Tool to manage AA when investing?

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nasrullah
Posts: 188
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Tool to manage AA when investing?

Post by nasrullah » Tue Sep 10, 2019 11:12 am

Hello,

I'm looking for a tool to help manage asset allocation as part of my monthly investment cycle. Vanguard's portfolio testing tool allows you to enter hypothetical changes to the portfolio but it doesn't exactly fit my needs. Specifically with a target AA (including an International allocation) and an additional cash in amount I'd like to get something spit out that details exactly how much of each fund to purchase. The complicating factor for me right now is that I have outsized holdings in taxable accounts so I have to manage by Bond allocation with CA Munis (and in the Vanguard way this means three different funds). I'm hoping that someone can point me to a tool I'm missing with Google Search vs. falling down the Excel rabbit hole.

Thanks!

For what it's worth I want a 75/25 AA with 20% International, and the CA Munis allocated 30%/40%/30% for Short, Medium, and Long term.

Funds in Taxable Account(s)
VMLUX Vanguard Limited-Term Tax-Exempt Fund Admiral Shares
VCADX Vanguard California Intermediate-Term Tax-Exempt Fund Admiral Shares
VCLAX Vanguard California Long-Term Tax-Exempt Fund Admiral Shares
VTSAX Vanguard Total Stock Market Index Fund Admiral Shares
VTIAX Vanguard Total International Stock Index Fund Admiral Shares

Funds in Tax Advantaged Account(s)
VBTLX Vanguard Total Bond Market Index Fund Admiral Shares
VTABX Vanguard Total International Bond Index Fund Admiral Shares
VTSAX Vanguard Total Stock Market Index Fund Admiral Shares
VTIAX Vanguard Total International Stock Index Fund Admiral Shares
"We have a lot to do, and very little time, so we must work slowly." Liviu Ciulei | | Thanks vineviz (https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=134698) for the quote.

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Sandtrap
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Re: Tool to manage AA when investing?

Post by Sandtrap » Tue Sep 10, 2019 11:15 am

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Firecalc. Retirement. How long will your money last?
https://www.firecalc.com
Morningstar Instant Xray
http://www.morningstar.com/portfolio.ht ... Entry.aspx
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magicrat
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Re: Tool to manage AA when investing?

Post by magicrat » Tue Sep 10, 2019 11:15 am

I use Excel

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Wiggums
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Re: Tool to manage AA when investing?

Post by Wiggums » Tue Sep 10, 2019 11:17 am

magicrat wrote:
Tue Sep 10, 2019 11:15 am
I use Excel
I do the same. I buy and hold, so it is not time consuming or difficult to maintain.

dbr
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Re: Tool to manage AA when investing?

Post by dbr » Tue Sep 10, 2019 11:39 am

Wiggums wrote:
Tue Sep 10, 2019 11:17 am
magicrat wrote:
Tue Sep 10, 2019 11:15 am
I use Excel
I do the same. I buy and hold, so it is not time consuming or difficult to maintain.
And one more. This is the sort of thing spreadsheets are designed to do.

You have to do a little work to enter the data but you get the benefit of seeing exactly what you want to see and you can check that it is right.

anon_investor
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Re: Tool to manage AA when investing?

Post by anon_investor » Tue Sep 10, 2019 11:59 am

If you know how to do formulas in excel, it's the best tool by far. That would by my pick (it is what I do).

MotoTrojan
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Re: Tool to manage AA when investing?

Post by MotoTrojan » Tue Sep 10, 2019 12:03 pm

Google Sheets.

Can you help me understand why you need that bond allocation? Holding just the intermediate term would give you a similar exposure without needing 3 funds. Seems like a huge complexity improvement for no gain.

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Phineas J. Whoopee
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Re: Tool to manage AA when investing?

Post by Phineas J. Whoopee » Tue Sep 10, 2019 12:57 pm

HP-12C. Add 'em up then divide 'em.
PJW

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mhc
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Re: Tool to manage AA when investing?

Post by mhc » Tue Sep 10, 2019 3:19 pm

I know you said you wanted to avoid excel, but I also use excel. One Christmas break I sat down in front of the TV with my laptop and created a spreadsheet to manage my AA. I have been using the same spreadsheet for years now. I just manually enter my holdings, and the spreadsheet tells me what to do.

tesuzuki2002
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Re: Tool to manage AA when investing?

Post by tesuzuki2002 » Tue Sep 10, 2019 3:57 pm

Phineas J. Whoopee wrote:
Tue Sep 10, 2019 12:57 pm
HP-12C. Add 'em up then divide 'em.
PJW


:sharebeer :sharebeer

tesuzuki2002
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Re: Tool to manage AA when investing?

Post by tesuzuki2002 » Tue Sep 10, 2019 3:58 pm

mhc wrote:
Tue Sep 10, 2019 3:19 pm
I know you said you wanted to avoid excel, but I also use excel. One Christmas break I sat down in front of the TV with my laptop and created a spreadsheet to manage my AA. I have been using the same spreadsheet for years now. I just manually enter my holdings, and the spreadsheet tells me what to do.
I little work goes a LONG WAY!!! I recently updated mine to simple link to the export from Vanguard.... I can update it with the click of a button and the update is once and done!! Then I look at the numbers and decide if I should change anything.

It's a great activity with a bottle of wine!!!

Rudedog
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Re: Tool to manage AA when investing?

Post by Rudedog » Tue Sep 10, 2019 4:06 pm

I use Morningstar Portfolio X-ray, and X-ray interpreter.

livesoft
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Re: Tool to manage AA when investing?

Post by livesoft » Tue Sep 10, 2019 4:07 pm

I don't think such a tool is useful because no one needs to have their AA precisely perfect to better than about 2% to 5%. Sure, one could do the math to get things to within 0.001% based on the previous day's prices, but not for the current day after the purchases are made.

So I think the goal is idiotic. Yes, I wrote idiotic.

For me there are other considerations such as portfolio simplification, tax-loss harvesting, avoiding creating short-term redemption fees, avoiding oddball transactions, whether a particular investments had an RBD, upcoming distributions, etc.

Feel free to express disagreement, I won't mind at all.
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MotoTrojan
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Re: Tool to manage AA when investing?

Post by MotoTrojan » Tue Sep 10, 2019 4:12 pm

livesoft wrote:
Tue Sep 10, 2019 4:07 pm
I don't think such a tool is useful because no one needs to have their AA precisely perfect to better than about 2% to 5%. Sure, one could do the math to get things to within 0.001% based on the previous day's prices, but not for the current day after the purchases are made.

So I think the goal is idiotic. Yes, I wrote idiotic.

For me there are other considerations such as portfolio simplification, tax-loss harvesting, avoiding creating short-term redemption fees, avoiding oddball transactions, whether a particular investments had an RBD, upcoming distributions, etc.
Bob has $10K to invest from a bonus. Bob can either plug "10000" into a spreadsheet and have it tell him what fund(s) to buy, or he can pull out a calculator, find out roughly what his AA is by opening several different brokerages, and then know what fund(s) to buy. Really?

GrowthSeeker
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Re: Tool to manage AA when investing?

Post by GrowthSeeker » Tue Sep 10, 2019 4:13 pm

I use a google sheet with a list of stocks/funds that I have or keep track of; next column is share price; next is dividend percentage. These update automatically with current (delayed) numbers. I have no personal information on the google sheet, which lives in the cloud.

I have personal information on a LibreOffice Calc sheet, which lives on my computer’s local drive. A have a data tab which has the same list, in order, as the google sheet. I copy and paste one block of data from the google sheet to the LibreOffice Calc sheet. Then another tab with list of accounts, holdings of each account, number of shares etc, gets its data from the data tab.
Just because you're paranoid doesn't mean they're NOT out to get you.

vipertom1970
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Re: Tool to manage AA when investing?

Post by vipertom1970 » Tue Sep 10, 2019 4:21 pm

Excel for me.
Last edited by vipertom1970 on Wed Sep 11, 2019 12:34 am, edited 1 time in total.

livesoft
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Re: Tool to manage AA when investing?

Post by livesoft » Tue Sep 10, 2019 4:25 pm

MotoTrojan wrote:
Tue Sep 10, 2019 4:12 pm
Bob has $10K to invest from a bonus. Bob can either plug "10000" into a spreadsheet and have it tell him what fund(s) to buy, or he can pull out a calculator, find out roughly what his AA is by opening several different brokerages, and then know what fund(s) to buy. Really?
Bob probably has to think about whether the $10,000 goes in his taxable account, his 529 plans, his Roth IRA, his spouse's Roth IRA, his Maserati, his repair on his BMW, or his mortgage. Bob's' wife, Jane knows the money should go for her vacation.

How is a spreadsheet going to help him?

Bob should already know roughly what his asset allocation roughly is by using any of the tools Bob doesn't want to use as outlined in this thread: viewtopic.php?t=150267
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Topic Author
nasrullah
Posts: 188
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Re: Tool to manage AA when investing?

Post by nasrullah » Tue Sep 10, 2019 5:31 pm

tesuzuki2002 wrote:
Tue Sep 10, 2019 3:58 pm
mhc wrote:
Tue Sep 10, 2019 3:19 pm
I know you said you wanted to avoid excel, but I also use excel. One Christmas break I sat down in front of the TV with my laptop and created a spreadsheet to manage my AA. I have been using the same spreadsheet for years now. I just manually enter my holdings, and the spreadsheet tells me what to do.
I little work goes a LONG WAY!!! I recently updated mine to simple link to the export from Vanguard.... I can update it with the click of a button and the update is once and done!! Then I look at the numbers and decide if I should change anything.

It's a great activity with a bottle of wine!!!
Ugg - I'm going to have to copy this :sharebeer
"We have a lot to do, and very little time, so we must work slowly." Liviu Ciulei | | Thanks vineviz (https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=134698) for the quote.

Topic Author
nasrullah
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Joined: Fri Feb 10, 2017 11:40 am

Re: Tool to manage AA when investing?

Post by nasrullah » Tue Sep 10, 2019 5:39 pm

MotoTrojan wrote:
Tue Sep 10, 2019 12:03 pm
Can you help me understand why you need that bond allocation? Holding just the intermediate term would give you a similar exposure without needing 3 funds. Seems like a huge complexity improvement for no gain.
Because VBTLX is 30/40/30 and when I moved to Vanguard from Wealthfront PAS set me up 30/40/30 in Munis. Admittedly I never stopped for a second to question it, I just continued with it. With everything else I've been focused on I'm a little embarrassed now to realize that. Dropping down to just VTSAX, VTIAX, and VCADX in my taxable account would make my life soo much easier.

Seriously though, what do I lose / why would someone keep the 30/40/30 short/medium/long allocation of Munis? Any higher or lower risk that would be incurred as a result?
"We have a lot to do, and very little time, so we must work slowly." Liviu Ciulei | | Thanks vineviz (https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=134698) for the quote.

dbr
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Re: Tool to manage AA when investing?

Post by dbr » Tue Sep 10, 2019 5:46 pm

Spreadsheets are also helpful because they are storable records that can be put away, moved around, and recalled. That is good reason to keep data in a spreadsheet compared to operating a calculator that does not save anything or looking at an app on line unless the app also stores the data.

MotoTrojan
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Re: Tool to manage AA when investing?

Post by MotoTrojan » Tue Sep 10, 2019 11:21 pm

nasrullah wrote:
Tue Sep 10, 2019 5:39 pm
MotoTrojan wrote:
Tue Sep 10, 2019 12:03 pm
Can you help me understand why you need that bond allocation? Holding just the intermediate term would give you a similar exposure without needing 3 funds. Seems like a huge complexity improvement for no gain.
Because VBTLX is 30/40/30 and when I moved to Vanguard from Wealthfront PAS set me up 30/40/30 in Munis. Admittedly I never stopped for a second to question it, I just continued with it. With everything else I've been focused on I'm a little embarrassed now to realize that. Dropping down to just VTSAX, VTIAX, and VCADX in my taxable account would make my life soo much easier.

Seriously though, what do I lose / why would someone keep the 30/40/30 short/medium/long allocation of Munis? Any higher or lower risk that would be incurred as a result?
The only advantage I could imagine is an ability to adjust your duration (interest rate sensitivity) as you get into retirement, but that would make more sense if you started with only long and then added short.

Do you have large capital gains on the short/long? Probably so given rates, so you may be stuck, but this seems more like a ploy to overcomplicate things to make it seem like you are getting some value from Wealthfront.

bluquark
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Re: Tool to manage AA when investing?

Post by bluquark » Wed Sep 11, 2019 2:48 am

livesoft wrote:
Tue Sep 10, 2019 4:07 pm
For me there are other considerations such as portfolio simplification, tax-loss harvesting
Having a spreadsheet *is* portfolio simplification. Instead of literally collapsing multiple holdings into one, you virtually collapse them into "asset classes" without needing to disrupt reality.

* Tax-loss harvesting or tax gain avoidance is indeed one good reason to go down that path -- it's not always possible to do optimally without accumulating more holdings over time.

* It's also a natural extension to an IPS. Even better than a bunch of words explaining a policy, is an algorithm visualizing how well you have been following it, and exact instructions on the next steps to take.

I find it's a waste of time to make arbitrary judgement calls about what magnitude of benefit justifies adding portfolio complexity, so I don't. If it's more tax-efficient or more diversified to have an extra holding, I don't hesitate to add or keep it -- and notwithstanding the "wise" assertions of non-spreadsheeting Bogleheads, that doesn't cause me any headaches. On the contrary, investing is easier and more carefree when the additional pain of holding one more ETF or mutual fund is negligible.

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nasrullah
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Re: Tool to manage AA when investing?

Post by nasrullah » Wed Sep 11, 2019 10:39 am

MotoTrojan wrote:
Tue Sep 10, 2019 11:21 pm
Do you have large capital gains on the short/long? Probably so given rates, so you may be stuck, but this seems more like a ploy to overcomplicate things to make it seem like you are getting some value from Wealthfront.
About $8500 total between the two funds. I've been staring at this number a lot since last night. I'm extremely tempted to exit the positions.
"We have a lot to do, and very little time, so we must work slowly." Liviu Ciulei | | Thanks vineviz (https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=134698) for the quote.

MotoTrojan
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Re: Tool to manage AA when investing?

Post by MotoTrojan » Wed Sep 11, 2019 11:42 am

nasrullah wrote:
Wed Sep 11, 2019 10:39 am
MotoTrojan wrote:
Tue Sep 10, 2019 11:21 pm
Do you have large capital gains on the short/long? Probably so given rates, so you may be stuck, but this seems more like a ploy to overcomplicate things to make it seem like you are getting some value from Wealthfront.
About $8500 total between the two funds. I've been staring at this number a lot since last night. I'm extremely tempted to exit the positions.
I wouldn’t personally but you could turnoff dividend reinvestment and if they ever go negative tax-loss harvest them into the intermediate fund. You aren’t hurting because of this, just could be simpler. Paying taxes on $8500 for no benefit other than less complexity seems like a poor move.

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dratkinson
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Re: Tool to manage AA when investing?

Post by dratkinson » Wed Sep 11, 2019 3:04 pm

nasrullah wrote:
Tue Sep 10, 2019 11:12 am
Hello,

I'm looking for a tool to help manage asset allocation as part of my monthly investment cycle. Vanguard's portfolio testing tool allows you to enter hypothetical changes to the portfolio but it doesn't exactly fit my needs. Specifically with a target AA (including an International allocation) and an additional cash in amount I'd like to get something spit out that details exactly how much of each fund to purchase. The complicating factor for me right now is that I have outsized holdings in taxable accounts so I have to manage by Bond allocation with CA Munis (and in the Vanguard way this means three different funds). I'm hoping that someone can point me to a tool I'm missing with Google Search vs. falling down the Excel rabbit hole.

Thanks!

For what it's worth I want a 75/25 AA with 20% International, and the CA Munis allocated 30%/40%/30% for Short, Medium, and Long term.

Funds in Taxable Account(s)
VMLUX Vanguard Limited-Term Tax-Exempt Fund Admiral Shares
VCADX Vanguard California Intermediate-Term Tax-Exempt Fund Admiral Shares
VCLAX Vanguard California Long-Term Tax-Exempt Fund Admiral Shares
VTSAX Vanguard Total Stock Market Index Fund Admiral Shares
VTIAX Vanguard Total International Stock Index Fund Admiral Shares

Funds in Tax Advantaged Account(s)
VBTLX Vanguard Total Bond Market Index Fund Admiral Shares
VTABX Vanguard Total International Bond Index Fund Admiral Shares
VTSAX Vanguard Total Stock Market Index Fund Admiral Shares
VTIAX Vanguard Total International Stock Index Fund Admiral Shares

Your Vanguard account homepage.

I would think your Vanguard account homepage would tell you everything you need to know: bonds%, int'l stocks%, US stocks%.

Recall there is a way to map-in outside investments. Your external TA accounts would be included there.


Suggestion. Since your have VTSAX and VTIAX in both taxable and TA, you have slightly complicated your life if you want to TLH. Suggest using a single TDR fund in TA accounts, and discrete funds in taxable. Then fewer TLH problems.


Suggestion. Am assuming your are shooting for IT duration in taxable bonds. Can do that by owning only
VMLUX and VCLAX split 50/50. Can rebalance by visual inspection.


Suggestion. Or keep all three munis and reset desired allocation to 1/3 each. Can rebalance by visual inspection.



"Close" must be good enough.
--Assuming you don't have unlimited funds so can never make your investment match your desired allocation, so close must be good enough.
--Since the market will whipsaw your investment more than you will be able to, or care to compensate for, so close must be good enough.


Adding new money regularly is important---especially when starting out. Maintaining exact percentages is less so---unless you can foretell the future, in which case you should be buying lottery tickets.


A good thing. If you use a TDR fund in your TA accounts, it will under-represent your desired total bonds%, so your taxable account must over-represent your bonds%. But that can be a good thing as these bonds in taxable can be used as an extended tier of your EFs. (A larger EF is better than smaller.)


A good thing. Seem to recall that a TDR fund does rebalance often (daily?), so your only concern is to keep your taxable account balanced. One less thing to worry about---not needing to rebalance bonds in TA.



Excel function to tell you what you want to know.

Your major decision is trying to hit your AA (stocks/bonds). US/int'l is a minor decision. So the Excel function to test for this is:

=IF(current bonds% < desired bonds%, then "Buy bonds",
else IF(current int'l% < desired int'l%, then "Buy int'l stocks",
else "Buy US stocks")))



Idea: "Automate the Boring Stuff". A past forum topic suggested this book could teach us how to use Python scripts to work among applications to do a lot of work for us. Might be worth reading.

Recall one BH was planning to use it to automate the process of updating his monthly savings bond (paper bonds from Savings Bond Calculator, and electronic bonds from TD) information his Excel spreadsheet.



Disclosure. I've used Excel since my beginning (2005) to track/manage my investment. So far, so good.
--A "new contribution" column is provided beside each fund and used with "current balance" (column) to compute "planned balance" (column). My AA to each fund is computed from the "planned balance" (column).
--Any amount entered in the "new contribution" (column) caused above Excel function to run and I'm told to: "Buy bonds", "Buy int'l stock", or "Buy US stocks". So even if I enter an amount against the wrong fund, the Excel IF function nags me to correct any mistake.
--The current stock market run-up is more than my small monthly new contributions can compensate for by buying bonds, and since it's not tax-efficient to sell in taxable (and my Roth is all equities to "shoot for the moon"), so close must be good enough.


A saying from software development. “It's not possible to idiot-proof an automated tool. Why? Because idiots are so very creative.”

So no matter what tool you use (or create for yourself) it will not be able to handle every contingency, so you must be able to override its suggestions. In this case, a simpler tool can provide general guidance, then you override it as necessary.



Bottom line. Even if you could put your investments into perfect balance, they will be out of balance after the next trading day. And since it's not feasible for you to rebalance every day, so close must be good enough.

So contribute as much as you can, as often as you can.

And don't sweat the small stuff.
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

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