Brokerage account - what to buy?

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Topic Author
babyvinny
Posts: 58
Joined: Thu Nov 14, 2019 2:40 pm

Brokerage account - what to buy?

Post by babyvinny »

Hi, we are in our late 30s, tax bracket @ 32% Fed and 11% state.
Our portfolio is mainly in tax deferred accounts, with about 10% in Roth, and <2% in taxable brokerage account.
. Tax deferred accounts: 40% TRF, 52% total stock markets (VTSAX, vanguard 500 index), and 8% bonds (VBILX, VBLAX)
. Roth + taxable: 100% VTSAX
We just started brokerage account recently, and want to DCA. So far, we automatically invest into VTSAX, but I wonder should we increase our bond holding to lower market risk? If so, which fund? Thank you.
backpacker61
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Re: Brokerage account - what to buy?

Post by backpacker61 »

A municipal bond fund, preferable one for your state.
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sycamore
Posts: 1943
Joined: Tue May 08, 2018 12:06 pm

Re: Brokerage account - what to buy?

Post by sycamore »

babyvinny wrote: Wed Apr 07, 2021 5:22 pm Hi, we are in our late 30s, tax bracket @ 32% Fed and 11% state.
Our portfolio is mainly in tax deferred accounts, with about 10% in Roth, and <2% in taxable brokerage account.
. Tax deferred accounts: 40% TRF, 52% total stock markets (VTSAX, vanguard 500 index), and 8% bonds (VBILX, VBLAX)
. Roth + taxable: 100% VTSAX
We just started brokerage account recently, and want to DCA. So far, we automatically invest into VTSAX, but I wonder should we increase our bond holding to lower market risk? If so, which fund? Thank you.
Babyvinny, by asking if you should increase bonds, you're essentially asking "what should my asset allocation be?" Ideally, you'll pick your AA first, and then pick investments for tax-deferred or taxable accounts appropriate for your target AA as well for tax-efficiency.

Why/how did you pick your previous AA? Have you considered your willingness, ability, and need to take risk? The Boglehead wiki article https://www.bogleheads.org/wiki/Assessi ... _tolerance talks about those factors. Knowing why you want to change your market risk is important.

Once you get your AA finalized, the easy part will be deciding what investments to put into which accounts (likely stocks in taxable), and which bond fund to use (likely the same bond funds you're using now).
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retired@50
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Location: Living in the U.S.A.

Re: Brokerage account - what to buy?

Post by retired@50 »

Consider Vanguard California Intermediate Term Municipal Bond Fund (VCAIX) if you decide on using municipal bonds.

They also have a long-term CA muni fund if that is of interest (VCITX).

Regards,
This is one person's opinion. Nothing more.
Topic Author
babyvinny
Posts: 58
Joined: Thu Nov 14, 2019 2:40 pm

Re: Brokerage account - what to buy?

Post by babyvinny »

sycamore wrote: Wed Apr 07, 2021 5:35 pm
babyvinny wrote: Wed Apr 07, 2021 5:22 pm Hi, we are in our late 30s, tax bracket @ 32% Fed and 11% state.
Our portfolio is mainly in tax deferred accounts, with about 10% in Roth, and <2% in taxable brokerage account.
. Tax deferred accounts: 40% TRF, 52% total stock markets (VTSAX, vanguard 500 index), and 8% bonds (VBILX, VBLAX)
. Roth + taxable: 100% VTSAX
We just started brokerage account recently, and want to DCA. So far, we automatically invest into VTSAX, but I wonder should we increase our bond holding to lower market risk? If so, which fund? Thank you.
Babyvinny, by asking if you should increase bonds, you're essentially asking "what should my asset allocation be?" Ideally, you'll pick your AA first, and then pick investments for tax-deferred or taxable accounts appropriate for your target AA as well for tax-efficiency.

Why/how did you pick your previous AA? Have you considered your willingness, ability, and need to take risk? The Boglehead wiki article https://www.bogleheads.org/wiki/Assessi ... _tolerance talks about those factors. Knowing why you want to change your market risk is important.

Once you get your AA finalized, the easy part will be deciding what investments to put into which accounts (likely stocks in taxable), and which bond fund to use (likely the same bond funds you're using now).
Thank you for your reply.
We think we can tolerate risk, our income is relatively stable, and we plan to work for another 20 years. Last year our portfolio dropped 30%, we came out fine, but I think with 10% -15% bond, we may feel less painful if market drops again?
I don’t really have a defined financial plan, so I just picked what the company offers at the lowest expense ratio, and VTSAX for convenience.
Topic Author
babyvinny
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Re: Brokerage account - what to buy?

Post by babyvinny »

retired@50 wrote: Wed Apr 07, 2021 5:40 pm Consider Vanguard California Intermediate Term Municipal Bond Fund (VCAIX) if you decide on using municipal bonds.

They also have a long-term CA muni fund if that is of interest (VCITX).

Regards,
Thanks, I’ll look into it
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ruralavalon
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Re: Brokerage account - what to buy?

Post by ruralavalon »

babyvinny wrote: Wed Apr 07, 2021 5:22 pm Hi, we are in our late 30s, tax bracket @ 32% Fed and 11% state.
Our portfolio is mainly in tax deferred accounts, with about 10% in Roth, and <2% in taxable brokerage account.
. Tax deferred accounts: 40% TRF, 52% total stock markets (VTSAX, vanguard 500 index), and 8% bonds (VBILX, VBLAX)
. Roth + taxable: 100% VTSAX
We just started brokerage account recently, and want to DCA. So far, we automatically invest into VTSAX, but I wonder should we increase our bond holding to lower market risk? If so, which fund? Thank you.
Vanguard Total Stock Market Index Fund (VTSAX) is an excellent choice in the taxable account, it is very tax-efficient.

You can adjust your asset allocation by the increasing your use of Vanguard Intermediate-term Bond Index Fund (VBILX) in your 401k account.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Topic Author
babyvinny
Posts: 58
Joined: Thu Nov 14, 2019 2:40 pm

Re: Brokerage account - what to buy?

Post by babyvinny »

ruralavalon wrote: Wed Apr 07, 2021 6:33 pm
babyvinny wrote: Wed Apr 07, 2021 5:22 pm Hi, we are in our late 30s, tax bracket @ 32% Fed and 11% state.
Our portfolio is mainly in tax deferred accounts, with about 10% in Roth, and <2% in taxable brokerage account.
. Tax deferred accounts: 40% TRF, 52% total stock markets (VTSAX, vanguard 500 index), and 8% bonds (VBILX, VBLAX)
. Roth + taxable: 100% VTSAX
We just started brokerage account recently, and want to DCA. So far, we automatically invest into VTSAX, but I wonder should we increase our bond holding to lower market risk? If so, which fund? Thank you.
Vanguard Total Stock Market Index Fund (VTSAX) is an excellent choice in the taxable account, it is very tax-efficient.

You can adjust your asset allocation by the increasing your use of Vanguard Intermediate-term Bond Index Fund (VBILX) in your 401k account.
At this time, we can’t make adjustment for that 401k. Should I sell VTSAX in Roth and replace with VBILX?
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retired@50
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Location: Living in the U.S.A.

Re: Brokerage account - what to buy?

Post by retired@50 »

babyvinny wrote: Wed Apr 07, 2021 10:37 pm
ruralavalon wrote: Wed Apr 07, 2021 6:33 pm
babyvinny wrote: Wed Apr 07, 2021 5:22 pm Hi, we are in our late 30s, tax bracket @ 32% Fed and 11% state.
Our portfolio is mainly in tax deferred accounts, with about 10% in Roth, and <2% in taxable brokerage account.
. Tax deferred accounts: 40% TRF, 52% total stock markets (VTSAX, vanguard 500 index), and 8% bonds (VBILX, VBLAX)
. Roth + taxable: 100% VTSAX
We just started brokerage account recently, and want to DCA. So far, we automatically invest into VTSAX, but I wonder should we increase our bond holding to lower market risk? If so, which fund? Thank you.
Vanguard Total Stock Market Index Fund (VTSAX) is an excellent choice in the taxable account, it is very tax-efficient.

You can adjust your asset allocation by the increasing your use of Vanguard Intermediate-term Bond Index Fund (VBILX) in your 401k account.
At this time, we can’t make adjustment for that 401k. Should I sell VTSAX in Roth and replace with VBILX?
I'd use a municipal bond fund in taxable before I put taxable bonds inside a Roth account, especially at your tax bracket.

Regards,
This is one person's opinion. Nothing more.
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ruralavalon
Posts: 20879
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Location: Illinois

Re: Brokerage account - what to buy?

Post by ruralavalon »

babyvinny wrote: Wed Apr 07, 2021 10:37 pm
ruralavalon wrote: Wed Apr 07, 2021 6:33 pm
babyvinny wrote: Wed Apr 07, 2021 5:22 pm Hi, we are in our late 30s, tax bracket @ 32% Fed and 11% state.
Our portfolio is mainly in tax deferred accounts, with about 10% in Roth, and <2% in taxable brokerage account.
. Tax deferred accounts: 40% TRF, 52% total stock markets (VTSAX, vanguard 500 index), and 8% bonds (VBILX, VBLAX)
. Roth + taxable: 100% VTSAX
We just started brokerage account recently, and want to DCA. So far, we automatically invest into VTSAX, but I wonder should we increase our bond holding to lower market risk? If so, which fund? Thank you.
Vanguard Total Stock Market Index Fund (VTSAX) is an excellent choice in the taxable account, it is very tax-efficient.

You can adjust your asset allocation by the increasing your use of Vanguard Intermediate-term Bond Index Fund (VBILX) in your 401k account.
At this time, we can’t make adjustment for that 401k. Should I sell VTSAX in Roth and replace with VBILX?
What is the reason you can't exchange funds (stock fund to bond fund) inside your 401k account?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Topic Author
babyvinny
Posts: 58
Joined: Thu Nov 14, 2019 2:40 pm

Re: Brokerage account - what to buy?

Post by babyvinny »

retired@50 wrote: Wed Apr 07, 2021 11:24 pm
babyvinny wrote: Wed Apr 07, 2021 10:37 pm
ruralavalon wrote: Wed Apr 07, 2021 6:33 pm
babyvinny wrote: Wed Apr 07, 2021 5:22 pm Hi, we are in our late 30s, tax bracket @ 32% Fed and 11% state.
Our portfolio is mainly in tax deferred accounts, with about 10% in Roth, and <2% in taxable brokerage account.
. Tax deferred accounts: 40% TRF, 52% total stock markets (VTSAX, vanguard 500 index), and 8% bonds (VBILX, VBLAX)
. Roth + taxable: 100% VTSAX
We just started brokerage account recently, and want to DCA. So far, we automatically invest into VTSAX, but I wonder should we increase our bond holding to lower market risk? If so, which fund? Thank you.
Vanguard Total Stock Market Index Fund (VTSAX) is an excellent choice in the taxable account, it is very tax-efficient.

You can adjust your asset allocation by the increasing your use of Vanguard Intermediate-term Bond Index Fund (VBILX) in your 401k account.
At this time, we can’t make adjustment for that 401k. Should I sell VTSAX in Roth and replace with VBILX?
I'd use a municipal bond fund in taxable before I put taxable bonds inside a Roth account, especially at your tax bracket.

Regards,
I don’t know a lot about bonds, I tried to learn, but still don’t get them. Thanks for letting me know the advantage of municipal bond fund in taxable.
Topic Author
babyvinny
Posts: 58
Joined: Thu Nov 14, 2019 2:40 pm

Re: Brokerage account - what to buy?

Post by babyvinny »

ruralavalon wrote: Thu Apr 08, 2021 9:38 am
babyvinny wrote: Wed Apr 07, 2021 10:37 pm
ruralavalon wrote: Wed Apr 07, 2021 6:33 pm
babyvinny wrote: Wed Apr 07, 2021 5:22 pm Hi, we are in our late 30s, tax bracket @ 32% Fed and 11% state.
Our portfolio is mainly in tax deferred accounts, with about 10% in Roth, and <2% in taxable brokerage account.
. Tax deferred accounts: 40% TRF, 52% total stock markets (VTSAX, vanguard 500 index), and 8% bonds (VBILX, VBLAX)
. Roth + taxable: 100% VTSAX
We just started brokerage account recently, and want to DCA. So far, we automatically invest into VTSAX, but I wonder should we increase our bond holding to lower market risk? If so, which fund? Thank you.
Vanguard Total Stock Market Index Fund (VTSAX) is an excellent choice in the taxable account, it is very tax-efficient.

You can adjust your asset allocation by the increasing your use of Vanguard Intermediate-term Bond Index Fund (VBILX) in your 401k account.
At this time, we can’t make adjustment for that 401k. Should I sell VTSAX in Roth and replace with VBILX?
What is the reason you can't exchange funds (stock fund to bond fund) inside your 401k account?
The bond funds are in an old solo401k. I’m not sure if I should do anything with it.
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ruralavalon
Posts: 20879
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Brokerage account - what to buy?

Post by ruralavalon »

babyvinny wrote: Thu Apr 08, 2021 3:48 pm
ruralavalon wrote: Thu Apr 08, 2021 9:38 am
babyvinny wrote: Wed Apr 07, 2021 10:37 pm
ruralavalon wrote: Wed Apr 07, 2021 6:33 pm
babyvinny wrote: Wed Apr 07, 2021 5:22 pm Hi, we are in our late 30s, tax bracket @ 32% Fed and 11% state.
Our portfolio is mainly in tax deferred accounts, with about 10% in Roth, and <2% in taxable brokerage account.
. Tax deferred accounts: 40% TRF, 52% total stock markets (VTSAX, vanguard 500 index), and 8% bonds (VBILX, VBLAX)
. Roth + taxable: 100% VTSAX
We just started brokerage account recently, and want to DCA. So far, we automatically invest into VTSAX, but I wonder should we increase our bond holding to lower market risk? If so, which fund? Thank you.
Vanguard Total Stock Market Index Fund (VTSAX) is an excellent choice in the taxable account, it is very tax-efficient.

You can adjust your asset allocation by the increasing your use of Vanguard Intermediate-term Bond Index Fund (VBILX) in your 401k account.
At this time, we can’t make adjustment for that 401k. Should I sell VTSAX in Roth and replace with VBILX?
What is the reason you can't exchange funds (stock fund to bond fund) inside your 401k account?
The bond funds are in an old solo401k. I’m not sure if I should do anything with it.
Are good funds with low expense ratios offered in your current employer's 401k plan?

Have you kept your old solo 401k open for some particular reason? Do you still have self-employment income?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Topic Author
babyvinny
Posts: 58
Joined: Thu Nov 14, 2019 2:40 pm

Re: Brokerage account - what to buy?

Post by babyvinny »

ruralavalon wrote: Thu Apr 08, 2021 3:57 pm
babyvinny wrote: Thu Apr 08, 2021 3:48 pm
ruralavalon wrote: Thu Apr 08, 2021 9:38 am
babyvinny wrote: Wed Apr 07, 2021 10:37 pm
ruralavalon wrote: Wed Apr 07, 2021 6:33 pm
Vanguard Total Stock Market Index Fund (VTSAX) is an excellent choice in the taxable account, it is very tax-efficient.

You can adjust your asset allocation by the increasing your use of Vanguard Intermediate-term Bond Index Fund (VBILX) in your 401k account.
At this time, we can’t make adjustment for that 401k. Should I sell VTSAX in Roth and replace with VBILX?
What is the reason you can't exchange funds (stock fund to bond fund) inside your 401k account?
The bond funds are in an old solo401k. I’m not sure if I should do anything with it.
Are good funds with low expense ratios offered in your current employer's 401k plan?

Have you kept your old solo 401k open for some particular reason? Do you still have self-employment income?
No good employer’s 401k plan. At the moment, no self-employment income, but may be in the near future.
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