~6 years to retirement, portfolio questions

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sgm7091
Posts: 56
Joined: Mon Dec 30, 2019 10:42 pm

~6 years to retirement, portfolio questions

Post by sgm7091 » Sat May 23, 2020 8:48 am

I became member of BH a few months ago and learned immensely. I had previously posted questions and received many valuable advice from the community here - thank you. I like to share updates (may be helpful to others in similar situations) and also have a few questions.

Actions we have taken:
-- consolidated from 10+ different accounts at different brokers (between Schwab, ETrade, Fidelity, Trowe, + others) to pretty much one brokerage - Fidelity. So far we have been happy with the consolidation and Fidelity. The website is better than Schwab though could still improve. I also have access to local Fidelity CFP advisor to review portfolio 3-4 times a year. Fido has been good in customer service too and have not pressured me to buy their advisor services. My Fido advisor respects DIY and BH, and is not trying to push Fido products. Their support staff gives me special treatment too :-).
-- Rolled over all of tIRAs to Solo-401k so I can do backdoor Roth for 2019, 2020 and going forward (+contributed and converted 2019-20). No issues seen so far. I think balance on solo-401k will exceed 250k and so next year 2021 July, I think I have to file the 5500 EZ or so.
-- Simplified our holding from 100+ positions between those accounts to under 10 positions. I can do more (and will do).
-- I used the technique of selling towards the end of a trading day the MF positions and buying around 3:30pm on trading days to minimize the swing effect between days. I got this suggestion from BH forum - thank you. Fortunately cash/MM positions helped to do this as settlement takes 2+ days.

Actions we did not take fully:
-- I had some excess cash (from a small windfall) that I had talked about -- investing using DCA/Lump-sum back in Dec/Jan. We have not invested substantial parts of it in stock/bonds. Except for..
-- Contributed IRA/Roth contributions for 2019-20 (total $28k, between DW and me) and invested those in US/Intl funds/ETF.
-- Purchased i-bonds $25k between me and DW.
-- Rest of cash is in HY CDs and Savings accounts.

We sort of look at our funds in two buckets:

#1-- Retirement (tax-advantaged and taxable mixed): approx $1m (AA 60/14/26)
+ US: Broad SP500s like IVV: 43%
+ International: Broad index based like IXUS: 14%
+ Bonds: Mix of BND, TLT, and TIP: 14%
+ Short-term: I-bonds, MM, CDs: 26%
+ Other: Gold ETF, etc: 3%
* (special note): Since November - approx 10% of portfoilio above, I am using Gary A's momentum investing using the Parity portfolio rules (Parity portfolio uses 5 asset classes Gold, Real-estate, US Stocks, Short-Bonds, Long-Bonds) and switches based on signal rules monthly.
* taxable part is approx 115k, with 15% in US/Intl stock ETFs

#2-- Operating funds: approx $210k 3-yrs expense (AA 0/0/100)
+ All in CDs, Savings etc: 100%

Our yearly expense is ~$70k. Both I and DW are employed (annual income: $250k) and estimate 6 years from retirement (I had stated 8 years before but reduced our estimate). We both max our 401k/403b to the extent possible (approx: $26k + $5k a year). Our jobs seem ok for now but risk of job loss is there ~ 20% as of now. But this may change. We will have SS when we retire (approx $3,900 pm together). I also have a private pension ($600 pm no COLA adjustment)

Our questions are:
1. Are we being conservative in our investment (by keeping total $600k in cash/bonds between the two buckets above) given our time horizon?
2. What alternatives would you suggest how to invest the Operating funds, for example is 10/0/90 than 0/0/100?
3. Any suggestions on products to use the cash component in Retirement section?
4. What will be the easiest way to file 5500 form - I heard EZ is paper-based?

Thank you all.

retired@50
Posts: 2651
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: ~6 years to retirement, portfolio questions

Post by retired@50 » Sat May 23, 2020 8:57 am

sgm7091 wrote:
Sat May 23, 2020 8:48 am

* (special note): Since November - approx 10% of portfoilio above, I am using Gary A's momentum investing using the Parity portfolio rules (Parity portfolio uses 5 asset classes Gold, Real-estate, US Stocks, Short-Bonds, Long-Bonds) and switches based on signal rules monthly.
Since I've never heard of Gary A's momentum investing, how's it going?

Is it any better than a 50/50 portfolio of stocks and bonds?

Regards,
This is one person's opinion. Nothing more.

btenny
Posts: 5360
Joined: Sun Oct 07, 2007 6:47 pm

Re: ~6 years to retirement, portfolio questions

Post by btenny » Sat May 23, 2020 11:51 am

Is your home paid for? I asked as $70K seem to be a very low spend rate versus a $250K income. Are you sure of your numbers? Are you really going to try to keep your spending this low in retirement?

You need to tell us your age and how you will cover spending in early retirement before SS. This will tell us how much you need to have in taxable and how much you need to have in low risk assets for early retirement.

I have no idea what the Gary thing is. Please explain.

Topic Author
sgm7091
Posts: 56
Joined: Mon Dec 30, 2019 10:42 pm

Re: ~6 years to retirement, portfolio questions

Post by sgm7091 » Sat May 23, 2020 11:59 am

Will post more details on Gary A momentum parity thing later when I am home with both info, portfolio and results so far.

The 70k expense is after taxes. Our primary home is almost paid off 25k remaining and will be paid off next year 2021 latest useless we see any job loss. We were thinking to do that this year but due to this covid surprise, we are on the fence.

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