Vanguard advisor suggesting 90/10

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Ani
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Vanguard advisor suggesting 90/10

Post by Ani » Thu Dec 06, 2018 7:41 am

Hello All,

My wife and I are both 35. We have around 100k in our vanguard accounts ( our IRA accounts).
We have 401ks outside vanguard and have been saving up for a home down payment outside vanguard( around 200k in an online savings account barclays). Have an emergency savings in our bank checking account for 6 month expenses.

Currently most of these vanguard funds are lying in a money market account.

I have been trying to follow the investment threads on bogleheads. They are very informative and helpful. However, given my lack of time to invest and lack of expertise in investing, I decided to go for vanguard personal advisor services. The fees seem reasonable.

The advisor seemed very professional. His advice is to invest in 90 percent stock and 10 percent bond allocation.

Everyone seems to be talking about an imminent stock market crash. What are your thoughts on 90/10 asset allocation given current market conditions.

I was thinking of having them manage only half of my portfolio with the 90/10 and
Let the other half sit in a money market.

Or should I just bite the bullet and go for the 90/10 allocation for my entire portfolio. I don't really need that 100 k for the next couple years and know that time in the market is more important than timing the market.

Just wondering if there is a better way to do this.

Thanks!

Dandy
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Re: Vanguard advisor suggesting 90/10

Post by Dandy » Thu Dec 06, 2018 9:36 am

90/10 for a couple in their mid 30's is a bit aggressive. Seems to fit VG's idea of your risk tolerance rather than yours. If you don't have much investment savvy and/or time you might consider a balanced fund(s), TD or Life Strategy fund with a less aggressive allocation. Just make sure you decide based upon the overall equity/fixed income allocation.

You can pair two balanced fund to get the overall allocation you want e.g. Balanced Index with a 60/40 and Wellesley Income Fund with about a 35+/65ish allocation. TD and Life Strategy Funds have a range of allocations just don't go by the date or title go by the underlying allocation.

If you want a moderate or conservative allocation you can also pair two balanced fund to get the overall allocation you want e.g. Balanced Index with a 60/40 and Wellesley Income Fund with about a 38/62ish allocation.

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Svensk Anga
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Re: Vanguard advisor suggesting 90/10

Post by Svensk Anga » Thu Dec 06, 2018 10:16 am

If you were in Vanguard's target retirement fund appropriate for your ages, likely the 2045 version, you would be 90/10, so the advisor recommendation is fully in line with Vanguard's thinking. If you had been investing in this fund little by little over the years, you likely would be more comfortable holding it now. What's daunting is lump sum investing now with the market near its highs and following a period of higher volatility.

Perhaps reviewing the threads on investing a lump sum versus dollar cost averaging is in order.

beanie
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Re: Vanguard advisor suggesting 90/10

Post by beanie » Thu Dec 06, 2018 10:26 am

I think you said you don’t need the 100k in your IRA for “the next couple years.” Could you elaborate? Are you investing for the short term or the long term?

magicrat
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Re: Vanguard advisor suggesting 90/10

Post by magicrat » Thu Dec 06, 2018 10:31 am

You've outlined two options: 1) a 90% stock / 10% bond portfolio or 2) a 45% stock / 5% bond / 50% cash portfolio. These are wildly different and suggest that you have more work to do to understand your need, ability, and willingness to take risk.

Also, choosing the right asset allocation has zero to do with what the market is doing now.

J G Bankerton
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Re: Vanguard advisor suggesting 90/10

Post by J G Bankerton » Thu Dec 06, 2018 10:45 am

OP you are keeping your 200K home down payment in cash I assume.

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greg24
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Re: Vanguard advisor suggesting 90/10

Post by greg24 » Thu Dec 06, 2018 10:45 am

How about the Vanguard 80/20 fund?

staustin
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Re: Vanguard advisor suggesting 90/10

Post by staustin » Thu Dec 06, 2018 10:45 am

your age plus 10% in bonds with the balance in a total stock market fund is a good general metric to follow. You can tilt that up or down according to your risk profile. You seem risk averse. That's wise. Follow your instincts and invest accordingly to allow you to sleep comfortably at night.

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Re: Vanguard advisor suggesting 90/10

Post by goblue100 » Thu Dec 06, 2018 10:54 am

Ani wrote:
Thu Dec 06, 2018 7:41 am
I don't really need that 100 k for the next couple years
There is the famous Peter Lynch quote of
“Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves.”.
The goblue100 corollary is:

"Far more gains have been foregone by investors who think they will need the money in the short term then they would have lost in the event of a market downturn when they find out they don't need it in the short term"

If you know for sure you need the 100k in 2 years then it should not be in the market. If the need for the 100k is vague at best, then I would invest per your investment plan.

I know when I was young and my wife and I married, she was very concerned about locking money up for the long term in 401k or IRA. As it turns out, we've never had a sudden need for a large amount of cash that we couldn't finance. The best thing we ever did was invest for the very long term.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns

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knpstr
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Re: Vanguard advisor suggesting 90/10

Post by knpstr » Thu Dec 06, 2018 10:55 am

In my mid 30s I have 100% of my "paper investments" in equities. I do have rental real estate and a relatively small "cash" reserve for liquidity purposes. I don't have any bonds.


Hopefully I still have a 50+ year investment horizon.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

Ani
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Re: Vanguard advisor suggesting 90/10

Post by Ani » Thu Dec 06, 2018 11:22 am

Thank you all for all your replies

I should have been more specific in my query. :oops:

I do not need the 100k that I have in vanguard, till I retire around 67.

I am saving outside vanguard in Barclays online savings for downpayment on house and have saved up for emergency expenses outside of vanguard.

Glockenspiel
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Re: Vanguard advisor suggesting 90/10

Post by Glockenspiel » Thu Dec 06, 2018 11:30 am

I'm only a year younger than you and my formula is Age minus 22 in bonds. So I currently have approximately 12% of my portfolio in bonds (not including my mortgage).

J G Bankerton
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Re: Vanguard advisor suggesting 90/10

Post by J G Bankerton » Thu Dec 06, 2018 11:32 am

Ani wrote:
Thu Dec 06, 2018 11:22 am
Thank you all for all your replies

I should have been more specific in my query. :oops:

I do not need the 100k that I have in vanguard, till I retire around 67.

I am saving outside vanguard in Barclays online savings for downpayment on house and have saved up for emergency expenses outside of vanguard.
Good job; 100% VTI.

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mhc
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Re: Vanguard advisor suggesting 90/10

Post by mhc » Thu Dec 06, 2018 11:38 am

There is nothing wrong with 90/10, but if the market tanks, will you panic and change the asset allocation(AA)?

90/10 is too aggressive for some and can cause behavioral errors. If 90/10 is too aggressive, then go for 80/20, 70/30, 60/40, or 50/50. No one knows which will be best. You need to determine what works for you and stick to it. Behavioral errors can be very detrimental to a portfolio.

Maybe start at 75/25 and see how you do.

Ani
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Re: Vanguard advisor suggesting 90/10

Post by Ani » Thu Dec 06, 2018 11:47 am

What if I let them manage 50k as per 90/10.

The other half 50k, I'll let it sit in a money market till the market crashes (if and when it does crash). This way I'll buy the market when it's down. If it does not crash in the next 2 to 3 years, I'll just put it back in the market.

This way I'll expose only half of my vanguard assets to volatility.

The outcome im trying to avoid is a sharp drop in my assets by putting 90 %of ALL of 100k in stocks.



I should add that im also going to add approx 4166/ month in vanguard taxable brokerage account with 90/10 allocation. (Dollar cost averaging)

Its just this lumpsump 100k im concerned about.

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whodidntante
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Re: Vanguard advisor suggesting 90/10

Post by whodidntante » Thu Dec 06, 2018 11:48 am

90/10 is reasonable if you have the temperament for it.

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Re: Vanguard advisor suggesting 90/10

Post by MJW » Thu Dec 06, 2018 11:57 am

Ani wrote:
Thu Dec 06, 2018 11:47 am
What if I let them manage 50k as per 90/10.

The other half 50k, I'll let it sit in a money market till the market crashes (if and when it does crash). This way I'll buy the market when it's down. If it does not crash in the next 2 to 3 years, I'll just put it back in the market.

This way I'll expose only half of my vanguard assets to volatility.

The outcome im trying to avoid is a sharp drop in my assets by putting 90 %of ALL of 100k in stocks.



I should add that im also going to add approx 4166/ month in vanguard taxable brokerage account with 90/10 allocation. (Dollar cost averaging)

Its just this lumpsump 100k im concerned about.
I was going to type a completely different response to you until I saw this post. If this is your primary concern you should not be 90/10. Case closed.

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vineviz
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Re: Vanguard advisor suggesting 90/10

Post by vineviz » Thu Dec 06, 2018 12:00 pm

Ani wrote:
Thu Dec 06, 2018 11:47 am
What if I let them manage 50k as per 90/10.

The other half 50k, I'll let it sit in a money market till the market crashes (if and when it does crash). This way I'll buy the market when it's down. If it does not crash in the next 2 to 3 years, I'll just put it back in the market.
This is a terrible idea.

Your plan gives you a 20% chance of paying less for your stocks and an 80% chance of paying more for them. The math is not in your favor.

Invest it all now. If you can't muster the courage to do that at a 90/10 allocation then invest it all now at a 60/40 allocation.

Or invest $60k now and then $5k each month until it is all invested.

Waiting for the market to crash and hoping you'll be some combination of lucky enough and brave enough to time the market is not an investment plan.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

WhiteMaxima
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Re: Vanguard advisor suggesting 90/10

Post by WhiteMaxima » Thu Dec 06, 2018 12:01 pm

90/100 is no much difference from 100/0. I would say 60/40 (or 70/30) will make some difference.

harvestbook
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Re: Vanguard advisor suggesting 90/10

Post by harvestbook » Thu Dec 06, 2018 12:04 pm

If you like 90/10, why pay an extra .3 percent ER for the advisor? Just use a target date fund. But as pointed out, if you only put half in that, you're actually choosing a 45/55 AA.

Maybe it's the "90/10" that's making you think it's too aggressive, or your perception of the market. You can get the Target Retirement 2015 fund if you feel like you need to be as conservative as a retired person instead of someone who's 30 years away from retirement. And when will you know that the market has bottomed, or indeed if it's even crashed at all?

For the record, I'm 90/10 at age 56 with the expectation my money has to last for 40 more years. I sleep fine.
I'm not smart enough to know, and I can't afford to guess.

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David Jay
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Re: Vanguard advisor suggesting 90/10

Post by David Jay » Thu Dec 06, 2018 12:09 pm

mhc wrote:
Thu Dec 06, 2018 11:38 am
There is nothing wrong with 90/10, but if the market tanks, will you panic and change the asset allocation(AA)?
That, Detective, is the right question (quote: "I Robot").

At your age and duration (don't need the funds until retirement), asset allocation is a balance between return and your personal emotional makeup. Even 100/0 is acceptable with your timeframe if you won't "blink". Most of us will. So you need to back down your AA until it is something you can live with through thick and thin.

Your concerns about the market suggest that 90/10 is not appropriate for your current situation. Maybe 70/30 or 60/40.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

retiringwhen
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Re: Vanguard advisor suggesting 90/10

Post by retiringwhen » Thu Dec 06, 2018 12:09 pm

All of this discussion get confusing.

If you have cash being set away for buying an house. Just set it aside, don't consider it as part of your long-term investment.

The money you are putting away for retirement, look at it in total. Then decide if you can take the ride with a 90/10 portfolio. If not, tell the VPAS guy you need less volatility.

I did 85/15 for decades with my retirement money and didn't change until I hit my 50s, there was some serious nail-biters along the way...

My son on the other hand is a lot more risk adverse due to growing up in the shadow the 2008 financial crisis. He is around 70/30 (Roth at 90/10, and taxable funds at 60/40).

BTW, he also has a cash stash bigger than his retirement fund as he considers a couple major purchases.

I know this because he came to me last week and asked to review his portfolio for end of 2018, he only made minor tactical updates (move to higher paying MM, re-balance a bit into international)..........

Be sure you keep it all modeled for the purposes of the money. that is important. because you don't have one goal, you have at least two major goals.

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Re: Vanguard advisor suggesting 90/10

Post by megabad » Thu Dec 06, 2018 12:12 pm

Just out of curiosity, have you discussed your concerns with Vanguard PAS? What was the response? Did you ask them about possibly leaning a little more conservative?

If we are only talking about the long term portion of your portfolio, 90/10 fits within the range of reasonable based on most Modern Portfolio Theory Models.

wolf359
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Re: Vanguard advisor suggesting 90/10

Post by wolf359 » Thu Dec 06, 2018 12:29 pm

Ani wrote:
Thu Dec 06, 2018 11:47 am
What if I let them manage 50k as per 90/10.

The other half 50k, I'll let it sit in a money market till the market crashes (if and when it does crash). This way I'll buy the market when it's down. If it does not crash in the next 2 to 3 years, I'll just put it back in the market.

This way I'll expose only half of my vanguard assets to volatility.

The outcome im trying to avoid is a sharp drop in my assets by putting 90 %of ALL of 100k in stocks.



I should add that im also going to add approx 4166/ month in vanguard taxable brokerage account with 90/10 allocation. (Dollar cost averaging)

Its just this lumpsump 100k im concerned about.
With Vanguard managed accounts, you're not paying them to outperform the stock market. They will not actively trade your money.

What you're paying them for is advice on how to prudently manage your funds. They will do it for you so you're not market timing and making bad financial decisions based on emotion.

Taking half the money and market timing directly works against what you're paying them to do. You will probably lose more money due to poor investment decisions than you will if you just accept that the market is volatile, throw the money in now, and wait 20 years.

Why don't you invest the current money at 60% equities 40% bonds? All new money would be invested at 100% equities until you're at 90/10. At that point, all new money is invested 90/10. This gives you the best of all worlds:

- You're invested immediately.
- If the market tanks, your balance doesn't drop that far.
- If the market rises, you have the bulk of your investment in equities, and new money will bring you to 90/10 within 7-8 months.
- Your asset allocation will gradually climb from 60/40 to 90/10, allowing you to get adjusted to the volatility over time.

Or just trust your Vanguard advisor, give him the money, and let him do his thing. Don't watch the market at all -- that's his job. Just look at your statements once a month or once a year and move on with your life.

If you're only looking at the market once a year, your stress level goes down.

Jordan4FI
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Re: Vanguard advisor suggesting 90/10

Post by Jordan4FI » Thu Dec 06, 2018 12:37 pm

Depends on when you want to "retire" Vanguard and everyone else expects you to do that at age 65+.

Myself, I do not want to work (for anyone) past 40.. So you need to adjust your AA to meet your own goals.

J G Bankerton
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Re: Vanguard advisor suggesting 90/10

Post by J G Bankerton » Thu Dec 06, 2018 12:46 pm

vineviz wrote:
Thu Dec 06, 2018 12:00 pm
Ani wrote:
Thu Dec 06, 2018 11:47 am
What if I let them manage 50k as per 90/10.

The other half 50k, I'll let it sit in a money market till the market crashes (if and when it does crash). This way I'll buy the market when it's down. If it does not crash in the next 2 to 3 years, I'll just put it back in the market.
This is a terrible idea.
I agree, you are in an excellent position to take on more risk than any other time in your life. There could be the mother of all Santa Clause rallies around the corner. If not this month so be it, it will happen in your life time. Dot invest like an old man, take some TUMS or better don't look.

MotoTrojan
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Re: Vanguard advisor suggesting 90/10

Post by MotoTrojan » Thu Dec 06, 2018 12:57 pm

How expensive of a home are you planning to purchase? Given you only have $100K combined for retirement, a current savings of $200K just for a downpayment seems hefty. I am guessing you live over on the west-coast with me.

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Re: Vanguard advisor suggesting 90/10

Post by MotoTrojan » Thu Dec 06, 2018 12:59 pm

J G Bankerton wrote:
Thu Dec 06, 2018 12:46 pm
vineviz wrote:
Thu Dec 06, 2018 12:00 pm
Ani wrote:
Thu Dec 06, 2018 11:47 am
What if I let them manage 50k as per 90/10.

The other half 50k, I'll let it sit in a money market till the market crashes (if and when it does crash). This way I'll buy the market when it's down. If it does not crash in the next 2 to 3 years, I'll just put it back in the market.
This is a terrible idea.
I agree, you are in an excellent position to take on more risk than any other time in your life. There could be the mother of all Santa Clause rallies around the corner. If not this month so be it, it will happen in your life time. Dot invest like an old man, take some TUMS or better don't look.
Agreed, terrible idea. This is how money is lost. There are countless threads of people that have been doing this for 2, 3, 4, or even 7 years (2011 was all doom & gloom as well) who are now afraid to enter the market because they fear a 50% drop. Funny thing is they would've doubled their money if they had just stayed invested in some cases, and even the 50% drop would've left them even.

J G Bankerton
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Re: Vanguard advisor suggesting 90/10

Post by J G Bankerton » Thu Dec 06, 2018 1:11 pm

MotoTrojan wrote:
Thu Dec 06, 2018 12:59 pm

Agreed, terrible idea. This is how money is lost.
If 90% stock, recommended by a professionals, is excellent advice. How is recommending 10% more stock terrible? Excellent to terrible has a narrow spread. How about 95% stock?

hdas
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Re: Vanguard advisor suggesting 90/10

Post by hdas » Thu Dec 06, 2018 1:13 pm

Ani wrote:
Thu Dec 06, 2018 7:41 am

Everyone seems to be talking about an imminent stock market crash. What are your thoughts on 90/10 asset allocation given current market conditions.
Mr. Ani,
I'm sorry you have been exposed to the cesspool portion of the forum. We all need to do a better job at keeping the quality high, precisely for this reason. Someone looking for guidance can get the wrong input.

To your case, unless you have a volatile career you probably can stick to 90/10 and then the only enemy will be yourself. I would follow the 90/10 advice and try to limit your consumption of financial gibberish.

Cheers :greedy
Stay the course and buy some more.

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Re: Vanguard advisor suggesting 90/10

Post by MotoTrojan » Thu Dec 06, 2018 1:14 pm

J G Bankerton wrote:
Thu Dec 06, 2018 1:11 pm
MotoTrojan wrote:
Thu Dec 06, 2018 12:59 pm

Agreed, terrible idea. This is how money is lost.
If 90% stock, recommended by a professionals, is excellent advice. How is recommending 10% more stock terrible? Excellent to terrible has a narrow spread. How about 95% stock?
Huh? I was agreeing with you and vineviz that holding 50% as dry-powder was not a sound investing move. I'd be 100/0 in their position, considering I have $200K cash on the sidelines especially. Little younger than them now but I am 100/0 with a SCV tilt and similar invested $ amount, and not losing any sleep.

LiterallyIronic
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Re: Vanguard advisor suggesting 90/10

Post by LiterallyIronic » Thu Dec 06, 2018 1:16 pm

Ani wrote:
Thu Dec 06, 2018 11:47 am
What if I let them manage 50k as per 90/10.

The other half 50k, I'll let it sit in a money market till the market crashes (if and when it does crash). This way I'll buy the market when it's down. If it does not crash in the next 2 to 3 years, I'll just put it back in the market.
Horrible idea. There is, of course, a chance that you'll make more money that way, but you'll have to be right multiple times in order to know when to get out of the market (apparently now?) and when to get in (some arbitrary time between now and 2-3 years from now?). Good luck with that.

If 90/10 is too aggressive for you, that's not a bad thing (or a good thing, it's just a thing). Everyone's risk tolerance is different. I'm 35 and I'm 90/10 because I need to be aggressive in order to have a chance at meeting my retirement goal. If you don't have the need or ability to take the 90/10 risk, then there's nothing wrong with 80/20, 70/30, or whatever asset allocation you feel comfortable with. Just pick one and stick with it.

J G Bankerton
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Re: Vanguard advisor suggesting 90/10

Post by J G Bankerton » Thu Dec 06, 2018 1:20 pm

MotoTrojan wrote:
Thu Dec 06, 2018 1:14 pm

Huh? I was agreeing with you ...
Oh never mind. :beer

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Re: Vanguard advisor suggesting 90/10

Post by Fallible » Thu Dec 06, 2018 2:05 pm

megabad wrote:
Thu Dec 06, 2018 12:12 pm
Just out of curiosity, have you discussed your concerns with Vanguard PAS? What was the response? Did you ask them about possibly leaning a little more conservative? ...
To these important questions, I'll add two more regarding the basis on which the VG advisor made his recommendations:

-Did he ask about and discuss your risk tolerance and its importance in deciding an asset allocation?

-Did the advisor also discuss your need and ability to take risk? (See the wiki's "Asset allocation" and "Risk tolerance" pages.)
Bogleheads® wiki | Investing Advice Inspired by Jack Bogle

averagedude
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Re: Vanguard advisor suggesting 90/10

Post by averagedude » Thu Dec 06, 2018 2:19 pm

35 year old retiring at 67 with a 90/10 asset allocation sounds reasonable to me. I would lump sum the money and focus on my savings rate from now until retirement instead of what the markets are going to do during that time. The advisory service isn' a bad idea, but you could just put your now and future money in the target date 2050 fund.

J G Bankerton
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Re: Vanguard advisor suggesting 90/10

Post by J G Bankerton » Thu Dec 06, 2018 2:35 pm

averagedude wrote:
Thu Dec 06, 2018 2:19 pm
35 year old retiring at 67 with a 90/10 asset allocation sounds reasonable to me. I would lump sum the money and focus on my savings rate from now until retirement instead of what the markets are going to do during that time. The advisory service isn' a bad idea, but you could just put your now and future money in the target date 2050 fund.
I would replicate the funds the target date fund holds with Admiral shares of the underlying funds. With large balances it gets expensive to add an layer that takes a cut.

F_E
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Re: Vanguard advisor suggesting 90/10

Post by F_E » Thu Dec 06, 2018 2:43 pm

If you are good with 90/10 but unsure about the timing, you might as well just move 12.5% to 25% of the MM money to the 90/10 plan every quarter for the next year or two. And, if you see a big market drop, just pull the trigger and get it all transferred. Guess this may be interpreted as market timing a bit, but might as well have a plan that addresses your concerns while still moving you towards your goals. Good luck.

GmanJeff
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Re: Vanguard advisor suggesting 90/10

Post by GmanJeff » Thu Dec 06, 2018 3:02 pm

90% equities is a very high-level, broad, and relatively non-specific asset allocation description, because the word "equities" alone encompasses a wide range of potential volatilities, risks, and returns, as is also true for the 10% debt portion of the recommended portfolio. Assuming a well diversified equity portfolio across different equity asset classes, especially in a manner consistent with Vanguard's asset allocation model for your professed risk tolerance and return objectives, and given your time horizon, a 90/10 portfolio is likely optimum for you.

nix4me
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Re: Vanguard advisor suggesting 90/10

Post by nix4me » Thu Dec 06, 2018 4:28 pm

If I was your age I would put 100% in VTSAX or FZROX. And I would spend my time working, figuring out how to save more, and reducing my expenses. Then I would save like crazy until I had enough to FIRE. Then I would switch to 60/40.

Ani
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Re: Vanguard advisor suggesting 90/10

Post by Ani » Thu Dec 06, 2018 7:06 pm

Thank you all for your opinions :beer

I did talk about risk tolerance with the Vanguard advisor, and am okay with the 90/10 allocation over time. I am going to put the additional monthly money in stocks 100 % till I ultimately reach 90/10.

Its putting all this money in lump sum that I am not comfortable with.

If you go to portfolio visualizer and invest 100k lump sum with 90/10 in VTSMX/VBMFX.

The guy who started investing in 2007 or 2008 ends up with $ 231,444
They guy who started investing in 2009 ends up with $ 344,557 , a whopping nearly 100k more.



What are your thoughts on this comparison between investing lump sum between 2007/2008 or 2009


I dont want to be the guy who invested in 2007/2008. I understand that there is no way on earth to predict when the crash happens.

Hence, am leaning towards wolf359 idea of current money in 60/40 and put all the new monthly investments in stock till I reach 90/10 over time. This approach seems to be in the middle ground.
wolf359 wrote:
Thu Dec 06, 2018 12:29 pm
Ani wrote:
Thu Dec 06, 2018 11:47 am
Why don't you invest the current money at 60% equities 40% bonds? All new money would be invested at 100% equities until you're at 90/10. At that point, all new money is invested 90/10. This gives you the best of all worlds:

- You're invested immediately.
- If the market tanks, your balance doesn't drop that far.
- If the market rises, you have the bulk of your investment in equities, and new money will bring you to 90/10 within 7-8 months.
- Your asset allocation will gradually climb from 60/40 to 90/10, allowing you to get adjusted to the volatility over time.

side note- I live in New Jersey- would like to make a huge downpayment on my primary home and get rid of interest payments on my 'future' mortgage.
I own a rental condo that I am considering purchasing more- I just do 20 % downpayments on these as the tenant will pay them off.

EnjoyTheJourney
Posts: 9
Joined: Sat Nov 17, 2018 8:36 pm

Re: Vanguard advisor suggesting 90/10

Post by EnjoyTheJourney » Fri Dec 07, 2018 6:38 am

There's an interesting thinkpiece about the fallacy of time diversification that I ran across through these boards. It convinced me to be more conservative with my wife and I's allocation because we benefit most by lowering the risk of really low total returns, at this point.

A key point of the "fallacy of time diversification" argument is that the higher the stock % in a portfolio, the larger the standard deviation of total return for any given time frame. Since total return is the most important outcome, and not average annual returns, paying attention to the worst case scenarios for total return is worthwhile.

With the good start the OP seems to have, keeping the "total return" floor relatively high might be seen as a reasonable goal.

Ani
Posts: 5
Joined: Wed Aug 22, 2018 10:03 pm

Re: Vanguard advisor suggesting 90/10

Post by Ani » Fri Dec 07, 2018 10:40 am

EnjoyTheJourney wrote:
Fri Dec 07, 2018 6:38 am
There's an interesting thinkpiece about the fallacy of time diversification that I ran across through these boards. It convinced me to be more conservative with my wife and I's allocation because we benefit most by lowering the risk of really low total returns, at this point.

A key point of the "fallacy of time diversification" argument is that the higher the stock % in a portfolio, the larger the standard deviation of total return for any given time frame. Since total return is the most important outcome, and not average annual returns, paying attention to the worst case scenarios for total return is worthwhile.

With the good start the OP seems to have, keeping the "total return" floor relatively high might be seen as a reasonable goal.

This sounds like an interesting read. Thank you for bringing this up.
Seems to align with what I've been thinking.
I found some articles on this. I'll read more on this and ask my advisor to see what he has to say.

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