Portfolio Advice ~ Retiring Georgia Teacher

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KingEdward57
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Joined: Mon Jun 29, 2015 11:26 pm
Location: Atlanta

Portfolio Advice ~ Retiring Georgia Teacher

Post by KingEdward57 » Thu Dec 21, 2017 10:54 pm

Hello. I'm a 60-yr old just-retired teacher in the planning stage of structuring assets. Have just transferred all retirement monies to Chas Schwab. *[SCHWAB's now custodian / but investment options are not limited ... they don't need to be Schwab funds. Many free trades available].
I, meanwhile, can easily live on current income.

1. Emergency Funds: $25,000
2. Debit: none
3. Tax-Filing Status: single
4. Tax Rate:
5. State of Residence: Georgia
6. Age: 60
7. Desired Asset Allocation: [60% stocks / 40% bonds]
8. Desired International Allocation: ? 25% ?


Current Retirement Assets ~

1. Taxable
a. Emergency Fund, $25,000 cash
b. Available Cash for Investment: $115,000 cash

2. Rollover IRA: $437,000 cash

3. Roth IRA: $110,000 (100% VTWNX - 'Target Retirement 2020')



Other Assets ~

1. Real Estate
a. Rental home #1 ($223,000 / paid off)
b. Rental home #2 ($230,500 / paid off)
c. Rental home #3 ($190,000 / paid off)
d. Personal home ~ ($324,000 / paid off)

2. Current Income
a. Georgia Teacher Retirement ($3000 mo)
b. Rental income ($4000 mo)
c. Part-time side jobs / pleasure ($2500 mo)
d. Social Security (*deferred until age 70.5)

Estimated Living Expenses: $5000, mo


My questions:

1. What should I now invest in?
2. Which asset class should be in which type account?

I appreciate any help/suggestions you may have.
Thanks so much for your time.

Ed
Atlanta
Last edited by KingEdward57 on Mon Jan 15, 2018 1:21 pm, edited 7 times in total.

Alex Frakt
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Re: Portfolio Advice ~ Retiring Georgia Teacher

Post by Alex Frakt » Fri Dec 22, 2017 3:13 pm

bumping following technical problem

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Duckie
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Re: Portfolio Advice ~ Retiring Georgia Teacher

Post by Duckie » Fri Dec 22, 2017 8:47 pm

KingEdward57 wrote:6. Age: 60
7. Desired Asset Allocation: 60% stocks / 40% bonds
60/40 is reasonable for your age.
8. Desired International Allocation: ? 25% ?
If you mean 25% of stocks, that mean 60% X 25% which becomes 15% of the total portfolio. Vanguard has found between 20% and 40% of stocks in international to be the "sweet spot". See the Vanguard paper link and the discussion. I usually split the difference and recommend 30% of stocks. Your 25% is reasonable.
Which asset class should be in which type account?
Put bonds in your Rollover IRA because it is tax-sheltered and pre-tax. Put stocks in your taxable and Roth IRA.
What exactly should I now invest in?
The following is an example of a retirement portfolio which has an AA of 60% stocks, 40% bonds, with 25% of stocks in international. That breaks down to 45% US stocks, 15% international stocks, and 40% bonds. You could have:

Taxable at Schwab -- $115K -- 17%
17% (SWTSX) Schwab Total Stock Market Index Fund (0.03%)

Rollover IRA at Schwab -- $437K -- 66%
11% (SWTSX) Schwab Total Stock Market Index Fund (0.03%)
15% (SWISX) Schwab International Index Fund (0.06%) <-- Developed markets only, ~75% of international stocks.
40% (SWAGX) Schwab U.S. Aggregate Bond Index Fund (0.04%)

Roth IRA at Schwab -- $110K -- 17%
17% (SWTSX) Schwab Total Stock Market Index Fund (0.03%)

Just some possibilities.
Last edited by Duckie on Sat Dec 23, 2017 5:28 pm, edited 1 time in total.

peterwantstosave
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Re: Portfolio Advice ~ Retiring Georgia Teacher

Post by peterwantstosave » Fri Dec 22, 2017 9:15 pm

Congrats on doing very well. By my count, you're more than a millionaire. Good work!

I feel like you're too invested in real estate. You may wish to consolidate your rentals. Otherwise, I agree with the Schwab recommendations.

Other specific questions?

Peter

KingEdward57
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Location: Atlanta

Re: Portfolio Advice ~ Retiring Georgia Teacher

Post by KingEdward57 » Sat Dec 23, 2017 3:09 am

Thank u, Duckie, for the various Schwab possibilities you outlined.
Will spend time comparing them over the weekend & I so appreciate you sharing them.

And Peter ... you definitely have me thinking now about my rentals and wondering if I might need to
look at them in a new way. I appreciate the idea! And thx for the encouraging words.

*All the best to both of you.
Happy Holidays

Ed
Atlanta

blastoff
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Re: Portfolio Advice ~ Retiring Georgia Teacher

Post by blastoff » Sat Dec 23, 2017 5:00 am

First, congratulations!

How much is social security? Between pension and that, you might be very close to your $6000 estimated living expense.

For the rentals, you probably have a good idea of how risky they are and how much work. I guess I would think about how long you want to own them. 10 years probably not so bad if relatively low maintenance and you have a good system in place. But I doubt you'd want to own them when 87?

As for your investments and allocation I would just say to think about when you're actually going to need the money and the time horizon. It seems to me that there's a pretty good chance that you don't ever touch a lot of the IRA and investment assets you have... it seems like the pension plus rental income and/or Social Security might cover most of your living expenses if not more than your living expenses!

KingEdward57
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Location: Atlanta

Re: Portfolio Advice ~ Retiring Georgia Teacher

Post by KingEdward57 » Fri Jan 12, 2018 9:28 am

Thank you for helpful tips !

Given my original inquiry, am wondering if the (Bogleheads) "Rick Ferris' LAZY-3-FUND" might be a good choice for me. {??}
It's one that seems (to me, anyway) to be a good option.
If you agree, then should I buy Mutual or ETF?
[Am pretty sure I qualify for the 'Admiral' option].

Here, btw, is a recap of the Lazy 3 (R. Ferris) Fund:

% Allocation [Admiral] [ETF Fund]

40 Vanguard Total Bond Mkt Index Fund VBTLX .06% BND .06%
40 " " Stock Mkt " " VTSAX .04% VTI .04%
20 " " Intl. Stock " " VTIAX .11% VXUS .11%

* Thanks so much.

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facepalm
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Re: Portfolio Advice ~ Retiring Georgia Teacher

Post by facepalm » Fri Jan 12, 2018 10:34 am

Congratulations on your retirement!

Since you have some free trades coming, I'm not sure this will apply to you, but Schwab still charges an additional transaction fee for mutual fund purchases (to my knowledge). I'd ask someone on their trading desk if they are going to waive that fee too.

If not, they also have Vanguard ETFs which will work quite well. VTI (Vanguard Total Stock Market), BND (Vanguard Total Bond Market) and either VEU (Vanguard Total International Stock ETF) or VXUS (Vanguard FTSE All-Wld ex-US ETF) would give you the same or similar exposure to the markets. The Euro funds track different indexes so I would do a little research before I picked one over the other.

In any case, good luck and Congrats!

KingEdward57
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Location: Atlanta

Re: Portfolio Advice ~ Retiring Georgia Teacher

Post by KingEdward57 » Fri Jan 12, 2018 5:24 pm

thx a lot, facepalm.
I'll check w/ Schwab about the mutual fees you've mentioned.
Thank u for reminding me of this.

Ed

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facepalm
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Re: Portfolio Advice ~ Retiring Georgia Teacher

Post by facepalm » Fri Jan 12, 2018 8:08 pm

KingEdward57 wrote:
Fri Jan 12, 2018 5:24 pm
thx a lot, facepalm.
I'll check w/ Schwab about the mutual fees you've mentioned.
Thank u for reminding me of this.

Ed
Sure thing. I'm also a teacher (but not retired), and I have a brokerage acct. with Schwab as well as two IRAs. There are things I really like about Schwab, the web interface isn't bad and they never ever call me to try and sell me anything. My local broker is really easy to work with as well. I rolled two 403(b) accounts over from American Fidelity this year, and Schwab made it really easy.

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