Portfolio Advice Requested

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sumac2001
Posts: 1
Joined: Wed Oct 10, 2018 6:55 pm

Portfolio Advice Requested

Post by sumac2001 » Wed Oct 10, 2018 7:05 pm

It would be appreciated if you would give my portfolio an overview.

What I am interested in are any suggestions you have but most specifically regarding asset allocation and the type of vanguard stocks you would suggest. Thank you for your time.

Please note that my 401K is limited to a few Vanguard Index funds I can choose from and I will notes these choices below.

My portfolio is based on what I read in Richard Ferri's book, All about Asset Allocation. Most specifically the "Midlife Accumulators - Asset Allocation" in the chapter Building Your portfolio.

Emergency funds: I have three months worth of emergency funds that are kept in the following: Vanguard Municipal Money Market Fund VMSXX: Expense Ratio: .15%. I put in $200 a month into this fund.

Debt: The only debt I have is a rental mortgage with a 3.75 interest rate.

Tax filing: Single

Tax Rate: Federal: 22%. Washington State: No income tax.

State of Residence: Washington State.

Age: 56

Desire Retirement age: 65 if not earlier.

Desired asset allocation: 70% stock and 30% bonds: Please provide suggestions:




The follow are my taxable funds which I do not balance out due to concerns about taxes:

Vanguard Total Bond Market Index Fund VBTLX: $13,500: Expense Ratio: .05

Vanguard Total Stock Market Index VTSAX: $40,500: Expense Ratio: .04

Total: $54,000. Of this 25% is in bonds and 75% is in stocks.


The following are all retirement assets: I attempt to keep 70% in stock and 30% in bonds.

Since I have three different retirement accounts, a 401k, Roth IRA and a Roth Roll Over it takes some math each year to ensure I have the correct asset allocation percentage distributed correctly.

I invest $18500 into my 401K, $6500 into my Roth IRA and nothing into my roll over IRA.

The distribution in my Roth IRA and Roll Over IRA is as follows. Please note these percentages are the combined total for both the Roth IRA and the Roth Roll Over IRA - Meaning I may weight the US Bond in the Roll over IRA at 20% but weight it 10% in the Roth IRA in order to get the correct 30% balance.

30%: US Bond: Vanguard Total Bond Market Index Fund

34%: US Stock: Vanguard Total Stock Market Index Fund

8% US Small cap: Vanguard Small-Cap-Value Index Fund

8% REIT: Vanguard Real Estate Index - Index Fund

15% International stock: Vanguard Total International Stock Index Fund

5% Vanguard International Small Cap:



Roth IRA invested via Vangaurd.com as follows:

I max the IRA out every year and therefore invest $6500 each years as follows:

US Bond: Vanguard Total Bond Market Index Fund VBTLX: Expense Ratio: .05%

US Stock: Vanguard Total Stock Market Index Fund VTSAX: Expense Ratio: .04%

US Small cap: Vanguard Small-Cap-Value Index Fund VSIAX: Expense Ratio: .07%

REIT: Vanguard Real Estate Index VGSLX: Expense Ratio: .12%

International stock: Vanguard Total International Stock Index Fund VTIAX: Expense Ratio: .11%

International Small Cap: Vanguard FTSE All world Ex-US Small Cap Index Fund VFSVZ: Expense Ratio: .25%

Total Balance: $164,840.81




Rollover Roth: Invested via Vangaurd.com. I can no longer put money into this account since it is a roll over and I now only invest in the ROth IRA.

VFSVX Vanguard FTSE All-World ex-US Small-Cap Index Fund Investor Shares. Expense ratio: .25

VGSLX: Vanguard REIT Index Fund: Expense ratio: .12

VSIAX Vanguard Small-Cap Value Index Fund Admiral. Expense ratio: .07

VBTLX Vanguard Total Bond Market Index Fund Admiral Shares. Expense ratio: .05

VTIAX Vanguard Total International Stock Index Fund Admiral Shares. Expense ratio: .11

VTSAX Vanguard Total Stock Market Index Fund Admiral Shares. Expense ratio: .04

Total Balance: $213,021.51


My 401K is invested through T.Rowe Price: All investments are via Vanguard Index Funds:

Annual Contributions: 18,000. Employer match: 4%.

30%: US Stocks: Vanguard Institutional Index Fund VINIX: Expense Ratio: 04%

24%: International Stock: VANGUARD TTL INTL STK IDX INST VTSNX: Expense Ratio: 09%

16%: Small Cap Stock: Vanguard Small Capitalization Index Fund VSCIX: Expense Ratio: 04%

30%: US Bonds: Vanguard Total Bond Market Index Institutional VBTIX: 04%

Total Balance: $90,000




The following are the Vanguard Index Funds I can choose from for my 401K: Invested via T.Roweprice.com

VANGUARD INST INDEX VINIX

VANGUARD MID-CAP INDEX, INST VMCIX: Expense Ratio: .04%

VANGUARD SMALL CAP INDEX INSTL VSCIX: Expense Ratio: .04%

VANGUARD TTL INTL STK IDX INST VTSNX: Expense Ratio: .09%

VANGUARD TTL BND MRK INDX INST VBTIX: Expense Ratio: .04%

It also offers the T ROWE PRICE RETIREMENT FUND BASED ON MY AGE: 2025 TR B RG2: Expense Ratio: .40%

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Watty
Posts: 14607
Joined: Wed Oct 10, 2007 3:55 pm

Re: Portfolio Advice Requested

Post by Watty » Wed Oct 10, 2018 7:53 pm

sumac2001 wrote:
Wed Oct 10, 2018 7:05 pm
Desired asset allocation: 70% stock and 30% bonds: Please provide suggestions:
For comparison the Vanguard 2025 fund is 65% stocks and 35% bonds so you are in the same ballpark but a little bit more aggressive which is OK if it matches your temperament.

I didn't crunch the numbers on the mutual funds you listed but they looked more or less reasonable but I am not sure that there is a good reason to add the extra funds. I would probably simplify it to just three funds though: Total Stocks(US), Total International, and Total Bond

Living Free
Posts: 130
Joined: Thu Jul 19, 2018 7:31 pm

Re: Portfolio Advice Requested

Post by Living Free » Wed Oct 10, 2018 8:09 pm

Welcome sumac2001,

My advice would be to try to simplify across your accounts. You don't need to hold every fund or every asset class in every account. I'd favor putting bonds more so in the 401k rather than the other accounts. Depending on how much you have in each account you could maybe put all or nearly all your bonds in the 401k. It looks like you want to add a REIT index fund and a small cap fund to the 3 fund portfolio and that's fine. But I'd consider holding those in just one of your accounts (the roth or really wherever) if possible so that way it'll overall be more simple. I'd also consider not investing further into the bond fund in taxable; at your tax bracket might be close as to whether a muni bond fund might be better than total bond index fund in taxable. But you don't need bonds in taxable anyway if you can fit them in your 401k. (for an interesting read see this article regarding bonds in taxable: https://humbledollar.com/2017/08/who-needs-munis/)

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Duckie
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Joined: Thu Mar 08, 2007 2:55 pm

Re: Portfolio Advice Requested

Post by Duckie » Wed Oct 10, 2018 8:10 pm

sumac2001, welcome to the forum.
sumac2001 wrote:Desired asset allocation: 70% stock and 30% bonds: Please provide suggestions:
30% bonds is a little aggressive for age 56. Also, you don't state your international AA. You've got 15/70 in the Roth IRAs and 24/70 in the 401k.
The follow are my taxable funds which I do not balance out due to concerns about taxes:
Bonds don't belong in taxable if your income is high enough. A 22% tax bracket is on the edge. Consider selling the bonds in this account.
Since I have three different retirement accounts, a 401k, Roth IRA and a Roth Roll Over it takes some math each year to ensure I have the correct asset allocation percentage distributed correctly.
If the "Roth Roll Over" is a Roth IRA rolled from your former employer plan you can combine it with your other Roth IRA.

You could greatly simplify your portfolio. The following example has an AA of 70% stocks, 30% bonds, with 20% of stocks in international. That breaks down to 56% US stocks, 14% international stocks, and 30% bonds. You could have:

Taxable at Vanguard -- $54K -- 10%
10% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

401k at T. Rowe Price -- $90K -- 17%
17% (VBTIX) Vanguard Total Bond Market Index Fund Institutional Shares (0.04%)

Roth IRA at Vanguard -- $165K -- 32%
32% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

Rollover Roth IRA at Vanguard -- $213K -- 41% <-- Combine both Roth IRAs if possible.
14% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)
14% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)
13% (VBTLX) Vanguard Total Bond Market Index Fund Admiral Shares (0.05%)

The above example is much easier to maintain and rebalance.

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Taylor Larimore
Advisory Board
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Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Re: Portfolio Advice Requested

Post by Taylor Larimore » Wed Oct 10, 2018 8:11 pm

sumac2001

Welcome to the Bogleheads Forum!

I will comment only on your two Roth IRAs. I believe you can and should consolidate them. Check with Vanguard. Read this article:

Too Many Roth IRAs. It's Time to Consolidate

Read my "Simplicity" link below.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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