Portfolio contents

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Topic Author
josephny
Posts: 142
Joined: Wed Apr 03, 2024 9:24 am

Portfolio contents

Post by josephny »

I'm several months into my BH learning and very much enjoying it and appreciative of it and this group. I understand the very basics of the idea of a 3-fund portfolio. But, I see that there are nuances, variations, and possible complicating factors.

I am still very much struggling with the overall investing portfolio ideas and plan, but am working towards it.

In the meantime, and in the hopes of both learning and being smarter with my money, I am hoping to get some advice on just mine (57) and my wife's (65) retirement portfolio contents. We are not particularly risk averse, and have other investments for use during our retirement also (if needed).

These are our combined holdings, 100% in tax-deferred accounts (sIRA, 401k, defined benefits, cash balance).

Having read through quite a few threads here, I think there will be some (most? all?) who say sell liquidate it all and buy 3 funds. Frankly, I'm scared of that -- although I don't know exactly why. Could be the idea of missing out on gains, could be the idea of simply making a generalize mistake. Bottom line, if this portfolio could double in 8 years (as I've read so much about here), we'd be quite happy.

Here is what we currently have (this is after selling many many other positions and buying 3 month treasuries for the time being):

Image

https://imgur.com/a/3aBZd0f

I include the above links to images of PDF exported from Excel. I tried posting the contents of the 57 row spreadsheet here, but it formatting make it difficult to read. In case anyone would prefer, here it is:

Product Type Name Last ($) Quantity
STOCKS BERKSHIRE A 615,900.000 1.00
STOCKS BERKSHIRE B 407.410 10.00
STOCKS BERKSHIRE B 407.410 49.00
STOCKS CONAGRA 30.280 440.00
STOCKS DEERE 374.960 200.00
STOCKS MARATHON OIL 25.560 4000.00
STOCKS MARATHON PETROL 177.800 700.00
STOCKS MORGAN STANLEY 98.970 48.00
STOCKS ROCHE ADR 31.600 70.00
STOCKS WALGREENS 16.030 4000.00
MUTUAL-F DBLN LOW DURAT BD I 9.600 302.70
MUTUAL-F DOUBLELINE LOW DURATION BD I 9.600 3944.57
MUTUAL-F DOUBLELINE TOT RETURN I 8.610 546.06
MUTUAL-F DOUBLELINE TOT RETURN I 8.610 7133.04
MUTUAL-F FIDELITY 500 INDEX 184.520 1612.13
MUTUAL-F FIDELITY SMALL CAP GROWTH 31.590 9372.43
MUTUAL-F JPM STRAT INC OPPORT I 11.500 574.92
MUTUAL-F JPM STRAT INC OPPORT I 11.500 7495.92
MUTUAL-F PGIM SHORT-TERM CORP BOND Z 10.430 276.89
MUTUAL-F PGIM SHORT-TERM CORP BOND Z 10.430 3613.80
MUTUAL-F PIMCO INCOME I2 10.490 622.20
MUTUAL-F PIMCO INCOME I2 10.490 8122.54
MUTUAL-F VANGUARD MID CAP INDEX ADM 305.330 751.27
MUNI CA ST CPN: 7.550% 119.909 10000.00
GOVT US Treasury 3 mon 98.746 456000.00
GOVT US Treasury 3 mon 98.746 152000.00
GOVT US Treasury 4.500% 101.297 20000.00
ETF FT NASDAQ CYBERSECUR 55.710 37.00
ETF FT NASDAQ CYBERSECUR 55.710 185.00
ETF INVESCO NASDAQ 100 188.480 24.00
ETF INVESCO NASDAQ 100 188.480 113.00
ETF ISHARES CORE HIGH DIVIDEND 108.980 2000.00
ETF ISHARES CORE MSCI EAFE 75.290 72.00
ETF ISHARES CORE MSCI EAFE ETF 75.290 352.00
ETF ISHARES CORE S&P 500 ETF 532.150 106.00
ETF ISHARES CORE S&P 500 ETF 532.150 519.00
ETF JPM NASDAQ EQUITY PREMIUM 54.380 39.00
ETF JPM NASDAQ EQUITY PREMIUM 54.380 192.00
ETF JPMORGAN EQUITY PREMIUM INCO 56.920 55.00
ETF JPMORGAN EQUITY PREMIUM INCO 56.920 270.00
ETF SPDR S&P 500 ETF TRUST 529.440 1000.00
ETF VANGUARD GROWTH ETF 355.460 200.00
ETF VANGUARD GROWTH ETF 355.460 95.00
ETF VANGUARD INDUSTRIAL ETF 241.410 17.00
ETF VANGUARD INDUSTRIAL ETF 241.410 84.00
ETF VANGUARD INFO TECH ETF 545.230 9.00
ETF VANGUARD INFO TECH ETF 545.230 39.00
ETF VANGUARD MID-CAP ETF INDEX 246.600 51.00
ETF VANGUARD MID-CAP ETF INDEX 246.600 251.00
ETF VANGUARD RUSSELL 2000 ETF 83.070 1832.00
ETF VANGUARD RUSSELL 2000 ETF 83.070 90.00
ETF VANGUARD SMALL CAP ETF 222.590 28.00
ETF VANGUARD SMALL CAP ETF 222.590 138.00
ETF VANGUARD TTL STK MKT ETF 261.870 587.00
ETF VANGUARD TTL STK MKT ETF 261.870 270.00
ETF WISDOMTREE FLOATING RATE 50.310 47.00
ETF WISDOMTREE FLOATING RATE 50.310 613.00
CASH 136039.64

Thank you!
Outer Marker
Posts: 4539
Joined: Sun Mar 08, 2009 8:01 am

Re: Portfolio contents

Post by Outer Marker »

josephny wrote: Mon May 27, 2024 4:37 am I understand the very basics of the idea of a 3-fund portfolio. But, I see that there are nuances, variations, and possible complicating factors.
I am still very much struggling with the overall investing portfolio ideas and plan, but am working towards it.
That portfolio is a mess and very difficult to understand.

I'd suggest you make things easy on yourself and put it in a Target Date retirement fund appropriate to your age and risk tollerance. e.g.
https://investor.vanguard.com/investmen ... omposition
https://fundresearch.fidelity.com/mutua ... /315793703

This assumes you have access to a low cost target date fund among the options in your retirement account.

This will give you all the advantages of the classic 3-fund portfolio without having to think about it and manage/rebalance yourself.
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Sandtrap
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Re: Portfolio contents

Post by Sandtrap »

To OP:
questions for you:
1
What brokerages do you have accounts with?
Vanguard?
Fidelity?
etc?
2
Do you have ACH transfer links set up between them?
3
You have a long list. Where are they now?
4
There is a general "rules of thumbs" about portfolio consolidation, taking into account size of each fund/stock holding relative to the total (percentage of total), etc.
There are some excellent posts/threads on this as well as the forum "wiki".

Are you familiar with this?

It includes:
Avoid/eliminate overlap and redundancy.
Reduce/eliminate high expense funds/etc.
Eliminate positions/holdings less than 5 percent or more of the total (they do not "move the needle").
etc, etc,

5
How were these funds/stocks first aquired?
You bought them, HR Fund manager, FA, ???

j
Wiki Bogleheads Wiki: Everything You Need to Know
Topic Author
josephny
Posts: 142
Joined: Wed Apr 03, 2024 9:24 am

Re: Portfolio contents

Post by josephny »

Outer Marker wrote: Mon May 27, 2024 6:39 am
josephny wrote: Mon May 27, 2024 4:37 am I understand the very basics of the idea of a 3-fund portfolio. But, I see that there are nuances, variations, and possible complicating factors.
I am still very much struggling with the overall investing portfolio ideas and plan, but am working towards it.
That portfolio is a mess and very difficult to understand.

I'd suggest you make things easy on yourself and put it in a Target Date retirement fund appropriate to your age and risk tollerance. e.g.
https://investor.vanguard.com/investmen ... omposition
https://fundresearch.fidelity.com/mutua ... /315793703

This assumes you have access to a low cost target date fund among the options in your retirement account.

This will give you all the advantages of the classic 3-fund portfolio without having to think about it and manage/rebalance yourself.
Thank you very much for the analysis and advice.

I don't have (and don't believe it is possible to arrive at) a target date (or even year) for retirement for me or my wife.

I have zero experience with target date funds, but a quick google indicates that a retirement date is required. Do I understand correctly?
Topic Author
josephny
Posts: 142
Joined: Wed Apr 03, 2024 9:24 am

Re: Portfolio contents

Post by josephny »

Sandtrap wrote: Mon May 27, 2024 6:53 am To OP:
questions for you:
1
What brokerages do you have accounts with?
Vanguard?
Fidelity?
etc?
2
Do you have ACH transfer links set up between them?
3
You have a long list. Where are they now?
4
There is a general "rules of thumbs" about portfolio consolidation, taking into account size of each fund/stock holding relative to the total (percentage of total), etc.
There are some excellent posts/threads on this as well as the forum "wiki".

Are you familiar with this?

It includes:
Avoid/eliminate overlap and redundancy.
Reduce/eliminate high expense funds/etc.
Eliminate positions/holdings less than 5 percent or more of the total (they do not "move the needle").
etc, etc,

5
How were these funds/stocks first aquired?
You bought them, HR Fund manager, FA, ???

j
Thank you for your help!

Everything listed in the original post is held at Morgan Stanley. Please don't ask -- it is something I've been struggling with (think agita) for months and turns out moving to Fidelity (for example) is far more complicated that it seems.

Overlap/redundancy is without a doubt abundant in my portfolio, being one (of many) reason why it is very hard to analyze.

The high-expense and positions less than 5% I can do -- if I was certain I was doing it right. I know these are all in tax-deferred, but do I really lose nothing by simply selling?

Some of these are held in managed accounts (which I cannot get out of without moving from MS and can't move from MS because the cash balance, defined benefits, 401k profit sharing accounts, while custodial only to MS, could get all messed up under Fidelity, who does not necessarily handle these well).

Many of these positions were bought by previous managers or by me (when I knew even less than I do now).

I wonder if I can tell MS where to put my money while in the AUM-fee accounts? If so, where should it be put?
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Re: Portfolio contents

Post by Outer Marker »

josephny wrote: Mon May 27, 2024 8:02 am Thank you very much for the analysis and advice.

I don't have (and don't believe it is possible to arrive at) a target date (or even year) for retirement for me or my wife.

I have zero experience with target date funds, but a quick google indicates that a retirement date is required. Do I understand correctly?
Just pick a "target date" close to your desired asset allocation. It's certainly not mandatory that you pick a date that corresponds to your exact retirement date (they are generally offered in 5 year increments - it's not an exact science). The 2030 date funds mentioned above, have roughly a 60/40 asset allocation, which seems reasonable for your age. If you want to be a little more agressive, pick a later date which will have more equities. And, you can always switch to a different date fund if your circumstances change. Target date funds are a great default option for folks that have most of their money in tax deferred accounts and don't want to be hands on with their investments. The funds are on a "glidepath" to automatically become more conservative as you get older. What are the fund options avialble in your retirement plans and what are their expense ratios?
Topic Author
josephny
Posts: 142
Joined: Wed Apr 03, 2024 9:24 am

Re: Portfolio contents

Post by josephny »

Outer Marker wrote: Mon May 27, 2024 8:16 am
josephny wrote: Mon May 27, 2024 8:02 am Thank you very much for the analysis and advice.

I don't have (and don't believe it is possible to arrive at) a target date (or even year) for retirement for me or my wife.

I have zero experience with target date funds, but a quick google indicates that a retirement date is required. Do I understand correctly?
Just pick a "target date" close to your desired asset allocation. It's certainly not mandatory that you pick a date that corresponds to your exact retirement date (they are generally offered in 5 year increments - it's not an exact science). The 2030 date funds mentioned above, have roughly a 60/40 asset allocation, which seems reasonable for your age. If you want to be a little more agressive, pick a later date which will have more equities. And, you can always switch to a different date fund if your circumstances change. Target date funds are a great default option for folks that have most of their money in tax deferred accounts and don't want to be hands on with their investments. The funds are on a "glidepath" to automatically become more conservative as you get older. What are the fund options avialble in your retirement plans and what are their expense ratios?
That very much fills me in -- thank you.

I still don't understand why I would use a target date fund, except for the generalized idea that I might not want to be hands-on.

I think I'd rather be more hands-on.

The retirement plans that are not managed by MS are managed by me, and anything available to purchase through MS is therefore available to hold in these accounts. Not 100% sure this answers your question -- if not, sorry, and please let me know.
livesoft
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Joined: Thu Mar 01, 2007 7:00 pm

Re: Portfolio contents

Post by livesoft »

Folks who are asking portfolio questions like yours are asked to present in a different way than you have presented things. That's because one cannot easily move assets from a taxable account to a Roth IRA --- or from an employer retirement acccount like a 401(k) to another account like a deferered compensation plan or taxable account. Also one cannot move from spouse's IRA to one's own IRA.

Therefore bogleheads.org has come up with a way for folks to ask portfolio questions. Here is the format:
https://www.bogleheads.org/wiki/Asking_ ... _questions

That said, it is easy to see that you many of the same investments in different acccounts. It is impossible for me to tell you what to do because I cannot tell which accounts will have tremendous taxes to make changes and which accounts will have no taxes to make changes ... plus many other things that one has to watch out for.
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Topic Author
josephny
Posts: 142
Joined: Wed Apr 03, 2024 9:24 am

Re: Portfolio contents

Post by josephny »

livesoft wrote: Mon May 27, 2024 8:42 am Folks who are asking portfolio questions like yours are asked to present in a different way than you have presented things. That's because one cannot easily move assets from a taxable account to a Roth IRA --- or from an employer retirement acccount like a 401(k) to another account like a deferered compensation plan or taxable account. Also one cannot move from spouse's IRA to one's own IRA.

Therefore bogleheads.org has come up with a way for folks to ask portfolio questions. Here is the format:
https://www.bogleheads.org/wiki/Asking_ ... _questions

That said, it is easy to see that you many of the same investments in different acccounts. It is impossible for me to tell you what to do because I cannot tell which accounts will have tremendous taxes to make changes and which accounts will have no taxes to make changes ... plus many other things that one has to watch out for.
Just to pick up on the subject of the last paragraph: All these holdings are in tax-deferred accounts. Does that address the concern about which "will have tremendous taxes to make changes?"
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Re: Portfolio contents

Post by Outer Marker »

josephny wrote: Mon May 27, 2024 8:21 am I still don't understand why I would use a target date fund, except for the generalized idea that I might not want to be hands-on.

I think I'd rather be more hands-on.
What would you differently than Fidelity or Vanguard's portfolio construction experts? There may be valid reasons, such as you prefer a greater % of US to foreign equities, or prefer safer, shorter bonds than Total Bond (as I do). Like you, I'm also a Berkshire fan. That said, a low cost target date index fund is a very good starting point.

If you wanted to go it alone, and taking into account your current preferences, you could do something like

5% Berkeshire
50% Total Stock Market Index
15% Total International Stock Market Index
30% Short Term Treasury Index
livesoft
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Re: Portfolio contents

Post by livesoft »

josephny wrote: Mon May 27, 2024 8:50 amJust to pick up on the subject of the last paragraph: All these holdings are in tax-deferred accounts. Does that address the concern about which "will have tremendous taxes to make changes?"
Yes it does.
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upwind
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Re: Portfolio contents

Post by upwind »

I don’t feel I am in position to advise others. Moreover, it would take long time to get head around that portfolio. You will want to figure out your overall AA and then how it breaks down into categories. You have so many different holdings it’s hard to know how your holdings tilt and what have you. I see a lot of growth and tech stuff but didn’t try to figure out to what degree that is balanced out by other things. That is something I’d want to get my head around if you don’t. It is possible your equity holdings may be more volatile than desired especially as you continue to age. Since you say this is all tax deferred I guess you can just decide on your end state and implement instead of trying to determine exactly how the current holdings shake out.

You don’t need to get to 3 funds let alone 1 fund but what you have is undoubtedly excessively complex with a lot of overlap and counter balancing. I don’t like 1 fund portfolios because you get what you get for AA between domestic stock, foreign stock, domestic bonds, and foreign bonds. For some people it might be fine but it might not be what you want.

You would probably be well served to make the core of your holdings 3 fund but you can certainly broaden out from there if you feel it serves a purpose. As one example, I don’t want all my bonds in open ended bond funds. Also consider fund costs as you look through your portfolio. For the higher fee funds are they really delivering the consistent long term performance to justify their keep?
“Investing is the intersection of economics and psychology.” - Seth Klarman
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retired@50
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Re: Portfolio contents

Post by retired@50 »

josephny wrote: Mon May 27, 2024 4:37 am I'm several months into my BH learning and very much enjoying it and appreciative of it and this group. I understand the very basics of the idea of a 3-fund portfolio. But, I see that there are nuances, variations, and possible complicating factors.

I am still very much struggling with the overall investing portfolio ideas and plan, but am working towards it.

In the meantime, and in the hopes of both learning and being smarter with my money, I am hoping to get some advice on just mine (57) and my wife's (65) retirement portfolio contents. We are not particularly risk averse, and have other investments for use during our retirement also (if needed).

These are our combined holdings, 100% in tax-deferred accounts (sIRA, 401k, defined benefits, cash balance).

Having read through quite a few threads here, I think there will be some (most? all?) who say sell liquidate it all and buy 3 funds. Frankly, I'm scared of that -- although I don't know exactly why. Could be the idea of missing out on gains, could be the idea of simply making a generalize mistake. Bottom line, if this portfolio could double in 8 years (as I've read so much about here), we'd be quite happy.

Here is what we currently have (this is after selling many many other positions and buying 3 month treasuries for the time being):

Image

https://imgur.com/a/3aBZd0f

I include the above links to images of PDF exported from Excel. I tried posting the contents of the 57 row spreadsheet here, but it formatting make it difficult to read. In case anyone would prefer, here it is:

Product Type Name Last ($) Quantity
STOCKS BERKSHIRE A 615,900.000 1.00
STOCKS BERKSHIRE B 407.410 10.00
STOCKS BERKSHIRE B 407.410 49.00
STOCKS CONAGRA 30.280 440.00
STOCKS DEERE 374.960 200.00
STOCKS MARATHON OIL 25.560 4000.00
STOCKS MARATHON PETROL 177.800 700.00
STOCKS MORGAN STANLEY 98.970 48.00

STOCKS ROCHE ADR 31.600 70.00
STOCKS WALGREENS 16.030 4000.00
MUTUAL-F DBLN LOW DURAT BD I 9.600 302.70
MUTUAL-F DOUBLELINE LOW DURATION BD I 9.600 3944.57
MUTUAL-F DOUBLELINE TOT RETURN I 8.610 546.06
MUTUAL-F DOUBLELINE TOT RETURN I 8.610 7133.04

MUTUAL-F FIDELITY 500 INDEX 184.520 1612.13
MUTUAL-F FIDELITY SMALL CAP GROWTH 31.590 9372.43

MUTUAL-F JPM STRAT INC OPPORT I 11.500 574.92
MUTUAL-F JPM STRAT INC OPPORT I 11.500 7495.92
MUTUAL-F PGIM SHORT-TERM CORP BOND Z 10.430 276.89
MUTUAL-F PGIM SHORT-TERM CORP BOND Z 10.430 3613.80
MUTUAL-F PIMCO INCOME I2 10.490 622.20
MUTUAL-F PIMCO INCOME I2 10.490 8122.54

MUTUAL-F VANGUARD MID CAP INDEX ADM 305.330 751.27
MUNI CA ST CPN: 7.550% 119.909 10000.00
GOVT US Treasury 3 mon 98.746 456000.00
GOVT US Treasury 3 mon 98.746 152000.00
GOVT US Treasury 4.500% 101.297 20000.00

ETF FT NASDAQ CYBERSECUR 55.710 37.00
ETF FT NASDAQ CYBERSECUR 55.710 185.00
ETF INVESCO NASDAQ 100 188.480 24.00
ETF INVESCO NASDAQ 100 188.480 113.00
ETF ISHARES CORE HIGH DIVIDEND 108.980 2000.00

ETF ISHARES CORE MSCI EAFE 75.290 72.00 <- Presumably, this is the IEFA ticker.
ETF ISHARES CORE MSCI EAFE ETF 75.290 352.00
ETF ISHARES CORE S&P 500 ETF 532.150 106.00
ETF ISHARES CORE S&P 500 ETF 532.150 519.00
ETF JPM NASDAQ EQUITY PREMIUM 54.380 39.00
ETF JPM NASDAQ EQUITY PREMIUM 54.380 192.00
ETF JPMORGAN EQUITY PREMIUM INCO 56.920 55.00
ETF JPMORGAN EQUITY PREMIUM INCO 56.920 270.00
ETF SPDR S&P 500 ETF TRUST 529.440 1000.00
ETF VANGUARD GROWTH ETF 355.460 200.00
ETF VANGUARD GROWTH ETF 355.460 95.00
ETF VANGUARD INDUSTRIAL ETF 241.410 17.00
ETF VANGUARD INDUSTRIAL ETF 241.410 84.00
ETF VANGUARD INFO TECH ETF 545.230 9.00
ETF VANGUARD INFO TECH ETF 545.230 39.00
ETF VANGUARD MID-CAP ETF INDEX 246.600 51.00
ETF VANGUARD MID-CAP ETF INDEX 246.600 251.00
ETF VANGUARD RUSSELL 2000 ETF 83.070 1832.00
ETF VANGUARD RUSSELL 2000 ETF 83.070 90.00
ETF VANGUARD SMALL CAP ETF 222.590 28.00
ETF VANGUARD SMALL CAP ETF 222.590 138.00

ETF VANGUARD TTL STK MKT ETF 261.870 587.00 <- Presumably, this is the VTI ticker.
ETF VANGUARD TTL STK MKT ETF 261.870 270.00
ETF WISDOMTREE FLOATING RATE 50.310 47.00
ETF WISDOMTREE FLOATING RATE 50.310 613.00
CASH 136039.64


Thank you!
The blue funds / stocks appear to be US stocks. Sell all the blue funds and buy more VTI.

The red funds appear to be US bonds and cash. Sell all the red funds and buy BND or VBTLX depending on what's available in this account.

The green funds / stocks appear to be International stocks. Sell all the green funds and buy more IEFA.

Regards,
"All of us would be better investors if we just made fewer decisions." - Daniel Kahneman
bonesly
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Re: Portfolio contents

Post by bonesly »

josephny wrote: Mon May 27, 2024 4:37 am Having read through quite a few threads here, I think there will be some (most? all?) who say sell liquidate it all and buy 3 funds. Frankly, I'm scared of that -- although I don't know exactly why. Could be the idea of missing out on gains, could be the idea of simply making a generalize mistake. Bottom line, if this portfolio could double in 8 years (as I've read so much about here), we'd be quite happy.
You can't control your return (you'd need an average 9.05% return over 8 years to double with no further contributions). You can and should control your risk to something appropriate for your tolerance and minimize your costs.

Control Your Risk
Read the Wiki article for Assessing Risk Tolerance, take the Vanguard Investor Questionnaire, then tailor the asset allocation (AA) that was recommended by the quiz based on your knowledge of your personal risk tolerance having read the Wiki article.

Alternatively (or in addition to), ask "How much of a drop in portfolio value as a % of total value can I handle?" cut that % in half to get standard deviation, then lookup that std. dev. on the X-Axis of the chart below, and finally scan up to see what AA that corresponds to. As an example, if you can only stomach a -24% drop in portfolio value, that's a ±12% std. dev, which corresponds to an AA of 60/40. The return you get is an average and you'll get what you get with your unique sequence of returns (there's a lot of variance in outcomes due to the associated volatility of stocks so it probably will NOT be the average, but something more or less).
Image

Minimize Your Costs
The info you provided about your holdings includes: Product Type, Name, Last Price ($), and nShares. All useful info but missing the most critical info to minimize costs; what is the expense ratio for your mutual funds and ETFs? A Boglehead philosophy tends toward passive index funds/ETFs with ERs < 0.20% (the 3-Fund portfolio from Vanguard funds/ETFs is around 0.05%).

This dizzying array of individual stocks, bonds, mutual funds, and ETFs looks like it was assembled by a financial advisor using the "investing is so complex you could never do this without me" tactic. Even without looking up all the ERs, I'll say is unnecessarily complex, which makes it hard to manage, so you should simplify by selling it all and buying the individual funds/ETFs for a 3-Fund Portfolio in proportion to your chosen AA and desired international exposure as a % of stocks (typically 20-40%). See the section on Minimizing Costs in the Boglehead Investment Philosophy article of the Wiki.

"Simplicity is the master key to financial success." -- John C. Bogle
Don't do what Bogleheads tell you. Listen to what we say, consider other sources, and make your own decisions, since you have to live with the risks & rewards (not us or anyone else).
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BolderBoy
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Re: Portfolio contents

Post by BolderBoy »

josephny wrote: Mon May 27, 2024 8:10 amEverything listed in the original post is held at Morgan Stanley. Please don't ask -- it is something I've been struggling with (think agita) for months and turns out moving to Fidelity (for example) is far more complicated that it seems.
Your portfolio is so overwhelming (MS did that to you intentionally) that I would sell everything to a cash position. Then call Fidelity and tell them you want to move it all over to them (tIRA, rIRA, 401k, whatever). Fido will be delighted to get your business. Or to Vanguard or Schwab or whomever. But I'd get it all into cash first; much cleaner.

Wow...
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
Topic Author
josephny
Posts: 142
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Re: Portfolio contents

Post by josephny »

If only it were that easy....

I'm stuck with MS -- at least that's what I think. They have 3 retirement accounts, totaling about $1.5MM, that they charge their 90bp AUM fee. I have reached out to the recommended companies here and none are equipped to be the custodians of those accounts. Fidelity says they can, using their non-prototype accounts, but there are conflicting accounts of Fidelity's level of capability to do that.

So, some of the holdings I list above are not under my control.

The others I will follow the advice here and simplify -- sell and buy VTI or FXIAX, etc.

As for AA, I think I am simply incapable of either comprehending or conforming or accepting. I generally have a rather high risk tolerance. But, like pain tolerance, no one wants to experience things when they go bad. Would I be very upset with a 30% drop in portfolio value -- heck yes! Would I be upset with a 1.19% annual return in BND (that appears to be the 10 year return; 1, 3, and 5 are negative returns) -- heck yes! Bottom line, if my understanding is correct, I'm much more inclined to adopt a 80/20 or 90/10 AA.

Anyway, I'm starting to liquidate and invest smarter, and I'm pushing MS to either reduce it's fees or reduce the number of accounts under management.

BTW, these were just the tax advantaged (retirement) accounts. You don't want to see the stupidity I exhibited in my "investing" choices in the taxable accounts.
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Re: Portfolio contents

Post by wetgear »

josephny wrote: Tue May 28, 2024 7:06 am If only it were that easy....

I'm stuck with MS -- at least that's what I think. They have 3 retirement accounts, totaling about $1.5MM, that they charge their 90bp AUM fee. I have reached out to the recommended companies here and none are equipped to be the custodians of those accounts. Fidelity says they can, using their non-prototype accounts, but there are conflicting accounts of Fidelity's level of capability to do that.

So, some of the holdings I list above are not under my control.

The others I will follow the advice here and simplify -- sell and buy VTI or FXIAX, etc.

As for AA, I think I am simply incapable of either comprehending or conforming or accepting. I generally have a rather high risk tolerance. But, like pain tolerance, no one wants to experience things when they go bad. Would I be very upset with a 30% drop in portfolio value -- heck yes! Would I be upset with a 1.19% annual return in BND (that appears to be the 10 year return; 1, 3, and 5 are negative returns) -- heck yes! Bottom line, if my understanding is correct, I'm much more inclined to adopt a 80/20 or 90/10 AA.

Anyway, I'm starting to liquidate and invest smarter, and I'm pushing MS to either reduce it's fees or reduce the number of accounts under management.

BTW, these were just the tax advantaged (retirement) accounts. You don't want to see the stupidity I exhibited in my "investing" choices in the taxable accounts.
I don’t believe you are stuck, that is very unlikely. Are these 401ks or IRAs?
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Re: Portfolio contents

Post by BolderBoy »

josephny wrote: Tue May 28, 2024 7:06 am If only it were that easy....

I'm stuck with MS -- at least that's what I think. They have 3 retirement accounts, totaling about $1.5MM, that they charge their 90bp AUM fee.
You are being pretty vague about all of this.

What, specifically, are the types of the three retirement accounts?
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
lakpr
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Re: Portfolio contents

Post by lakpr »

retired@50 wrote: Mon May 27, 2024 10:01 am
The blue funds / stocks appear to be US stocks. Sell all the blue funds and buy more VTI.

The red funds appear to be US bonds and cash. Sell all the red funds and buy BND or VBTLX depending on what's available in this account.

The green funds / stocks appear to be International stocks. Sell all the green funds and buy more IEFA.
@josephny,

If all the funds are in tax-deferred accounts as was mentioned earlier, this would be an excellent plan of action to trim your portfolio down, simplify and diversify all at the same time. No tax costs in selling and buying within the tax-deferred accounts.

I would make ONE change though, I would keep the BRK.A stock, would not sell it, only because it would grant shareholder voting privileges that you don't get with the B-class shares. It is diversified enough to be considered a mutual fund equivalent on its own, much like VTI.
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Re: Portfolio contents

Post by josephny »

BolderBoy wrote: Tue May 28, 2024 9:40 am
josephny wrote: Tue May 28, 2024 7:06 am If only it were that easy....

I'm stuck with MS -- at least that's what I think. They have 3 retirement accounts, totaling about $1.5MM, that they charge their 90bp AUM fee.
You are being pretty vague about all of this.

What, specifically, are the types of the three retirement accounts?
I suppose I am being vague, but not because I'm trying to hide anything.

I have posted other threads which talk about the specific difficulty I'm having with moving from MS, and I didn't want to violate any rules of etiquette and repeat my situation (I already sound like I'm complaining too much).

My wife and I each have cash balance, defined benefits, and profit sharing 401K plans for each of our businesses. We hired a 3rd party plan formation company which files the annual papers and provides the contribution calculations. MS is where those accounts are, and we are the plan managers. But, MS will only hold (act as the custodian of?) these accounts if they are managed by them (for a fee of 90bp).

I contacts Fidelity, Vanguard and Schwab (with Fidelity being my preference, just from the general consensus here), and none of them will do this easily/readily. Fidelity says they can be the custodian by setting up non-prototype accounts, but people here (and elsewhere) have had mixed experiences with Fidelity and their non-prototype accounts. So I'm reluctant to switch.

I'm not happy about the 90bp, and I'm even less happy (more and more as the days pass and I learn more and more about the BH way) with how that money is invested by the MS asset managers.

So, my plan (i.e., path of least resistance for the moment) is to clean up the accounts that I have control over first. Then make a final decision about moving.


Does that make sense?
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Re: Portfolio contents

Post by BolderBoy »

josephny wrote: Tue May 28, 2024 12:30 pm My wife and I each have cash balance, defined benefits, and profit sharing 401K plans for each of our businesses.

Does that make sense?
Oh. Well the DB plans are way over my head.

Best wishes for untangling yourself from MS. I wouldn't know where to begin in this situation.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
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Re: Portfolio contents

Post by bonesly »

josephny wrote: Tue May 28, 2024 12:30 pm My wife and I each have cash balance, defined benefits, and profit sharing 401K plans for each of our businesses. We hired a 3rd party plan formation company which files the annual papers and provides the contribution calculations. MS is where those accounts are, and we are the plan managers. But, MS will only hold (act as the custodian of?) these accounts if they are managed by them (for a fee of 90bp).

I contacts Fidelity, Vanguard and Schwab (with Fidelity being my preference, just from the general consensus here), and none of them will do this easily/readily. Fidelity says they can be the custodian by setting up non-prototype accounts, but people here (and elsewhere) have had mixed experiences with Fidelity and their non-prototype accounts. So I'm reluctant to switch.
Is this a viable plan?

Move all the holdings to cash.
Move the 401k accounts to a "Rollover IRA" at Fidelity
Establish a new 401k at Fidelity
Make your future 401k contributions to the new plan at Fido

That's got to be less expensive than sticking with MS, right? I assumed it was the various holdings that Fido/Schwab could not receive but maybe it's the structure of your 401k plan, so a completely new plan should eliminate that obstacle (if that's the issue for Fido/Schwab).

I know Vanguard got out of the solo 401k/SIMPLE/SEP business, but if your company employs more than one person it seems easier to just setup a new 401k plan unless you're under some contract that Morgan Stanley will service your company in perpetuity (I guess you could challenge that in court, but if you signed something so restrictive, I can agree with your "I think we're stuck" comment).
Don't do what Bogleheads tell you. Listen to what we say, consider other sources, and make your own decisions, since you have to live with the risks & rewards (not us or anyone else).
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Re: Portfolio contents

Post by josephny »

bonesly wrote: Tue May 28, 2024 1:59 pm
josephny wrote: Tue May 28, 2024 12:30 pm My wife and I each have cash balance, defined benefits, and profit sharing 401K plans for each of our businesses. We hired a 3rd party plan formation company which files the annual papers and provides the contribution calculations. MS is where those accounts are, and we are the plan managers. But, MS will only hold (act as the custodian of?) these accounts if they are managed by them (for a fee of 90bp).

I contacts Fidelity, Vanguard and Schwab (with Fidelity being my preference, just from the general consensus here), and none of them will do this easily/readily. Fidelity says they can be the custodian by setting up non-prototype accounts, but people here (and elsewhere) have had mixed experiences with Fidelity and their non-prototype accounts. So I'm reluctant to switch.
Is this a viable plan?

Move all the holdings to cash.
Move the 401k accounts to a "Rollover IRA" at Fidelity
Establish a new 401k at Fidelity
Make your future 401k contributions to the new plan at Fido

That's got to be less expensive than sticking with MS, right? I assumed it was the various holdings that Fido/Schwab could not receive but maybe it's the structure of your 401k plan, so a completely new plan should eliminate that obstacle (if that's the issue for Fido/Schwab).

I know Vanguard got out of the solo 401k/SIMPLE/SEP business, but if your company employs more than one person it seems easier to just setup a new 401k plan unless you're under some contract that Morgan Stanley will service your company in perpetuity (I guess you could challenge that in court, but if you signed something so restrictive, I can agree with your "I think we're stuck" comment).
I think my head is now (this time for real real) going to explode.

You just pulled together so many unanswered questions (that you didn't even know were out there).

I'll back up.

These CB/DB/PS-401K plans were just created in 2022 as a way to create tax-deferred retirement plans. Because we are on the age-mature side, and had never done this before, we qualified for "catch-up" (which I don't claim to understand, but it let us sock away quite a lot and deduct from taxable income in 2022 and 2023). There was mention of needing to make at least a minimum contribution (which is still quite substantial) for some time in the future (I don't know if the total was 3 years, 5, 7, ?).

But you're idea of converting these accounts now (or next year if necessary and if advisable from a taxation perspective) is intriguing. It will make Fidelity a reasonable move, eliminate I think about $5,000-$6,000/yr to the plan admin guys who file papers, advise, and provide calculations, and allow us to simplify (which I've learned here, thanks to so many of you, is a worthy and rewarded goal).

And yet there's more: Another element raised in another thread was that at our ages (57 & 65), with our level of tax-deferred retirement savings, and the impending RMDs, etc., it might make sense to stop contributing so much to these accounts. I can't say I understand this concept well-enough either, but I know well-enough to know I should try.

All in all: Thank you. This is something I need to get answers to.
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Re: Portfolio contents

Post by bonesly »

josephny wrote: Tue May 28, 2024 4:55 pm And yet there's more: Another element raised in another thread was that at our ages (57 & 65), with our level of tax-deferred retirement savings, and the impending RMDs, etc., it might make sense to stop contributing so much to these accounts. I can't say I understand this concept well-enough either, but I know well-enough to know I should try.
This is the so called "tax time-bomb" of a tax-deferred account. It's not tax-free so you'll owe taxes on it eventually when you're forced to take RMDs and it will ALL be taxed as ordinary income regardless of whether it's stocks, bonds, or cash in the tax-deferred account. Roth accounts don't give a tax-break now, but the earnings are tax-free. Taxable accounts don't give a tax-break now either but capital gains from stocks in a Taxable account are taxed more favorably than ordinary income (typically 15% for LTCG if your AGI is between $47K and $519K).

That's why in the Wiki article for Tax-Efficient Fund Placement, it's suggested that your entire bond allocation be placed in tax-deferred (and only stocks in Taxable & Tax-Free if possible), because bonds don't grow as much as stocks and if you only held stocks in tax-deferred (or you contribute only to tax-deferred and not to Roth and/or Taxable) then that increases the magnitude of your tax time-bomb.

That might sound simple yet the decision between Trad vs Roth is often non-trivial. There's value in holding a semblance of balance between Trad Tax-Deferred and Roth Tax-Free, so you get the benefits of both. Often the strategy is to max Tax-Deferred 401k and Roth IRA during your working years, and then when you stop W-2 income but before you collect SocSec (hopefully the lowest tax bracket during retirement), you do Roth Conversions from the 401k to achieve that "semblance of balance" and reduce the magnitude of your tax time-bomb.

It might take a few reads of the linked articles and a few more Q&A sessions here to understand this concept well-enough to know how to address it, but we're here for the Q&A part (the reading assignments are on you)! :)
Don't do what Bogleheads tell you. Listen to what we say, consider other sources, and make your own decisions, since you have to live with the risks & rewards (not us or anyone else).
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josephny
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Re: Portfolio contents

Post by josephny »

UPDATE as of early June, 2024:

I am in the process of simplifying the portfolio and have sold a great many positions.

This is the current allocation of investments (except for a small handful of positions that I am still in the process of liquidating -- 5 to 7% of total).

Retirement funds (various accounts, all tax-deferred; according to Morgan Stanley's analysis the AA is 57/19 with 24% in cash):

Stocks: $1MM (in order of market value within portfolio: Berkshire-A, Marathon Petroleum, Marathon Oil, Deere, Walgreens, Berkshire-B, Conagra)
ETF: $2MM (SPY VTI IVV HDV VTWO VUG XSW VO VB USFR)
Government Securities: $600k (3 month treasury)
Mutual Funds: $300k (All Bonds of various types: Doubleline Low Duration BD I, Doubleline Total Return I, JP Morgan Strat Inc Opportunity I, PGIM Short Term Corp Bond Z, PIMCO Income I2)
Cash: $1.3MM


Our taxable/investment accounts (according to Morgan Stanley's analysis the AA is 70/30) include:

Stocks: $2.4MM (terribly performing crap that I'm embarrassed to identify here)
ETF: $450k (PIMCO Active Bond Exchange T BOND, Vanguard Russell 2000 VTWO, Vanguard Small Cap 600 VIOV, VTI)
Government Securities: $1M (3 month treasury)

One problem is that some of these holdings are in accounts managed by Morgan, so I cannot simplify that portion of the portfolio. I have not moved forward with moving to Fidelity.

Another problem is I have not yet been able to get my head about the best course of action with respect to continuing to contribute to tax-deferred retirement accounts vs. stopping those contributions.

Another problem is the decision (and timing) of converting to Roth. I have been reading, and slowly learning that there is real value to converting to Roth, but our tax bracket makes is very expensive -- and yes, I've read (and have a basic understanding) that future tax rates might be higher, making a conversion now even wiser.

For now, I am focused on continuing to clean up and simplify these accounts.

So, I have quite a bit of cash sitting in these accounts, and the 3 month treasuries will become cash soon enough.

If I understand enough about this process, the first step in deciding where to put that money to work is to choose an AA (for which a main factor is risk tolerance). This is where I am stuck.

So, again, I am turning to the wise and experienced people here for guidance.

Thank you.
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Re: Portfolio contents

Post by lakpr »

josephny wrote: Thu Jun 06, 2024 5:20 am Stocks: $2.4MM (terribly performing crap that I'm embarrassed to identify here)
If "performing crap", you may be able to sell all those positions for little tax cost. If the net is a loss, you may be able to sell one of those individual stocks to offset
josephny wrote: Thu Jun 06, 2024 5:20 am Stocks: $1MM (in order of market value within portfolio: Berkshire-A, Marathon Petroleum, Marathon Oil, Deere, Walgreens, Berkshire-B, Conagra)
I mentioned this up-thread, I would keep the BRK.A and perhaps BRK.B, but suggest selling the remaining stocks here as and when the opportunity arises.
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Re: Portfolio contents

Post by josephny »

lakpr wrote: Thu Jun 06, 2024 6:46 am
josephny wrote: Thu Jun 06, 2024 5:20 am Stocks: $2.4MM (terribly performing crap that I'm embarrassed to identify here)
If "performing crap", you may be able to sell all those positions for little tax cost. If the net is a loss, you may be able to sell one of those individual stocks to offset
josephny wrote: Thu Jun 06, 2024 5:20 am Stocks: $1MM (in order of market value within portfolio: Berkshire-A, Marathon Petroleum, Marathon Oil, Deere, Walgreens, Berkshire-B, Conagra)
I mentioned this up-thread, I would keep the BRK.A and perhaps BRK.B, but suggest selling the remaining stocks here as and when the opportunity arises.
Sorry, but I don't understand what you mean by a "little tax cost." Many of these stocks are well below my cost, and I don't have the experience, discipline, skills, understanding to bring myself to sell. I'm using the highly effective method of keeping-my-fingers-crossed-until-the-stock-comes-back.

Understood about Berkshire. But, with respect to Marathon P and Marathon O, profit is there. Deere, Walgreens and Conagra, loss is there. In both situations, I am reluctant (see my self-assessment above) to sell (for all the wrong reasons). Perhaps even worse: I'd sooner sell the winners and hold the losers (again, reference my level of investing acumen).

So how wrong am I?
lakpr
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Re: Portfolio contents

Post by lakpr »

josephny wrote: Thu Jun 06, 2024 7:13 am
lakpr wrote: Thu Jun 06, 2024 6:46 am
josephny wrote: Thu Jun 06, 2024 5:20 am Stocks: $2.4MM (terribly performing crap that I'm embarrassed to identify here)
If "performing crap", you may be able to sell all those positions for little tax cost. If the net is a loss, you may be able to sell one of those individual stocks to offset
josephny wrote: Thu Jun 06, 2024 5:20 am Stocks: $1MM (in order of market value within portfolio: Berkshire-A, Marathon Petroleum, Marathon Oil, Deere, Walgreens, Berkshire-B, Conagra)
I mentioned this up-thread, I would keep the BRK.A and perhaps BRK.B, but suggest selling the remaining stocks here as and when the opportunity arises.
Sorry, but I don't understand what you mean by a "little tax cost." Many of these stocks are well below my cost, and I don't have the experience, discipline, skills, understanding to bring myself to sell. I'm using the highly effective method of keeping-my-fingers-crossed-until-the-stock-comes-back.

Understood about Berkshire. But, with respect to Marathon P and Marathon O, profit is there. Deere, Walgreens and Conagra, loss is there. In both situations, I am reluctant (see my self-assessment above) to sell (for all the wrong reasons). Perhaps even worse: I'd sooner sell the winners and hold the losers (again, reference my level of investing acumen).

So how wrong am I?
Very wrong :)

Your investments are worth what they are, today. Unless you know something about these stocks that the rest of the market does not, there is no point in holding them, and the only reason to consider holding them further is if you would incur a large tax cost if you were to sell them.

See Bogleheads Wiki entry on Anchoring Fallacy

Let me ask you a question in the reverse way. If you were in possession of $10k cash, today, would you go out and buy John Deere, or Walgreens, or Conagra? If your answer is yes, keep those stocks. If the answer is no, then sell them (see the URL link above again).

If there are losses, you can pair them with selling the winners so that the net result is as close to zero as possible. If only Berkshire has the gains, I would keep the A class share (for voting rights), sell the B class shares to the extent that gains offset losses. Since the net gain is zero, either insignificant or no tax bill!

[ Then again, I would sell Marathon Petroleum and Marathon Oil before I would sell Berkshire, either A or B class shares ]
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Re: Portfolio contents

Post by josephny »

lakpr wrote: Thu Jun 06, 2024 7:19 am
josephny wrote: Thu Jun 06, 2024 7:13 am
lakpr wrote: Thu Jun 06, 2024 6:46 am
josephny wrote: Thu Jun 06, 2024 5:20 am Stocks: $2.4MM (terribly performing crap that I'm embarrassed to identify here)
If "performing crap", you may be able to sell all those positions for little tax cost. If the net is a loss, you may be able to sell one of those individual stocks to offset
josephny wrote: Thu Jun 06, 2024 5:20 am Stocks: $1MM (in order of market value within portfolio: Berkshire-A, Marathon Petroleum, Marathon Oil, Deere, Walgreens, Berkshire-B, Conagra)
I mentioned this up-thread, I would keep the BRK.A and perhaps BRK.B, but suggest selling the remaining stocks here as and when the opportunity arises.
Sorry, but I don't understand what you mean by a "little tax cost." Many of these stocks are well below my cost, and I don't have the experience, discipline, skills, understanding to bring myself to sell. I'm using the highly effective method of keeping-my-fingers-crossed-until-the-stock-comes-back.

Understood about Berkshire. But, with respect to Marathon P and Marathon O, profit is there. Deere, Walgreens and Conagra, loss is there. In both situations, I am reluctant (see my self-assessment above) to sell (for all the wrong reasons). Perhaps even worse: I'd sooner sell the winners and hold the losers (again, reference my level of investing acumen).

So how wrong am I?
Very wrong :)

Your investments are worth what they are, today. Unless you know something about these stocks that the rest of the market does not, there is no point in holding them, and the only reason to consider holding them further is if you would incur a large tax cost if you were to sell them.

See Bogleheads Wiki entry on Anchoring Fallacy

Let me ask you a question in the reverse way. If you were in possession of $10k cash, today, would you go out and buy John Deere, or Walgreens, or Conagra? If your answer is yes, keep those stocks. If the answer is no, then sell them (see the URL link above again).

If there are losses, you can pair them with selling the winners so that the net result is as close to zero as possible. If only Berkshire has the gains, I would keep the A class share (for voting rights), sell the B class shares to the extent that gains offset losses. Since the net gain is zero, either insignificant or no tax bill!

[ Then again, I would sell Marathon Petroleum and Marathon Oil before I would sell Berkshire, either A or B class shares ]
Great explanation!

Interestingly, the question of whether I would go out today and buy Deere, Walgreens, and/or Conagra is not so straightforward. Not that I know anything everyone else does not. But, rather, I could easily see myself falling victim to the 'it must be a good investment -- it's so much cheaper than it used to be' fallacy.

But, I will force reason, logic, and other's experience and wisdom down my throat and do what needs to be done.

Thank you again.

Do you think 3 month treasuries are a reasonable short-term place for the cash?
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Re: Portfolio contents

Post by lakpr »

josephny wrote: Thu Jun 06, 2024 7:58 am Do you think 3 month treasuries are a reasonable short-term place for the cash?
Yes, and in fact the BEST PLACE for cash to be in these times. Especially for you being in NYC, it will escape state and local taxes, so very attractive.
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josephny
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Re: Portfolio contents

Post by josephny »

lakpr wrote: Thu Jun 06, 2024 8:07 am
josephny wrote: Thu Jun 06, 2024 7:58 am Do you think 3 month treasuries are a reasonable short-term place for the cash?
Yes, and in fact the BEST PLACE for cash to be in these times. Especially for you being in NYC, it will escape state and local taxes, so very attractive.
Great, thank you for the confirmation.

Only hiccup (if that) is that the cash is in an IRA, so the state/local tax exemption (I think) is of no value.
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Re: Portfolio contents

Post by lakpr »

josephny wrote: Thu Jun 06, 2024 9:03 am
lakpr wrote: Thu Jun 06, 2024 8:07 am
josephny wrote: Thu Jun 06, 2024 7:58 am Do you think 3 month treasuries are a reasonable short-term place for the cash?
Yes, and in fact the BEST PLACE for cash to be in these times. Especially for you being in NYC, it will escape state and local taxes, so very attractive.
Great, thank you for the confirmation.

Only hiccup (if that) is that the cash is in an IRA, so the state/local tax exemption (I think) is of no value.
Even without the tax break, the 3M treasuries have the highest yields, I couldn't find any CDs either that would exceed 5.2% for 3 months, or even up to 1 year. I could find some MYGA (multi-year guaranteed annuities) products up to 6% rates, but then those investments are appropriate only if you are going to be more than 59.5 years old by the maturity date. But for simplicity (meaning I am assuming you do not want to go and open yet another account), 3-month treasuries are really perfect place.

Edited to add: MYGAs are also longer term investments, with the emphasis on "Y" initial of the MYGA acronym. I also read your original post that you are 57, so MYGAs should roll into the picture only if you are considering investments for at least 3 years horizon and longer. Your wife however is older than 59.5, so perhaps any IRAs in her name MAY BE considered ...

My favorite site for MYGAs: https://www.blueprintincome.com/fixed-annuities
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josephny
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Re: Portfolio contents

Post by josephny »

lakpr wrote: Thu Jun 06, 2024 9:09 am
josephny wrote: Thu Jun 06, 2024 9:03 am
lakpr wrote: Thu Jun 06, 2024 8:07 am
josephny wrote: Thu Jun 06, 2024 7:58 am Do you think 3 month treasuries are a reasonable short-term place for the cash?
Yes, and in fact the BEST PLACE for cash to be in these times. Especially for you being in NYC, it will escape state and local taxes, so very attractive.
Great, thank you for the confirmation.

Only hiccup (if that) is that the cash is in an IRA, so the state/local tax exemption (I think) is of no value.
Even without the tax break, the 3M treasuries have the highest yields, I couldn't find any CDs either that would exceed 5.2% for 3 months, or even up to 1 year. I could find some MYGA (multi-year guaranteed annuities) products up to 6% rates, but then those investments are appropriate only if you are going to be more than 59.5 years old by the maturity date. But for simplicity (meaning I am assuming you do not want to go and open yet another account), 3-month treasuries are really perfect place.

Edited to add: MYGAs are also longer term investments, with the emphasis on "Y" initial of the MYGA acronym. I also read your original post that you are 57, so MYGAs should roll into the picture only if you are considering investments for at least 3 years horizon and longer. Your wife however is older than 59.5, so perhaps any IRAs in her name MAY BE considered ...

My favorite site for MYGAs: https://www.blueprintincome.com/fixed-annuities
That's great to hear.

I don't know anything about MYGAs.
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Re: Portfolio contents

Post by lakpr »

josephny wrote: Thu Jun 06, 2024 9:22 am I don't know anything about MYGAs.
Somewhat like a 5-year or a 7-year CD, except that you will have access to part of the principal depending on the annuity agreement. Typically 10%. Say you invested $100k in a 5-year CD, but you had a cash crunch in year-3, you are able to withdraw up to $10k in that year without having to completely break the CD.

No worries if you are not aware of them, or know anything about them. A brutal lesson drilled into me ... NEVER BUY SOMETHING YOU DO NOT UNDERSTAND (bond funds in my case ...)
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Re: Portfolio contents

Post by josephny »

lakpr wrote: Thu Jun 06, 2024 9:28 am
josephny wrote: Thu Jun 06, 2024 9:22 am I don't know anything about MYGAs.
Somewhat like a 5-year or a 7-year CD, except that you will have access to part of the principal depending on the annuity agreement. Typically 10%. Say you invested $100k in a 5-year CD, but you had a cash crunch in year-3, you are able to withdraw up to $10k in that year without having to completely break the CD.

No worries if you are not aware of them, or know anything about them. A brutal lesson drilled into me ... NEVER BUY SOMETHING YOU DO NOT UNDERSTAND (bond funds in my case ...)
I, too, have spent a fortune on that education.
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Re: Portfolio contents

Post by Rocinante Rider »

josephny wrote: Mon May 27, 2024 4:37 am I understand the very basics of the idea of a 3-fund portfolio. But, I see that there are nuances, variations, and possible complicating factors.

I am still very much struggling with the overall investing portfolio ideas and plan, but am working towards it...

I think there will be some (most? all?) who say sell liquidate it all and buy 3 funds. Frankly, I'm scared of that -- although I don't know exactly why. Could be the idea of missing out on gains, could be the idea of simply making a generalize mistake. Bottom line, if this portfolio could double in 8 years (as I've read so much about here), we'd be quite happy.
I'm not sure that you are ready to transition to a DIY Boglehead approach. When one adequately understands the basic idea of a 3-fund portfolio (or any reasonable variations - such a target date fund, or 4 funds, or 2 funds, etc.), then the "nuances, variations, and possible complicating factors" are relatively insignificant concerns. The main idea is to use low-cost, broad market index funds and avoid the fees and added risks of active management. It's really quite simple when you come down to it.

But as you say, you're still struggling with the basic idea of passive index investing. You fear "missing out on gains" of active management. You're also looking for some assurance of outcomes, such as your portfolio doubling in 8 years. The only thing that a Boglehead can assure you about is that active management will entail paying unnecessary AUM and other fees. A passively invested dollar is absolutely guaranteed to outperform the aggregate returns of an active managed invested dollar, but by investing passively you also forego the 1-2% chance of beating the market returns over the next 20-30 years.

My suggestion is that you read and re-read several of the basic books on DIY investing recommended on this site. At some point you might become more comfortable with this approach. It took most of us some time to truly become comfortable with Boglehead-type investing. Based on your current post and other similar recent posts of yours, I'm not sure that you are ready to make the change yet. When and if you become ready, you may be amazed at how incredibly simple investing really is.
bonesly
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Re: Portfolio contents

Post by bonesly »

josephny wrote: Thu Jun 06, 2024 5:20 am the first step in deciding where to put that money to work is to choose an AA (for which a main factor is risk tolerance). This is where I am stuck.
This is the correct first step (having the cash parked in 3m T-Bills is fine until you decide on an AA).

To help you get moving on deciding an AA, I'll reiterate that you should read the Wiki topic on Assessing Risk Tolerance, take the Vanguard Investor Questionnaire, then tailor the AA the quiz recommends based on your self-understanding of your own personal risk-tolerance (from having read the Wiki topic and done some soul-searching).

Another approach is to answer: "How much of a total drop in portfolio value can I handle without panic?" Is it -10%, -20%, -50%? Then you can cut that max drop in half to get standard deviation and look up the AA associated on the X-axis of the Risk/Reward chart (below). That AA should fit your risk-tolerance from the perspective of that single question. I think the quiz is a better tool because its result is based on multiple questions, but in a pinch the "max drop I can handle" approach is at least quick and should still get you in the ballpark of an appropriate AA.

Image
Don't do what Bogleheads tell you. Listen to what we say, consider other sources, and make your own decisions, since you have to live with the risks & rewards (not us or anyone else).
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josephny
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Re: Portfolio contents

Post by josephny »

Rocinante Rider wrote: Thu Jun 06, 2024 11:04 am
josephny wrote: Mon May 27, 2024 4:37 am I understand the very basics of the idea of a 3-fund portfolio. But, I see that there are nuances, variations, and possible complicating factors.

I am still very much struggling with the overall investing portfolio ideas and plan, but am working towards it...

I think there will be some (most? all?) who say sell liquidate it all and buy 3 funds. Frankly, I'm scared of that -- although I don't know exactly why. Could be the idea of missing out on gains, could be the idea of simply making a generalize mistake. Bottom line, if this portfolio could double in 8 years (as I've read so much about here), we'd be quite happy.
I'm not sure that you are ready to transition to a DIY Boglehead approach. When one adequately understands the basic idea of a 3-fund portfolio (or any reasonable variations - such a target date fund, or 4 funds, or 2 funds, etc.), then the "nuances, variations, and possible complicating factors" are relatively insignificant concerns. The main idea is to use low-cost, broad market index funds and avoid the fees and added risks of active management. It's really quite simple when you come down to it.

But as you say, you're still struggling with the basic idea of passive index investing. You fear "missing out on gains" of active management. You're also looking for some assurance of outcomes, such as your portfolio doubling in 8 years. The only thing that a Boglehead can assure you about is that active management will entail paying unnecessary AUM and other fees. A passively invested dollar is absolutely guaranteed to outperform the aggregate returns of an active managed invested dollar, but by investing passively you also forego the 1-2% chance of beating the market returns over the next 20-30 years.

My suggestion is that you read and re-read several of the basic books on DIY investing recommended on this site. At some point you might become more comfortable with this approach. It took most of us some time to truly become comfortable with Boglehead-type investing. Based on your current post and other similar recent posts of yours, I'm not sure that you are ready to make the change yet. When and if you become ready, you may be amazed at how incredibly simple investing really is.
I think you are correct. I have my reservations, concerns, worries, ambivalence, etc. But, certainly not because I think I know better (not admittedly, of course (;-). Basically, my it is fear driver. I am working on attaining an "adequate understanding." I am at a point where I am learning so much that I see more and more nuances, variations and complicating factors that do indeed point to this not being a simple solution.

For example, I am coming this the BH approach after decades of working, building a business, and investing in all the wrong ways. So, not only is there unwinding to do, but there is a real estate portfolio, a Mrs. (with her own business and lifetime of bizarre investments), retirement accounts, kids, an expensive lifestyle (which I've tried very hard to tame), etc. to work consider.

Nonetheless, I have been working hard and making great progress towards cleaning and unwinding the investments. Still some progress yet to be had.

Thank you!
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josephny
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Re: Portfolio contents

Post by josephny »

bonesly wrote: Thu Jun 06, 2024 1:16 pm
josephny wrote: Thu Jun 06, 2024 5:20 am the first step in deciding where to put that money to work is to choose an AA (for which a main factor is risk tolerance). This is where I am stuck.
This is the correct first step (having the cash parked in 3m T-Bills is fine until you decide on an AA).

To help you get moving on deciding an AA, I'll reiterate that you should read the Wiki topic on Assessing Risk Tolerance, take the Vanguard Investor Questionnaire, then tailor the AA the quiz recommends based on your self-understanding of your own personal risk-tolerance (from having read the Wiki topic and done some soul-searching).

Another approach is to answer: "How much of a total drop in portfolio value can I handle without panic?" Is it -10%, -20%, -50%? Then you can cut that max drop in half to get standard deviation and look up the AA associated on the X-axis of the Risk/Reward chart (below). That AA should fit your risk-tolerance from the perspective of that single question. I think the quiz is a better tool because its result is based on multiple questions, but in a pinch the "max drop I can handle" approach is at least quick and should still get you in the ballpark of an appropriate AA.

Image
Wow! The BH risk tolerance wiki does a great job of clarifying AA.

The Vanguard risk assessment test put me at 70/30 (stocks/bonds).

So I went online to check what I have and MS reports that in my non-retirement accounts, I have exactly a 70/30 AA (having recently cleaned up and bought 3 month treasuries).

In the retirement accounts, I am 53/43 and 4% cash (again have recently cleaned a lot of poop out and bought 3 month treasuries).

The 53% in stocks includes Berkshire-A (11% of total portfolio), total-market and S&P ETFs (37% of total portfolio), and misc stocks and mutual funds (5%)

The 43% in fixed-income includes 3-month treasuries (34% of total portfolio), mix of bond holding mutual funds (11%).

So, am I light in stocks in the retirement accounts?

Anything stand out as a recommendation for what to do now, or in a couple of months when the 3-month treasuries mature?

Thank you!
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Rocinante Rider
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Re: Portfolio contents

Post by Rocinante Rider »

josephny wrote: Mon Jun 10, 2024 3:51 am Basically, my it is fear driver...I see more and more nuances, variations and complicating factors that do indeed point to this not being a simple solution.

...not only is there unwinding to do, but there is a real estate portfolio, a Mrs. (with her own business and lifetime of bizarre investments), retirement accounts, kids, an expensive lifestyle (which I've tried very hard to tame), etc.
Unwinding a deceptively and unnecessarily complicated, actively-managed portfolio can be challenging. A real estate portfolio and how to best save for retirement and kids also present unique considerations, as does reining in spending. And letting go of a psychological dependency on high-fee financial advisors can be daunting, and even insurmountable, for some.

All that being said, the actual mechanics of a passive DIY investing approach could not be simpler:
“Effective investing can be incredibly simple: Create a simple, diversified asset allocation plan. Invest a part of each paycheck in low-cost, no-load index funds according to your plan. Check your investments periodically, rebalance when necessary, then stay the course.” (From: The Bogleheads’s Guide to Investing)
“The big secret to successful investing is that it’s actually not all that complicated” Kiplinger.

Determining your AA is just about the only part that gets nuanced and complicated. This determination is highly individualized based upon your own unique personal, financial, and psychological considerations. The extent and nature or your "fear" is one of the psychological factors to take into consideration in setting your AA. There are no guaranteed outcomes, so you need to be comfortable with the amount of risk you take with your chosen AA. After you decide on an appropriate and comfortable AA, however, investing in a 3 fund portfolio (or anything similar) is incredibly simple and easy.
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Rocinante Rider
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Re: Portfolio contents

Post by Rocinante Rider »

josephny wrote: Mon Jun 10, 2024 4:14 am in my non-retirement accounts, I have exactly a 70/30 AA...

In the retirement accounts, I am 53/43 and 4% cash...

So, am I light in stocks in the retirement accounts?
AA refers to your portfolio in aggregate, not to each individual account or type of account. If you've chosen a 70/30 AA, you do not need to apply that to each account. 70/30 just means that in aggregate your entire portfolio consists of 70% stock and 30% fixed income.

It's preferable to place assets in a tax efficient manner. Fixed income investments are usually best held in tax-deferred, and stock investments are usually best held in taxable or Roth accounts. My AA is 75/15/10 (the 10% is cash equivalents such as Money Markets and T-bills). All of my 15% bond and 10% cash are in tax-deferred (tIRA, 403b). I also have stock in those tax-deferred accounts because the account balances exceed my total fixed income allocation. My taxable accounts are 100% stock, except for enough MMkt to meet normal short-term expenses and cash flow.

In your case, you're probably too "heavy" in bonds and cash in your non-retirement accounts.
https://www.bogleheads.org/wiki/Tax-eff ... _placement
bonesly
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Re: Portfolio contents

Post by bonesly »

josephny wrote: Mon Jun 10, 2024 4:14 am The Vanguard risk assessment test put me at 70/30 (stocks/bonds).

So I went online to check what I have and MS reports that in my non-retirement accounts, I have exactly a 70/30 AA (having recently cleaned up and bought 3 month treasuries).

In the retirement accounts, I am 53/43 and 4% cash (again have recently cleaned a lot of poop out and bought 3 month treasuries).
...
So, am I light in stocks in the retirement accounts?
As @Rocinante Rider said, that 70/30 is in aggregate. If you're using a "mirrored" setup, then yes, you're light on stocks in the retirement accounts, but it's better to look at all the "retirement" accounts (Taxable, Tax-Deferred, and Tax-Free) in aggregate and make changes to adhere to Tax-Efficient Fund Placement (typically, only holding stocks in Taxable and Tax-Free, and placing all of your bonds in Tax-Deferred, along with stocks if there's more space in the Trad 401k/IRAs).

If you're using the tax-efficient setup rather than a mirrored one (or you want to get to a tax-efficient setup), then It's likely you want to make changes to deploy the T-Bills (cash) and shift the bonds in the Taxable account to all stocks. Then add more bonds to the Tax-Deferred account to bring your target on track.
josephny wrote: Mon Jun 10, 2024 4:14 am Anything stand out as a recommendation for what to do now, or in a couple of months when the 3-month treasuries mature?
If you list the dollar amounts (or % of total value across all accounts) of stocks, bonds, and cash in each of your Taxable, Tax-Deferred, and Tax-Free accounts, I can make a recommendation about changes to adhere to tax-efficient placement while getting your aggregate AA on track at 70/30 across accounts, similar to the example below from another poster.

Image

If you want to pursue that kind of exercise on your own, rathe than post dollar amounts or percentages of total value, the sheet is linked below:

Asset Allocation Sheet
AA Current and Proposed
Don't do what Bogleheads tell you. Listen to what we say, consider other sources, and make your own decisions, since you have to live with the risks & rewards (not us or anyone else).
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Re: Portfolio contents

Post by muffins14 »

lakpr wrote: Thu Jun 06, 2024 9:28 am
josephny wrote: Thu Jun 06, 2024 9:22 am I don't know anything about MYGAs.
Somewhat like a 5-year or a 7-year CD, except that you will have access to part of the principal depending on the annuity agreement. Typically 10%. Say you invested $100k in a 5-year CD, but you had a cash crunch in year-3, you are able to withdraw up to $10k in that year without having to completely break the CD.

No worries if you are not aware of them, or know anything about them. A brutal lesson drilled into me ... NEVER BUY SOMETHING YOU DO NOT UNDERSTAND (bond funds in my case ...)
By the way, how far down is your bond fund in that IRA/401k now?
Crom laughs at your Four Winds
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Re: Portfolio contents

Post by lakpr »

muffins14 wrote: Thu Jun 13, 2024 9:05 am
lakpr wrote: Thu Jun 06, 2024 9:28 am
josephny wrote: Thu Jun 06, 2024 9:22 am I don't know anything about MYGAs.
Somewhat like a 5-year or a 7-year CD, except that you will have access to part of the principal depending on the annuity agreement. Typically 10%. Say you invested $100k in a 5-year CD, but you had a cash crunch in year-3, you are able to withdraw up to $10k in that year without having to completely break the CD.

No worries if you are not aware of them, or know anything about them. A brutal lesson drilled into me ... NEVER BUY SOMETHING YOU DO NOT UNDERSTAND (bond funds in my case ...)
By the way, how far down is your bond fund in that IRA/401k now?
10% since Jan-2021, last I looked at the end of May.
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