Asset allocation tweaks

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Topic Author
Samy
Posts: 66
Joined: Mon Aug 13, 2007 7:05 pm
Location: Los Angeles

Asset allocation tweaks

Post by Samy » Mon Aug 12, 2019 3:00 pm

I am in the process of rolling over my 457 plan to IRA at Vanguard. The 457 had a lot of restrictions. But I will be in a better position to tweak my portfolio. But i am not sure how. My current allocations:

4% 40K emergency fund US IBOND
His Roth 4% VGSLX Vanguard reit
Her Roth 4% VTSAX Vanguard total stock market
Her IRA 6% VBTLX Vanguard Total Bond Market
His IRA 54% VBTLX
Taxable 12 VTIAX Total International
Taxable 20% VTSAX

Asset breakdown will be:
4% Emergency
60% Bond
12% International
24% US

1. Is this a good breakdown for recently retired folks?
2. I like REIT, should I increase my reit allocation?
3. VTIAX international seems not doing any thing. Should I consider VTWAX? or something else.
4.Am I set OK if I need tax harvesting in the future?

Silk McCue
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Joined: Thu Feb 25, 2016 7:11 pm

Re: Asset allocation tweaks

Post by Silk McCue » Mon Aug 12, 2019 3:49 pm

More information is needed to have folks provide you useful advice on the big picture questions.

Please update the post using the following format and the information requested.

https://www.bogleheads.org/wiki/Asking_ ... _questions

My first reaction is that your Asset Allocation is too conservative for a long retirement but that impression is made is in the absence of other critical information.

Cheers

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Peter Foley
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Location: Lake Wobegon

Re: Asset allocation tweaks

Post by Peter Foley » Mon Aug 12, 2019 3:53 pm

I'm not aware of your risk tolerance or you need to take risk, but I personally would want to be closer to 50/50 early in retirement.

before moving everything in the 457 plan I would check to see what their stable value fund pays. It can be a good diversifier for bonds.

You are fine if you need to do tax loss harvesting in the future. There are many alternatives to total stock market that do not constitute wash sales, an S&P 500 fund being an obvious example.

Topic Author
Samy
Posts: 66
Joined: Mon Aug 13, 2007 7:05 pm
Location: Los Angeles

Re: Asset allocation tweaks

Post by Samy » Mon Aug 12, 2019 6:19 pm

Here the post with more Info:

I am in the process of rolling over my 457 plan to IRA at Vanguard. The 457 is restrictive. I hope to be in a better position to tweak my portfolio. But i am not sure how. My current allocations:

4% emergency fund US IBOND Funded
Debt, 200k mortgae 2.75 fixed. Ends 2028, no other debts
Married filing jointly
Tax Bracket 22% and 8% for california
Portfolio high six digits, he is 69, she 6. I think my risk tolerance is moderate.

His Roth 4% Vanguard REIT VGSLX
Her Roth 4% Vanguard total stock market VTSAX
Her IRA 6% Vanguard Total Bond Market VBTLX
His IRA 54% Vanguard Total Bond Market VBTLX
Taxable 12% Vanguard Total International VTIAX
Taxable 20% Vanguard Total Stock Market VTSAX

Asset breakdown will be:
4% Emergency
60% Bond
12% International
24% US

Questions:

1. Is this a good breakdown for recently retired folks? Is it tax efficient?
2. I like REIT, should I increase my reit allocation?
3. VTIAX international seems not doing any thing. Should I consider VTWAX? or something else.
4. Am I set OK if I need tax harvesting in the future?

rkhusky
Posts: 6889
Joined: Thu Aug 18, 2011 8:09 pm

Re: Asset allocation tweaks

Post by rkhusky » Mon Aug 12, 2019 7:45 pm

Samy wrote:
Mon Aug 12, 2019 3:00 pm
4.Am I set OK if I need tax harvesting in the future?
Since you have VTSAX in taxable and an IRA, you will need to be careful about buying shares in the IRA within 30 days +- (for example through dividend payments), while also selling for a loss in taxable.

The AA looks fine. International hasn't been doing as well as US recently, but that could change in the future. Best to stay the course.

best2u
Posts: 83
Joined: Tue Jul 28, 2015 12:51 pm

Re: Asset allocation tweaks

Post by best2u » Mon Aug 12, 2019 8:49 pm

My experience with the Vanguard Real estate is that it can be more volatile than Total Stock Market funds. Be careful if you do not have a stomach for that sort of thing, and do not be surprised if it falls 70% when the market falls 50%. Which is what happened in 2007 recession. Could have been an aberration back then, and full disclosure I have some money invested in VNQ.
“There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest of them have to pee on the electric fence for themselves.” Will Rogers

Topic Author
Samy
Posts: 66
Joined: Mon Aug 13, 2007 7:05 pm
Location: Los Angeles

Re: Asset allocation tweaks

Post by Samy » Tue Aug 13, 2019 1:01 pm

thank you. very good points.

pkcrafter
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Re: Asset allocation tweaks

Post by pkcrafter » Tue Aug 13, 2019 2:55 pm

Samy, it isn't clear if you are doing this, but don't count the 4% emergency as part of asset allocation. REIT is 10% of equity and international is 30% of equity. Both are reasonable allocations as is the overall 40/60, but it is a minimum in effective equity exposure.

Are you retiring or recently retired? If so, what is your withdrawal rate?


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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