Taxable Investment Portfolio Construction Feedback

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Topic Author
boogiehead
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Joined: Wed Sep 27, 2017 11:45 pm

Taxable Investment Portfolio Construction Feedback

Post by boogiehead » Thu Aug 15, 2019 11:48 am

I sold my rental property earlier this year and received about 300K from the proceeds. I'm looking to construct a simple efficient taxable portfolio focused on "growth" with the proceeds since I'm about 20 years away from retirement and wanted to get some feedback on the portfolio breakdown below. I don't have the guts to lump sum :| as it'll probably keep me up at nights so I'm planning to DCA, however I was thinking with a slight twist, if the ETF price drops from 1 month to the next I will buy double the shares for a "discount" from the previous month if not I will buy the same number of shares (see example below)... I know this is a form of market timing, but to me it seems logical and will lower the risk? All feedback welcome, thanks in advance!

January $100 1000
February $85 2000
March $90 1000
April $95 1000
May $92 2000

VTI Total Stock Market 35
VXUS Total World Stock 25
VTEB Bond 20
VB Small Cap 10
VWO Emerging Market 10

magicrat
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Re: Taxable Investment Portfolio Construction Feedback

Post by magicrat » Thu Aug 15, 2019 11:54 am

Market timing is not logical and does not lower risk. Thousands of threads on the topic that you can search.

No idea what the numbers next to the months are.

80% equities is fine, though you are already nervous so that might be too much for you.

Your equity holdings are overlapping. Use Total World OR Total US + Total International. I see you have a small cap and EM tilt, which is fine but does not meet your objective of simplicity.

Tax-exempt bonds only if you marginal tax rate is high enough.

nix4me
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Re: Taxable Investment Portfolio Construction Feedback

Post by nix4me » Thu Aug 15, 2019 12:48 pm

Most of those don’t belong in a taxable account.

Topic Author
boogiehead
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Re: Taxable Investment Portfolio Construction Feedback

Post by boogiehead » Thu Aug 15, 2019 2:37 pm

nix4me wrote:
Thu Aug 15, 2019 12:48 pm
Most of those don’t belong in a taxable account.
Recommendations for alternatives?

livesoft
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Re: Taxable Investment Portfolio Construction Feedback

Post by livesoft » Thu Aug 15, 2019 2:43 pm

One can mix DCA and LS. I often read on this forum to Lump Sum 50% and then DCA the remaining 50% in 5% increments over the follow 10 months. And if there is really bad day, then also put one of those 5% increments in. That way, one will be fully invested in 10 months or less.

Studies show that LS will outperform a 12-month DCA about 66% of the time, but DCA outperforms the other 33%. And "outperform" is a sub-4% number. So if you do the 50% over 10 months, the average outperformance now gets reduced to under 2% which is rather small. Indeed, by investing today rather than 2 days ago, one already saved 3%. :twisted:

Your chosen investments are fine since they are among the typical investments used in taxable accounts. I would ignore nix4me's response.
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MoneyMarathon
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Re: Taxable Investment Portfolio Construction Feedback

Post by MoneyMarathon » Thu Aug 15, 2019 4:17 pm

magicrat wrote:
Thu Aug 15, 2019 11:54 am
Your equity holdings are overlapping. Total World OR Total US + Total International
VXUS is ex-US. It's Vanguards "Total International Stock ETF."

https://investor.vanguard.com/etf/profile/VXUS

The OP mistitled it.

MoneyMarathon
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Re: Taxable Investment Portfolio Construction Feedback

Post by MoneyMarathon » Thu Aug 15, 2019 4:19 pm

boogiehead wrote:
Thu Aug 15, 2019 2:37 pm
nix4me wrote:
Thu Aug 15, 2019 12:48 pm
Most of those don’t belong in a taxable account.
Recommendations for alternatives?
They're all fine in taxable.

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Sandtrap
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Re: Taxable Investment Portfolio Construction Feedback

Post by Sandtrap » Thu Aug 15, 2019 4:50 pm

You have a great plan.
There are other plans that are great plans.
But, what you have is also a great plan.

Have you considered a percentage to REIT's as a diversifier as well?

j
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retiredjg
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Re: Taxable Investment Portfolio Construction Feedback

Post by retiredjg » Thu Aug 15, 2019 5:05 pm

The "problem" with your plan, if there is one, is that it is a plan for just one account. It is better to piece your entire portfolio together - all the accounts together - than to just do it account by account.

Topic Author
boogiehead
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Re: Taxable Investment Portfolio Construction Feedback

Post by boogiehead » Thu Aug 15, 2019 5:48 pm

livesoft wrote:
Thu Aug 15, 2019 2:43 pm
One can mix DCA and LS. I often read on this forum to Lump Sum 50% and then DCA the remaining 50% in 5% increments over the follow 10 months. And if there is really bad day, then also put one of those 5% increments in. That way, one will be fully invested in 10 months or less.

Studies show that LS will outperform a 12-month DCA about 66% of the time, but DCA outperforms the other 33%. And "outperform" is a sub-4% number. So if you do the 50% over 10 months, the average outperformance now gets reduced to under 2% which is rather small. Indeed, by investing today rather than 2 days ago, one already saved 3%. :twisted:

Your chosen investments are fine since they are among the typical investments used in taxable accounts. I would ignore nix4me's response.
Thanks for that suggestion that sounds like another possibility and less complicated.

Topic Author
boogiehead
Posts: 118
Joined: Wed Sep 27, 2017 11:45 pm

Re: Taxable Investment Portfolio Construction Feedback

Post by boogiehead » Thu Aug 15, 2019 5:57 pm

Sandtrap wrote:
Thu Aug 15, 2019 4:50 pm
You have a great plan.
There are other plans that are great plans.
But, what you have is also a great plan.

Have you considered a percentage to REIT's as a diversifier as well?

j
I actually did.... in my first iteration I had VNQ instead of VB, but from what I've been gathering REIT's aren't tax efficient in taxable portfolios so I'm planning to have that tilt in my IRA account.

Topic Author
boogiehead
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Re: Taxable Investment Portfolio Construction Feedback

Post by boogiehead » Thu Aug 15, 2019 6:04 pm

retiredjg wrote:
Thu Aug 15, 2019 5:05 pm
The "problem" with your plan, if there is one, is that it is a plan for just one account. It is better to piece your entire portfolio together - all the accounts together - than to just do it account by account.
Thanks for the reminder I'm in the process of trying to sort out my Roth/IRA as well since its mixed with my old 401K rollover in which its all mutual funds that I want to convert to all ETFs since my Roth/IRA is ETFs to begin with.

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