Lazy Portfolio Users - Same in all accounts

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jbsmith05
Posts: 121
Joined: Fri Apr 01, 2016 2:01 pm

Lazy Portfolio Users - Same in all accounts

Post by jbsmith05 » Thu Dec 06, 2018 4:46 pm

For those of you that follow a lazy portfolio strategy....do you apply the same plan to your 401k, IRA, and Brokerage accounts?

I, in my naivety, began my investing by picking funds without much of a strategy other than low ER's. While they've done quite well over their life (total gains in the 20-50% range not all of them but most/many), I'm now in a situation where I have about 15-20 different funds scattered across different account types. I'm contemplating moving to a 3 or 4 fund strategy, but with capital gains - I'm not quite sure how...or if I'd apply the same 3-4 fund strategy in each account.

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Phineas J. Whoopee
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Re: Lazy Portfolio Users - Same in all accounts

Post by Phineas J. Whoopee » Thu Dec 06, 2018 4:53 pm

As long as it's intended for one purpose, commonly retirement, it is one portfolio. The best thing is to decide upon an asset allocation, then use the advantages and disadvantages in each account to choose specifically what goes where.
PJW

jbsmith05
Posts: 121
Joined: Fri Apr 01, 2016 2:01 pm

Re: Lazy Portfolio Users - Same in all accounts

Post by jbsmith05 » Thu Dec 06, 2018 4:58 pm

Phineas J. Whoopee wrote:
Thu Dec 06, 2018 4:53 pm
As long as it's intended for one purpose, commonly retirement, it is one portfolio. The best thing is to decide upon an asset allocation, then use the advantages and disadvantages in each account to choose specifically what goes where.
PJW
It's not one purpose. You could say at least 2 - Retirement, and to Accumulate Wealth (which of course is then used for a number of different things potentially - purchasing another/new home, etc.)

are you saying you treat each each purpose as a different portfolio?

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Phineas J. Whoopee
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Re: Lazy Portfolio Users - Same in all accounts

Post by Phineas J. Whoopee » Thu Dec 06, 2018 5:01 pm

jbsmith05 wrote:
Thu Dec 06, 2018 4:58 pm
Phineas J. Whoopee wrote:
Thu Dec 06, 2018 4:53 pm
As long as it's intended for one purpose, commonly retirement, it is one portfolio. The best thing is to decide upon an asset allocation, then use the advantages and disadvantages in each account to choose specifically what goes where.
PJW
It's not one purpose. You could say at least 2 - Retirement, and to Accumulate Wealth (which of course is then used for a number of different things potentially - purchasing another/new home, etc.)

are you saying you treat each each purpose as a different portfolio?
If a person is accumulating for a far-off retirement and also saving for a house down payment in the near future, for example, they can be treated differently.

Naturally one owns the totality of what one owns. If, say, 38% of the total is in fixed income, then that's how much it is.

Does that answer your question?

PJW

pdavi21
Posts: 219
Joined: Sat Jan 30, 2016 4:04 pm

Re: Lazy Portfolio Users - Same in all accounts

Post by pdavi21 » Thu Dec 06, 2018 5:10 pm

You entire net worth should be treated as two baskets:
Allocable: Can be traded easily (accounts, cash, physical commodities, paper bonds)
Non-Allocable: Cannot be traded easily (Property, valuables (or collectibles), physical commodities, Pensions, Social Security, Employment Income Stream, cash reserves if required)

All Allocable assets should follow your asset allocation.
Non-allocable assets should not count in your asset allocation (unless you have a good reason-i.e close to retirement for pension), but should impact your risk tolerance and choice of asset allocation percentages.

EDIT: I forgot to answer your main question. I try to use the combo of funds with the lowest total ER. For example, one account has total stock for 0.5% and total bond for 1%, and one has them for .05% and .10%. You would use the 0.5% ER total stock and 0.10% total bond (as much as possible within account balance limitations). to minimize ER.
Last edited by pdavi21 on Thu Dec 06, 2018 5:15 pm, edited 1 time in total.

jbsmith05
Posts: 121
Joined: Fri Apr 01, 2016 2:01 pm

Re: Lazy Portfolio Users - Same in all accounts

Post by jbsmith05 » Thu Dec 06, 2018 5:15 pm

pdavi21 wrote:
Thu Dec 06, 2018 5:10 pm
You entire net worth should be treated as two baskets:
Allocable: Can be traded easily (accounts, cash, physical commodities, paper bonds)
Non-Allocable: Cannot be traded easily (Property, valuables (or collectibles), physical commodities, Pensions, Social Security, Employment Income Stream, cash reserves if required)

All Allocable assets should follow your asset allocation.
Non-allocable assets should not count in your asset allocation (unless you have a good reason-i.e close to retirement for pension), but should impact your risk tolerance and choice of asset allocation percentages.
That's what I thought - Now I need to figure out how or if I can get out of some of these other funds efficiently. Or maybe I just leave them, and instead of re-investing in them, only invest in the correct funds per my asset allocation strategy.

pdavi21
Posts: 219
Joined: Sat Jan 30, 2016 4:04 pm

Re: Lazy Portfolio Users - Same in all accounts

Post by pdavi21 » Thu Dec 06, 2018 5:17 pm

jbsmith05 wrote:
Thu Dec 06, 2018 5:15 pm
pdavi21 wrote:
Thu Dec 06, 2018 5:10 pm
You entire net worth should be treated as two baskets:
Allocable: Can be traded easily (accounts, cash, physical commodities, paper bonds)
Non-Allocable: Cannot be traded easily (Property, valuables (or collectibles), physical commodities, Pensions, Social Security, Employment Income Stream, cash reserves if required)

All Allocable assets should follow your asset allocation.
Non-allocable assets should not count in your asset allocation (unless you have a good reason-i.e close to retirement for pension), but should impact your risk tolerance and choice of asset allocation percentages.
That's what I thought - Now I need to figure out how or if I can get out of some of these other funds efficiently. Or maybe I just leave them, and instead of re-investing in them, only invest in the correct funds per my asset allocation strategy.
I forgot to answer your main question. I try to use the combo of funds with the lowest total ER. For example, one account has total stock for 0.5% and total bond for 1%, and one has them for .05% and .10%. You would use the 0.5% ER total stock and 0.10% total bond (as much as possible within account balance limitations) to minimize ER. (EDIT: this two fund becomes a three fund to reach your AA - you either need to add extra 1% total bond or 0.05% total stock to bridge the gap to AA)

EDIT: For capital gains try to fool around with after-tax accounts the least (if at all).
Last edited by pdavi21 on Thu Dec 06, 2018 5:22 pm, edited 2 times in total.

NotTooDeepLearning
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Joined: Wed Oct 24, 2018 2:04 pm

Re: Lazy Portfolio Users - Same in all accounts

Post by NotTooDeepLearning » Thu Dec 06, 2018 5:17 pm

For simplicity I hold a TR in my 401k, and Vanguard Balanced + Life Strategy Growth in the roth, so both accounts are around 70/30. Same AA and only 3 funds across both accounts. I don't have anything in a taxable account yet though.

Jordan4FI
Posts: 133
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Location: Honduras

Re: Lazy Portfolio Users - Same in all accounts

Post by Jordan4FI » Thu Dec 06, 2018 5:30 pm

You might have to do it slowly per year to ensure you can pay for capital gains tax as you sell and buy into the 3/4 fund portfolio... You can also look at "fund of funds" Like Target Date Funds and Life Strategy Funds which is one fund but hold 3-5 funds within that single fund, aka super lazy.

Now if you have the extra cash to pay the tax, then you can move it all, or half and half a month or two apart.

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