Asset Allocation for my 30 yr old daughter

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Topic Author
downrod
Posts: 22
Joined: Tue Apr 30, 2019 5:42 am

Asset Allocation for my 30 yr old daughter

Post by downrod » Fri Nov 08, 2019 10:30 am

Hello, My daughter got married this past spring and they are reaching out to me for investment advice. Both of them have good jobs and are making a good salary for their ages. She is 30 and her husband is 32. They are off to a great start with approx 300K invested for retirement.
I have them consolidating their past 401ks and IRAs to Vanguard.
My question is about what AA to advise. They trust my judgement and will most likely do whatever I advise them to do. I want to make sure that I am giving them rock solid advice.
Should they have any bonds in their portfolios at their ages? I am thinking probably not but I am open to suggestions

I was thinking
70% VTSAX
30% VTIAX

or

60% VTSAX
30% VTIAX
10% VBTLX

AA opinions encouraged!

bgf
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Joined: Fri Nov 10, 2017 9:35 am

Re: Asset Allocation for my 30 yr old daughter

Post by bgf » Fri Nov 08, 2019 11:04 am

If they dont want to manage it themselves why not just put them in a Target Date Fund?
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

delamer
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Joined: Tue Feb 08, 2011 6:13 pm

Re: Asset Allocation for my 30 yr old daughter

Post by delamer » Fri Nov 08, 2019 11:10 am

bgf wrote:
Fri Nov 08, 2019 11:04 am
If they dont want to manage it themselves why not just put them in a Target Date Fund?
My thought too.

That’s what my kids have for their IRAs.

Plus it makes them less dependent on you, since there is no rebalancing involved.

HomeStretch
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Re: Asset Allocation for my 30 yr old daughter

Post by HomeStretch » Fri Nov 08, 2019 11:17 am

+1

They should also have an emergency fund and savings for medium-term goals like house, etc.

If their joint income is near or over the limits to directly contribute to Roth IRAs, an alternative for consolidating the IRAs/old 401ks is to roll them over into their workplace 401ks (if allowed and have low-cost funds) rather than Vanguard IRAs. This will allow them to do backdoor Roths and avoid the pro rata rule.

KingRiggs
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Location: Indiana

Re: Asset Allocation for my 30 yr old daughter

Post by KingRiggs » Fri Nov 08, 2019 11:41 am

Respectfully, at their age it is the perfect time to learn about investing and asset allocation for THEMSELVES. I would gift them a copy of the Bogleheads Guide to Investing and tell them you are happy to discuss it with them AFTER they have read it, but that their AA is up to them.

Best of fortune to you and the happy couple.
Advice = noun | Advise = verb | | Roth, not ROTH

Topic Author
downrod
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Joined: Tue Apr 30, 2019 5:42 am

Re: Asset Allocation for my 30 yr old daughter

Post by downrod » Fri Nov 08, 2019 11:50 am

bgf wrote:
Fri Nov 08, 2019 11:04 am
If they dont want to manage it themselves why not just put them in a Target Date Fund?
Not a bad idea, although costs are a bit higher with the Target Date Fund.

Topic Author
downrod
Posts: 22
Joined: Tue Apr 30, 2019 5:42 am

Re: Asset Allocation for my 30 yr old daughter

Post by downrod » Fri Nov 08, 2019 11:51 am

KingRiggs wrote:
Fri Nov 08, 2019 11:41 am
Respectfully, at their age it is the perfect time to learn about investing and asset allocation for THEMSELVES. I would gift them a copy of the Bogleheads Guide to Investing and tell them you are happy to discuss it with them AFTER they have read it, but that their AA is up to them.

Best of fortune to you and the happy couple.
This is great advice and I will follow up with this. Thanks!

lakpr
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Re: Asset Allocation for my 30 yr old daughter

Post by lakpr » Fri Nov 08, 2019 1:40 pm

downrod wrote:
Fri Nov 08, 2019 11:50 am
bgf wrote:
Fri Nov 08, 2019 11:04 am
If they dont want to manage it themselves why not just put them in a Target Date Fund?
Not a bad idea, although costs are a bit higher with the Target Date Fund.
But in exchange they get to be completely hands off and the contributions and growth are balanced on a daily basis

Topic Author
downrod
Posts: 22
Joined: Tue Apr 30, 2019 5:42 am

Re: Asset Allocation for my 30 yr old daughter

Post by downrod » Fri Nov 08, 2019 1:58 pm

lakpr wrote:
Fri Nov 08, 2019 1:40 pm
downrod wrote:
Fri Nov 08, 2019 11:50 am
bgf wrote:
Fri Nov 08, 2019 11:04 am
If they dont want to manage it themselves why not just put them in a Target Date Fund?
Not a bad idea, although costs are a bit higher with the Target Date Fund.
But in exchange they get to be completely hands off and the contributions and growth are balanced on a daily basis
How do they balance daily? Isn't that a heck of a lot of buying and selling? Just trying to understand

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Wiggums
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Re: Asset Allocation for my 30 yr old daughter

Post by Wiggums » Fri Nov 08, 2019 2:21 pm

downrod wrote:
Fri Nov 08, 2019 1:58 pm
lakpr wrote:
Fri Nov 08, 2019 1:40 pm
downrod wrote:
Fri Nov 08, 2019 11:50 am
bgf wrote:
Fri Nov 08, 2019 11:04 am
If they dont want to manage it themselves why not just put them in a Target Date Fund?
Not a bad idea, although costs are a bit higher with the Target Date Fund.
But in exchange they get to be completely hands off and the contributions and growth are balanced on a daily basis
How do they balance daily? Isn't that a heck of a lot of buying and selling? Just trying to understand
I believe that Vanguard has a paper on this. Vanguard rebalances daily just by managing the money coming into the fund from new investors/re-investors and the money going out of the fund from withdrawals. if the portfolio skews more than 2 or 3 percent from its target allocation, the fund will actively buy or sell shares of its underlying holdings to rebalance.

snowman
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Re: Asset Allocation for my 30 yr old daughter

Post by snowman » Fri Nov 08, 2019 2:46 pm

My kids are younger than your D, but I told them to decide on US/international split and stay with it forever, and not to worry about bonds until they get to their 40s. I don't see the point of owning bonds until later in life if you have high risk tolerance, but I do realize on this board people like myself are in minority.

texasdiver
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Location: Vancouver WA

Re: Asset Allocation for my 30 yr old daughter

Post by texasdiver » Fri Nov 08, 2019 3:11 pm

If it were my kids I'd just recommend a target date fund like Target Retirement 2050 and be done with it. That way you don't wind up second guessing the domestic/international allocation split as it is done for you. Also recommend that they come here and ask the questions themselves.

Yes the fees are slightly more, but it isn't significant until you close in on 7 figures.

b42
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Re: Asset Allocation for my 30 yr old daughter

Post by b42 » Fri Nov 08, 2019 3:43 pm

You know your daughter best, does she have any interest in investing? If not, I'd recommend one of Vanguard's Target Retirement Date funds. It's slightly more expensive than breaking out the funds, but simple. My sister has no interest in investing, so I throw her Roth IRA contributions into a Target Date Fund. Easy for her and easy for me.

CurlyDave
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Joined: Thu Jul 28, 2016 11:37 am

Re: Asset Allocation for my 30 yr old daughter

Post by CurlyDave » Fri Nov 08, 2019 3:57 pm

snowman wrote:
Fri Nov 08, 2019 2:46 pm
My kids are younger than your D, but I told them to decide on US/international split and stay with it forever, and not to worry about bonds until they get to their 40s. I don't see the point of owning bonds until later in life if you have high risk tolerance, but I do realize on this board people like myself are in minority.
+1

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