Finally simplified. Looking for feedback on my lifelong portfolio.

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Topic Author
manlymatt83
Posts: 307
Joined: Tue Jan 30, 2018 8:23 am

Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

Emergency funds: 6 months expenses in a CD

Debt: $0

Tax Status: single

Tax Rate: 30 ish Federal, 6% State

State of Residence: Massachusetts

Age: 36

Desired Asset allocation: 120 - age for stocks / rest bonds. Currently 84/16.
Desired International allocation: 20% of stocks
Desired Small Cap Value tilt: 30% of stocks

Portfolio Size: $200k

Current assets:

Taxable:

39% VTI (Vanguard Total US)
20% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US)
5% DLS/DGS (International Small Cap Value/Dividend)

IRA:

12% BND (Vanguard Bond)
4% BNDX (Vanguard Intl Bond)
8% VNQ (Vanguard REIT)


I believe strongly in the small cap value tilt as well as the REIT allocation. I have the REIT and bonds in my tax advantaged.

What you see above is actually 90% of my overall portfolio. I also have 10% of the total that I put in a separate account and buy individual stocks, etc. with.

Just looking for some validation that I didn’t make any insane mistakes!
DoubleClick
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Joined: Mon Oct 18, 2010 1:12 am

Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by DoubleClick »

Sounds reasonable overall. Notes:

- you have only 16% in bonds. Is this the target?
- you have even less in bonds when considering tax adjusted asset allocation
- how much more than domestic stock do you believe REIT and small cap will yield? Is the weighted expected value worth the simplicity trade-off?
typical.investor
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by typical.investor »

mjuszczak wrote: Fri May 01, 2020 8:53 pm Emergency funds: 6 months expenses in a CD

Debt: $0

Tax Status: single

Tax Rate: 30 ish Federal, 6% State

State of Residence: Massachusetts

Age: 36

Desired Asset allocation: 120 - age for stocks / rest bonds. Currently 84/16.
Desired International allocation: 20% of stocks
Desired Small Cap Value tilt: 30% of stocks

Portfolio Size: $200k

Current assets:

Taxable:

39% VTI (Vanguard Total US)
20% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US)
5% DLS/DGS (International Small Cap Value/Dividend)

IRA:

12% BND (Vanguard Bond)
4% BNDX (Vanguard Intl Bond)
8% VNQ (Vanguard REIT)


I believe strongly in the small cap value tilt as well as the REIT allocation. I have the REIT and bonds in my tax advantaged.

What you see above is actually 90% of my overall portfolio. I also have 10% of the total that I put in a separate account and buy individual stocks, etc. with.

Just looking for some validation that I didn’t make any insane mistakes!
Nothing insane, but I wouldn't hold DLS, DGS in taxable. They are dividend funds. My inclination would be to hold them in the IRA and if BND taxes were too painful hold municipal bonds.

Or actually, I would prefer long term treasuries in taxable to rebalance the equities after a crash. How are you going to rebalance from bonds to stocks when necessary?

I use FNDC in taxable for International Small Cap value.
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Noobvestor
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by Noobvestor »

A few notes:

1) Massively tilted toward the US - might come back to haunt you if means revert (60/40 or 50/50 would be closer to cap-weighted)
2) Per a comment above, no really easy way to rebalance - might want to hold a mix in tax-advantaged to make that easier
3) Bonds-in-tax-advantaged is an old rule of thumb that I'm not sure is as useful in today's low-yield environment (might want to math it out)
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
retiredjg
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by retiredjg »

mjuszczak wrote: Fri May 01, 2020 8:53 pm Just looking for some validation that I didn’t make any insane mistakes!
Nothing major jumps out to me. Some questions though.
  • At some point, you need to know your tax bracket. "30ish" isn't a tax bracket although it might be an effective rate - which would mean your bracket is very high. Do you know how to determine your tax bracket?

    Do you have a plan at work? If yes, you probably should be using it.

    How do you rebalance? It would be hard to do with the arrangement you have now.
Sgal8713
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by Sgal8713 »

Agree on a higher international amount, cloudy crystal ball but reversion to the mean is real over 30-40 years.

You should look at 401k/403b at work, good marginal benefit on your taxes. If you dont have a 401k/403b at work, look at solo 401k if you meet criteria. Again good marginal benefit and can stock away serious $$
lakpr
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Joined: Fri Mar 18, 2011 9:59 am

Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by lakpr »

Age 36 suggests you have been working for a while (?)
Mention of only an IRA and no 401k, either past or current
30+% Federal tax bracket

Have you never had any access to any retirement plan at work, or are you choosing not to participate for a specific reason? The IRA limit is only $6k whereas with the 401k it's more than thrice, at $19.5k in 2020 and by law adjusted for inflation.

By participating in a 401k plan, you get to keep an additional $5k in your pocket per year.
Topic Author
manlymatt83
Posts: 307
Joined: Tue Jan 30, 2018 8:23 am

Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

DoubleClick wrote: Sat May 02, 2020 12:44 am Sounds reasonable overall. Notes:

- you have only 16% in bonds. Is this the target?
- you have even less in bonds when considering tax adjusted asset allocation
- how much more than domestic stock do you believe REIT and small cap will yield? Is the weighted expected value worth the simplicity trade-off?
Yes, 16% is my target. I’m not too picky on that. As long as it’s at least 10% I’m good.

I do believe in the SLYV and REIT allocation. I also have a really hard time just doing “simple” and having a tilt towards those two prevents me from buying individual stocks which is much riskier.
Topic Author
manlymatt83
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Joined: Tue Jan 30, 2018 8:23 am

Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

typical.investor wrote: Sat May 02, 2020 1:00 am
mjuszczak wrote: Fri May 01, 2020 8:53 pm Emergency funds: 6 months expenses in a CD

Debt: $0

Tax Status: single

Tax Rate: 30 ish Federal, 6% State

State of Residence: Massachusetts

Age: 36

Desired Asset allocation: 120 - age for stocks / rest bonds. Currently 84/16.
Desired International allocation: 20% of stocks
Desired Small Cap Value tilt: 30% of stocks

Portfolio Size: $200k

Current assets:

Taxable:

39% VTI (Vanguard Total US)
20% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US)
5% DLS/DGS (International Small Cap Value/Dividend)

IRA:

12% BND (Vanguard Bond)
4% BNDX (Vanguard Intl Bond)
8% VNQ (Vanguard REIT)


I believe strongly in the small cap value tilt as well as the REIT allocation. I have the REIT and bonds in my tax advantaged.

What you see above is actually 90% of my overall portfolio. I also have 10% of the total that I put in a separate account and buy individual stocks, etc. with.

Just looking for some validation that I didn’t make any insane mistakes!
Nothing insane, but I wouldn't hold DLS, DGS in taxable. They are dividend funds. My inclination would be to hold them in the IRA and if BND taxes were too painful hold municipal bonds.

Or actually, I would prefer long term treasuries in taxable to rebalance the equities after a crash. How are you going to rebalance from bonds to stocks when necessary?

I use FNDC in taxable for International Small Cap value.
Interesting. That’s helpful and good point. TBH I have thought about dumping DLS and DGS entirely and just tilting small cap value domestically. And just letting VXUS cover all international.
Topic Author
manlymatt83
Posts: 307
Joined: Tue Jan 30, 2018 8:23 am

Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

Noobvestor wrote: Sat May 02, 2020 5:03 am A few notes:

1) Massively tilted toward the US - might come back to haunt you if means revert (60/40 or 50/50 would be closer to cap-weighted)
2) Per a comment above, no really easy way to rebalance - might want to hold a mix in tax-advantaged to make that easier
3) Bonds-in-tax-advantaged is an old rule of thumb that I'm not sure is as useful in today's low-yield environment (might want to math it out)
Thank you! Good points. Maybe I will increase international to 30% but I don’t want to go 50%. There are people who say 0 and people who say 50 so I would like to be somewhere in the middle.
Topic Author
manlymatt83
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

retiredjg wrote: Sat May 02, 2020 7:32 am
mjuszczak wrote: Fri May 01, 2020 8:53 pm Just looking for some validation that I didn’t make any insane mistakes!
Nothing major jumps out to me. Some questions though.
  • At some point, you need to know your tax bracket. "30ish" isn't a tax bracket although it might be an effective rate - which would mean your bracket is very high. Do you know how to determine your tax bracket?

    Do you have a plan at work? If yes, you probably should be using it.

    How do you rebalance? It would be hard to do with the arrangement you have now.
I don’t know my tax bracket because I have complicated taxes so have an accountant do them. I guess I should ask.

Good point on rebalancing. How do you suggest I solve? A little bit of everything in all accounts?

I don’t have a plan at work. All of my income is self W-2. I have thought about starting a solo 401k or a SEP IRA but I recently had a ton of debt until about 3 months ago. A lot was going into paying that off.
Topic Author
manlymatt83
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Joined: Tue Jan 30, 2018 8:23 am

Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

Sgal8713 wrote: Sat May 02, 2020 7:52 am Agree on a higher international amount, cloudy crystal ball but reversion to the mean is real over 30-40 years.

You should look at 401k/403b at work, good marginal benefit on your taxes. If you dont have a 401k/403b at work, look at solo 401k if you meet criteria. Again good marginal benefit and can stock away serious $$
I don’t have a plan at work. All of my income is self W-2.
Topic Author
manlymatt83
Posts: 307
Joined: Tue Jan 30, 2018 8:23 am

Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

lakpr wrote: Sat May 02, 2020 10:57 am Age 36 suggests you have been working for a while (?)
Mention of only an IRA and no 401k, either past or current
30+% Federal tax bracket

Have you never had any access to any retirement plan at work, or are you choosing not to participate for a specific reason? The IRA limit is only $6k whereas with the 401k it's more than thrice, at $19.5k in 2020 and by law adjusted for inflation.

By participating in a 401k plan, you get to keep an additional $5k in your pocket per year.
Thanks! Unfortunately I don’t have a plan at work. All of my income is self W-2.
retiredjg
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by retiredjg »

mjuszczak wrote: Sat May 02, 2020 11:35 am I don’t know my tax bracket because I have complicated taxes so have an accountant do them. I guess I should ask.
Find the line on your taxes that says "taxable income". Compare that number to a tax bracket chart. You can probably find a similar chart on the internet for your state taxes.

http://www.moneychimp.com/features/tax_brackets.htm


Good point on rebalancing. How do you suggest I solve? A little bit of everything in all accounts?
You don't have to have everything in each account, but having some US stocks and some bonds together in 1 account will help.

I don’t have a plan at work. All of my income is self W-2. I have thought about starting a solo 401k or a SEP IRA but I recently had a ton of debt until about 3 months ago. A lot was going into paying that off.
I think it might be time to consider a solo 401k or SEP IRA. Which is best for your situation is not obvious from what you have posted so far.
ARoseByAnyOtherName
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by ARoseByAnyOtherName »

Nothing insane to my eyes, just a couple comments:
mjuszczak wrote: Fri May 01, 2020 8:53 pm I believe strongly in the small cap value tilt
My personal bias is to not tilt. My portfolio has US total market, international total market, and bonds. Easy peasy.

That out of the way, you might want to check your assumptions regarding small cap value:
viewtopic.php?f=10&t=313688

And tilts in general:
viewtopic.php?f=10&t=313485&start=50

Even if you continue to tilt small cap value (which is a perfectly understandable thing to do!) it's good to read dissenting viewpoints.

Regarding your international allocation, Taylor posted a very reasonable default suggestion here that's well worth reading:
viewtopic.php?t=196956

Overall you have a reasonable plan. Now comes the hardest part... stay the course through thick and thin!
Outer Marker
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by Outer Marker »

mjuszczak wrote: Fri May 01, 2020 8:53 pm I believe strongly in the small cap value tilt as well as the REIT allocation. I have the REIT and bonds in my tax advantaged.
I did too. After 20+ years of sticking it out in SCV and being completely unrewarded, I finally got tired of the tracking error and lumped it into TSM. I still hold a small REIT allocation, but am looking to unwind that too when and if REITS recover. YMMV
DoubleClick
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by DoubleClick »

ARoseByAnyOtherName wrote: Sat May 02, 2020 12:10 pm Even if you continue to tilt small cap value (which is a perfectly understandable thing to do!) it's good to read dissenting viewpoints.
Great point. Overall, reading dissenting viewpoints is something we should encourage everyone to do.
Sgal8713
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by Sgal8713 »

mjuszczak wrote: Sat May 02, 2020 11:36 am
Sgal8713 wrote: Sat May 02, 2020 7:52 am Agree on a higher international amount, cloudy crystal ball but reversion to the mean is real over 30-40 years.

You should look at 401k/403b at work, good marginal benefit on your taxes. If you dont have a 401k/403b at work, look at solo 401k if you meet criteria. Again good marginal benefit and can stock away serious $$
I don’t have a plan at work. All of my income is self W-2.
Gotcha. Would ask the non-regular W2 peeps here about SEP v solo 401k. From what little I know, i think the 401k is better, but i think both can get you 50k+ tax advantaged room.
Topic Author
manlymatt83
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

ARoseByAnyOtherName wrote: Sat May 02, 2020 12:10 pm Nothing insane to my eyes, just a couple comments:
mjuszczak wrote: Fri May 01, 2020 8:53 pm I believe strongly in the small cap value tilt
My personal bias is to not tilt. My portfolio has US total market, international total market, and bonds. Easy peasy.

That out of the way, you might want to check your assumptions regarding small cap value:
viewtopic.php?f=10&t=313688

And tilts in general:
viewtopic.php?f=10&t=313485&start=50

Even if you continue to tilt small cap value (which is a perfectly understandable thing to do!) it's good to read dissenting viewpoints.

Regarding your international allocation, Taylor posted a very reasonable default suggestion here that's well worth reading:
viewtopic.php?t=196956

Overall you have a reasonable plan. Now comes the hardest part... stay the course through thick and thin!
Thank you!
Topic Author
manlymatt83
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

Outer Marker wrote: Sat May 02, 2020 12:15 pm
mjuszczak wrote: Fri May 01, 2020 8:53 pm I believe strongly in the small cap value tilt as well as the REIT allocation. I have the REIT and bonds in my tax advantaged.
I did too. After 20+ years of sticking it out in SCV and being completely unrewarded, I finally got tired of the tracking error and lumped it into TSM. I still hold a small REIT allocation, but am looking to unwind that too when and if REITS recover. YMMV
I may just simplify to six funds then and dump the DGS/DLS. If my only SCV tilt is to domestic small cap value via SLYV that’s probably something I can keep forever.

I knew I wasn’t going to come out of this thread with more complication but may take advantage of the opportunity to simplify even further.
lakpr
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Post by lakpr »

mjuszczak wrote: Sat May 02, 2020 11:36 am
lakpr wrote: Sat May 02, 2020 10:57 am Age 36 suggests you have been working for a while (?)
Mention of only an IRA and no 401k, either past or current
30+% Federal tax bracket

Have you never had any access to any retirement plan at work, or are you choosing not to participate for a specific reason? The IRA limit is only $6k whereas with the 401k it's more than thrice, at $19.5k in 2020 and by law adjusted for inflation.

By participating in a 401k plan, you get to keep an additional $5k in your pocket per year.
Thanks! Unfortunately I don’t have a plan at work. All of my income is self W-2.
Sounds like you are self-employed, but as had been mentioned already up-thread (@retiredjg and @Sgal8713), you should consider establishing a SEP-IRA (which would allow you to contribute about $13k per year tax-deferred) or a a Independent 401k (which would allow you to contribute up to $57k per year, depending on the revenues and some slightly complicated formulas).

Once established, I suggest you start contributing the max to the Independent 401k or SEP-IRA, and if your paycheck is slimmer for it and therefore not possible to meet all your monthly expenses from the remainder, draw down the shortfall from the taxable account. In effect, you will have shifted your assets from taxable account to tax-deferred, and saving yourself 30+% in taxes.
Topic Author
manlymatt83
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

retiredjg wrote: Sat May 02, 2020 11:48 am You don't have to have everything in each account, but having some US stocks and some bonds together in 1 account will help.
I just reviewed all of the funds.

SLYV, DGS, DLS, VTI, VXUS, BND, BNDX... all pay dividends. Some of them are 4 - 5%, but the lowest they go is like 2%.

Should I just own a little of each in both accounts for rebalancing purposes? And maybe just try to have slightly more of the allocation of the higher dividend ones in my tax advantaged?
ARoseByAnyOtherName
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Post by ARoseByAnyOtherName »

DoubleClick wrote: Sat May 02, 2020 12:51 pm
ARoseByAnyOtherName wrote: Sat May 02, 2020 12:10 pm Even if you continue to tilt small cap value (which is a perfectly understandable thing to do!) it's good to read dissenting viewpoints.
Great point. Overall, reading dissenting viewpoints is something we should encourage everyone to do.
:sharebeer
typical.investor
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by typical.investor »

mjuszczak wrote: Sat May 02, 2020 7:42 pm
retiredjg wrote: Sat May 02, 2020 11:48 am You don't have to have everything in each account, but having some US stocks and some bonds together in 1 account will help.
I just reviewed all of the funds.

SLYV, DGS, DLS, VTI, VXUS, BND, BNDX... all pay dividends. Some of them are 4 - 5%, but the lowest they go is like 2%.

Should I just own a little of each in both accounts for rebalancing purposes? And maybe just try to have slightly more of the allocation of the higher dividend ones in my tax advantaged?
You can, but it seems a little messy. retiredjg had a good suggestion above. Also, you can effectively do rebalancing with new contributions as well. Just buy more of what is below your allocation.

But for the moment, forget rebalancing. Read the post from lakpr just above. It's a good strategy to move taxable amounts into tax sheltered.
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manlymatt83
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Post by manlymatt83 »

typical.investor wrote: Sat May 02, 2020 8:11 pm
mjuszczak wrote: Sat May 02, 2020 7:42 pm
retiredjg wrote: Sat May 02, 2020 11:48 am You don't have to have everything in each account, but having some US stocks and some bonds together in 1 account will help.
I just reviewed all of the funds.

SLYV, DGS, DLS, VTI, VXUS, BND, BNDX... all pay dividends. Some of them are 4 - 5%, but the lowest they go is like 2%.

Should I just own a little of each in both accounts for rebalancing purposes? And maybe just try to have slightly more of the allocation of the higher dividend ones in my tax advantaged?
You can, but it seems a little messy. retiredjg had a good suggestion above. Also, you can effectively do rebalancing with new contributions as well. Just buy more of what is below your allocation.

But for the moment, forget rebalancing. Read the post from lakpr just above. It's a good strategy to move taxable amounts into tax sheltered.
Getting a SEP IRA/solo 401k going isn’t going to happen any time soon. I have at least one other on payroll across all of my companies and the SEP IRA would require me to also fund those accounts which doesn’t financially make sense for the businesses right now. It’s on my list but not part of my plan until at least 2022 (I plan on shutting a few of my companies down).
Topic Author
manlymatt83
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

typical.investor wrote: Sat May 02, 2020 1:00 am
mjuszczak wrote: Fri May 01, 2020 8:53 pm Emergency funds: 6 months expenses in a CD

Debt: $0

Tax Status: single

Tax Rate: 30 ish Federal, 6% State

State of Residence: Massachusetts

Age: 36

Desired Asset allocation: 120 - age for stocks / rest bonds. Currently 84/16.
Desired International allocation: 20% of stocks
Desired Small Cap Value tilt: 30% of stocks

Portfolio Size: $200k

Current assets:

Taxable:

39% VTI (Vanguard Total US)
20% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US)
5% DLS/DGS (International Small Cap Value/Dividend)

IRA:

12% BND (Vanguard Bond)
4% BNDX (Vanguard Intl Bond)
8% VNQ (Vanguard REIT)


I believe strongly in the small cap value tilt as well as the REIT allocation. I have the REIT and bonds in my tax advantaged.

What you see above is actually 90% of my overall portfolio. I also have 10% of the total that I put in a separate account and buy individual stocks, etc. with.

Just looking for some validation that I didn’t make any insane mistakes!
Nothing insane, but I wouldn't hold DLS, DGS in taxable. They are dividend funds. My inclination would be to hold them in the IRA and if BND taxes were too painful hold municipal bonds.

Or actually, I would prefer long term treasuries in taxable to rebalance the equities after a crash. How are you going to rebalance from bonds to stocks when necessary?

I use FNDC in taxable for International Small Cap value.
Curious. When you suggested DLS and DGS in tax advantaged, is it because dividends from them would never be qualified? Why not be concerned about VXUS, for example, which has quite a high dividend as well?
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Noobvestor
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Post by Noobvestor »

mjuszczak wrote: Sat May 02, 2020 11:34 am
Noobvestor wrote: Sat May 02, 2020 5:03 am A few notes:

1) Massively tilted toward the US - might come back to haunt you if means revert (60/40 or 50/50 would be closer to cap-weighted)
2) Per a comment above, no really easy way to rebalance - might want to hold a mix in tax-advantaged to make that easier
3) Bonds-in-tax-advantaged is an old rule of thumb that I'm not sure is as useful in today's low-yield environment (might want to math it out)
Thank you! Good points. Maybe I will increase international to 30% but I don’t want to go 50%. There are people who say 0 and people who say 50 so I would like to be somewhere in the middle.
Very few people recommend 0% outright. Just be ready for tracking error if the US has a bad decade.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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manlymatt83
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

What if I buy 90% VT and 10% BND in all but a certain dollar amount of my portfolio (vs %).

Then I take — say (eventually) — 50k — and put it in whatever I want. SLYV etc.

Maybe that’s a better way of doing this because as my net worth grows my SCV and low international allocation will shrink?
typical.investor
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Post by typical.investor »

mjuszczak wrote: Sat May 02, 2020 11:15 pm Curious. When you suggested DLS and DGS in tax advantaged, is it because dividends from them would never be qualified? Why not be concerned about VXUS, for example, which has quite a high dividend as well?
VXUS is market cap weighted. DLS and DGS select for dividend payers. I prefer a value fund (FNDC) that does not select for dividend instead of DLS. For DGS, I see no alternative. DLS and DGS are both distribute 5% or so. VXUS 3.5%.

FNDC has about 87% QDI for 2019. Can't find DLS

It gets complicated. I didn't go all the way to consider how much was qualified. I assume less for the small cap funds.

If in taxable, can you claim the foreign tax credit? I can not. That's another factor.

So I use FNDC in taxable and DGS in tax deferred. My positions are larger than 5% though.
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manlymatt83
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Post by manlymatt83 »

typical.investor wrote: Sun May 03, 2020 12:12 am
mjuszczak wrote: Sat May 02, 2020 11:15 pm Curious. When you suggested DLS and DGS in tax advantaged, is it because dividends from them would never be qualified? Why not be concerned about VXUS, for example, which has quite a high dividend as well?
VXUS is market cap weighted. DLS and DGS select for dividend payers. I prefer a value fund (FNDC) that does not select for dividend instead of DLS. For DGS, I see no alternative. DLS and DGS are both distribute 5% or so. VXUS 3.5%.

FNDC has about 87% QDI for 2019. Can't find DLS

It gets complicated. I didn't go all the way to consider how much was qualified. I assume less for the small cap funds.

If in taxable, can you claim the foreign tax credit? I can not. That's another factor.

So I use FNDC in taxable and DGS in tax deferred. My positions are larger than 5% though.
Helpful, thank you.

I need to understand the difference between non-qualified and ordinary dividends. That will help in my research. Is ordinary qualified dividends but you didn’t hold them for 61 days prior? Or is that non-qualified?
typical.investor
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by typical.investor »

mjuszczak wrote: Sun May 03, 2020 12:14 am
typical.investor wrote: Sun May 03, 2020 12:12 am
mjuszczak wrote: Sat May 02, 2020 11:15 pm Curious. When you suggested DLS and DGS in tax advantaged, is it because dividends from them would never be qualified? Why not be concerned about VXUS, for example, which has quite a high dividend as well?
VXUS is market cap weighted. DLS and DGS select for dividend payers. I prefer a value fund (FNDC) that does not select for dividend instead of DLS. For DGS, I see no alternative. DLS and DGS are both distribute 5% or so. VXUS 3.5%.

FNDC has about 87% QDI for 2019. Can't find DLS

It gets complicated. I didn't go all the way to consider how much was qualified. I assume less for the small cap funds.

If in taxable, can you claim the foreign tax credit? I can not. That's another factor.

So I use FNDC in taxable and DGS in tax deferred. My positions are larger than 5% though.
Helpful, thank you.

I need to understand the difference between non-qualified and ordinary dividends. That will help in my research. Is ordinary qualified dividends but you didn’t hold them for 61 days prior? Or is that non-qualified?
Sorry. My terminology is poor. It's qualified dividends vs ordinary.

87% of dividends from FNDC were qualified assuming you met holding period requirements.

For rebalancing, I would do something more like this.

Taxable:

39% VTI (Vanguard Total US)
15% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US)
10% (Long or Intermediate) Term Treasuries

IRA:

6% BND (Vanguard Bond)
8% VNQ (Vanguard REIT)
5% DLS/DGS (International Small Cap Value/Dividend)
5% SLYV (Sm cap value ETF)

(hope the totals are correct ... anyway you get the idea)

BNDX holds little appeal to me. It will only be useful if the US has inflation and the rest of the world doesn't. Treasuries are better to rebalance from.

If you are worried about inflation, I suggest 1) your high equity allocation will serve you well, 2) your value and REIT holding won't be hurt as much when the current value of future expected growth is discounted when inflation hits

Or maybe VXUS in taxable instead of SLYV.
Last edited by typical.investor on Sun May 03, 2020 12:49 am, edited 1 time in total.
Topic Author
manlymatt83
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

typical.investor wrote: Sun May 03, 2020 12:44 am
mjuszczak wrote: Sun May 03, 2020 12:14 am
typical.investor wrote: Sun May 03, 2020 12:12 am
mjuszczak wrote: Sat May 02, 2020 11:15 pm Curious. When you suggested DLS and DGS in tax advantaged, is it because dividends from them would never be qualified? Why not be concerned about VXUS, for example, which has quite a high dividend as well?
VXUS is market cap weighted. DLS and DGS select for dividend payers. I prefer a value fund (FNDC) that does not select for dividend instead of DLS. For DGS, I see no alternative. DLS and DGS are both distribute 5% or so. VXUS 3.5%.

FNDC has about 87% QDI for 2019. Can't find DLS

It gets complicated. I didn't go all the way to consider how much was qualified. I assume less for the small cap funds.

If in taxable, can you claim the foreign tax credit? I can not. That's another factor.

So I use FNDC in taxable and DGS in tax deferred. My positions are larger than 5% though.
Helpful, thank you.

I need to understand the difference between non-qualified and ordinary dividends. That will help in my research. Is ordinary qualified dividends but you didn’t hold them for 61 days prior? Or is that non-qualified?
Sorry. My terminology is poor. It's qualified dividends vs ordinary.

87% of dividends from FNDC were qualified assuming you met holding period requirements.

For rebalancing, I would do something more like this.

Taxable:

39% VTI (Vanguard Total US)
15% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US)
10% (Long or Intermediate) Term Treasuries

IRA:

6% BND (Vanguard Bond)
8% VNQ (Vanguard REIT)
5% DLS/DGS (International Small Cap Value/Dividend)
5% SLYV (Sm cap value ETF)

(hope the totals are correct ... anyway you get the idea)

BNDX holds little appeal to me. It will only be useful if the US has inflation and the rest of the world doesn't. Treasuries are better to rebalance from.

If you are worried about inflation, I suggest 1) your high equity allocation will serve you well, 2) your value and REIT holding won't be hurt as much when the current value of future expected growth is discounted when inflation hits
Super super helpful! Thanks a ton!
retiredjg
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by retiredjg »

mjuszczak wrote: Sat May 02, 2020 7:42 pm
retiredjg wrote: Sat May 02, 2020 11:48 am You don't have to have everything in each account, but having some US stocks and some bonds together in 1 account will help.
I just reviewed all of the funds.

SLYV, DGS, DLS, VTI, VXUS, BND, BNDX... all pay dividends. Some of them are 4 - 5%, but the lowest they go is like 2%.

Should I just own a little of each in both accounts for rebalancing purposes? And maybe just try to have slightly more of the allocation of the higher dividend ones in my tax advantaged?
I would only put Total Stock in with the bonds.

The only important ratio is stocks to bonds. The ratios of US stock to foreign or large cap to small cap is relatively unimportant and does not change quickly anyway. Having some total stock in with the bonds gives you a way to rebalance your stock to bond ratio easily.

If you do start a plan at work, some of this rigidity will go away.
Topic Author
manlymatt83
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

retiredjg wrote: Sun May 03, 2020 6:24 am
mjuszczak wrote: Sat May 02, 2020 7:42 pm
retiredjg wrote: Sat May 02, 2020 11:48 am You don't have to have everything in each account, but having some US stocks and some bonds together in 1 account will help.
I just reviewed all of the funds.

SLYV, DGS, DLS, VTI, VXUS, BND, BNDX... all pay dividends. Some of them are 4 - 5%, but the lowest they go is like 2%.

Should I just own a little of each in both accounts for rebalancing purposes? And maybe just try to have slightly more of the allocation of the higher dividend ones in my tax advantaged?
I would only put Total Stock in with the bonds.

The only important ratio is stocks to bonds. The ratios of US stock to foreign or large cap to small cap is relatively unimportant and does not change quickly anyway. Having some total stock in with the bonds gives you a way to rebalance your stock to bond ratio easily.

If you do start a plan at work, some of this rigidity will go away.
Thanks! But now I'm reading that $BND (my major bond holding) isn't best for a taxable account, which is where I would put most of my TSM. So sounds like I need to maybe put LTT in my taxable alongside TSM and keep BND in tax advantaged?
retiredjg
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by retiredjg »

I was suggesting putting some total stock market- maybe a 5% slice - in the IRA.

But you could also put some bonds in taxable if you want. If that 30ish tax bracket is correct, it should be a tax-exempt bond fund although I guess some might use treasuries. I don't recommend long term bonds, even treasuries.
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manlymatt83
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

OK, I did a lot of read this morning and understand a lot more now:

https://www.bogleheads.org/wiki/Vanguar ... tributions
https://www.bogleheads.org/wiki/Tax-eff ... _placement

However, I am still not sure where to put DLS or DGS. On one side of the fence, they pay high dividends. On the other side of the fence, their capital gains distributions are low/non-existant and their dividends are qualified. According to one of the links above, it makes sense to prioritize that in a taxable account?
Topic Author
manlymatt83
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

retiredjg wrote: Sun May 03, 2020 11:32 am I was suggesting putting some total stock market- maybe a 5% slice - in the IRA.
Got it! I can do that. I want to avoid the potential for wash sale issues if I TLH, but I can avoid that.
decapod10
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by decapod10 »

I used to tilt towards SCV and REITs (US and international), but just recently I got rid of the REITs and bumped up US TSM and US SCV a bit. One reason was to simplify a bit. I didn't have a huge slice of REITs to begin with, it was 8% of equities which was about 6.4% of total portfolio, so it probably wasn't having a huge impact anyway. Another is that some think that much of the REIT behavior is similar to SCV, and since I'm tilting toward SCV anyway, it might not be worth doing both. Third is that if you look at IJS for example on Morningstar, it's already at 10% Real Estate compared to 4% Real Estate in VTI, so there is some overweighting to REITs just by virtue of holding SCV, though only a very small amount relative to the overall portfolio.

So now I just have 4 funds: US TSM, Total International, Total US Bond, and US SCV.
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manlymatt83
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

decapod10 wrote: Sun May 03, 2020 11:37 am I used to tilt towards SCV and REITs (US and international), but just recently I got rid of the REITs and bumped up US TSM and US SCV a bit. One reason was to simplify a bit. I didn't have a huge slice of REITs to begin with, it was 8% of equities which was about 6.4% of total portfolio, so it probably wasn't having a huge impact anyway. Another is that some think that much of the REIT behavior is similar to SCV, and since I'm tilting toward SCV anyway, it might not be worth doing both. Third is that if you look at IJS for example on Morningstar, it's already at 10% Real Estate compared to 4% Real Estate in VTI, so there is some overweighting to REITs just by virtue of holding SCV, though only a very small amount relative to the overall portfolio.

So now I just have 4 funds: US TSM, Total International, Total US Bond, and US SCV.
Awesome and helpful! Do you mind if I ask where you hold your SCV funds, particularly international? Taxable or tax advantaged?
retiredjg
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by retiredjg »

mjuszczak wrote: Sun May 03, 2020 11:33 am
retiredjg wrote: Sun May 03, 2020 11:32 am I was suggesting putting some total stock market- maybe a 5% slice - in the IRA.
Got it! I can do that. I want to avoid the potential for wash sale issues if I TLH, but I can avoid that.
I should have said to put some 500 index in the IRA.... :oops:
Topic Author
manlymatt83
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

retiredjg wrote: Sun May 03, 2020 11:59 am
mjuszczak wrote: Sun May 03, 2020 11:33 am
retiredjg wrote: Sun May 03, 2020 11:32 am I was suggesting putting some total stock market- maybe a 5% slice - in the IRA.
Got it! I can do that. I want to avoid the potential for wash sale issues if I TLH, but I can avoid that.
I should have said to put some 500 index in the IRA.... :oops:
Ohhh, interesting! So hold VTI/VXUS in taxable and VOO in IRA?
retiredjg
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by retiredjg »

I think you may be trying to juggle too many balls with this inflexible portfolio. You cannot have all the funds you want and have maximum tax efficiency. That does not mean you can't achieve reasonable tax efficiency.

You need to decide what is important and what would be nice to have.

A lot of things would be easier if you just dropped 5% DLS/DGS (International Small Cap Value/Dividend) from your portfolio. The slices are too small to be more than just clutter and neither is particularly necessary. You already have enough sprinkles on the icing (SCV and REIT) and don't need more.

With your current arrangement, your tax-advantaged account is going to be small in relation to taxable and I suspect that will get worse, not better. Maybe you should concentrate on just a core portfolio for now and add on this other stuff when you have more tax-advantaged space.
Topic Author
manlymatt83
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

retiredjg wrote: Sun May 03, 2020 12:17 pm I think you may be trying to juggle too many balls with this inflexible portfolio. You cannot have all the funds you want and have maximum tax efficiency. That does not mean you can't achieve reasonable tax efficiency.

You need to decide what is important and what would be nice to have.

A lot of things would be easier if you just dropped 5% DLS/DGS (International Small Cap Value/Dividend) from your portfolio. The slices are too small to be more than just clutter and neither is particularly necessary. You already have enough sprinkles on the icing (SCV and REIT) and don't need more.

With your current arrangement, your tax-advantaged account is going to be small in relation to taxable and I suspect that will get worse, not better. Maybe you should concentrate on just a core portfolio for now and add on this other stuff when you have more tax-advantaged space.
OK. So if hypothetically speaking I dropped DLS/DGS and was left with:

VTI, VXUS, BND, BNDX, SLYV, VNQ

... it's obvious to me that VTI/VXUS/SLYV would be primarily in taxable and VNQ would be in tax advantaged.

Probably makes sense to keep BND and BNDX in tax advantaged as well, and then add a little VOO to tax-advantaged for rebalancing? Done?
retiredjg
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by retiredjg »

mjuszczak wrote: Sun May 03, 2020 12:14 pm
retiredjg wrote: Sun May 03, 2020 11:59 am
mjuszczak wrote: Sun May 03, 2020 11:33 am
retiredjg wrote: Sun May 03, 2020 11:32 am I was suggesting putting some total stock market- maybe a 5% slice - in the IRA.
Got it! I can do that. I want to avoid the potential for wash sale issues if I TLH, but I can avoid that.
I should have said to put some 500 index in the IRA.... :oops:
Ohhh, interesting! So hold VTI/VXUS in taxable and VOO in IRA?
Yes. You'll have to give up something to get there.

How about....

Taxable 76%

39% VTI (Vanguard Total US)
20% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US) <<<----this is only half of the international allocation you said you wanted...why?
5% Tax Exempt bonds


IRA 24%
8% 500 index
7% BND (Vanguard Bond)
4% BNDX (Vanguard Intl Bond)
5% VNQ (Vanguard REIT)


Having an 8% slice of stock in the IRA will not be enough to rebalance when the market is changing a lot, but it is plenty during normal times.
decapod10
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by decapod10 »

mjuszczak wrote: Sun May 03, 2020 11:46 am
decapod10 wrote: Sun May 03, 2020 11:37 am I used to tilt towards SCV and REITs (US and international), but just recently I got rid of the REITs and bumped up US TSM and US SCV a bit. One reason was to simplify a bit. I didn't have a huge slice of REITs to begin with, it was 8% of equities which was about 6.4% of total portfolio, so it probably wasn't having a huge impact anyway. Another is that some think that much of the REIT behavior is similar to SCV, and since I'm tilting toward SCV anyway, it might not be worth doing both. Third is that if you look at IJS for example on Morningstar, it's already at 10% Real Estate compared to 4% Real Estate in VTI, so there is some overweighting to REITs just by virtue of holding SCV, though only a very small amount relative to the overall portfolio.

So now I just have 4 funds: US TSM, Total International, Total US Bond, and US SCV.
Awesome and helpful! Do you mind if I ask where you hold your SCV funds, particularly international? Taxable or tax advantaged?
I don't have a significant taxable account, so it's basically all in tax advantaged accounts, so unfortunately can't be much help there. Also, this wasn't clear but I didn't have any international SCV, only US SCV (I had US and international REITs which I have sold).
Topic Author
manlymatt83
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

retiredjg wrote: Sun May 03, 2020 12:26 pm
mjuszczak wrote: Sun May 03, 2020 12:14 pm
retiredjg wrote: Sun May 03, 2020 11:59 am
mjuszczak wrote: Sun May 03, 2020 11:33 am
retiredjg wrote: Sun May 03, 2020 11:32 am I was suggesting putting some total stock market- maybe a 5% slice - in the IRA.
Got it! I can do that. I want to avoid the potential for wash sale issues if I TLH, but I can avoid that.
I should have said to put some 500 index in the IRA.... :oops:
Ohhh, interesting! So hold VTI/VXUS in taxable and VOO in IRA?
Yes. You'll have to give up something to get there.

How about....

Taxable 76%

39% VTI (Vanguard Total US)
20% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US) <<<----this is only half of the international allocation you said you wanted...why?
5% Tax Exempt bonds


IRA 24%
8% 500 index
7% BND (Vanguard Bond)
4% BNDX (Vanguard Intl Bond)
5% VNQ (Vanguard REIT)


Having an 8% slice of stock in the IRA will not be enough to rebalance when the market is changing a lot, but it is plenty during normal times.
Regarding VXUS -- because DGS/DLS were international and are now no longer part of that allocation. But that's where the additional 8% had come from.

Thanks w.r.t. the 8% suggestion! I'll do that!
retiredjg
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by retiredjg »

mjuszczak wrote: Sun May 03, 2020 12:35 pm Regarding VXUS -- because DGS/DLS were international and are now no longer part of that allocation. But that's where the additional 8% had come from.
Sorry, I had read that you wanted 30% of your stocks in international, but that was wrong.

But you may need to take a little out of the small cap value to get the international up to your target. The problem is you are trying to divey up your 84% in stocks into a lot of things. If you put 20% of it into international and 30% into small cap value and 10% into REIT....how much space does that leave for a core holding?
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manlymatt83
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

retiredjg wrote: Sun May 03, 2020 12:41 pm
mjuszczak wrote: Sun May 03, 2020 12:35 pm Regarding VXUS -- because DGS/DLS were international and are now no longer part of that allocation. But that's where the additional 8% had come from.
Sorry, I had read that you wanted 30% of your stocks in international, but that was wrong.

But you may need to take a little out of the small cap value to get the international up to your target. The problem is you are trying to divey up your 84% in stocks into a lot of things. If you put 20% of it into international and 30% into small cap value and 10% into REIT....how much space does that leave for a core holding?
Maybe I was mis-representing how I want things divided. My ultimate goal was:

80% US, 20% International

US Split:
US REIT 10% allocation of US (8% overall)
US SCV 30% allocation of US (24% overall)
US TSM 60% allocation of US (48% overall)

International Split:
International SCV 30% allocation of International (6% overall)
International TSM 70% allocation of International (14% overall)

8 + 24 + 48 + 6 + 14 = 100%
lakpr
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by lakpr »

Small caps make up only 18% if the overall US stock market, SCV is half that, so 9%. You are allocating 30% to SCV that is one heck of a tilt towards SCV. You sure you want to tilt that strongly?
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manlymatt83
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.

Post by manlymatt83 »

lakpr wrote: Sun May 03, 2020 1:17 pm Small caps make up only 18% if the overall US stock market, SCV is half that, so 9%. You are allocating 30% to SCV that is one heck of a tilt towards SCV. You sure you want to tilt that strongly?
Yes.
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