will be paid off in the next 13 years.

I do plan on staying in my current home.

I don’t have any kids.

I don’t have a pension.


Regarding annual savings, the $45K pretax savings is the minimum that we save every year. This past year we saved an additional $100K over that, but that is not guaranteed to happen every year. Expenses are consistent around $130K per year. Income can fluctuate, but usually never less than $350K.

I know the asset allocation is too aggressive, but wanted others’ input.

Much appreciated.

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mhadden1
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Joined: Tue Mar 25, 2014 8:14 pm
Location: North Alabama

Re: Long Time Lurker - Portfolio Analysis

Post by mhadden1 » Wed Mar 13, 2019 1:06 pm

Regarding the funds you are using, along with Total Stock Market, I se extended mkt/mid/small funds - do you have a specific tilt you are trying to achieve? What is your reasoning?
Oh I can't, can I? That's what they said to Thomas Edison, mighty inventor, Thomas Lindberg, mighty flyer,and Thomas Shefsky, mighty like a rose.

Topic Author
Bogleman2
Posts: 4
Joined: Mon Jan 28, 2019 8:12 pm

Re: Long Time Lurker - Portfolio Analysis

Post by Bogleman2 » Wed Mar 13, 2019 1:44 pm

mhadden1 wrote:
Wed Mar 13, 2019 1:06 pm
Regarding the funds you are using, along with Total Stock Market, I se extended mkt/mid/small funds - do you have a specific tilt you are trying to achieve? What is your reasoning?

I like the extended market / mid-cap / small-cap tilt to my find selections. More risk, but more reward over the long term. These portions of my portfolio have been strong performers over the last 25 years.

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2pedals
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Joined: Wed Dec 31, 2014 12:31 pm

Re: Long Time Lurker - Portfolio Analysis

Post by 2pedals » Wed Mar 13, 2019 2:14 pm

Bogleman2 wrote:
Wed Mar 13, 2019 1:00 pm
2pedals wrote:
Tue Mar 12, 2019 11:59 pm
Will your 30 year house loan be paid in full before age 60? Do you plan to retire in a 1.6+ million house? Do you have any kids that may want to go to college? Do you have a pension?

Off the cuff I say no. Your lifestyle is a bit rich with a savings of 2.2M and an income of 450k.
Thank you for the reply.

The house will be paid off in the next 13 years.

I do plan on staying in my current home.

I don’t have any kids.

I don’t have a pension.


Regarding annual savings, the $45K pretax savings is the minimum that we save every year. This past year we saved an additional $100K over that, but that is not guaranteed to happen every year. Expenses are consistent around $130K per year. Income can fluctuate, but usually never less than $350K.

I know the asset allocation is too aggressive, but wanted others’ input.

Much appreciated.
If it was me.
I would reduce your risk to 70-60% stocks. Sell your debt in your house. You should be able find a "nice enough" house for a couple with 800k in TN. Rather than paying off the debt make your big shovel compound into the stock market index funds. With an income of 450k you should be able to save 200k/year. This would get you and a much better position for a very nice retirement and eliminate some real estate and stock market risk.

Monte Carlo Simulation

Topic Author
Bogleman2
Posts: 4
Joined: Mon Jan 28, 2019 8:12 pm

Re: Long Time Lurker - Portfolio Analysis

Post by Bogleman2 » Wed Mar 13, 2019 5:27 pm

2pedals wrote:
Wed Mar 13, 2019 2:14 pm
Bogleman2 wrote:
Wed Mar 13, 2019 1:00 pm
2pedals wrote:
Tue Mar 12, 2019 11:59 pm
Will your 30 year house loan be paid in full before age 60? Do you plan to retire in a 1.6+ million house? Do you have any kids that may want to go to college? Do you have a pension?

Off the cuff I say no. Your lifestyle is a bit rich with a savings of 2.2M and an income of 450k.
Thank you for the reply.

The house will be paid off in the next 13 years.

I do plan on staying in my current home.

I don’t have any kids.

I don’t have a pension.


Regarding annual savings, the $45K pretax savings is the minimum that we save every year. This past year we saved an additional $100K over that, but that is not guaranteed to happen every year. Expenses are consistent around $130K per year. Income can fluctuate, but usually never less than $350K.

I know the asset allocation is too aggressive, but wanted others’ input.

Much appreciated.
If it was me.
I would reduce your risk to 70-60% stocks. Sell your debt in your house. You should be able find a "nice enough" house for a couple with 800k in TN. Rather than paying off the debt make your big shovel compound into the stock market index funds. With an income of 450k you should be able to save 200k/year. This would get you and a much better position for a very nice retirement and eliminate some real estate and stock market risk.

Monte Carlo Simulation

Selling my home to downsize is not an option at this time. I like my house and can easily afford the monthly payment. I’m not interested in a “nice enough” house.

Wanderingwheelz
Posts: 41
Joined: Mon Mar 04, 2019 9:52 am

Re: Long Time Lurker - Portfolio Analysis

Post by Wanderingwheelz » Wed Mar 13, 2019 6:46 pm

Bogleman2 wrote:
Wed Mar 13, 2019 5:27 pm
2pedals wrote:
Wed Mar 13, 2019 2:14 pm
Bogleman2 wrote:
Wed Mar 13, 2019 1:00 pm
2pedals wrote:
Tue Mar 12, 2019 11:59 pm
Will your 30 year house loan be paid in full before age 60? Do you plan to retire in a 1.6+ million house? Do you have any kids that may want to go to college? Do you have a pension?

Off the cuff I say no. Your lifestyle is a bit rich with a savings of 2.2M and an income of 450k.
Thank you for the reply.

The house will be paid off in the next 13 years.

I do plan on staying in my current home.

I don’t have any kids.

I don’t have a pension.


Regarding annual savings, the $45K pretax savings is the minimum that we save every year. This past year we saved an additional $100K over that, but that is not guaranteed to happen every year. Expenses are consistent around $130K per year. Income can fluctuate, but usually never less than $350K.

I know the asset allocation is too aggressive, but wanted others’ input.

Much appreciated.
If it was me.
I would reduce your risk to 70-60% stocks. Sell your debt in your house. You should be able find a "nice enough" house for a couple with 800k in TN. Rather than paying off the debt make your big shovel compound into the stock market index funds. With an income of 450k you should be able to save 200k/year. This would get you and a much better position for a very nice retirement and eliminate some real estate and stock market risk.

Monte Carlo Simulation

Selling my home to downsize is not an option at this time. I like my house and can easily afford the monthly payment. I’m not interested in a “nice enough” house.
Retiring early often requires some sacrifices. My wife and I live in a really nice home that’s paid for and we were recently considering spending more to purchase a home in the $1.5 range, but we decided to stay put and retire earlier.

Early retirement is a pretty simple function of saving more by controlling your spending (a mortgage payment is spending, I don’t care what anyone says since a primary residence isn’t an investment to a rich person).

pascalwager
Posts: 1570
Joined: Mon Oct 31, 2011 8:36 pm

Re: Long Time Lurker - Portfolio Analysis

Post by pascalwager » Wed Mar 13, 2019 11:24 pm

Estrada study: Both fixed 100/0 and 60/40 have worked well for accumulation and retirement.

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