Please critique my plan.

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newbees
Posts: 15
Joined: Sat Jan 19, 2013 11:19 pm

Please critique my plan.

Post by newbees » Sun Nov 29, 2015 2:19 pm

I have discovered Vanguard 17 years ago, and have religiously put money in my account every year. However, I only discovered Boggleheads 4 years ago, so my investments are very randomly placed. Please critique my portfolio.
Wife (42), Husband (49), son (15), daughter (12)
Son- current balance: 100k in CA-passive 2018 education 529.
Daughter 80k current balance in CA-passive 2021 education 529.
Currently we put in $1200/month for son and $900/month for daughter.
Husband: 350k current balance in Vanguard target retirement 2035 at work 401k. Currently he is not working, so no extra money is added. We did not rollover his 401k. It is with his old company Merry Lynch account.
Wife: 650k balance in Vanguard Sep-IRA, 410k balance in Vanguard taxable account. Among the 1060k, here is the breakdown:
10% in Vanguard 2035 target retirement
13% in total stock market index
12% in TOtal world stock market index
10% in Vanguard REITS ETF
10% in Vanguard Healthcare ETF
10% in GNMA
12% in random ETF: energy, precious metal and mining, financial, emerging market, technology etf....
7% wellington
6% Wellesley
We own a rental property that currently brings in 4000/month. We still have a 200k mortgage on that property (3.0%- we have 8 years left). Our tax bill is 10,500/year for property tax. Insurance and maintenance is 6000/year. We also live on another duplex that brings in 2000/month for rent. THe property tax bill for the property we live in is 11k/year. We still owe 180k on mortgage (3.9%- we have 15 years left)
Should we continue to fund our children 529 or should we use that money for paying down our mortgage or put more money in our taxable account?
Also, are we having too much risk (stock) for our age?

Thanks.

mhalley
Posts: 7783
Joined: Tue Nov 20, 2007 6:02 am

Re: Please critique my plan.

Post by mhalley » Sun Nov 29, 2015 4:59 pm

I didn't bother to actually calculate your aa, but it does look a little stock heavy. I would think something like 60/40 to no more than 70/30. Looks like in your previous post from 2013 you were looking at 60/40. Are you still working? Still investing in a 401k and funding iras? I would max out 401k and iras before funding 529s. You have about a mill now, when do you plan to retire, is your husband going back to work? Not enough info to make any good rec. Your portfolio is fairly complicated, but at least they are in low cost vanguard funds. Do you have losses in the taxable account, say in the mining fund? I might consider paying on the 3.9% mortgage, but it is on the cusp of just paying as is.
Is the Reit in tax deferred? If not it should be. I would prefer separating total world into total stock and total intl if it is in the taxable account to gain tax loss harvesting.
Mike

Alto Astral
Posts: 694
Joined: Thu Oct 08, 2009 10:47 am

Re: Please critique my plan.

Post by Alto Astral » Sun Nov 29, 2015 5:41 pm

10% in Vanguard 2035 target retirement : 49% Total Stock, 32% Total Intl Stock
13% in total stock market index
12% in TOtal world stock market index
7% wellington: 65% Stocks
6% Wellesley : 38% Stocks

Yes, it is stock-heavy. I looked at the 2035, wellington, wellesley funds and marked in bold above how much exposure you have to stocks. Here's some of the advice I followed based on other posts on this forum:
1. Consider it as one big pot for the retirement. You need not make each of the accounts have the same 60/40 AA that you pick. For example all of your husbands balance can be in bonds and all of your balance can be stocks - depending on what funds are available in which bucket.
2. Consider a simple 3-fund portfolio
3. Consider skipping the ETFs. International only if you must. REITs, maybe.

kenner
Posts: 3129
Joined: Sat Mar 01, 2008 8:45 am

Re: Please critique my plan.

Post by kenner » Sun Nov 29, 2015 6:12 pm

newbees wrote:
Husband: 350k current balance in Vanguard target retirement 2035 at work 401k. Currently he is not working, so no extra money is added. We did not rollover his 401k. It is with his old company Merry Lynch account.
Wife: 650k balance in Vanguard Sep-IRA, 410k balance in Vanguard taxable account. Among the 1060k, here is the breakdown:
10% in Vanguard 2035 target retirement
13% in total stock market index
12% in TOtal world stock market index
10% in Vanguard REITS ETF
10% in Vanguard Healthcare ETF
10% in GNMA
12% in random ETF: energy, precious metal and mining, financial, emerging market, technology etf....
7% wellington
6% Wellesley

Assuming your ultimate goal is to have a more coherent, tax-efficient, lower cost asset allocation, it seems important to know:

1) Which of your investments - and in what amounts - are in your taxable account(s)?

2) What is your tax-filing status and what are your marginal income tax rates - both federal and state?

3) Since you may be overweight in real estate, what is the approximate current equity value of all real estate you own?


We own a rental property that currently brings in 4000/month. We still have a 200k mortgage on that property (3.0%- we have 8 years left). Our tax bill is 10,500/year for property tax. Insurance and maintenance is 6000/year. We also live on another duplex that brings in 2000/month for rent. THe property tax bill for the property we live in is 11k/year. We still owe 180k on mortgage (3.9%- we have 15 years left)
Should we continue to fund our children 529 or should we use that money for paying down our mortgage or put more money in our taxable account?
Also, are we having too much risk (stock) for our age?

Thanks.
If your desired asset allocation is 60/40 stocks/bonds, you seem to be quite a ways off that target.

Independent
Posts: 551
Joined: Tue Sep 22, 2009 1:09 pm

Re: Please critique my plan.

Post by Independent » Sun Nov 29, 2015 10:54 pm

A plan usually starts with goals. You didn't list yours.

It seems to me that your asset allocation might depend on whether you plan to start living on your investments 2 years from now, or 20 years from now.

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