[Help me select a Three-Fund Portfolio for my retirement]

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LXEX55
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[Help me select a Three-Fund Portfolio for my retirement]

Post by LXEX55 » Tue Feb 05, 2019 10:51 am

[Moved into a new thread from: The Three-Fund Portfolio --admin LadyGeek]

Hello Sir, if you wish, a quick yes or no answer will do. If you wish to comment, all the better. Question: I am about to retire at age 63.5. Virtually all my savings are in my 401k which I will move over to a Vanguard IRA. In your opinion is the three portfolio allocation the single best place to park my money thru retirement until the day I check out? Understand, I have very little skill or interest in investing or similar financial matters. I have been bombarded with calls about annuities, money managers, etc. and am a bit confused and nervous. Thank you for your time. I did read your book and learned much.

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bertilak
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!

Post by bertilak » Tue Feb 05, 2019 2:45 pm

LXEX55 wrote:
Tue Feb 05, 2019 10:51 am
Hello Sir, if you wish, a quick yes or no answer will do. If you wish to comment, all the better. Question: I am about to retire at age 63.5. Virtually all my savings are in my 401k which I will move over to a Vanguard IRA. In your opinion is the three portfolio allocation the single best place to park my money thru retirement until the day I check out? Understand, I have very little skill or interest in investing or similar financial matters. I have been bombarded with calls about annuities, money managers, etc. and am a bit confused and nervous. Thank you for your time. I did read your book and learned much.
Quick Answer: YES

There are other possibilities that, depending on your circumstances, might be just as good. For example a Vanguard Lifestyle fund will get you a great one-fund solution, but may not be as flexible after RMDs kick in, or perhaps go to a four-fund solution (three-fund plus international bonds), but the complexity level is going up.

Stay away from the bombardment! Those things can only lead you down a twisty and expensive path. Complexity is their friend, not yours.

Also, be sure you also have your entire financial situation worked out as well: mortgage, insurance, health care, estate planning, all in addition to investment planning.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker, the Cowboy Poet

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ruralavalon
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Re: !

Post by ruralavalon » Tue Feb 05, 2019 4:00 pm

Congratulations on your imminent retirement.

bertilak wrote:
Tue Feb 05, 2019 2:45 pm
LXEX55 wrote:
Tue Feb 05, 2019 10:51 am
Hello Sir, if you wish, a quick yes or no answer will do. If you wish to comment, all the better. Question: I am about to retire at age 63.5. Virtually all my savings are in my 401k which I will move over to a Vanguard IRA. In your opinion is the three portfolio allocation the single best place to park my money thru retirement until the day I check out? Understand, I have very little skill or interest in investing or similar financial matters. I have been bombarded with calls about annuities, money managers, etc. and am a bit confused and nervous. Thank you for your time. I did read your book and learned much.
Quick Answer: YES

There are other possibilities that, depending on your circumstances, might be just as good. For example a Vanguard Lifestyle fund will get you a great one-fund solution, but may not be as flexible after RMDs kick in, or perhaps go to a four-fund solution (three-fund plus international bonds), but the complexity level is going up.

Stay away from the bombardment! Those things can only lead you down a twisty and expensive path. Complexity is their friend, not yours.

Also, be sure you also have your entire financial situation worked out as well: mortgage, insurance, health care, estate planning, all in addition to investment planning.
Either a three-fund portfolio, or a Vanguard LifeStrategy fund, or Vanguard Target Income Fund would be very simple and easy for you since "virtually all of [your] savings are in [your] 401k, and you "have very little skill or interest in investing".

Beware of anyone trying to sell you any type of investment or money management.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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LXEX55
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Re: The Three-Fund Portfolio

Post by LXEX55 » Fri Mar 15, 2019 9:39 am

My current 401k (Wells Fargo) offers a Stable Value fund. Would this be superior to a total bond fund in my 3 fund portfolio? My 401k plan allows me to remove some of my money (move to Vanguard) and leave some in the 401k. I am retiring end of March.

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bertilak
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Re: The Three-Fund Portfolio

Post by bertilak » Fri Mar 15, 2019 1:39 pm

LXEX55 wrote:
Fri Mar 15, 2019 9:39 am
My current 401k (Wells Fargo) offers a Stable Value fund. Would this be superior to a total bond fund in my 3 fund portfolio? My 401k plan allows me to remove some of my money (move to Vanguard) and leave some in the 401k. I am retiring end of March.
Does the stable value fund pay dividends? As much as the total bond fund?
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker, the Cowboy Poet

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LXEX55
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Re: The Three-Fund Portfolio

Post by LXEX55 » Fri Mar 15, 2019 3:05 pm

bertilak wrote:
Fri Mar 15, 2019 1:39 pm
LXEX55 wrote:
Fri Mar 15, 2019 9:39 am
My current 401k (Wells Fargo) offers a Stable Value fund. Would this be superior to a total bond fund in my 3 fund portfolio? My 401k plan allows me to remove some of my money (move to Vanguard) and leave some in the 401k. I am retiring end of March.
Does the stable value fund pay dividends? As much as the total bond fund?
The return rate is less than 2%.

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bertilak
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Re: The Three-Fund Portfolio

Post by bertilak » Fri Mar 15, 2019 3:41 pm

LXEX55 wrote:
Fri Mar 15, 2019 3:05 pm
bertilak wrote:
Fri Mar 15, 2019 1:39 pm
LXEX55 wrote:
Fri Mar 15, 2019 9:39 am
My current 401k (Wells Fargo) offers a Stable Value fund. Would this be superior to a total bond fund in my 3 fund portfolio? My 401k plan allows me to remove some of my money (move to Vanguard) and leave some in the 401k. I am retiring end of March.
Does the stable value fund pay dividends? As much as the total bond fund?
The return rate is less than 2%.
Vanguard's Total Bond fund (VBTLX) currently has an SEC yield of 3.11%
  • SEC Yield
    A non-money market fund's SEC yield is based on a formula mandated by the Securities and Exchange Commission (SEC) that calculates a fund's hypothetical annualized income as a percentage of its assets. A security's income, for the purposes of this calculation, is based on the current market yield to maturity (for bonds) or projected dividend yield (for stocks) of the fund's holdings over a trailing 30-day period. This hypothetical income will differ (at times, significantly) from the fund's actual experience; as a result, income distributions from the fund may be higher or lower than implied by the SEC yield.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker, the Cowboy Poet

Topic Author
LXEX55
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Re: The Three-Fund Portfolio

Post by LXEX55 » Wed Jun 12, 2019 7:30 pm

Sir, may I ask a fund specific question: Which one of Fidelity's Bond funds would best be suited for the three fund portfolio? I don't want to select the wrong one. I thank you for your time and expertise.

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LadyGeek
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Re: [Help me select a Three-Fund Portfolio for my retirement]

Post by LadyGeek » Wed Jun 12, 2019 7:43 pm

LXEX55 - In order to give appropriate advice, its best to have a single, dedicated thread for your questions. I moved your posts (and replies) into a single thread here.

May I suggest you post your portfolio information in this thread using the Asking Portfolio Questions format? It will make you think about the "big picture" while giving us the information we need to point you in the right direction.

If you have any questions, ask them here.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Silk McCue
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Re: The Three-Fund Portfolio

Post by Silk McCue » Wed Jun 12, 2019 7:48 pm

LXEX55 wrote:
Wed Jun 12, 2019 7:30 pm
Sir, may I ask a fund specific question: Which one of Fidelity's Bond funds would best be suited for the three fund portfolio? I don't want to select the wrong one. I thank you for your time and expertise.
Take a look at this Wiki page. It has the components for a Fidelity 3 fund portfolio in addition to other providers.

https://www.bogleheads.org/wiki/Three-fund_portfolio

Cheers

Dude2
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Re: [Help me select a Three-Fund Portfolio for my retirement]

Post by Dude2 » Wed Jun 12, 2019 10:35 pm

Confused about why, if rolling over the 401k to Vanguard, you are asking about Fidelity funds.

I don't have to think for more than half a second to give you the answer to what the three funds would be at Vanguard. The 3 fund portfolio consists of the Total Stock Market fund, Total International Stock Market fund, and the Total Bond Market fund.

A person call roll over their 401k into a Traditional IRA to Vanguard, and then you can specify what percentage of that money to place into each of the 3 funds. The percentage you select is completely at your discretion. The more bonds, the more conservative you might consider your portfolio to be.

Going forward, you can decide what funds to sell as you extract the money from your retirement account. If you have a percentage in mind to keep your allocations at, then it would make sense to sell the particular fund that will bring your percentages back into line.

The other method is to select an allocation from a Lifestyle fund. This will have a particular ratio that will not change, for example, 40% stock (40% of which is International), 60% bonds. Here, all you would have to do is take money out of this one fund when you needed to, and the fund itself is always at the ratio. There are different flavors of these types of funds as discussed here https://investor.vanguard.com/mutual-fu ... trategy/#/.

Getting an annuity is another option. I think most people on this forum believe it is not necessary, but it will make it so that you get a check for a particular amount on a regular basis.

Nobody can decide what is best for you but you. Seems to me that you have the right frame of mind, having read the Boglehead's Guide.

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