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New investor... Am I crazy?

Posted: Mon Oct 07, 2019 12:00 pm
by DublinGuy1975
Hey all,

Brand new to the forum, and still trying to absorb the wealth of information available here!

I recently cashed out on the family business, and I am trying to figure out a good strategy that will allow me to retire in the next year or two...

Please humor me, and of course, feel free to trash me, as I am really struggling with so many options!

Based on $4M available, here were my thoughts:
1. $1M on AKREX: certainly the 1.32% expense ratio seems daunting, but it seems to have a solid track return of 19%, 21% and 16% over the last 1, 3 and 5 years... Its worth 3 month return seems to be only around 8% which gives me some confident that they are able to handle downturns pretty effectively...
2. $1M on CSIEX: pretty similar story, returns maybe not quite as good, but lower expense ration as well...
3. $1M combined on VDIGX and VDADX: pretty strong, solid funds, low expense ratios, pretty solid diversification and hopefully mitigating some of the risk from #1 and #2
4. 500K on BMGAX: solid returns, wanted to have some investment on mid cap companies, the expense ration seems a little bit too high and its 3 month worst performance of almost 17% is more scary
5. 500K on OLGAX: solid returns as well, but similar story as #4

Ideally, at 43, I'd like to find some investments that can generate a solid 10% investment, and retire in 2 years at 45 with a solid portfolio... That's why I don't want to even think of retiring until after the next election when the economy and the uncertainty hopefully settles down one way or another, specially given a current situation where I am generating 200k income annually (gross)...

Any advice? am I totally off-base? Are my investments totally whacky?

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 12:49 pm
by ponyboy
I would look into the 3 fund portfolio. You're setting yourself up for a disaster.

And, what do you mean by solid returns? Past does not predict future performance. No one has a crystal ball. And, you'll spend a small fortune in expenses with those funds.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 12:52 pm
by retired@50
DublinGuy1975 wrote:
Mon Oct 07, 2019 12:00 pm
Hey all,

Brand new to the forum, and still trying to absorb the wealth of information available here!

I recently cashed out on the family business, and I am trying to figure out a good strategy that will allow me to retire in the next year or two...

Please humor me, and of course, feel free to trash me, as I am really struggling with so many options!

Based on $4M available, here were my thoughts:
1. $1M on AKREX: certainly the 1.32% expense ratio seems daunting, but it seems to have a solid track return of 19%, 21% and 16% over the last 1, 3 and 5 years... Its worth 3 month return seems to be only around 8% which gives me some confident that they are able to handle downturns pretty effectively...
2. $1M on CSIEX: pretty similar story, returns maybe not quite as good, but lower expense ration as well...
3. $1M combined on VDIGX and VDADX: pretty strong, solid funds, low expense ratios, pretty solid diversification and hopefully mitigating some of the risk from #1 and #2
4. 500K on BMGAX: solid returns, wanted to have some investment on mid cap companies, the expense ration seems a little bit too high and its 3 month worst performance of almost 17% is more scary
5. 500K on OLGAX: solid returns as well, but similar story as #4

Ideally, at 43, I'd like to find some investments that can generate a solid 10% investment, and retire in 2 years at 45 with a solid portfolio... That's why I don't want to even think of retiring until after the next election when the economy and the uncertainty hopefully settles down one way or another, specially given a current situation where I am generating 200k income annually (gross)...

Any advice? am I totally off-base? Are my investments totally whacky?
Regarding your proposed funds and their expense ratios...
1. AKREX @ 1M = $13,200 / year
2. CSIEX @ 1M = $10,100 / year
3. VDIGX & VDADX @ 500K each = $1,100 + $400 = $1,500 / year
4. BMGAX @500K = $6,300 / year
5. OLGAX @ 500K = $5,300 / year

Add it all up and you'll pay $36,400 per year in expense ratios.

I'd rather see you put 4M into (VTSAX) Vanguard Total Stock Market Fund and pay $1,600 per year. I don't think your expectation of "solid 10%" is rational. The minute you start relying on unrealistic assumptions you've lost the game. Also, you make no mention of bonds at all... Is this on purpose? Best of luck.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 1:00 pm
by muffins14
I would argue that expecting the 10% return is indeed totally off base. It would be more prudent choose a more standard portfolio and to either a) relax your expectation of only working 2 more years or b) relax your desire for 200k income, if their portfolio will be the only source.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 1:05 pm
by Thegame14
I think he means that he currently makes $200K in income gross, not he is looking for a $200K per year return on his portfolio.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 1:12 pm
by BuckyBadger
What you are suggesting isn't the sort of portfolio usually recommended on this forum. I would recommend a three fund "lazy" portfolio consisting of Total US Stock, Total International Stock, and Total US Bonds in a ratio that suits your willingness and ability to take risk.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 1:16 pm
by bertilak
Not crazy but misguided.

Cherry picking past returns is asking for disappointment. Especially using such costly (high ER) funds. The ERs will suck you dry as your hoped-for returns don't show up, or the market takes a nosedive.

You have a ton of money. Don't get greedy or you might end up with half a ton and on the lookout for a new strategy, but with much less to implement it.

Capital preservation should be high on your list of priorities.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 1:19 pm
by greg24
To be honest, your proposed portfolio basically goes against the belief system of this board.

This would be a good place to get started:
https://www.bogleheads.org/wiki/Getting_started

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 1:30 pm
by DublinGuy1975
Thanks guys for the feedback!
Maybe I am overthinking this and trying to overcomplicate things... I did start with the basic thinking of putting it all in one index fund (something like VTSAX that was mentioned or something similar)... but I also feel like I am young enough and not really needing to quit work at this time, so maybe I should try to invest in something potentially a little bit more risky but with higher upside...
Granted yes, past returns mean nothing about what future returns will be, and that’s always a good reminder, specially as the returns aren’t guaranteed but the fund expenses are lol!

So maybe an index fund or the traditional 3 fund portfolio is what I should stick to... thanks for grounding me!

With that said, VTSAX is one of the largest funds in the world... any additional recommendations? Or are they all ultimately similar and I should again not try to overthink?

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 1:49 pm
by GLState
CSIEX has a 4.75% load.
OLGAX has a 5.25% load.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 2:27 pm
by sd323232
DublinGuy1975 wrote:
Mon Oct 07, 2019 1:30 pm
Thanks guys for the feedback!
Maybe I am overthinking this and trying to overcomplicate things... I did start with the basic thinking of putting it all in one index fund (something like VTSAX that was mentioned or something similar)... but I also feel like I am young enough and not really needing to quit work at this time, so maybe I should try to invest in something potentially a little bit more risky but with higher upside...
Granted yes, past returns mean nothing about what future returns will be, and that’s always a good reminder, specially as the returns aren’t guaranteed but the fund expenses are lol!

So maybe an index fund or the traditional 3 fund portfolio is what I should stick to... thanks for grounding me!

With that said, VTSAX is one of the largest funds in the world... any additional recommendations? Or are they all ultimately similar and I should again not try to overthink?
More risk doesnt not mean more gains. Most active hedge funds do not beat VTSAX or SP500.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 2:35 pm
by frcabot
GLState wrote:
Mon Oct 07, 2019 1:49 pm
CSIEX has a 4.75% load.
OLGAX has a 5.25% load.
There are usually a ton of ways to get around a load, including putting in enough money or buying through a broker that has an NTF network.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 2:35 pm
by Ob81
Op, my suggestion is that you don’t make any financial moves for at least 60 days while you learn. Parking the money is better than the loads and the fees that you are setting yourself up for. You could afford a full-time live-in maid with the amount of fees you would be paying.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 2:36 pm
by bgf
DublinGuy1975 wrote:
Mon Oct 07, 2019 1:30 pm
Thanks guys for the feedback!
Maybe I am overthinking this and trying to overcomplicate things... I did start with the basic thinking of putting it all in one index fund (something like VTSAX that was mentioned or something similar)... but I also feel like I am young enough and not really needing to quit work at this time, so maybe I should try to invest in something potentially a little bit more risky but with higher upside...
Granted yes, past returns mean nothing about what future returns will be, and that’s always a good reminder, specially as the returns aren’t guaranteed but the fund expenses are lol!

So maybe an index fund or the traditional 3 fund portfolio is what I should stick to... thanks for grounding me!

With that said, VTSAX is one of the largest funds in the world... any additional recommendations? Or are they all ultimately similar and I should again not try to overthink?
i think the most important thing for you to do is determine how much you want in stocks, bonds, and cash.

once you decide that, put your stock allocation in either a US total market or SP500 fund. or if you want international stocks you can add those as well.

those decisions are not as important as your overall allocation between stocks and bonds.

a poor decision would be to keep those expensive high load funds.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 2:38 pm
by FrugalConservative
DublinGuy1975 wrote:
Mon Oct 07, 2019 12:00 pm
Hey all,

Brand new to the forum, and still trying to absorb the wealth of information available here!

I recently cashed out on the family business, and I am trying to figure out a good strategy that will allow me to retire in the next year or two...

Please humor me, and of course, feel free to trash me, as I am really struggling with so many options!

Based on $4M available, here were my thoughts:
1. $1M on AKREX: certainly the 1.32% expense ratio seems daunting, but it seems to have a solid track return of 19%, 21% and 16% over the last 1, 3 and 5 years... Its worth 3 month return seems to be only around 8% which gives me some confident that they are able to handle downturns pretty effectively...
2. $1M on CSIEX: pretty similar story, returns maybe not quite as good, but lower expense ration as well...
3. $1M combined on VDIGX and VDADX: pretty strong, solid funds, low expense ratios, pretty solid diversification and hopefully mitigating some of the risk from #1 and #2
4. 500K on BMGAX: solid returns, wanted to have some investment on mid cap companies, the expense ration seems a little bit too high and its 3 month worst performance of almost 17% is more scary
5. 500K on OLGAX: solid returns as well, but similar story as #4

Ideally, at 43, I'd like to find some investments that can generate a solid 10% investment, and retire in 2 years at 45 with a solid portfolio... That's why I don't want to even think of retiring until after the next election when the economy and the uncertainty hopefully settles down one way or another, specially given a current situation where I am generating 200k income annually (gross)...

Any advice? am I totally off-base? Are my investments totally whacky?
Zero chance I would invest in AKREX or CSIEX or any of the others you stated. THose expense ratios are much too high and they wont outperform the market in the long term. WHy even consider a loaded fun, yikes.

You have much to learn and are very wet behind the ears. You havent been reading enough on this forum to be honest.

Good luck getting 10% as well.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 2:40 pm
by goodenyou
I would highly suggest you continue to read and follow the information on this board more closely. You are still what most seasoned Bogleheads would consider ill-informed and misguided. You are reaching for winning mutual funds based on recent history. That is one, if not the biggest, cardinal mistake of investing. The overarching parable in this forum is that slow and steady wins the race...you know tortoise and hare. If you think you are a different tortoise, you will learn a very costly lesson. Pick low cost index funds and be patient.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 2:40 pm
by frcabot
To OP, look at underlying holdings of the mutual funds and see what the outperformance is being generated by. The more money you have, the more money high ERs will cost you. If you want to try to outperform the market, you could also invest directly in the underlying stock holdings and save yourself the ER, which as others pointed out amounts to tens of thousands of dollars a year. Many on this board will counsel you not to chase performance, though—as you’ve seen from the replies thus far.

It looks like AKRAX only has 28 holdings—wow! So it’d be very easy to just buy the 28 stocks directly and save yourself the 1%+ ER. By the way, it’s easy to outperform (or underperform) when you’re not very diversified.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 2:48 pm
by alex_686
DublinGuy1975 wrote:
Mon Oct 07, 2019 1:30 pm
... but I also feel like I am young enough and not really needing to quit work at this time, so maybe I should try to invest in something potentially a little bit more risky but with higher upside...
The easiest way to increase your risk / return profile is to increase your equity allocation in your asset allocation. Note, anything about 70% to 80% is probably counterproductive. Oddly, by increasing your risk your increase your volatility, and that volatility drag can actually produce worse results. Just think about somebody who loaded up on equities just before the dot.com bust or the 2008 crisis.

There are some cheap ways to increase risk. Don't pay off your mortgage on your home - that is a modest form of leverage. There are also value, small cap, and momentum styles that are passive and might work. These are always hotly debated on this forum.

Alas, any other reasonable choice to increase your risk/return profile requires time and skill to pull off. Rental properties is a popular one. I might also suggest investing in individual stocks. I personally think that this is a easier path then trying to pick winning mutual funds. Note, I am not saying that picking individual stocks is easy, but more highlighting the difficulty of evaluating a funds and managers - which I did in a former job.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 2:59 pm
by Beefriendly
Two cents from a person who retired at 49:
1. heed the advice above, and
2. hang out on the forum more.
Do your retirement goals require more or less spending? How is your risk tolerance? With the current portfolio how would a negative return affect your financial and emotional health? Do you have other sources of income?
Kudos to you for reaching out to this really grounded group for advice. You have opened the the door to discovering a prosperous future.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 3:00 pm
by k3vb0t
alex_686 wrote:
Mon Oct 07, 2019 2:48 pm
DublinGuy1975 wrote:
Mon Oct 07, 2019 1:30 pm
... but I also feel like I am young enough and not really needing to quit work at this time, so maybe I should try to invest in something potentially a little bit more risky but with higher upside...
The easiest way to increase your risk / return profile is to increase your equity allocation in your asset allocation.
+1

OP you are associating high expense ratios as increasing your risk. That’s not how most here or anywhere would associate increasing risk.

A majority of your risk is based on your asset allocation. Sure you can pick a highly specialized niche fund that charges a high ER and increase risk, but a majority of that risk would still be the holdings of the fund and not the ER.

I agree with the other replier who said to park the cash while you think things through. I think with enough reading you’ll come to the conclusion of Bogle — to not try to buy the needle in the haystack, just buy the whole haystack. This boils your decision making down to the cheapest way to hold your target asset allocation.

Just think. At $4m plus current income of $200k, you’ve won the game. No need to get fancy. Pick your AA, buy whole haystacks of that AA, and enjoy life... while saving tens of thousands of dollars in expense ratio fees.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 3:11 pm
by acshen
Honestly your first post reeks of someone who was pitched a bunch of funds by a "registered financial advisor" who is looking to take advantage of you.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 3:17 pm
by Tal-
Welcome aboard. And congrats on your business!!!

I have a few thoughts:

1: Stick with index funds. No matter your asset alloation, risk, destired return, retirment status, etc. - Index Funds should be 80%-100% of your investments.

2: It's hard to say your corret asset allocation (stocks vs bonds) based on this conversation, but generally speaking, I wouldn't invest 100% of your investments in stocks. At the age of 43, targeting retirement in 2 years, I'd suggest something like 70% stocks and 30% bonds. But the most important things about your asset allocation is that you don't tinker with it when stocks shoot up or crash! The right allocation is the right allocation regardless of market conditions...

3: I really really like that you're waiting for two years before possibly retiring. I also think that two years is a reasonable goal - though it's hard to say for sure without exploring the other relevant info (debt, desires, taxes, etc. etc. etc.).

4: Yes - you're crazy to expect 10% returns. :)

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 3:56 pm
by BoglePaul
1) Funds have very high fees (as mentioned)
2) Some of the funds have a fee to purchase (load) (as mentioned)
3) The funds payout large capital gains distributions every year: (14% for OLGAX in 2018, which is taxed at your high tax bracket)

4) The co-manager of AKREX departed in May
(consider a morningstar.com trial or access morningstar through your library for a detailed fund analysis).

I feel a vanguard managed account (.30% fee) might be a better place to start. The ETFs are also tax efficient.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 4:05 pm
by DublinGuy1975
acshen wrote:
Mon Oct 07, 2019 3:11 pm
Honestly your first post reeks of someone who was pitched a bunch of funds by a "registered financial advisor" who is looking to take advantage of you.
Haha! That made me laugh! Unfortunately I got burned by a financial advisor early in my career and I have stayed away from them ever since...

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 4:13 pm
by DublinGuy1975
Thanks all for your advice! It's definitely great to get feedback from this community and to get challenged by more experienced investors!

I am not necessarily worried about loads on the funds right now, as the amount I plan to invest usually lets you get past most of the loads, but still, definitely good to keep in mind. You all make a great point about the fees though, as they are, in a way, an automatic loss/reduction in your earnings, so I have to take them into account in addition to the overall return (and of course their impact on compounding too)...

I am definitely not going to rush into these investments until I am confident on what to invest on (and some of these funds also charge 1% if you try to sell within the first 90 days, which encourages me to not rush for sure)...

I like the idea of of investing 70-30 in stock vs bond index funds and that's probably the way to go...

VTSAX seems to be a well supported fund by folks in this forum, but it would be great to see if there are any good recommended bond funds by the community.

Thanks all, I really appreciate it!

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 4:29 pm
by Tamarind
DublinGuy1975 wrote:
Mon Oct 07, 2019 4:13 pm
I like the idea of of investing 70-30 in stock vs bond index funds and that's probably the way to go...

VTSAX seems to be a well supported fund by folks in this forum, but it would be great to see if there are any good recommended bond funds by the community.
That is definitely the way to go. Having a bigger concern of money to invest doesn't mean you need to do anything different (read fancier or more expensive). On the contrary, since fees are percentages, making mistakes like high ER for no better return is a more expensive mistake for you than it would be for me. K.I.S.S and spend your time on more interesting things!

70/30 send like a reasonable allocation.

I like Vanguard Total Bond (VTBLX). Everything you need in one near and cheap package.

I also recommend VTIAX (total international) for between 25-50% of your stock portion (i.e 17-35% of total), so you get exposure to global markets, not just US.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 4:32 pm
by retired@50
DublinGuy1975 wrote:
Mon Oct 07, 2019 4:13 pm
Thanks all for your advice! It's definitely great to get feedback from this community and to get challenged by more experienced investors!

I am not necessarily worried about loads on the funds right now, as the amount I plan to invest usually lets you get past most of the loads, but still, definitely good to keep in mind. You all make a great point about the fees though, as they are, in a way, an automatic loss/reduction in your earnings, so I have to take them into account in addition to the overall return (and of course their impact on compounding too)...

I am definitely not going to rush into these investments until I am confident on what to invest on (and some of these funds also charge 1% if you try to sell within the first 90 days, which encourages me to not rush for sure)...

I like the idea of of investing 70-30 in stock vs bond index funds and that's probably the way to go...

VTSAX seems to be a well supported fund by folks in this forum, but it would be great to see if there are any good recommended bond funds by the community.

Thanks all, I really appreciate it!
The Vanguard Total Bond Market Index VBTLX is a decent place to start. Expense ratio = .05%

If you want to stay away from any long term bond exposure you can isolate your holdings to short term and intermediate term bonds as well by using the Vanguard indexes for these portions of the bond market. VBILX VBIRX. Best of luck.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 4:42 pm
by Sic Vis Pacem
I'm going to make the counterintuitive suggestion that you get off these forums (for now). This forum can be a bit like drinking from a firehose unless you are grounded in the underlying theories generally favored here.

What you need is a primer on index fund investing, not answers to specific questions at this point. In my humble opinion, that's best done with a good old fashioned book. I'd suggest you start with the Boglehead's Guide to Investing. The book is a comprehensive overview of the theory animating this forum. As you're eyeing retirement, you may want to also read the Boglehead's Guide to Retirement Planning.

When you're done with those, come back and peruse the excellent forum wiki. Read a few more of the books on the suggested reading list. Decide if you're convinced on the theory, and if not, come to this forum for clarity. (Note: use the search box in the upper right before a new post, as there is a very good chance your question has been asked and the answer posed, challenged, defended, analogized, examined, and otherwise debated by caring, intelligent individuals).

Once you've done that, come back and post away.

And until then... there's no rush. The money can sit in an interest generating account or maybe a 50/50 balanced fund. You have acquired a fortune by any standards and the biggest risk to it at this point appears to be your appetite for returns.

Welcome to the forum. You're in good hands.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 6:57 pm
by k3vb0t
Also check out the wiki about an IPS, 3 fund portfolio, etc. Determine what, if any, international exposure you want.

The common funds and their ETF equivalents:
VTSAX/VTI - Total stock market
VTIAX/VXUS - Total international stock market
VBTLX/BND - Total Bond market

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 7:23 pm
by ivk5
DublinGuy1975 wrote:
Mon Oct 07, 2019 4:13 pm
VTSAX seems to be a well supported fund by folks in this forum, but it would be great to see if there are any good recommended bond funds by the community.
it does not appear that you have done much reading here yet.

https://www.bogleheads.org/wiki/Getting_started

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 8:39 pm
by rkhusky
OP should also consider Vanguard Int Tax Exempt and/or a state-specific TE fund for a bond fund in a taxable account.

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 11:38 pm
by bigROI
I would split the money and run a :

2mill VTI(40%), VXUS(20%), BND(30%), BNDX(10%)
and
2mill VPMAX(40%), VZICX (20%), BNDW (40%)

See what one wins.

find a good fee only CFP to help strategize a trust, tax planning, will, insurance (umbrella ect..) and all the other things you should do to preserve your capital

Re: New investor... Am I crazy?

Posted: Mon Oct 07, 2019 11:44 pm
by MotoTrojan
If you need/want more risk then just be 100% equity, perhaps with some small-value or other higher risk tilt. What you’re proposing is crazy in my humble opinion.

Re: New investor... Am I crazy?

Posted: Tue Oct 08, 2019 4:54 am
by BoglePaul
Yes, VWIUX for the bond fund.

Re: New investor... Am I crazy?

Posted: Tue Oct 08, 2019 6:23 am
by oldcomputerguy
I'll second the recommendations above to step back.

When I first began investing, I read around on some web sites and thought I knew what I was doing. I was wrong, and it cost me several thousand dollars. I highly recommend that you step back from the forum (and any and all other investing information, both online and in the news), get a copy of the Bogleheads' Guide to Investing, read through it, and then come back here for help. The people here will be glad to help you form an investment plan that you can stick with through market highs and lows.

Re: New investor... Am I crazy?

Posted: Tue Oct 08, 2019 6:38 am
by RickBoglehead
DublinGuy1975 wrote:
Mon Oct 07, 2019 4:13 pm
Thanks all for your advice! It's definitely great to get feedback from this community and to get challenged by more experienced investors!

I am not necessarily worried about loads on the funds right now, as the amount I plan to invest usually lets you get past most of the loads, but still, definitely good to keep in mind. You all make a great point about the fees though, as they are, in a way, an automatic loss/reduction in your earnings, so I have to take them into account in addition to the overall return (and of course their impact on compounding too)...

I am definitely not going to rush into these investments until I am confident on what to invest on (and some of these funds also charge 1% if you try to sell within the first 90 days, which encourages me to not rush for sure)...

I like the idea of of investing 70-30 in stock vs bond index funds and that's probably the way to go...

VTSAX seems to be a well supported fund by folks in this forum, but it would be great to see if there are any good recommended bond funds by the community.

Thanks all, I really appreciate it!
Have you read the Wiki? Have you read about the 3 fund portfolio, which specifically identifies the 3 funds? https://www.bogleheads.org/wiki/Three-fund_portfolio

I strongly recommend you STOP, park your money in Vanguard Prime Money Market, and READ.

I'd also recommend you read The Bogleheads Guide to Investing, 2014.

Your goal of achieving 10% returns is simply not realistic. Sure, in a particular year you may hit that number, or even exceed it. But over the long term? No way.

Once you setup a 70/30 3 fund portfolio, you'll probably find that a reasonable expectation is around 6%. When you beat it, you'll smile. When you miss it, you won't jump off a bridge.

Slow down, read, and learn.

Re: New investor... Am I crazy?

Posted: Tue Oct 08, 2019 2:23 pm
by DublinGuy1975
Once again, thanks all for all your feedback and recommendations... I have learned and read more so much in the last couple of days and I'm really comfortable with the Bogleheads approach to investing...

I am getting pretty comfortable with a fairly simple approach where I'd do 70-30 stocks/bond

Overall, I was thinking:
60% VTSAX
10% VTIAX

15% VCAIX
15% VWITX

For Bond, I was considering tax exempt as this would be in a taxable account which is why I thought of VWITX and VCAIX (I am in California)

The approach would ultimately be to invest this, and let these sit for 2 years without even looking at it, as I don't want to consider retirement for that time period... Then at that time possibly consider moving more into bonds from equity or see where I am.

In the meantime, given I have no debt in mortgage or car, max out my IRA/retirement contributions and ensure I get the maximum employer match from the company and get that going...

Any major concerns with this approach? Thanks all!

Re: New investor... Am I crazy?

Posted: Tue Oct 08, 2019 3:20 pm
by ExitStageLeft
DublinGuy1975 wrote:
Tue Oct 08, 2019 2:23 pm
...
Any major concerns with this approach? Thanks all!
What will your federal tax rate be in a couple years? At your present tax rate it makes sense to go with tax-exempt bonds. But if your future tax rate will be very low then the after-tax yield of a total bond fund like VBTLX will probably be better. In that case I think I would get VBTLX or equivalent now and just pay a little extra tax until you retire.

Re: New investor... Am I crazy?

Posted: Tue Oct 08, 2019 3:23 pm
by retired@50
DublinGuy1975 wrote:
Tue Oct 08, 2019 2:23 pm
Once again, thanks all for all your feedback and recommendations... I have learned and read more so much in the last couple of days and I'm really comfortable with the Bogleheads approach to investing...

I am getting pretty comfortable with a fairly simple approach where I'd do 70-30 stocks/bond

Overall, I was thinking:
60% VTSAX
10% VTIAX

15% VCAIX
15% VWITX

For Bond, I was considering tax exempt as this would be in a taxable account which is why I thought of VWITX and VCAIX (I am in California)

The approach would ultimately be to invest this, and let these sit for 2 years without even looking at it, as I don't want to consider retirement for that time period... Then at that time possibly consider moving more into bonds from equity or see where I am.

In the meantime, given I have no debt in mortgage or car, max out my IRA/retirement contributions and ensure I get the maximum employer match from the company and get that going...

Any major concerns with this approach? Thanks all!
If you commit $50,000 or more to VWITX, then you qualify for Admiral shares with a lower expense ratio. See VWIUX on Vanguard site.

Re: New investor... Am I crazy?

Posted: Tue Oct 08, 2019 3:48 pm
by EnjoyIt
Welcome to this forum. Keep reading and keep learning.

The only thing I want to add is that you are investing for the next 40-60 years. You need to understand that. What happens over the next 2 years is meaningless and you should not be making investments for such a short time frame. Also, since all of your money is in a taxable account, it may be hard to jump around on asset allocations if there is any appreciation in your equities. You will need to sell and pay capital gains tax on those gains. It is probably best to pick an asset allocation you desire now as opposed to keep re-evaluating every 2 years.

Next, you mentioned politics. I hate to break it to you, but there will always be uncertainty in politics. You can not judge your financial decisions on who sits in what office and what their last twitter message was about. Many people have pulled out of the market after the election fearing the worst, only to find the market skyrocket. Equally, the market may have reacted differently and equities could have dropped just as well. The reality is that no one, including yourself can predict the future so it is best to invest now, pick an asset allocation that fits your risk, and move on. BTW, when I say an asset allocation that fits your risk, means that you should always expect a downturn in the markets and pick an asset allocation that you can tolerate this downturn, even if it happens tomorrow.

Lastly, you should look at some retirement data. The general consensus is that one can withdraw 4% of their portfolio every year and not run out of money for the next 30 years. For longer retirements such as yours many would agree something in the order of 3.5% - 4% is appropriate. There are some who are very fearful of future returns and believe that 3% or even less is appropriate but they are a very rare but vocal bunch. In your case, 3.5-4% with flexibility in cutting spending during a recession should be just fine. That means your $4 million will give you $140k-160k spending every year which probably is not to far off what you are spending now after taxes on a $200k/yr income in California.

Re: New investor... Am I crazy?

Posted: Tue Oct 08, 2019 4:54 pm
by Wiggums
DublinGuy1975 wrote:
Mon Oct 07, 2019 4:13 pm

I am not necessarily worried about loads on the funds right now, as the amount I plan to invest usually lets you get past most of the loads, but still, definitely good to keep in mind.
I’m not sure how you get past fees. Can you explain?

Re: New investor... Am I crazy?

Posted: Tue Oct 08, 2019 5:07 pm
by Dave55
DublinGuy1975 wrote:
Mon Oct 07, 2019 12:00 pm
Hey all,

Brand new to the forum, and still trying to absorb the wealth of information available here!

I recently cashed out on the family business, and I am trying to figure out a good strategy that will allow me to retire in the next year or two...

Please humor me, and of course, feel free to trash me, as I am really struggling with so many options!

Based on $4M available, here were my thoughts:
1. $1M on AKREX: certainly the 1.32% expense ratio seems daunting, but it seems to have a solid track return of 19%, 21% and 16% over the last 1, 3 and 5 years... Its worth 3 month return seems to be only around 8% which gives me some confident that they are able to handle downturns pretty effectively...
2. $1M on CSIEX: pretty similar story, returns maybe not quite as good, but lower expense ration as well...
3. $1M combined on VDIGX and VDADX: pretty strong, solid funds, low expense ratios, pretty solid diversification and hopefully mitigating some of the risk from #1 and #2
4. 500K on BMGAX: solid returns, wanted to have some investment on mid cap companies, the expense ration seems a little bit too high and its 3 month worst performance of almost 17% is more scary
5. 500K on OLGAX: solid returns as well, but similar story as #4

Ideally, at 43, I'd like to find some investments that can generate a solid 10% investment, and retire in 2 years at 45 with a solid portfolio... That's why I don't want to even think of retiring until after the next election when the economy and the uncertainty hopefully settles down one way or another, specially given a current situation where I am generating 200k income annually (gross)...

Any advice? am I totally off-base? Are my investments totally whacky?
You may to check out how different stock/bond ratio's have performed historically, that is, how much they have gained on average, their best year, and their worst year. This is very eye opening in the event you have not seen it.
See https://personal.vanguard.com/us/insigh ... llocations

Dave

Re: New investor... Am I crazy?

Posted: Tue Oct 08, 2019 5:43 pm
by HanSolo
Another possibility is a balanced fund. There are different balanced funds available with different stock/bond allocations (including Target Retirement funds which adjust the allocation over time). Some are index funds and some actively-managed. Some include international stocks/bonds and some don't.

Assuming this investment is in a taxable account, tax-exempt bond funds (or maybe Tax-Managed Balanced Fund) may be a good idea, but for the numbers you're talking about, I'd probably get a tax accountant or CPA (or whatever is appropriate) to estimate what the difference would be in your tax situation.

I like balanced funds and I think a person in this situation could even put everything in one fund. Vanguard has a good lineup of balanced funds (low expense ratios, anyway)... not so familiar with other companies but there are probably good ones at any major fund provider... pay attention to expense ratio, and make sure it's no-load.

I agree that the following is a good first step:
RickBoglehead wrote:
Tue Oct 08, 2019 6:38 am
Have you read the Wiki? Have you read about the 3 fund portfolio, which specifically identifies the 3 funds? https://www.bogleheads.org/wiki/Three-fund_portfolio

I strongly recommend you STOP, park your money in Vanguard Prime Money Market, and READ.

I'd also recommend you read The Bogleheads Guide to Investing, 2014.
The wiki also has a good page called Bogleheads Investment Philosophy.