Could use some advice for balancing/simplifying portfolio

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AC1984
Posts: 6
Joined: Fri Aug 24, 2018 7:53 am

Could use some advice for balancing/simplifying portfolio

Post by AC1984 » Sun Dec 02, 2018 7:37 pm

Hi All, still relatively new here and really appreciate everything I'm reading so far. I'm trying to maintain a balanced portfolio but the problem I'm running into (probably pretty common I'm guessing) is that I have multiple accounts between my work 401(k) and 457, my wife's 401(k), two Roth IRA's, and a taxable account. I'm trying to find a solution to get the right asset allocation for each account with regard to the holistic portfolio, but I'm not sure how to weight each one because they have different balances. This is getting complicated because they're in multiple groupings and I'd like to keep it as simple as possible. I'm open to new ways of conceptualizing or organizing this too so I'm all ears.

For reference, I'm 34, wife is 33, and we're trying to maintain a pretty aggressive portfolio for the foreseeable future (at least 90% equity) because we have at least 30 years out till retirement. Total household income varies between $154,000 - $225,000 (pre-tax) depending on my overtime eligibility. Our total portfolio at present is somewhere close to $140,000. We have spent down our emergency fund in the last year due to some unanticipated expenses and a loss of my anticipated overtime for now, so I'm trying to focus on getting that back up too. Currently that's at $4,000 and in the next 1-3 years I need to get it closer to $30-$40. I'm not sure how else to lay it out, so here are our current holdings:

My wife and I each have a Vanguard Roth IRA currently invested in the TR 2050 (all the other accounts we chose the indexes separataely). Both accounts are right around $10,000 ($20,000 total). We're maxing them out and started them two years ago. The TR2050 holdings are at present:

- Total Stock Market Index: 53.9%
- Total International Stock Market Index: 35.70%
- Total Bond II Index: 7.3%
- Total International Bond Index: 3.10%

We also opened a taxable Vanguard account to have a more flexible spending stream later on, but before retirement if needed. This is currently only invested in VSTX - Balance = $3,900. Investing $350 every month.

Wife's 401(k): Fidelity through work - Balance = $29,075 (10% pre-tax income).
- SP500 Index: 36%
- SP Dev International Index: 32.68%
- SP Extended Market Index: 22.86%
- FID US Bond Index: 8.39%

My 401(k): Voya - Balance = $73,528 (my percentage varies here based on how much overtime I get, but my baseline is 5% pre-tax and I receive a 9% pretax match).

- State Street Bond Market Index: 8%
- State Street S&P 500 Index: 35%
- State Street S&P MidCap Index: 24%
- State Street Global All Cap ex US: 30%
- Black Rocks Emerging Markets Index: 3%

My 457 through work (Voya) - Balance: $15,335 (5% pre-tax baseline, no match).
- State Street Bond Market Index: 7%
- State Street S&P 500 Index: 36%
- State Street S&P MidCap Index: 22%
- State Street Global All Cap ex US: 35%

Thanks for your time and any ideas!

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BL
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Joined: Sun Mar 01, 2009 2:28 pm

Re: Could use some advice for balancing/simplifying portfolio

Post by BL » Sun Dec 02, 2018 8:45 pm

What is VSTX?

Anyway, I would build up an emergency fund before investing in taxable. Could be Prime Money Market at V or higher yield FDIC insured MM or savings at bank or CU.

You don't need to have everything in each account. You could have one or two funds in most accounts and 3 basic ones for re-balancing in a 401k, for example.
Not sure the balanced fund helps you unless you put everything in only balanced funds.
You don't need international in every account, for example, especially 2 of them.
S&P 500 could be an adequate sub for total stock market without adding extras.

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

Re: Could use some advice for balancing/simplifying portfolio

Post by Living Free » Sun Dec 02, 2018 9:24 pm

If you could list the expense ratios that would be helpful.

I also agree with getting your EF beefed up prior to doing aggressive investing (but don't miss out on the match!).

It looks like you have an S&P 500 and a bond index fund in each of the tax deferred retirement accounts (the 403b, 457, and 401k). I'd just use those 2 index funds and try to keep all your bonds there in the tax deferred space.

Then use the roth IRA and taxable account for total US and total international stock index funds. If you want to make it more complicated you could add small/mid or "extended market" index into your Roth IRA, but really the total stock market and S&P 500 should be pretty closely correlated, so it might not be worth worrying about underweighting the small/mid caps by a little bit by just holding the S&P 500.

AC1984
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Joined: Fri Aug 24, 2018 7:53 am

Re: Could use some advice for balancing/simplifying portfolio

Post by AC1984 » Mon Dec 03, 2018 8:12 am

VSTX is the Vanguard Total Stock Market index.

Index24
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Joined: Sat Sep 08, 2018 7:25 am

Re: Could use some advice for balancing/simplifying portfolio

Post by Index24 » Mon Dec 03, 2018 8:50 am

AC1984 wrote:
Sun Dec 02, 2018 7:37 pm

We also opened a taxable Vanguard account to have a more flexible spending stream later on, but before retirement if needed. This is currently only invested in VSTX - Balance = $3,900. Investing $350 every month.

For starters, I would skip this step and redirect the funds into your emergency fund until you reach your number.

Flyer24
Posts: 453
Joined: Sun Apr 08, 2018 4:21 pm

Re: Could use some advice for balancing/simplifying portfolio

Post by Flyer24 » Mon Dec 03, 2018 9:21 am

Index24 wrote:
Mon Dec 03, 2018 8:50 am
AC1984 wrote:
Sun Dec 02, 2018 7:37 pm

We also opened a taxable Vanguard account to have a more flexible spending stream later on, but before retirement if needed. This is currently only invested in VSTX - Balance = $3,900. Investing $350 every month.

For starters, I would skip this step and redirect the funds into your emergency fund until you reach your number.
I agree. The poster needs to stop taxable investing until the emergency fund is back to normal.

Mr.BB
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Joined: Sun May 08, 2016 10:10 am

Re: Could use some advice for balancing/simplifying portfolio

Post by Mr.BB » Mon Dec 03, 2018 9:23 am

I'm glad to see you had a emergency fund to start with. Some people question the need for one; better safe than sorry.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

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BL
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Joined: Sun Mar 01, 2009 2:28 pm

Re: Could use some advice for balancing/simplifying portfolio

Post by BL » Mon Dec 03, 2018 9:40 am

You might be more likely to get specific help if you edit (click pencil in your first post) to include details and format from Asking Portfolio Questions (sticky at top of Help with personal investments column.)

It is a bit of work and asks for % of total for each fund to make it easier to plan the entire portfolio in a simpler manner. ERs are also important, etc. Many have found it a very useful exercise as well.

onourway
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Joined: Thu Dec 08, 2016 3:39 pm

Re: Could use some advice for balancing/simplifying portfolio

Post by onourway » Mon Dec 03, 2018 10:02 am

It looks like you are trying to create the three fund portfolio (plus a bit of tilt) in each of your accounts. This is overly complicated, and makes re-balancing difficult.

I would shoot for holding one, and no more than two funds in each individual account. Consider your entire portfolio as one and choose the best assets available in each account. This makes administration easier, and will make re-balancing easier as well.

AC1984
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Joined: Fri Aug 24, 2018 7:53 am

Re: Could use some advice for balancing/simplifying portfolio

Post by AC1984 » Mon Dec 03, 2018 7:48 pm

Thanks for all the feedback. It will be much easier to reorganize these accounts to have one fund in most and a couple in the larger ones to house the bonds. I also agree it makes sense to beef up the EF because there's not another backup for that. Much appreciated!

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onthecusp
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Re: Could use some advice for balancing/simplifying portfolio

Post by onthecusp » Wed Dec 05, 2018 5:24 pm

Rebalancing can be difficult with one fund in each account unless money can be added or withdrawn.

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