Seeking suggestions for portfolio simplification

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Topic Author
deserat
Posts: 59
Joined: Fri Dec 27, 2019 5:08 am

Seeking suggestions for portfolio simplification

Post by deserat »

Emergency funds: Don’t have
Debt: None
Tax Filing Status: Single
Tax Rate: 22-4% Federal, 0% State
State of Residence: FL
Age: 56

Desired Asset allocation: 60-70% stocks / 40-30% bonds
Desired International allocation: Open to suggestions - see below for current exposure

Low 7 figure portfolio

Current retirement assets

Taxable at Vanguard
23% VFMXX
12% VWIAX

TSP
8% F Fund
7% C Fund
2% S Fund
7% I Fund
5% company match

Roth IRA at Vanguard
16% VTSAX

SEP IRA at Vanguard
25%% VFORX

Contributions

New annual Contributions
$19,500 TSP- 5% match (also specify any employer matching contributions)
$6,500 catch-up Roth IRA with TSP

Comments/Questions:
1. Am planning on retiring in 1-2 years – want to simplify portfolio – will be doing IRA to Roth conversions up to top of 24 maybe 32% bracket from this year to age 60 when get a military Reserve pension (have modeled on Retiree Portfolio, i-ORP and FIRECALC)

2. Large cash balance in VFMXX is due to house sale in last year. Want to ensure have cash to purchase house cash when retire - no really good alternative right now for short term storage of cash outside of VFMXX as retirement date may be sooner rather than later

3. Have tried to emulate 3 fund with TSP using the four funds listed

4. Should I move funds from VWIAX to higher risk? (Am concerned about tax efficiency here, too)

5. Should Roth IRA be in VFORX as well?

6. Would like to stay at Vanguard for now – however, am open to other suggestions.
Living Free
Posts: 579
Joined: Thu Jul 19, 2018 7:31 pm

Re: Seeking suggestions for portfolio simplification

Post by Living Free »

deserat wrote: Fri Aug 21, 2020 10:57 am

2. Large cash balance in VFMXX is due to house sale in last year. Want to ensure have cash to purchase house cash when retire - no really good alternative right now for short term storage of cash outside of VFMXX as retirement date may be sooner rather than later
Per the vanguard website the yield of that money market fund is 0.1% right now. I'd look into a CD at an online bank, which will prob be closer to 1%. If it's a couple/few hundred K of cash, that will net you a few extra K over a couple of years. Almost as easy as picking up Benjamins off the floor.
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BolderBoy
Posts: 5355
Joined: Wed Apr 07, 2010 12:16 pm
Location: Colorado

Re: Seeking suggestions for portfolio simplification

Post by BolderBoy »

deserat wrote: Fri Aug 21, 2020 10:57 am Emergency funds: Don’t have

2. Large cash balance in VFMXX is due to house sale in last year. Want to ensure have cash to purchase house cash when retire - no really good alternative right now for short term storage of cash outside of VFMXX as retirement date may be sooner rather than later
I think you need to establish a designated emergency fund, not shared with your 'new house' fund.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
dbr
Posts: 34794
Joined: Sun Mar 04, 2007 9:50 am

Re: Seeking suggestions for portfolio simplification

Post by dbr »

A quick simplification would be to replace VWIAX with VTSAX and VFORX with VTSAX. You don't need to duplicate the three fund portfolio in the TSP; you only need to duplicate the three fund in the portfolio as a whole. The TSP could be just the F fund and the I Fund, depending on how the allocation works out. There are other possible combinations but if you want a simpler portfolio don't use balanced funds like TR funds and Wellesley and you don't need little amounts like your S fund. You can put a bond fund like the F fund (VBTLX) in your IRA if you need to. You could even change over the TSP to only the I fund, but that might be more international than you want. It isn't clear what the company match in the TSP is.

I would not even include a house fund you expect to cash out in no more than two or three years. I agree there could be a small emergency fund counted in.
Topic Author
deserat
Posts: 59
Joined: Fri Dec 27, 2019 5:08 am

Re: Seeking suggestions for portfolio simplification

Post by deserat »

A very belated thank you to the posters' suggestions. I will probably implement them at the end of the year.
🦃
And Happy Thanksgiving!
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