Investment Planning Advice

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bubbakc17
Posts: 2
Joined: Tue Dec 12, 2017 12:06 pm

Investment Planning Advice

Post by bubbakc17 »

Hello fellow bogleheads, I am seeking advice on how to approach my investment situation

I am a
30yo
Employed, making approximately $90k/year
Objective is retirement/financial independence
Moderate risk-tolerance (growth stocks, income stocks)
Time horizon, buy and hold until retirement

Current holdings
- ~$77K Vanguard Wellington Admiral (VWENX) in employer before-tax 401k
- ~$64K Vanguard Wellington Admiral (VWENX) in after-tax Roth IRA
- ~$35K Vanguard Wellesley Income Fund Investor Shares (VWINX) in after-tax Roth IRA
- ~$28K Vanguard Wellesley Income Fund Investor Shares (VWINX) in before-tax Rollover IRA
- ~$21K Vanguard 400 Index Fund Admiral (VFIAX) in before-tax Rollover IRA
- Total ~$225K

Viewed from a fund perspective
- ~$141K in Vanguard Wellington Fund Admiral Shares (VWENX)
- ~$63K in Vanguard Wellesley Income Fund Investor Shares (VWINX)
- ~$21K in Vanguard 500 Index Fund Admiral Shares (VFIAX)
- Total ~$225K

Viewed from a Taxable account perspective
- ~$126K in Before-Tax account
- ~$99K in after-tax account
- Total ~$225K

Asset Allocation perspective
- ~53% US Stocks
- ~32% US Bonds
- ~7% International Stocks
- ~7% International Bonds


Goals in order of priority:
1. Rebalance to other funds prefer passively managed index funds with low expense ratios – I think my asset allocation is conservative and I think I would like to increase my total stock holdings (both US and International Stock holdings) to ~80%, and decrease my US Bond holdings – I think I have too much in Bonds for my age and risk tolerance
2. Tax efficiency – honestly, I have no expertise in this area, i.e. are my holdings in unfavorable tax accounts or could I be more efficient with holdings in more tax favorable accounts, who knows?
3. Simplicity – in total I am invested in 3 funds, but they’re in 5 different “accounts”, furthermore, my VWINX holdings are currently split in two different “accounts”, but together I would have the $50,000 minimum investment to achieve a lower expense ratio, e.g. Admiral Share expense ratio (0.15%) instead of Investor Share expense ratio (0.22%)


What should I do? What would you do?

Thank you all for your time!
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David Jay
Posts: 14569
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Investment Planning Advice

Post by David Jay »

Welcome to the forum.

The first thing you need to do is establish your desired asset allocation and then select funds to get you to that target. The use of both Wellesley and Wellington suggests to me that you are not doing this because they have almost inverse asset allocations:
Wellesley - 35/65 (stock/bond)
Wellington - 65/35
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
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FiveK
Posts: 15691
Joined: Sun Mar 16, 2014 2:43 pm

Re: Investment Planning Advice

Post by FiveK »

The good news is that with all your funds in tax-advantaged accounts, there will be no taxes when you move to new funds.

As for which funds to use, in the 401k you are limited to the ones available there. You can use pretty much any fund in IRAs. See Three-fund portfolio - Bogleheads and Asset allocation in multiple accounts - Bogleheads for some thoughts.
Jack FFR1846
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Location: 26 miles, 385 yards west of Copley Square

Re: Investment Planning Advice

Post by Jack FFR1846 »

Remember that you don't need 3 funds in every account. I have 10 accounts and only one of these has more than 1 fund. That's the one (IRA) where I rebalance.
Bogle: Smart Beta is stupid
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Sandtrap
Posts: 19582
Joined: Sat Nov 26, 2016 5:32 pm
Location: Hawaii No Ka Oi - white sandy beaches, N. Arizona 1 mile high.

Re: Investment Planning Advice

Post by Sandtrap »

Goals in order of priority:
1. Rebalance to other funds prefer passively managed index funds with low expense ratios – I think my asset allocation is conservative and I think I would like to increase my total stock holdings (both US and International Stock holdings) to ~80%, and decrease my US Bond holdings – I think I have too much in Bonds for my age and risk tolerance
2. Tax efficiency – honestly, I have no expertise in this area, i.e. are my holdings in unfavorable tax accounts or could I be more efficient with holdings in more tax favorable accounts, who knows?
3. Simplicity – in total I am invested in 3 funds, but they’re in 5 different “accounts”, furthermore, my VWINX holdings are currently split in two different “accounts”, but together I would have the $50,000 minimum investment to achieve a lower expense ratio, e.g. Admiral Share expense ratio (0.15%) instead of Investor Share expense ratio (0.22%)
1
Asset Allocation
https://www.bogleheads.org/wiki/Asset_allocation
There's nothing wrong with your existing 60/40 per Bernstein
http://web.archive.org/web/200612140619 ... in6040.pdf
2
Tax-efficient fund placement
https://www.bogleheads.org/wiki/Tax-eff ... _placement
Last edited by Sandtrap on Wed Dec 13, 2017 10:40 am, edited 1 time in total.
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venkman
Posts: 1338
Joined: Tue Mar 14, 2017 10:33 pm

Re: Investment Planning Advice

Post by venkman »

bubbakc17 wrote: Tue Dec 12, 2017 1:39 pm Goals in order of priority:
1. Rebalance to other funds prefer passively managed index funds with low expense ratios – I think my asset allocation is conservative and I think I would like to increase my total stock holdings (both US and International Stock holdings) to ~80%, and decrease my US Bond holdings – I think I have too much in Bonds for my age and risk tolerance
Both Wellington and Wellesley are fine funds with low expense ratios, but... neither one is very well-diversified. Both are invested mostly in large value stocks and corporate bonds. I think you should go with either a Vanguard Target Retirement or Lifestrategy Fund. (TR funds will automatically become more conservative as you get closer to retirement, while LS funds will maintain a constant stock/bond ratio.) You can pick whichever fund looks best, and just own it within all your accounts.
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