Opinions on VG advisor's recommendations

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Randtor
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Opinions on VG advisor's recommendations

Post by Randtor » Tue Feb 19, 2019 4:37 pm

Hi All,

As noted in my previous topic, I have begun the process of transferring all of my assets from Ameriprise to Vanguard. For now I am leaving my Fidelity portfolio (taxable) in place - it is 100% individual stocks at the moment. Once I have this Vanguard portfolio squared away I will then work on the Fidelity portfolio to balance my holdings.For reference here is my original post with all holdings laid out: viewtopic.php?f=1&t=272292&p=4369256#p4369256
My first contact with a VG Advisor went well, and I am scheduled to meet again this Friday 2/22. In short this is what he recommended. I have some questions about it which I will bring up with him, but I thought I would run it by those here with much more investment savvy than I. It was my initial decision to go with a 40/60 split.

40% Stock:
VTSAX (24%): [VG Total Stock Market Index Fund] ; The other 16% would be comprised of VTMGX [Developed Markets Index Fund], VEMAX [Emerging Markets Stock Index Fund], and VTIAX VG [Variable Annuity-Total International Stock Market Index Portfolio].

My first question here is why an Annuity? That was one of the main driving forces that prompted me to start my research down the path leading to Bogleheads and Vanguard, my previous advisor pushed annuities on me. I don't see any conceivable reason to open another one in this account... do you?

60% Bond:
US Short Term (17%): VFSUX [short term investment grade fund] and VBTLX [Total Bond Market Index Fund]
US Intermediate (21%): VFIDX [Intermediate term investment grade fund] and VBTLX [see above]
US Long Term: (4%): VBTLX[see above]
International:(18%): VTABX VG Total International Bond Index Fund

US Short Term Reserve: VMFXX

So, I have a high number of funds in my overly complex Ameriprise account that will be pared down to essentially 4 stock funds and 4 bond funds. Great..."simplify" is the key!
But I am left wondering if this can be further pared down to hold 3 or 4 funds as recommended in the 3 fund portfolio or the 4 fund portfolio that I have been studying about here on the forum.

My other thought is, am I comfortable going forward at a 40%/60% stock/bond split? I am ok with risk. Both times I have been squeezed (2001 and 2007-08) I stayed the course and had no ill effects because I did nothing. But now as I approach retirement (I will be 68 next month), I feel it is wiser to protect my investments as I will likely be drawing from my holdings to live within the next 6 months. Following the 'rules' here, I should probably have a higher percentage of bond holdings than what I told the advisor (60/40), but I personally am ok with that split, I just hate leaving money on the table. I did that as a no-nothing investor who trusted an advisor to do what was best for me for a long time, only to find out she was doing what was best for HER and me.

I am very new to this, and I can only assume that the VG Advisor is giving me his best advice. I just don't know if it is "THE" best advice.
Thanks for your thoughts....
Rand
NOTE: Edited to change to correct symbols on Bond funds.
Last edited by Randtor on Wed Feb 20, 2019 1:07 pm, edited 1 time in total.
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BL
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Re: Opinions on VG advisor's recommendations

Post by BL » Tue Feb 19, 2019 5:04 pm

Looks like you had an annuity at A so my guess is that it would be converted to a Vanguard annuity to save on taxes now or later. Is that where it comes from? Otherwise I doubt it would be suggested.

If you are not considering the high risk of your individual funds, you are not thinking of it all together.

If you do it yourself, I would recommend the simplest possible 3-fund portfolio. Otherwise, you may have to go with the suggested portfolio, which is fine.

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Re: Opinions on VG advisor's recommendations

Post by livesoft » Tue Feb 19, 2019 5:04 pm

There seems to be some mis-translation from Vanguard to You to this thread.

VSCSX is short-term corporate bond index, while VFSUX is short-term investment grade last time I checked. And VISCX is intermediate-term corporate bond index. I guess the corporate bonds are investment grade bonds, but that shows an unclear communication to me, since there are other investment grade bonds besides corporate bonds.

As for the annuity, maybe you are transferring an annuity over, so in order to avoid a penalty and taxes, it may have to go from annuity to annuity. If that is so, then Vanguard should have made that clear to you.
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Re: Opinions on VG advisor's recommendations

Post by friar1610 » Tue Feb 19, 2019 5:08 pm

Randtor wrote:
Tue Feb 19, 2019 4:37 pm
Hi All,

As noted in my previous topic, I have begun the process of transferring all of my assets from Ameriprise to Vanguard. For now I am leaving my Fidelity portfolio (taxable) in place - it is 100% individual stocks at the moment. Once I have this Vanguard portfolio squared away I will then work on the Fidelity portfolio to balance my holdings.For reference here is my original post with all holdings laid out: viewtopic.php?f=1&t=272292&p=4369256#p4369256
My first contact with a VG Advisor went well, and I am scheduled to meet again this Friday 2/22. In short this is what he recommended. I have some questions about it which I will bring up with him, but I thought I would run it by those here with much more investment savvy than I. It was my initial decision to go with a 40/60 split.

40% Stock:
VTSAX (24%): [VG Total Stock Market Index Fund] ; The other 16% would be comprised of VTMGX [Developed Markets Index Fund], VEMAX [Emerging Markets Stock Index Fund], and VTIAX VG [Variable Annuity-Total International Stock Market Index Portfolio].

My first question here is why an Annuity? That was one of the main driving forces that prompted me to start my research down the path leading to Bogleheads and Vanguard, my previous advisor pushed annuities on me. I don't see any conceivable reason to open another one in this account... do you?

60% Bond:
US Short Term (17%): VSCSX [short term investment grade fund] and VBTLX [Total Bond Market Index Fund]
US Intermediate (21%): VICSX [Intermediate term investment grade fund] and VBTLX [see above]
US Long Term: (4%): VBTLX[see above]
International:(18%): VTABX VG Total International Bond Index Fund

US Short Term Reserve: VMFXX

So, I have a high number of funds in my overly complex Ameriprise account that will be pared down to essentially 4 stock funds and 4 bond funds. Great..."simplify" is the key!
But I am left wondering if this can be further pared down to hold 3 or 4 funds as recommended in the 3 fund portfolio or the 4 fund portfolio that I have been studying about here on the forum.

My other thought is, am I comfortable going forward at a 40%/60% stock/bond split? I am ok with risk. Both times I have been squeezed (2001 and 2007-08) I stayed the course and had no ill effects because I did nothing. But now as I approach retirement (I will be 68 next month), I feel it is wiser to protect my investments as I will likely be drawing from my holdings to live within the next 6 months. Following the 'rules' here, I should probably have a higher percentage of bond holdings than what I told the advisor (60/40), but I personally am ok with that split, I just hate leaving money on the table. I did that as a no-nothing investor who trusted an advisor to do what was best for me for a long time, only to find out she was doing what was best for HER and me.

I am very new to this, and I can only assume that the VG Advisor is giving me his best advice. I just don't know if it is "THE" best advice.
Thanks for your thoughts....
Rand
My guess is that he is suggesting an annuity because you already have one and he wants you to move it from the current provider to VG (technically, VG's partner insurance company) via a 1035 tax-free transfer. If you were to simply liquidate the current annuity you would likely incur undesirable tax consequences (depending on the basis of the annuity and its performance since you bought it.)

I'm a 45-ish% equity guy, a little bit older than you. I recently had a VG plan drawn up and the recommendations were along the same lines as you got although not exactly the same. In my case, I've opted to stick with managing the port myself while still keeping an eye out for a good fee-only person who can hold my wife's hand if needed after I'm gone. I don't personally see the need to break my Total Bond Index and Short-Term Bond Index funds into any more of their component parts nor do I see a need for international bonds. So paying to have those rebalanced periodically doesn't seem worth it, but that's just me.

If you haven't already, I would recommend becoming familiar with Bernstein's concept of liability-matched portfolios in retirement as that is a sensible way to determine the right asset allocation for you. Search the many posts by dandy in which he comments on how he used that concept as a way to determine his AA (which has equities in the low 40's and the remainder in fixed income - not just bonds). I've personally found dandy's approach to be eminently sensible.

Edited to add: I have a VG variable annuity. It's interesting that when they did my plan they said they couldn't manage a VA, even their own, under PAS.
Last edited by friar1610 on Tue Feb 19, 2019 5:15 pm, edited 1 time in total.
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Re: Opinions on VG advisor's recommendations

Post by Veritas Simplex » Tue Feb 19, 2019 5:09 pm

Great decision to leave Amerprise.

Vanguard's recommendations are fairly streamlined. You could consolidate holdings further by foregoing the 2 Investment Grade Bond Funds (corporates) in favor of Total Bond Market Index (mostly government). You can decide if you prefer the potential of higher interest rates on the Investment Grade funds or the simplicity of the Total Bond Fund.

Reviewing your previous post, not sure why they're using both underlying components, the Developed Markets and Emerging Markets funds instead of Total International Index. Usually, it would be due to an overweight/underweight of International Developed vs. Emerging in a taxable account, but I don't see any evidence of that. Just ask the Advisor why.

As to why an annuity, it's an outcome of your Amerprise account registrations. It's Amerprise who likely recommended the annuity, probably unnecessary to you, but definitely better for the Amerprise broker (nice commissions on the annuity). Rather than surrender the annuity and expose earnings to taxes, they are likely recommending a 1035 exchange to a Vanguard Variable Annuity. Costs are higher than their mutual funds due to insurance M&E charges, but still much lower than Amerprise.

40% stock, 60% bond is a reasonable allocation for a retired investor allocation. However, only you can decide if that allows you to sleep soundly.

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Re: Opinions on VG advisor's recommendations

Post by retiredjg » Tue Feb 19, 2019 5:10 pm

livesoft wrote:
Tue Feb 19, 2019 5:04 pm
As for the annuity, maybe you are transferring an annuity over, so in order to avoid a penalty and taxes, it may have to go from annuity to annuity. If that is so, then Vanguard should have made that clear to you.
And if that is not so, find out why they are suggesting an annuity. That is very unlike PAS from what we've seen before.

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Re: Opinions on VG advisor's recommendations

Post by billfromct » Tue Feb 19, 2019 6:20 pm

In your other post you referenced, you said "1.20% Annuities (River Source) NON Qualified $14,900".

That could be the reason why.

bill

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Re: Opinions on VG advisor's recommendations

Post by yogesh » Tue Feb 19, 2019 9:08 pm

Why not VTWAX + VBTLX?
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040

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Re: Opinions on VG advisor's recommendations

Post by Misenplace » Tue Feb 19, 2019 10:07 pm

Hi Rand,
In your other post, you noted that you had 900K in retirement accounts, and 216K in non-retirement. So I assume that these are for your retirement accounts of 900K.
Randtor wrote:
Tue Feb 19, 2019 4:37 pm
It was my initial decision to go with a 40/60 split.
If you go with a 40/60 split in your retirement accounts, and your taxable are all equity, then your overall equity/bond split is actually 52:48 over your entire portfolio. Just pointing it out, because it is more equities than you initially said you were comfortable holding.
Randtor wrote:
Tue Feb 19, 2019 4:37 pm
40% Stock:
VTSAX (24%): [VG Total Stock Market Index Fund] ; The other 16% would be comprised of VTMGX [Developed Markets Index Fund], VEMAX [Emerging Markets Stock Index Fund], and VTIAX VG [Variable Annuity-Total International Stock Market Index Portfolio].

My first question here is why an Annuity? That was one of the main driving forces that prompted me to start my research down the path leading to Bogleheads and Vanguard, my previous advisor pushed annuities on me. I don't see any conceivable reason to open another one in this account... do you?
That's my first question here as well. Since this is in your tax-advantaged accounts, there can't be a tax reason. Definitely something to explore with him. One of your goals in using PAS is to figure out how best to get out of the Riversource Variable Annuity, so you need to have him explain why he is switching you to a different annuity. I would want this to be crystal clear why I am staying in an annuity when I wanted to get out.
Next question, which others have also posted, is why not just do Total International Index, instead of Developed Markets and Emerging Markets. I don't understand that at all if the goal is to simplify.
Randtor wrote:
Tue Feb 19, 2019 4:37 pm
60% Bond:
US Short Term (17%): VSCSX [short term investment grade fund] and VBTLX [Total Bond Market Index Fund]
US Intermediate (21%): VICSX [Intermediate term investment grade fund] and VBTLX [see above]
US Long Term: (4%): VBTLX[see above]
International:(18%): VTABX VG Total International Bond Index Fund

US Short Term Reserve: VMFXX
This also seems overly complicated to me. I personally hold Total Bond Fund (for diversification), TIPs Index (for unexpected inflation), and in some of my accounts a Short Term treasury (because of interest rate sensitivity). Vanguard and their PAS do recommend International Bonds. Maybe they are right, I am still deciding. I would be curious to hear their explanation for their recommendation for each of these bond funds. Why split Short, Intermed, and include Long? Why the percentage split among them? Why Corporate bonds? Generally, Bogleheads don't go for Corporate bond funds since they correlate too closely with corporate equity funds, so you might as well have equity.

Since all of these are in retirement accounts, you can change them easily in the future if you disagree.
Randtor wrote:
Tue Feb 19, 2019 4:37 pm
So, I have a high number of funds in my overly complex Ameriprise account that will be pared down to essentially 4 stock funds and 4 bond funds. Great..."simplify" is the key!
But I am left wondering if this can be further pared down to hold 3 or 4 funds as recommended in the 3 fund portfolio or the 4 fund portfolio that I have been studying about here on the forum.
Ditto here.
Randtor wrote:
Tue Feb 19, 2019 4:37 pm
My other thought is, am I comfortable going forward at a 40%/60% stock/bond split? I am ok with risk. Both times I have been squeezed (2001 and 2007-08) I stayed the course and had no ill effects because I did nothing. But now as I approach retirement (I will be 68 next month), I feel it is wiser to protect my investments as I will likely be drawing from my holdings to live within the next 6 months. Following the 'rules' here, I should probably have a higher percentage of bond holdings than what I told the advisor (60/40), but I personally am ok with that split, I just hate leaving money on the table. I did that as a no-nothing investor who trusted an advisor to do what was best for me for a long time, only to find out she was doing what was best for HER and me.
See above, because overall this would make your portfolio higher than 40:60.

Good luck!

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Re: Opinions on VG advisor's recommendations

Post by venkman » Wed Feb 20, 2019 12:24 am

Other than the part about the annuity, and a tilt toward corporate bonds, your advisor is essentially recommending VG's Lifestrategy Conservative Growth Fund (VSCGX). (https://investor.vanguard.com/mutual-fu ... file/VSCGX)

Nothing wrong with that recommendation, but you don't really need an advisor to implement it.

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Re: Opinions on VG advisor's recommendations

Post by Randtor » Wed Feb 20, 2019 1:45 pm

livesoft wrote:
Tue Feb 19, 2019 5:04 pm
There seems to be some mis-translation from Vanguard to You to this thread.

VSCSX is short-term corporate bond index, while VFSUX is short-term investment grade last time I checked. And VISCX is intermediate-term corporate bond index. I guess the corporate bonds are investment grade bonds, but that shows an unclear communication to me, since there are other investment grade bonds besides corporate bonds.

As for the annuity, maybe you are transferring an annuity over, so in order to avoid a penalty and taxes, it may have to go from annuity to annuity. If that is so, then Vanguard should have made that clear to you.
Livesoft, thanks... spot on. I goofed when I put the symbols in. The advisor spelled them out in plain language, it was my translation to symbols that was wrong. And yes, there is a small annuity that currently exists, so I'm sure that is why this was recommended.

I am negligent in that I gave a cursory glance to the "reasons" listed in the advisor's report for these recommendations. I drilled down this morning and now have a better idea. There are some key points that still need to be discussed, but I feel much better about the transition process and why the recommendations are being made.
BL wrote:
Tue Feb 19, 2019 5:04 pm
If you are not considering the high risk of your individual funds, you are not thinking of it all together.

If you do it yourself, I would recommend the simplest possible 3-fund portfolio. Otherwise, you may have to go with the suggested portfolio, which is fine.
Yes, I wasn't thinking in terms of the effect the Fidelity stock account and the individual stock holdings in the retirement account will have on my AA. That will need tweaking for sure. At this point in the process, since I am still learning..and there is a LOT to learn!...I will probably go with the Advisory Service offered by VG, for at least the first year. The way I look at it, the savings in fees, expenses and more that were taken at Ameriprise will pay for the Advisory service with VG, and with anticipated much better results.
friar1610 wrote:
Tue Feb 19, 2019 5:08 pm
My guess is that he is suggesting an annuity because you already have one and he wants you to move it from the current provider to VG (technically, VG's partner insurance company) via a 1035 tax-free transfer. If you were to simply liquidate the current annuity you would likely incur undesirable tax consequences (depending on the basis of the annuity and its performance since you bought it.)
Agreed, something I just came to realize.
I'm a 45-ish% equity guy, a little bit older than you. I recently had a VG plan drawn up and the recommendations were along the same lines as you got although not exactly the same. In my case, I've opted to stick with managing the port myself while still keeping an eye out for a good fee-only person who can hold my wife's hand if needed after I'm gone. I don't personally see the need to break my Total Bond Index and Short-Term Bond Index funds into any more of their component parts nor do I see a need for international bonds. So paying to have those rebalanced periodically doesn't seem worth it, but that's just me.
I am definitely not settled yet on my AA. I lean towards moderately aggressive, my smarter half is the definition of conservative :wink:
If you haven't already, I would recommend becoming familiar with Bernstein's concept of liability-matched portfolios in retirement as that is a sensible way to determine the right asset allocation for you. Search the many posts by dandy in which he comments on how he used that concept as a way to determine his AA (which has equities in the low 40's and the remainder in fixed income - not just bonds). I've personally found dandy's approach to be eminently sensible.
Good advice, will do. I did download Bernstein's book and will get to it ASAP. BTW, my son graduated PC in 2004!
Misenplace wrote:
Tue Feb 19, 2019 10:07 pm
In your other post, you noted that you had 900K in retirement accounts, and 216K in non-retirement. So I assume that these are for your retirement accounts of 900K.
. I believe this takes into account all of my holdings, taxable and non taxable.
Misenplace wrote:
Tue Feb 19, 2019 10:07 pm
If you go with a 40/60 split in your retirement accounts, and your taxable are all equity, then your overall equity/bond split is actually 52:48 over your entire portfolio. Just pointing it out, because it is more equities than you initially said you were comfortable holding
. Yes, you're right. I wasn't taking that into account. I will moving forward. I am not uncomfortable at that split, I've been way down and bounced way high, and can still sleep at night. But that was then (I wasn't taking withdrawals for years) and this is now (I'll be starting withdrawals before the end of the year). So can I afford to take withdrawals if my funds go down a lot? How will that effect me in the short term and long term? Discussion I need to have with the PAS Advisor.
Misenplace wrote:
Tue Feb 19, 2019 10:07 pm
That's my first question here as well. Since this is in your tax-advantaged accounts, there can't be a tax reason. Definitely something to explore with him. One of your goals in using PAS is to figure out how best to get out of the Riversource Variable Annuity, so you need to have him explain why he is switching you to a different annuity. I would want this to be crystal clear why I am staying in an annuity when I wanted to get out.
In reviewing everything now, with a better understanding of my portfolio thanks to this forum, there are 2 annuities I apparently had (I thought only 1!). The smaller one is the one referred to here. The larger one we will discuss getting out of when we speak at our appointment. Sorry, that was my fault...dumb investor disease lol!
Next question, which others have also posted, is why not just do Total International Index, instead of Developed Markets and Emerging Markets. I don't understand that at all if the goal is to simplify.
Yes, that's a good question. I can only assume the advisor makes recommendations based on his experience considering whats best for the client. Perhaps I can re-balance using less funds overall. I'll discuss this with him as I really want to simplify.

Thank you everyone. Your insights, comments and recommendations are truly appreciated. My aptitude for financial information has always been sorely lacking. It is my achilles hell. Recognizing that early on, I sought out an advisor I trusted (A friends daughter) to do the right thing. Now that my education is progressing at light speed, I am grateful for this forum and participants who give their time so freely, with much effort, to help us dumb- dumbs. :oops:
Unfortunately I discovered this so late in the game. I will do my utmost to educate my kids so they don't fall into the same trap.
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Randtor
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Re: Opinions on VG advisor's recommendations

Post by Randtor » Sun Mar 10, 2019 3:48 pm

So, everything is progressing with my transfer of funds to Vanguard. My advisor's suggestions following our last meeting are now 6 funds: VTSAX (total Stock Mkt) ; VTIAX (total International Stock Mkt) ; VBTLX ( total Bond Mkt) ; VTABX (total International Bond Mkt) ; VFSUX (tshort term investment grade bonds) ; VFIDX (Intermediate term investment grade bonds). The previous suggestion for an annuity was based on transferring one that I had but chose to liquidate before the move.

I have the following holdings (rounded) with Vanguard: (total - $990,600)
My IRA account: $ 721,200 (containing 7 individual stocks, total value $ 115,500; the rest in funds and cash since transfers)
Wife's IRA account: $ 211,700 (all funds and cash)
Brokerage Account: $ 57,700 (taxable) (all funds and cash)

I have 4 stocks in a taxable Fidelity account: $190,300; total for both accounts is $1,180,900.
The Fidelity stocks, and the Vanguard brokerage account will have to stay put for a few years, and gradually transfer them over to VTSAX (total stock index fund) due to tax consequences liquidating some funds at Ameriprise, and other stock moves made this year.

Knowing that the Fidelity Brokerage account (taxable) is about 16% of my holdings, and the Vanguard brokerage account is about 5% of my total, I would like to allocate my Vanguard appropriately so I have a total of 45% stock, 55% bonds between both accounts. That suggests about a 30% stock to 70% bond ratio in Vanguard.

I'm not sure I need to have a PAS Advisor based on comments made and information learned over the past month on this forum and books I have been devouring. Once I get the right allocations in the right funds, and (hopefully) simplify everything, then it will be just a matter of rebalancing 1 - 2 times a year.

Now my questions:
1. Why not simplify the 6 recommended funds into the 3 fund portfolio? Is there any benefit to holding the 6 recommended funds as opposed to the 3?
2. How do I apportion the Vanguard funds between the 3 accounts so that when I start withdrawing (which will likely be later this year) I can do so fairly easily without having to rebalance a lot, and looking ahead to RMD's to make it easier then as well?
3. is all of THIS actually a GOOD reason to have a PAS advisor, at least for the first year?
Your thoughts are appreciated ... Thanks!
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Re: Opinions on VG advisor's recommendations

Post by livesoft » Sun Mar 10, 2019 4:00 pm

1. Indeed, why? I would think that Vanguard believes that the extra funds provide a better Sharp ratio and diversity. But if "better" is only 0.1% better, does it really matter to you?

2. I doubt you will have to rebalance a lot. You really should not worry about this. But once you get to Vanguard, then you can use the Portfolio Watch tool to help with this. See: viewtopic.php?t=150267 I think it will be better to make each withdrawal decision on the day you need to make withdrawals, since things can change.

3. No. But it is a good reason to keep investigating and learning.
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Randtor
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Re: Opinions on VG advisor's recommendations

Post by Randtor » Sun Mar 10, 2019 9:02 pm

livesoft wrote:
Sun Mar 10, 2019 4:00 pm
1. Indeed, why? I would think that Vanguard believes that the extra funds provide a better Sharp ratio and diversity. But if "better" is only 0.1% better, does it really matter to you?
It does not. I suspect that is why the 3 fund portfolio is recommended. As I am gradually coming to understand it, the return on more diversity will likely be negligible in either direction.
livesoft wrote:
Sun Mar 10, 2019 4:00 pm
2. I doubt you will have to rebalance a lot. You really should not worry about this. But once you get to Vanguard, then you can use the Portfolio Watch tool to help with this. See: viewtopic.php?t=150267 I think it will be better to make each withdrawal decision on the day you need to make withdrawals, since things can change.
That is a great deal of info, thanks! I will try using portfolio watch, and since I have a fidelity account I will try that service as well. These will obviously be helpful in rebalancing.

My main question at this point, is how to apportion my funds in the 2 IRA accounts. I read the wiki page on "asset allocation in multiple accounts" ( https://www.bogleheads.org/wiki/Asset_a ... e_accounts), but I'm not really sure how to decipher all of that, nor which method would work best for us. I'm still reading it and hope to get more clearheaded about it with each pass, but I wouldn't mind some additional input :-)
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Re: Opinions on VG advisor's recommendations

Post by livesoft » Sun Mar 10, 2019 9:07 pm

Randtor wrote:
Sun Mar 10, 2019 9:02 pm
My main question at this point, is how to apportion my funds in the 2 IRA accounts. I read the wiki page on "asset allocation in multiple accounts" ( https://www.bogleheads.org/wiki/Asset_a ... e_accounts), but I'm not really sure how to decipher all of that, nor which method would work best for us. I'm still reading it and hope to get more clearheaded about it with each pass, but I wouldn't mind some additional input :-)
What we do is make the smaller accounts one.single.fund in them and put them in set-and-forget made as far as transactions go. Of course, they are included in the overall asset allocation, but rebalancing happens in one major account.

Since your spouse's IRA is much less than your IRA that would mean her IRA becomes one single fund such as a Total US Bond Market index fund. Your IRA gets rids of the individual stocks and gets index funds according to desired portfolio asset allocation taking into account that your spouse's IRA will be 100% bond fund for many years to come.
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Re: Opinions on VG advisor's recommendations

Post by retiredjg » Mon Mar 11, 2019 8:38 am

Randtor, I think it would help you greatly to learn to see your portfolio in a different way. If you see it as percentages of 1 whole thing, it is not difficult to play around with different possible allocations.

This is what it appears you have. Notice that the portfolio adds up to 100%.


Taxable - Vanguard $57,700 4.9%
4.9% unknown funds and cash

Taxable - Fidelity $190,300 16.1%
16.1% 4 stocks

My IRA $721,200 61.1%
9.8% 7 individual stocks 115,500
51.3% unknown funds and cash

Wife's IRA$211,700
17.9% unknown funds and cash


I know this is not what you have in mind, but I'd suggest you consider setting it up something like this because it is more tax-efficient and your tax-deferred accounts will grow slower so that your RMDs will be less.


Taxable - Vanguard $57,700 4.9%
4.9% US Stocks (total stock market)

Taxable - Fidelity $190,300 16.1%
16.1% 4 stocks <--sell over time and invest in Total Stock Index

My IRA $721,200 61.1%
7% US stocks (500 Index)
12% international stocks
42.1% bonds

Wife's IRA$211,700
17.9% bonds


This portfolio is the 40% stock and 60% bonds that you are interested in. I put 30% of the stocks (12% of the portfolio) in international. This is about as simple as it can get.



1. Why not simplify the 6 recommended funds into the 3 fund portfolio? Is there any benefit to holding the 6 recommended funds as opposed to the 3?
It does not matter much if you use 4 kinds of bond funds or 1 or 2. Just think of them as bonds and don't give a thought to how much you have of each one (other than not having a lot of international bonds). All are good choices. Vanguard likes to diversify them some and that does not hurt anything at all.

2. How do I apportion the Vanguard funds between the 3 accounts so that when I start withdrawing (which will likely be later this year) I can do so fairly easily without having to rebalance a lot, and looking ahead to RMD's to make it easier then as well?
Above is an example. When you want to take money out, just take a quick look at the "asset mix" tab (I think that is the name) and take money from the asset class you have too much of. (Note: to do this you will need to have an entry for "other assets".)


3. is all of THIS actually a GOOD reason to have a PAS advisor, at least for the first year?
It will cost you about $3k to use PAS for a year. That would be money well spent if you are unsure how to set this up and do this on your own. Once it is set up and going, I think you will see now easy it is to maintain. The reason it seems so difficult is that it is unknown.

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Re: Opinions on VG advisor's recommendations

Post by Randtor » Mon Mar 11, 2019 9:08 am

livesoft and retiredjg, thank you very much for your suggestions. I wasn't really sure how exactly to do this even though I had some idea from reading the Wiki information on asset allocation in multiple accounts. Still, I felt that I had come this far, I didn't want to make a mistake at this point.
livesoft wrote:
Sun Mar 10, 2019 9:07 pm
What we do is make the smaller accounts one.single.fund in them and put them in set-and-forget made as far as transactions go. Of course, they are included in the overall asset allocation, but rebalancing happens in one major account.

Since your spouse's IRA is much less than your IRA that would mean her IRA becomes one single fund such as a Total US Bond Market index fund. Your IRA gets rids of the individual stocks and gets index funds according to desired portfolio asset allocation taking into account that your spouse's IRA will be 100% bond fund for many years to come.
After reading and digesting your response, I went back and dissected the Wiki post thoroughly. After the 3rd or 4th pass it started to sink in! 'Eureka, I get it!" Thank you sir.
retiredjg wrote:
Mon Mar 11, 2019 8:38 am
Randtor, I think it would help you greatly to learn to see your portfolio in a different way. If you see it as percentages of 1 whole thing, it is not difficult to play around with different possible allocations.
That was the hardest part, seeing it all as one. Thanks for pointing out the importance of that once again.
retiredjg wrote:
Mon Mar 11, 2019 8:38 am
I know this is not what you have in mind, but I'd suggest you consider setting it up something like this because it is more tax-efficient and your tax-deferred accounts will grow slower so that your RMDs will be less.
On the contrary, this is exactly what I had in mind. I needed some direction, and you have provided me with a detailed road map.
retiredjg wrote:
Mon Mar 11, 2019 8:38 am
This portfolio is the 40% stock and 60% bonds that you are interested in. I put 30% of the stocks (12% of the portfolio) in international. This is about as simple as it can get.
Thank you! This is a good compromise, my wife is much more conservative than I am. We have a saying, I am Mr Right, she is Mrs ALWAYS Right :mrgreen:
retiredjg wrote:
Mon Mar 11, 2019 8:38 am
It does not matter much if you use 4 kinds of bond funds or 1 or 2. Just think of them as bonds and don't give a thought to how much you have of each one (other than not having a lot of international bonds). All are good choices. Vanguard likes to diversify them some and that does not hurt anything at all.
So, I could stay with the short and intermediate funds as suggested by the advisor, or just keep it simple and go with the Total bond index fund? Also, should I add international bond funds in a small percentage to my overall portfolio of 60% bonds?
retiredjg wrote:
Mon Mar 11, 2019 8:38 am
It will cost you about $3k to use PAS for a year. That would be money well spent if you are unsure how to set this up and do this on your own. Once it is set up and going, I think you will see now easy it is to maintain. The reason it seems so difficult is that it is unknown.
With good direction from you all, I think I can set this up pretty well now myself. I just don't know the ramifications with Vanguard. Once I do this without the PAS, can I still use an advisor for general questions without joining the PAS?
Thanks once again. This has been an eye opening experience and I have learned - and continue to learn - so much. Still a loooong was to go!
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Re: Opinions on VG advisor's recommendations

Post by retiredjg » Mon Mar 11, 2019 9:21 am

Randtor wrote:
Mon Mar 11, 2019 9:08 am
Thank you! This is a good compromise, my wife is much more conservative than I am. We have a saying, I am Mr Right, she is Mrs ALWAYS Right :mrgreen:
That's a great phrase!

So, I could stay with the short and intermediate funds as suggested by the advisor, or just keep it simple and go with the Total bond index fund?
Yes. Either approach is fine.

Also, should I add international bond funds in a small percentage to my overall portfolio of 60% bonds?
There is no "should" about international bonds in my opinion. Vanguard thinks they are a good thing. Other people don't care for them. Others are just too lazy to add international bonds now that a good fund is available.

With good direction from you all, I think I can set this up pretty well now myself. I just don't know the ramifications with Vanguard. Once I do this without the PAS, can I still use an advisor for general questions without joining the PAS?
I don't know and it may depend on the size of the account you have with them.

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Re: Opinions on VG advisor's recommendations

Post by Randtor » Mon Mar 11, 2019 10:31 am

retiredjg wrote:
Mon Mar 11, 2019 9:21 am
Also, should I add international bond funds in a small percentage to my overall portfolio of 60% bonds?

There is no "should" about international bonds in my opinion. Vanguard thinks they are a good thing. Other people don't care for them. Others are just too lazy to add international bonds now that a good fund is available.
Yes, from what I have been reading on the forum, it's a split decision. I think to begin with, I'll stick to the 3 fund portfolio as advanced by Taylor Larimore, perhaps tweaking the bonds with a small percentage of short and intermediate term investment grade funds as suggested by the advisor (VFSUX and VFIDX) - not really sure about this though. Once I have settled in I will spend more time researching the International Bond Index Fund (VTABX) and perhaps add some of that as well.
retiredjg wrote:
Mon Mar 11, 2019 9:21 am
With good direction from you all, I think I can set this up pretty well now myself. I just don't know the ramifications with Vanguard. Once I do this without the PAS, can I still use an advisor for general questions without joining the PAS?

I don't know and it may depend on the size of the account you have with them.
I have asked that question of the account manager assigned to me, and will await the answer.

Thanks again. You and livesoft have really been a big help!
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Re: Opinions on VG advisor's recommendations

Post by Dandy » Mon Mar 11, 2019 10:33 am

Investing in retirement is often a lot different. Your ability to earn money i.e. human capital usually goes close to zero rather quickly. That can be a wake up call especially if/when your portfolio takes a big hit a la 2001 or 2008. This is because not only aren't you contributing to your retirement assets neither are you getting any company matches -- and you are withdrawing assets. You "knew" this but it is often a lot different to "feel" this in retirement.

In retirement I had difficulty deciding if 60/40 allocation was too aggressive or if 40/60 was too conservative. What helped me decide was what I would call Dr. Wm Bernstein's bottom up approach. He suggested for those who had enough to put 20 to 25 years worth of draw down dollars in "safe" (my word) fixed income and invest the rest anyway you want even 100% equities. For me that resulted in about 2/3 of my fixed income was put in FDIC products, money markets and short term bond funds which comprises my "safe" portfolio which is to cover my expected draw down until age 90. The rest aka the "risk" portfolio is allocated about 67/33 for an overall 43/57 allocation. I feel you need to have a decent amount in the "risk" portfolio for some growth/inflation protection.

I sleep well and don't worry much about equity performance. I withdraw from a mix of "safe" and "risk" assets unless equities have a really bad year. No retirement investment or withdrawal approach is set it and forget it. But so far I'm happy with my decision and allocation. Every once in awhile I check my spending and adequacy of my "safe" portfolio to make sure I'm adequately "covered" to age 90. You have to make sure you are keeping up with your personal inflation not only the U.S. economic inflation.

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Advisor's Recommendation Is Wrong

Post by Taylor Larimore » Mon Mar 11, 2019 11:03 am

randtor wrote:I think to begin with, I'll stick to the 3 fund portfolio as advanced by Taylor Larimore, perhaps tweaking the bonds with a small percentage of short and intermediate term investment grade funds as suggested by the advisor (VFSUX and VFIDX) - not really sure about this though.
randtor:

This is the maturity breakdown of the bonds in Vanguard Total Bond Market Index Fund:
Distribution by effective maturity (% of fund)
as of 01/31/2019

Under 1 Year = 0.2%
1 - 3 Years = 24.0%
3 - 5 Years = 19.8%
5 - 10 Years = 39.0%
10 - 20 Year = 3.7%
20 - 30 Years = 12.8%
Over 30 Years = 0.5%
Source: https://investor.vanguard.com/mutual-fu ... olio/vbtlx

As you can see, there is no need for "tweaking" to add more short and intermediate term bonds.

Strive for simplicity -- not complexity.

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

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Re: Opinions on VG advisor's recommendations

Post by Randtor » Mon Mar 11, 2019 11:36 am

Taylor Larimore wrote:
Mon Mar 11, 2019 11:03 am
As you can see, there is no need for "tweaking" to add more short and intermediate term bonds.

Strive for simplicity -- not complexity.
Taylor, thank you for weighing in. I will follow your advice on the bonds, and continue to strive for simplicity! I am in the process of selling virtually everything I can in our IRA portfolios and converting that all to achieve my AA, despite taking some hits on deferred loads and fees to sell. I believe in the long run this will be of great benefit us.

How do you feel about acquiring a percentage of the International Bond Index fund? I know there is a diversity of opinions on this, and I believe you have said that it won't make much of a difference either way (Correct me if I am quoting you wrong). I value your opinion. You've acquired a wealth of knowledge that I couldn't match in a lifetime... thank you!
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Re: Opinions on VG advisor's recommendations

Post by Taylor Larimore » Mon Mar 11, 2019 12:35 pm

How do you feel about acquiring a percentage of the International Bond Index fund? I know there is a diversity of opinions on this, and I believe you have said that it won't make much of a difference either way
Randtor:

You got it almost right. I have said "It won't make much of a foreseeable difference."

Total Bond Market has done a very good job of providing safety for a portfolio. Why add another fund?

Strive for simplicity -- not complexity.

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

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Re: Opinions on VG advisor's recommendations

Post by Randtor » Mon Mar 11, 2019 9:49 pm

Taylor Larimore wrote:
Mon Mar 11, 2019 12:35 pm
You got it almost right. I have said "It won't make much of a foreseeable difference."

Total Bond Market has done a very good job of providing safety for a portfolio. Why add another fund?

Strive for simplicity -- not complexity.
Indeed. I decided after your response to - once again - click the "Simplicity" link on your signature, and - once again - read your post. It truly is remarkable that I keep wanting to drift back to complexity since that's all I've ever known. Thankfully you keep steering me gently back to the boglehead way, aka the 3 fund portfolio. I will continue the process of selling all of my current holdings and getting pared down to my asset allocation with 3 funds in multiple accounts, as nicely laid out by livesoft and retiredjg.
Last edited by Randtor on Wed Mar 13, 2019 9:21 am, edited 1 time in total.
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Re: Opinions on VG advisor's recommendations

Post by Randtor » Mon Mar 11, 2019 10:24 pm

Dandy wrote:
Mon Mar 11, 2019 10:33 am
Investing in retirement is often a lot different. Your ability to earn money i.e. human capital usually goes close to zero rather quickly. That can be a wake up call especially if/when your portfolio takes a big hit a la 2001 or 2008. This is because not only aren't you contributing to your retirement assets neither are you getting any company matches -- and you are withdrawing assets. You "knew" this but it is often a lot different to "feel" this in retirement.
Good point Dandy. I am still working so I look at my portfolio in a different light I suppose, than I will shortly, when I begin seeing all withdrawals and nothing going in. Sort of a scary proposition from this perspective right now!
Dandy wrote:
Mon Mar 11, 2019 10:33 am
In retirement I had difficulty deciding if 60/40 allocation was too aggressive or if 40/60 was too conservative. What helped me decide was what I would call Dr. Wm Bernstein's bottom up approach. He suggested for those who had enough to put 20 to 25 years worth of draw down dollars in "safe" (my word) fixed income and invest the rest anyway you want even 100% equities. For me that resulted in about 2/3 of my fixed income was put in FDIC products, money markets and short term bond funds which comprises my "safe" portfolio which is to cover my expected draw down until age 90. The rest aka the "risk" portfolio is allocated about 67/33 for an overall 43/57 allocation. I feel you need to have a decent amount in the "risk" portfolio for some growth/inflation protection.
Well Asset Allocation has become a perplexing point for me right now as well. I am not sure what is best, 40/60, 50/50, or 60/40, so I like your advice, but I have a couple of questions: 1-How do I determine the number of years and the amount of draw down dollars I need to put into "safe" fixed income? 2-Can you further explain "FDIC products"? Do you mean like CD's, treasuries, TIPs, and the like? I assume "money markets" is a money market fund, like VMFXX, and "short term bonds" like VBIRX, a short term Bond Index fund?
Dandy wrote:
Mon Mar 11, 2019 10:33 am
I sleep well and don't worry much about equity performance. I withdraw from a mix of "safe" and "risk" assets unless equities have a really bad year. No retirement investment or withdrawal approach is set it and forget it. But so far I'm happy with my decision and allocation. Every once in awhile I check my spending and adequacy of my "safe" portfolio to make sure I'm adequately "covered" to age 90. You have to make sure you are keeping up with your personal inflation not only the U.S. economic inflation.
Sounds like a good system. Once again, my question is how to determine how many years your portfolio will last, and at what dollar figures? I am still a rank amateur regarding so much of the financial world, I would love to know how to figure these out. Thanks for your input Dandy, I almost missed it!
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Re: Opinions on VG advisor's recommendations

Post by Dandy » Tue Mar 12, 2019 9:11 am

... Asset Allocation has become a perplexing point for me right now as well. I am not sure what is best, 40/60, 50/50, or 60/40, so I like your advice, but I have a couple of questions: 1-How do I determine the number of years and the amount of draw down dollars I need to put into "safe" fixed income? 2-Can you further explain "FDIC products"? Do you mean like CD's, treasuries, TIPs, and the like? I assume "money markets" is a money market fund, like VMFXX, and "short term bonds" like VBIRX, a short term Bond Index fund?
1. How do you determine the # of years and amount of draw down dollars to put into "safe" fixed income?

The amount of draw down dollars - In retirement how much each year will you have to take from your portfolio to supplement any retirement income e.g. Social Security, Annuities etc. to support your retirement life style. Let's say this was $40,000 per year.
Dr. Bernstein suggests putting 20 to 25 years worth of draw down dollars in "safe" (my word) fixed income. What I did at age 67 was choose to put 23 years i.e. until age 90. I think it is important to have a decent amount outside of the "safe" portfolio so that and your age/health should help you decide between 20 and 25. When in doubt err on the lower side.
So if your yearly draw down was $40k that would mean $800,000 or 20 years worth of draw down would be in "safe" fixed income. Does that leave you with a decent amount in the "risk" portfolio ($ outside the "safe" portfolio)? There is no specific guide on that but I would suggest having close to the same amount e.g. 800k. Also, I think if the number of years to age 90 is less than 20 years I'd consider opting for the years to age 90 unless there is a family history of living much longer.

2. What are FDIC products other "safe" products.
I feel 'safe' products fall into 2 categories - those that don't lose principal e.g. Savings, CDs, and other bank products, I bonds, etc. and short term bond funds e.g. VG short term bond index, ltd term tax exempt, etc. They usually have a duration of about 2.5 years or so. I would also include money market funds, Stable Value funds Individual TIPS & Treasuries. You basically want your money to be liquid and have little or no risk to principal. You also want it relatively short term.

3. While you didn't ask I think how you withdraw during retirement is important.

I don't view the "safe" portfolio as the money I always draw from i.e. I'm not taking 100% from the "safe" portfolio each year.
I view it more as insurance assets i.e. it is there when I need it. Also, if you just withdraw from the "safe" portfolio you will have a rising equity allocation which you may not want in late retirement. So, I withdraw a bit from both "safe" and "risk" unless the "risk" portfolio has had a pretty bad year. Each year you should look at your actual retirement expenses to see if your expenses are growing and make sure your "safe" portfolio is adequate and not excessive.

Please note
My approach was inspired by Dr. Wm Bernstein but much of the above is my attempt at implementing the basic idea of having a "safe"and "risk" asset approach. My approach hasn't been tested or endorsed by Dr. Bernstein. So, it is an approach from a non professional. His idea was directed to investors who had "enough". I can't address whether you have enough that is why I guess that your "risk" portfolio should be almost equal to your "safe" portfolio. Another way might be to divide your yearly draw down dollars by your total portfolio to get your draw down percentage. It should be well under 4%. If you don't have enough you should consider a different approach.

Good luck.

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Re: Opinions on VG advisor's recommendations

Post by abuss368 » Tue Mar 12, 2019 8:50 pm

Randtor wrote:
Tue Feb 19, 2019 4:37 pm
Hi All,

As noted in my previous topic, I have begun the process of transferring all of my assets from Ameriprise to Vanguard. For now I am leaving my Fidelity portfolio (taxable) in place - it is 100% individual stocks at the moment. Once I have this Vanguard portfolio squared away I will then work on the Fidelity portfolio to balance my holdings.For reference here is my original post with all holdings laid out: viewtopic.php?f=1&t=272292&p=4369256#p4369256
My first contact with a VG Advisor went well, and I am scheduled to meet again this Friday 2/22. In short this is what he recommended. I have some questions about it which I will bring up with him, but I thought I would run it by those here with much more investment savvy than I. It was my initial decision to go with a 40/60 split.

40% Stock:
VTSAX (24%): [VG Total Stock Market Index Fund] ; The other 16% would be comprised of VTMGX [Developed Markets Index Fund], VEMAX [Emerging Markets Stock Index Fund], and VTIAX VG [Variable Annuity-Total International Stock Market Index Portfolio].

My first question here is why an Annuity? That was one of the main driving forces that prompted me to start my research down the path leading to Bogleheads and Vanguard, my previous advisor pushed annuities on me. I don't see any conceivable reason to open another one in this account... do you?

60% Bond:
US Short Term (17%): VFSUX [short term investment grade fund] and VBTLX [Total Bond Market Index Fund]
US Intermediate (21%): VFIDX [Intermediate term investment grade fund] and VBTLX [see above]
US Long Term: (4%): VBTLX[see above]
International:(18%): VTABX VG Total International Bond Index Fund

US Short Term Reserve: VMFXX

So, I have a high number of funds in my overly complex Ameriprise account that will be pared down to essentially 4 stock funds and 4 bond funds. Great..."simplify" is the key!
But I am left wondering if this can be further pared down to hold 3 or 4 funds as recommended in the 3 fund portfolio or the 4 fund portfolio that I have been studying about here on the forum.

My other thought is, am I comfortable going forward at a 40%/60% stock/bond split? I am ok with risk. Both times I have been squeezed (2001 and 2007-08) I stayed the course and had no ill effects because I did nothing. But now as I approach retirement (I will be 68 next month), I feel it is wiser to protect my investments as I will likely be drawing from my holdings to live within the next 6 months. Following the 'rules' here, I should probably have a higher percentage of bond holdings than what I told the advisor (60/40), but I personally am ok with that split, I just hate leaving money on the table. I did that as a no-nothing investor who trusted an advisor to do what was best for me for a long time, only to find out she was doing what was best for HER and me.

I am very new to this, and I can only assume that the VG Advisor is giving me his best advice. I just don't know if it is "THE" best advice.
Thanks for your thoughts....
Rand
NOTE: Edited to change to correct symbols on Bond funds.
Surprised at all the bond funds and in my opinion it is additional complexity and not needed. Surprising in that Vanguard investment experts have been recommending a two fund strategy: Total Bond and Total International Bond.
John C. Bogle: "Simplicity is the master key to financial success."

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Re: Opinions on VG advisor's recommendations

Post by Randtor » Tue Mar 12, 2019 10:37 pm

Dandy, thank you for your detailed explanations.
Dandy wrote:
Tue Mar 12, 2019 9:11 am
he amount of draw down dollars - In retirement how much each year will you have to take from your portfolio to supplement any retirement income e.g. Social Security, Annuities etc. to support your retirement life style
I expect we will have enough so that we can be very comfortable and stay well within that 4% or lower area for a yearly draw. I just turned 68 and will likely be fully or 'mostly' retired by September. Your example ($40K/yr; $800K safe, $800K 'risk') is a close proximity. This is certainly another avenue to explore as I bump along this road and hope it starts smoothing out soon. The more I learn the more I know what I don't know :confused
Dandy wrote:
Tue Mar 12, 2019 9:11 am
3. While you didn't ask I think how you withdraw during retirement is important.
Yes, that is somewhat confusing too, but the advice previously given (this thread) is to see how it looks when I get there, and it should be fairly easy at that point to figure it out. I suspect that is true. Having never done this before, the 'unknown' factor is huge. I'm sure once I see this all unfold, it will be :oops: time!
Your wider variety of 'safe' holdings is a bit intimidating to me. I am trying to figure out how to have less confusion since my Ameriprise days... monthly statements 32 pages long which you would have needed a masters in business just to keep the pages right side up! I am going to get as close to the 3 fund portfolio as I can right away, then gradually shift everything in that direction over time so I don't have too many negative tax occurrence all at once. I will be re-evaluating everything as I move along and keep learning.

Thanks again for your interesting and thought provoking comments. I just recently read the Wm Bernstein short pamphlet and I have another of his books lined up on my 'short' list to read
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Re: Opinions on VG advisor's recommendations

Post by Randtor » Tue Mar 12, 2019 10:43 pm

abuss368 wrote:
Tue Mar 12, 2019 8:50 pm
Surprised at all the bond funds and in my opinion it is additional complexity and not needed. Surprising in that Vanguard investment experts have been recommending a two fund strategy: Total Bond and Total International Bond.
Indeed, I was a bit surprised as well. He started out recommending 8 funds. When we talked the second time we settled at 6, and even then I knew I wanted less, with time. Still, a very nice gentleman, and seemingly well educated in the financial field, especially with bonds. I expect that should I get cold feet and need more direction, I would definitely ask for him. But as I learn more, it seems to be coming together more, such that I believe I can take the reins and not run of the edge of the cliff... I hope!
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Re: Opinions on VG advisor's recommendations

Post by Dandy » Wed Mar 13, 2019 7:28 am

Your wider variety of 'safe' holdings is a bit intimidating to me.
I can understand that based on your prior experience with your adviser. Most fixed income choices aren't as confusing equities and far less risky and less in need of rebalancing. Not much difference if you have a bit more in an On line Savings vs a money market. A bit more of a deal, but only a bit, between a Savings account and a high quality short term bond fund.

Each fixed income type has pros and cons. Ltd Term Tax exempt is a good choice in your taxable account since it avoids Federal taxes but it usually has a lower yield. But, if interest rates rise it will lose value for awhile vs a Savings account which not only won't lose value but will likely start paying more. If there is a flight to quality a short term treasury fund might be good choice since there is almost no risk of default.

Most of my assets are in 3 different firms. I like to have the ability to write checks where ever I have my assets. So if I have a Savings account at an online bank I like to have a checking or money market account there also. That way if my computer or their computer is down I can always write a check. :happy

If I was going to set aside 800k for "safe" money I just wouldn't feel comfortable having it all in one or two products. How simple or diverse you make your fixed income is probably not as important as your overall allocation decisions.

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Re: Opinions on VG advisor's recommendations

Post by Randtor » Wed Mar 13, 2019 9:19 am

Dandy, thanks again for taking the time to make your comments. It's so good when others offer opinions, its a reminder that there are "many roads to Dublin" as Taylor Larimore is fond of pointing out!
Dandy wrote:
Wed Mar 13, 2019 7:28 am
If I was going to set aside 800k for "safe" money I just wouldn't feel comfortable having it all in one or two products. How simple or diverse you make your fixed income is probably not as important as your overall allocation decisions.
Agreed, Asset Allocation is the biggest decision for me. As I mentioned I am more aggressive in my thinking whereas my DW is very conservative. I am trying to find a middle ground where we will both be happy, and I suspect it will be tilted towards the conservative side - "Happy Wife, Happy Life." :D

I am going to strive for simplicity, at least to start, and see where that leads. I would like to invest and sit back, rebalance occasionally, and not be so worried about the market up/down swings. Its going to take me a while to do everything since I will have too many tax consequences should I try to do everything all at once.

I'll have to figure out my AA as I go along ( leaning towards 45/55 stocks/bonds) and get the right products into the right accounts (taxable vs non taxable). Its all a bit muddled as I have so many funds to deal with, but I think it will crystalize as I keep at it, and continue with financial self education 101 :D
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Re: Opinions on VG advisor's recommendations

Post by Jack FFR1846 » Wed Mar 13, 2019 9:37 am

Not that long ago, it seemed like PAS proposed portfolios matched one or another target date fund exactly. I'm wondering if enough people realized this and went back to them asking "If I'm paying 0.3% for you to simply choose a TG fund for me, what value are you adding?" and changed their game plan, going towards the dark side, adding complexity for no reason. 6 funds? It's certainly not the 24 funds and MLPs and annuities that a Sith would propose, but it's 3 funds more than necessary. If you want 40/60, buy a TG 2015 fund at 0.13% and be done with it (at a big savings over paying a PAS). Or, look at what makes up the 2015 and buy separate funds and rebalance on your birthday. Or best, in my opinion, choose the % you want and do your own 3 fund for the absolute lowest cost.

As time goes by, I'm less and less a fan of PAS.
Bogle: Smart Beta is stupid

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Randtor
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Re: Opinions on VG advisor's recommendations

Post by Randtor » Wed Mar 13, 2019 10:13 pm

Jack FFR1846 wrote:
Wed Mar 13, 2019 9:37 am
Or best, in my opinion, choose the % you want and do your own 3 fund for the absolute lowest cost.
Yes, I was expecting more from the PAS I guess, than what I heard. But that was my own perception. The advisor knew what he was talking about, I just didn't feel like there was anything being told to me that wasn't already discussed on the forum/wiki page. I am very much a newbie, but having done a lot of research and reading on the forum/wiki pages, I felt like I wasn't really getting anything I didn't already have a good understanding about. Or if I had questions, they could all be seemingly be answered here and on the Wiki pages.
"Whats done is done, and can't be undone"

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Re: Opinions on VG advisor's recommendations

Post by retiredjg » Thu Mar 14, 2019 7:35 am

Randtor wrote:
Wed Mar 13, 2019 10:13 pm
The advisor knew what he was talking about, I just didn't feel like there was anything being told to me that wasn't already discussed on the forum/wiki page. I am very much a newbie, but having done a lot of research and reading on the forum/wiki pages, I felt like I wasn't really getting anything I didn't already have a good understanding about. Or if I had questions, they could all be seemingly be answered here and on the Wiki pages.
You write this as if that makes PAS disappointing. :|

I think it is actually the beauty of PAS that they stick to the simple and low cost investing techniques that can work for anyone (whether they actually need an advisor or not).

Keep it simple.
Keep it low cost.
Add money regularly.
Don't do stupid stuff.

Some people need help with those things. I don't think you are one of them though.

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Re: Opinions on VG advisor's recommendations

Post by Randtor » Thu Mar 14, 2019 1:27 pm

retiredjg wrote:
Thu Mar 14, 2019 7:35 am
You write this as if that makes PAS disappointing.
I wasn't disappointed in the advisor. It was, as I said, my own perception.I was entering uncharted waters (for me) and I guess I expected something different... not that I can even put it into words. Maybe I set the bar too high on my expectations? What I realized was it is exactly as you (and others) have said:
retiredjg wrote:
Thu Mar 14, 2019 7:35 am
I think it is actually the beauty of PAS that they stick to the simple and low cost investing techniques that can work for anyone (whether they actually need an advisor or not).
No new fangled ideas, just K.I.S.S.
retiredjg wrote:
Thu Mar 14, 2019 7:35 am
Some people need help with those things. I don't think you are one of them though.
Time will tell lol! I literally jumped into the pool with rudimentary dog paddling skills, but as I keep from drowning, I am getting the hang of swimming :D
I have used your suggested template, and I am breaking down the accounts into dollar amounts. I have started the process, and will purchase specific amounts of equities and bonds according to dollar amounts so that I can end up with the AA that feels most comfortable to me. I am likely going to settle in around a 40-45% stock to 55-60% bond allocation for my overall portfolio.

Thanks again retiredjg, your previous detailed analysis has been a big help. And a big thanks to all that have taken the time to offer opinions. I will update as I go along and make changes. I thought I could do this in a few days, but I now realize it will take a few weeks, at least, to implement all the changes. I am treading lightly so as not to mess this up!
"Whats done is done, and can't be undone"

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