Request for advice on portfolio; primarily mutual funds

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Pete4
Posts: 4
Joined: Tue Nov 13, 2012 9:11 pm

Request for advice on portfolio; primarily mutual funds

Post by Pete4 » Wed Sep 12, 2018 4:57 pm

My wife and I are planning to make some changes to our portfolios, and would like some Boglehead advice. The main area for which I seek info is asset allocation. Since I am 71 and she will be 70 in November, we don’t need advice on preparing for or saving for retirement—that’s over. (I don’t mean to be glib about that, but we are in pretty good shape, and have retired.) We are prepared to take RMDs so don’t need advice on them.

I’ve just read “The Bogleheads’ Guide to the Three-fund Portfolio” and part of the 2nd edition of “The Bogleheads’ Guide to Investing.” We’ve held some Vanguard accounts for years, but now we think we want to move all or most of our retirement assets into the 3-fund plan (but not the cash in the 457(b) account). We don’t need our retirement assets to live on, so plan to take only RMDs from our retirement assets.

Our goals are to live frugally, but not cheaply, as we have done our entire lives. To travel a bit more, to help our kids some, and to leave an inheritance, because future generations are likely to have a much tougher time than ours has.

I’ve listed below our income and assets, along with some other information that seems relevant to me. I’d be interested in advice about asset allocation among the three funds. I welcome any other advice or thoughts, too.

If more detail on anything is required, please advise.
Thanks very much.
Pete4
PS. I'm editing this post to mention that in the past I've had a pretty good tolerance for risk in our mutual funds. In 2007-8, I left everything alone and it paid off. So I'm ok with having more in equities than someone my age would usually do, especially since our income is government-based and likely (?) to continue. On the other hand, the current federal administration scares the hell out of me. Don't know if these comments will help with giving advice, but it is what it is. Thanks again.

OTHER INFO:
1. Our house is small, and we plan to stay in it as long as we are able to. We also plan to build a small addition and redo the bathrooms, both of which will enhance our ability to remain in the home as we age. Those projects will probably cost 100,000-130,000. We plan to pay for them with cash.

2. Within the next few years, we will probably buy a new SUV to replace our current 15 year-old one. That will probably cost 35,000-40,000, paid in cash.

3. At present, we have no financial liabilities.

Cash
Cash—Liquid (most in savings, checking and money market accounts) 186,300
Cash—Not liquid (1-year CD, maturing 2-22-2019, 2.01% APY) 76,600
Annuity—We are not drawing on it; it is accumulating interest of approx. 2.0% 60,640
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Total 323,540

Income from Social Security and Husband’s State Pension (wife has survivorship)
State Pension (husband): Fed & state taxes withheld 5,160 /month = 61,920 /year
Social security: Fed taxes withheld
Husband: 2,500 /month = 30,000 /year
Wife: 880 /month = 10,560 /year
-------------------------------------
Total 8,540 /month = 102,480 /year

Husband's Stock
PNC Financial Services – PNCBank (PNC) 151,200
Walt Disney Co. (DIS) 1,650
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Total 152,850

Wife's Stock
AT&T (T) 18,720
Verizon (VZ) 6,740
Comcast, Class A (CMCSA) 2,870
Several other AT&T-related companies Approximately 425
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Total 28,755

RETIREMENT ASSETS

Husband’s Retirement Assets

457(b) Account (Nationwide Retirement Solutions) [Do not want to move this]
Nationwide Fixed Account - cash (earns 3.5% per year) 225,230

IRAs – Traditional - Mutual Funds
Bruce Fund (BRUFX) 109,450
Dodge & Cox Balanced (DODBX) 83,200
Dodge & Cox International Stock (DODFX) 16,920
Mairs & Power Growth Inv. (MPGFX) 126,300
Vanguard 500 Index, Admiral (VFIAX) 70,680
Vanguard Total Stock Market Index, Admiral (VTSAX) 60,450

IRA – Roth - Mutual Fund
Vanguard Total Stock Market Index, Admiral (VTSAX) 119,600


Wife’s Retirement Assets

IRAs – Traditional - Mutual Funds
Franklin Mutual Quest - Class Z (MQIFX) 90,860
Vanguard 500 Index, Admiral (VFIAX) 70,100
Vanguard High Dividend Yield Index (VHDYX) 65,440

IRAs – Roth - Mutual Funds
Vanguard Total Stock Market Index, Admiral (VTSAX) 115,030
Franklin Mutual Quest - Class Z (MQIFX) 41,620
Last edited by Pete4 on Wed Sep 12, 2018 5:22 pm, edited 1 time in total.

delamer
Posts: 5824
Joined: Tue Feb 08, 2011 6:13 pm

Re: Request for advice on portfolio; primarily mutual funds

Post by delamer » Wed Sep 12, 2018 5:22 pm

If your goal is to implement the 3 fund portfolio within the retirement plans, then it is a 2 step process:

1. Determine what allocation that you want on each of the 3 portions — US stocks, international stocks, US bonds. Given that you have a high risk tolerance, consider putting at least 60% into stocks.
2. Pick the lowest cost options available within each account. You don’t need to have a 3 fund portfolio with each account, but across all your retirement accounts. So if you have $600,000 in retirement accounts total and want 1/3 in each of the 3 allocations, then put $200,000 in each allocation across all your accounts. Maybe you end up with all bonds in one account and the stocks spread across multiple accounts; that’s fine.

There are no tax consequences for moving assets within IRAs.

Pete4
Posts: 4
Joined: Tue Nov 13, 2012 9:11 pm

Re: Request for advice on portfolio; primarily mutual funds

Post by Pete4 » Wed Sep 12, 2018 5:32 pm

Thank you. I want advice on how much to allocate to US stocks, foreign stocks and bonds.

TwstdSista
Posts: 984
Joined: Thu Nov 16, 2017 4:03 am

Re: Request for advice on portfolio; primarily mutual funds

Post by TwstdSista » Wed Sep 12, 2018 5:35 pm

Pete4 wrote:
Wed Sep 12, 2018 5:32 pm
Thank you. I want advice on how much to allocate to US stocks, foreign stocks and bonds.
There are a number of rules of thought -- age in bonds, age -10 in bonds, age -20 in bonds, whatever helps you sleep at night.

I'd recommend somewhere between 40/60 and 60/40, with 30% of equities in international. But that's simply because it's what I plan to do.

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