Finally simplified. Looking for feedback on my lifelong portfolio.
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Finally simplified. Looking for feedback on my lifelong portfolio.
Emergency funds: 6 months expenses in a CD
Debt: $0
Tax Status: single
Tax Rate: 30 ish Federal, 6% State
State of Residence: Massachusetts
Age: 36
Desired Asset allocation: 120 - age for stocks / rest bonds. Currently 84/16.
Desired International allocation: 20% of stocks
Desired Small Cap Value tilt: 30% of stocks
Portfolio Size: $200k
Current assets:
Taxable:
39% VTI (Vanguard Total US)
20% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US)
5% DLS/DGS (International Small Cap Value/Dividend)
IRA:
12% BND (Vanguard Bond)
4% BNDX (Vanguard Intl Bond)
8% VNQ (Vanguard REIT)
I believe strongly in the small cap value tilt as well as the REIT allocation. I have the REIT and bonds in my tax advantaged.
What you see above is actually 90% of my overall portfolio. I also have 10% of the total that I put in a separate account and buy individual stocks, etc. with.
Just looking for some validation that I didn’t make any insane mistakes!
Debt: $0
Tax Status: single
Tax Rate: 30 ish Federal, 6% State
State of Residence: Massachusetts
Age: 36
Desired Asset allocation: 120 - age for stocks / rest bonds. Currently 84/16.
Desired International allocation: 20% of stocks
Desired Small Cap Value tilt: 30% of stocks
Portfolio Size: $200k
Current assets:
Taxable:
39% VTI (Vanguard Total US)
20% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US)
5% DLS/DGS (International Small Cap Value/Dividend)
IRA:
12% BND (Vanguard Bond)
4% BNDX (Vanguard Intl Bond)
8% VNQ (Vanguard REIT)
I believe strongly in the small cap value tilt as well as the REIT allocation. I have the REIT and bonds in my tax advantaged.
What you see above is actually 90% of my overall portfolio. I also have 10% of the total that I put in a separate account and buy individual stocks, etc. with.
Just looking for some validation that I didn’t make any insane mistakes!
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- Joined: Mon Oct 18, 2010 1:12 am
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Sounds reasonable overall. Notes:
- you have only 16% in bonds. Is this the target?
- you have even less in bonds when considering tax adjusted asset allocation
- how much more than domestic stock do you believe REIT and small cap will yield? Is the weighted expected value worth the simplicity trade-off?
- you have only 16% in bonds. Is this the target?
- you have even less in bonds when considering tax adjusted asset allocation
- how much more than domestic stock do you believe REIT and small cap will yield? Is the weighted expected value worth the simplicity trade-off?
- typical.investor
- Posts: 5263
- Joined: Mon Jun 11, 2018 3:17 am
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Nothing insane, but I wouldn't hold DLS, DGS in taxable. They are dividend funds. My inclination would be to hold them in the IRA and if BND taxes were too painful hold municipal bonds.mjuszczak wrote: ↑Fri May 01, 2020 8:53 pm Emergency funds: 6 months expenses in a CD
Debt: $0
Tax Status: single
Tax Rate: 30 ish Federal, 6% State
State of Residence: Massachusetts
Age: 36
Desired Asset allocation: 120 - age for stocks / rest bonds. Currently 84/16.
Desired International allocation: 20% of stocks
Desired Small Cap Value tilt: 30% of stocks
Portfolio Size: $200k
Current assets:
Taxable:
39% VTI (Vanguard Total US)
20% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US)
5% DLS/DGS (International Small Cap Value/Dividend)
IRA:
12% BND (Vanguard Bond)
4% BNDX (Vanguard Intl Bond)
8% VNQ (Vanguard REIT)
I believe strongly in the small cap value tilt as well as the REIT allocation. I have the REIT and bonds in my tax advantaged.
What you see above is actually 90% of my overall portfolio. I also have 10% of the total that I put in a separate account and buy individual stocks, etc. with.
Just looking for some validation that I didn’t make any insane mistakes!
Or actually, I would prefer long term treasuries in taxable to rebalance the equities after a crash. How are you going to rebalance from bonds to stocks when necessary?
I use FNDC in taxable for International Small Cap value.
- Noobvestor
- Posts: 5944
- Joined: Mon Aug 23, 2010 1:09 am
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
A few notes:
1) Massively tilted toward the US - might come back to haunt you if means revert (60/40 or 50/50 would be closer to cap-weighted)
2) Per a comment above, no really easy way to rebalance - might want to hold a mix in tax-advantaged to make that easier
3) Bonds-in-tax-advantaged is an old rule of thumb that I'm not sure is as useful in today's low-yield environment (might want to math it out)
1) Massively tilted toward the US - might come back to haunt you if means revert (60/40 or 50/50 would be closer to cap-weighted)
2) Per a comment above, no really easy way to rebalance - might want to hold a mix in tax-advantaged to make that easier
3) Bonds-in-tax-advantaged is an old rule of thumb that I'm not sure is as useful in today's low-yield environment (might want to math it out)
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Nothing major jumps out to me. Some questions though.
- At some point, you need to know your tax bracket. "30ish" isn't a tax bracket although it might be an effective rate - which would mean your bracket is very high. Do you know how to determine your tax bracket?
Do you have a plan at work? If yes, you probably should be using it.
How do you rebalance? It would be hard to do with the arrangement you have now.
Link to Asking Portfolio Questions
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Agree on a higher international amount, cloudy crystal ball but reversion to the mean is real over 30-40 years.
You should look at 401k/403b at work, good marginal benefit on your taxes. If you dont have a 401k/403b at work, look at solo 401k if you meet criteria. Again good marginal benefit and can stock away serious $$
You should look at 401k/403b at work, good marginal benefit on your taxes. If you dont have a 401k/403b at work, look at solo 401k if you meet criteria. Again good marginal benefit and can stock away serious $$
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Age 36 suggests you have been working for a while (?)
Mention of only an IRA and no 401k, either past or current
30+% Federal tax bracket
Have you never had any access to any retirement plan at work, or are you choosing not to participate for a specific reason? The IRA limit is only $6k whereas with the 401k it's more than thrice, at $19.5k in 2020 and by law adjusted for inflation.
By participating in a 401k plan, you get to keep an additional $5k in your pocket per year.
Mention of only an IRA and no 401k, either past or current
30+% Federal tax bracket
Have you never had any access to any retirement plan at work, or are you choosing not to participate for a specific reason? The IRA limit is only $6k whereas with the 401k it's more than thrice, at $19.5k in 2020 and by law adjusted for inflation.
By participating in a 401k plan, you get to keep an additional $5k in your pocket per year.
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- Joined: Tue Jan 30, 2018 7:23 am
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Yes, 16% is my target. I’m not too picky on that. As long as it’s at least 10% I’m good.DoubleClick wrote: ↑Sat May 02, 2020 12:44 am Sounds reasonable overall. Notes:
- you have only 16% in bonds. Is this the target?
- you have even less in bonds when considering tax adjusted asset allocation
- how much more than domestic stock do you believe REIT and small cap will yield? Is the weighted expected value worth the simplicity trade-off?
I do believe in the SLYV and REIT allocation. I also have a really hard time just doing “simple” and having a tilt towards those two prevents me from buying individual stocks which is much riskier.
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Interesting. That’s helpful and good point. TBH I have thought about dumping DLS and DGS entirely and just tilting small cap value domestically. And just letting VXUS cover all international.typical.investor wrote: ↑Sat May 02, 2020 1:00 amNothing insane, but I wouldn't hold DLS, DGS in taxable. They are dividend funds. My inclination would be to hold them in the IRA and if BND taxes were too painful hold municipal bonds.mjuszczak wrote: ↑Fri May 01, 2020 8:53 pm Emergency funds: 6 months expenses in a CD
Debt: $0
Tax Status: single
Tax Rate: 30 ish Federal, 6% State
State of Residence: Massachusetts
Age: 36
Desired Asset allocation: 120 - age for stocks / rest bonds. Currently 84/16.
Desired International allocation: 20% of stocks
Desired Small Cap Value tilt: 30% of stocks
Portfolio Size: $200k
Current assets:
Taxable:
39% VTI (Vanguard Total US)
20% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US)
5% DLS/DGS (International Small Cap Value/Dividend)
IRA:
12% BND (Vanguard Bond)
4% BNDX (Vanguard Intl Bond)
8% VNQ (Vanguard REIT)
I believe strongly in the small cap value tilt as well as the REIT allocation. I have the REIT and bonds in my tax advantaged.
What you see above is actually 90% of my overall portfolio. I also have 10% of the total that I put in a separate account and buy individual stocks, etc. with.
Just looking for some validation that I didn’t make any insane mistakes!
Or actually, I would prefer long term treasuries in taxable to rebalance the equities after a crash. How are you going to rebalance from bonds to stocks when necessary?
I use FNDC in taxable for International Small Cap value.
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- Joined: Tue Jan 30, 2018 7:23 am
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Thank you! Good points. Maybe I will increase international to 30% but I don’t want to go 50%. There are people who say 0 and people who say 50 so I would like to be somewhere in the middle.Noobvestor wrote: ↑Sat May 02, 2020 5:03 am A few notes:
1) Massively tilted toward the US - might come back to haunt you if means revert (60/40 or 50/50 would be closer to cap-weighted)
2) Per a comment above, no really easy way to rebalance - might want to hold a mix in tax-advantaged to make that easier
3) Bonds-in-tax-advantaged is an old rule of thumb that I'm not sure is as useful in today's low-yield environment (might want to math it out)
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
I don’t know my tax bracket because I have complicated taxes so have an accountant do them. I guess I should ask.retiredjg wrote: ↑Sat May 02, 2020 7:32 amNothing major jumps out to me. Some questions though.
- At some point, you need to know your tax bracket. "30ish" isn't a tax bracket although it might be an effective rate - which would mean your bracket is very high. Do you know how to determine your tax bracket?
Do you have a plan at work? If yes, you probably should be using it.
How do you rebalance? It would be hard to do with the arrangement you have now.
Good point on rebalancing. How do you suggest I solve? A little bit of everything in all accounts?
I don’t have a plan at work. All of my income is self W-2. I have thought about starting a solo 401k or a SEP IRA but I recently had a ton of debt until about 3 months ago. A lot was going into paying that off.
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
I don’t have a plan at work. All of my income is self W-2.Sgal8713 wrote: ↑Sat May 02, 2020 7:52 am Agree on a higher international amount, cloudy crystal ball but reversion to the mean is real over 30-40 years.
You should look at 401k/403b at work, good marginal benefit on your taxes. If you dont have a 401k/403b at work, look at solo 401k if you meet criteria. Again good marginal benefit and can stock away serious $$
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Thanks! Unfortunately I don’t have a plan at work. All of my income is self W-2.lakpr wrote: ↑Sat May 02, 2020 10:57 am Age 36 suggests you have been working for a while (?)
Mention of only an IRA and no 401k, either past or current
30+% Federal tax bracket
Have you never had any access to any retirement plan at work, or are you choosing not to participate for a specific reason? The IRA limit is only $6k whereas with the 401k it's more than thrice, at $19.5k in 2020 and by law adjusted for inflation.
By participating in a 401k plan, you get to keep an additional $5k in your pocket per year.
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Find the line on your taxes that says "taxable income". Compare that number to a tax bracket chart. You can probably find a similar chart on the internet for your state taxes.
http://www.moneychimp.com/features/tax_brackets.htm
You don't have to have everything in each account, but having some US stocks and some bonds together in 1 account will help.Good point on rebalancing. How do you suggest I solve? A little bit of everything in all accounts?
I think it might be time to consider a solo 401k or SEP IRA. Which is best for your situation is not obvious from what you have posted so far.I don’t have a plan at work. All of my income is self W-2. I have thought about starting a solo 401k or a SEP IRA but I recently had a ton of debt until about 3 months ago. A lot was going into paying that off.
Link to Asking Portfolio Questions
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Nothing insane to my eyes, just a couple comments:
That out of the way, you might want to check your assumptions regarding small cap value:
viewtopic.php?f=10&t=313688
And tilts in general:
viewtopic.php?f=10&t=313485&start=50
Even if you continue to tilt small cap value (which is a perfectly understandable thing to do!) it's good to read dissenting viewpoints.
Regarding your international allocation, Taylor posted a very reasonable default suggestion here that's well worth reading:
viewtopic.php?t=196956
Overall you have a reasonable plan. Now comes the hardest part... stay the course through thick and thin!
My personal bias is to not tilt. My portfolio has US total market, international total market, and bonds. Easy peasy.
That out of the way, you might want to check your assumptions regarding small cap value:
viewtopic.php?f=10&t=313688
And tilts in general:
viewtopic.php?f=10&t=313485&start=50
Even if you continue to tilt small cap value (which is a perfectly understandable thing to do!) it's good to read dissenting viewpoints.
Regarding your international allocation, Taylor posted a very reasonable default suggestion here that's well worth reading:
viewtopic.php?t=196956
Overall you have a reasonable plan. Now comes the hardest part... stay the course through thick and thin!
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
I did too. After 20+ years of sticking it out in SCV and being completely unrewarded, I finally got tired of the tracking error and lumped it into TSM. I still hold a small REIT allocation, but am looking to unwind that too when and if REITS recover. YMMV
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Great point. Overall, reading dissenting viewpoints is something we should encourage everyone to do.ARoseByAnyOtherName wrote: ↑Sat May 02, 2020 12:10 pm Even if you continue to tilt small cap value (which is a perfectly understandable thing to do!) it's good to read dissenting viewpoints.
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Gotcha. Would ask the non-regular W2 peeps here about SEP v solo 401k. From what little I know, i think the 401k is better, but i think both can get you 50k+ tax advantaged room.mjuszczak wrote: ↑Sat May 02, 2020 11:36 amI don’t have a plan at work. All of my income is self W-2.Sgal8713 wrote: ↑Sat May 02, 2020 7:52 am Agree on a higher international amount, cloudy crystal ball but reversion to the mean is real over 30-40 years.
You should look at 401k/403b at work, good marginal benefit on your taxes. If you dont have a 401k/403b at work, look at solo 401k if you meet criteria. Again good marginal benefit and can stock away serious $$
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Thank you!ARoseByAnyOtherName wrote: ↑Sat May 02, 2020 12:10 pm Nothing insane to my eyes, just a couple comments:
My personal bias is to not tilt. My portfolio has US total market, international total market, and bonds. Easy peasy.
That out of the way, you might want to check your assumptions regarding small cap value:
viewtopic.php?f=10&t=313688
And tilts in general:
viewtopic.php?f=10&t=313485&start=50
Even if you continue to tilt small cap value (which is a perfectly understandable thing to do!) it's good to read dissenting viewpoints.
Regarding your international allocation, Taylor posted a very reasonable default suggestion here that's well worth reading:
viewtopic.php?t=196956
Overall you have a reasonable plan. Now comes the hardest part... stay the course through thick and thin!
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- Joined: Tue Jan 30, 2018 7:23 am
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
I may just simplify to six funds then and dump the DGS/DLS. If my only SCV tilt is to domestic small cap value via SLYV that’s probably something I can keep forever.Outer Marker wrote: ↑Sat May 02, 2020 12:15 pmI did too. After 20+ years of sticking it out in SCV and being completely unrewarded, I finally got tired of the tracking error and lumped it into TSM. I still hold a small REIT allocation, but am looking to unwind that too when and if REITS recover. YMMV
I knew I wasn’t going to come out of this thread with more complication but may take advantage of the opportunity to simplify even further.
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Sounds like you are self-employed, but as had been mentioned already up-thread (@retiredjg and @Sgal8713), you should consider establishing a SEP-IRA (which would allow you to contribute about $13k per year tax-deferred) or a a Independent 401k (which would allow you to contribute up to $57k per year, depending on the revenues and some slightly complicated formulas).mjuszczak wrote: ↑Sat May 02, 2020 11:36 amThanks! Unfortunately I don’t have a plan at work. All of my income is self W-2.lakpr wrote: ↑Sat May 02, 2020 10:57 am Age 36 suggests you have been working for a while (?)
Mention of only an IRA and no 401k, either past or current
30+% Federal tax bracket
Have you never had any access to any retirement plan at work, or are you choosing not to participate for a specific reason? The IRA limit is only $6k whereas with the 401k it's more than thrice, at $19.5k in 2020 and by law adjusted for inflation.
By participating in a 401k plan, you get to keep an additional $5k in your pocket per year.
Once established, I suggest you start contributing the max to the Independent 401k or SEP-IRA, and if your paycheck is slimmer for it and therefore not possible to meet all your monthly expenses from the remainder, draw down the shortfall from the taxable account. In effect, you will have shifted your assets from taxable account to tax-deferred, and saving yourself 30+% in taxes.
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
I just reviewed all of the funds.
SLYV, DGS, DLS, VTI, VXUS, BND, BNDX... all pay dividends. Some of them are 4 - 5%, but the lowest they go is like 2%.
Should I just own a little of each in both accounts for rebalancing purposes? And maybe just try to have slightly more of the allocation of the higher dividend ones in my tax advantaged?
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
DoubleClick wrote: ↑Sat May 02, 2020 12:51 pmGreat point. Overall, reading dissenting viewpoints is something we should encourage everyone to do.ARoseByAnyOtherName wrote: ↑Sat May 02, 2020 12:10 pm Even if you continue to tilt small cap value (which is a perfectly understandable thing to do!) it's good to read dissenting viewpoints.
- typical.investor
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
You can, but it seems a little messy. retiredjg had a good suggestion above. Also, you can effectively do rebalancing with new contributions as well. Just buy more of what is below your allocation.mjuszczak wrote: ↑Sat May 02, 2020 7:42 pmI just reviewed all of the funds.
SLYV, DGS, DLS, VTI, VXUS, BND, BNDX... all pay dividends. Some of them are 4 - 5%, but the lowest they go is like 2%.
Should I just own a little of each in both accounts for rebalancing purposes? And maybe just try to have slightly more of the allocation of the higher dividend ones in my tax advantaged?
But for the moment, forget rebalancing. Read the post from lakpr just above. It's a good strategy to move taxable amounts into tax sheltered.
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Getting a SEP IRA/solo 401k going isn’t going to happen any time soon. I have at least one other on payroll across all of my companies and the SEP IRA would require me to also fund those accounts which doesn’t financially make sense for the businesses right now. It’s on my list but not part of my plan until at least 2022 (I plan on shutting a few of my companies down).typical.investor wrote: ↑Sat May 02, 2020 8:11 pmYou can, but it seems a little messy. retiredjg had a good suggestion above. Also, you can effectively do rebalancing with new contributions as well. Just buy more of what is below your allocation.mjuszczak wrote: ↑Sat May 02, 2020 7:42 pmI just reviewed all of the funds.
SLYV, DGS, DLS, VTI, VXUS, BND, BNDX... all pay dividends. Some of them are 4 - 5%, but the lowest they go is like 2%.
Should I just own a little of each in both accounts for rebalancing purposes? And maybe just try to have slightly more of the allocation of the higher dividend ones in my tax advantaged?
But for the moment, forget rebalancing. Read the post from lakpr just above. It's a good strategy to move taxable amounts into tax sheltered.
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Curious. When you suggested DLS and DGS in tax advantaged, is it because dividends from them would never be qualified? Why not be concerned about VXUS, for example, which has quite a high dividend as well?typical.investor wrote: ↑Sat May 02, 2020 1:00 amNothing insane, but I wouldn't hold DLS, DGS in taxable. They are dividend funds. My inclination would be to hold them in the IRA and if BND taxes were too painful hold municipal bonds.mjuszczak wrote: ↑Fri May 01, 2020 8:53 pm Emergency funds: 6 months expenses in a CD
Debt: $0
Tax Status: single
Tax Rate: 30 ish Federal, 6% State
State of Residence: Massachusetts
Age: 36
Desired Asset allocation: 120 - age for stocks / rest bonds. Currently 84/16.
Desired International allocation: 20% of stocks
Desired Small Cap Value tilt: 30% of stocks
Portfolio Size: $200k
Current assets:
Taxable:
39% VTI (Vanguard Total US)
20% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US)
5% DLS/DGS (International Small Cap Value/Dividend)
IRA:
12% BND (Vanguard Bond)
4% BNDX (Vanguard Intl Bond)
8% VNQ (Vanguard REIT)
I believe strongly in the small cap value tilt as well as the REIT allocation. I have the REIT and bonds in my tax advantaged.
What you see above is actually 90% of my overall portfolio. I also have 10% of the total that I put in a separate account and buy individual stocks, etc. with.
Just looking for some validation that I didn’t make any insane mistakes!
Or actually, I would prefer long term treasuries in taxable to rebalance the equities after a crash. How are you going to rebalance from bonds to stocks when necessary?
I use FNDC in taxable for International Small Cap value.
- Noobvestor
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Very few people recommend 0% outright. Just be ready for tracking error if the US has a bad decade.mjuszczak wrote: ↑Sat May 02, 2020 11:34 amThank you! Good points. Maybe I will increase international to 30% but I don’t want to go 50%. There are people who say 0 and people who say 50 so I would like to be somewhere in the middle.Noobvestor wrote: ↑Sat May 02, 2020 5:03 am A few notes:
1) Massively tilted toward the US - might come back to haunt you if means revert (60/40 or 50/50 would be closer to cap-weighted)
2) Per a comment above, no really easy way to rebalance - might want to hold a mix in tax-advantaged to make that easier
3) Bonds-in-tax-advantaged is an old rule of thumb that I'm not sure is as useful in today's low-yield environment (might want to math it out)
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
What if I buy 90% VT and 10% BND in all but a certain dollar amount of my portfolio (vs %).
Then I take — say (eventually) — 50k — and put it in whatever I want. SLYV etc.
Maybe that’s a better way of doing this because as my net worth grows my SCV and low international allocation will shrink?
Then I take — say (eventually) — 50k — and put it in whatever I want. SLYV etc.
Maybe that’s a better way of doing this because as my net worth grows my SCV and low international allocation will shrink?
- typical.investor
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
VXUS is market cap weighted. DLS and DGS select for dividend payers. I prefer a value fund (FNDC) that does not select for dividend instead of DLS. For DGS, I see no alternative. DLS and DGS are both distribute 5% or so. VXUS 3.5%.
FNDC has about 87% QDI for 2019. Can't find DLS
It gets complicated. I didn't go all the way to consider how much was qualified. I assume less for the small cap funds.
If in taxable, can you claim the foreign tax credit? I can not. That's another factor.
So I use FNDC in taxable and DGS in tax deferred. My positions are larger than 5% though.
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Helpful, thank you.typical.investor wrote: ↑Sun May 03, 2020 12:12 amVXUS is market cap weighted. DLS and DGS select for dividend payers. I prefer a value fund (FNDC) that does not select for dividend instead of DLS. For DGS, I see no alternative. DLS and DGS are both distribute 5% or so. VXUS 3.5%.
FNDC has about 87% QDI for 2019. Can't find DLS
It gets complicated. I didn't go all the way to consider how much was qualified. I assume less for the small cap funds.
If in taxable, can you claim the foreign tax credit? I can not. That's another factor.
So I use FNDC in taxable and DGS in tax deferred. My positions are larger than 5% though.
I need to understand the difference between non-qualified and ordinary dividends. That will help in my research. Is ordinary qualified dividends but you didn’t hold them for 61 days prior? Or is that non-qualified?
- typical.investor
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Sorry. My terminology is poor. It's qualified dividends vs ordinary.mjuszczak wrote: ↑Sun May 03, 2020 12:14 amHelpful, thank you.typical.investor wrote: ↑Sun May 03, 2020 12:12 amVXUS is market cap weighted. DLS and DGS select for dividend payers. I prefer a value fund (FNDC) that does not select for dividend instead of DLS. For DGS, I see no alternative. DLS and DGS are both distribute 5% or so. VXUS 3.5%.
FNDC has about 87% QDI for 2019. Can't find DLS
It gets complicated. I didn't go all the way to consider how much was qualified. I assume less for the small cap funds.
If in taxable, can you claim the foreign tax credit? I can not. That's another factor.
So I use FNDC in taxable and DGS in tax deferred. My positions are larger than 5% though.
I need to understand the difference between non-qualified and ordinary dividends. That will help in my research. Is ordinary qualified dividends but you didn’t hold them for 61 days prior? Or is that non-qualified?
87% of dividends from FNDC were qualified assuming you met holding period requirements.
For rebalancing, I would do something more like this.
Taxable:
39% VTI (Vanguard Total US)
15% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US)
10% (Long or Intermediate) Term Treasuries
IRA:
6% BND (Vanguard Bond)
8% VNQ (Vanguard REIT)
5% DLS/DGS (International Small Cap Value/Dividend)
5% SLYV (Sm cap value ETF)
(hope the totals are correct ... anyway you get the idea)
BNDX holds little appeal to me. It will only be useful if the US has inflation and the rest of the world doesn't. Treasuries are better to rebalance from.
If you are worried about inflation, I suggest 1) your high equity allocation will serve you well, 2) your value and REIT holding won't be hurt as much when the current value of future expected growth is discounted when inflation hits
Or maybe VXUS in taxable instead of SLYV.
Last edited by typical.investor on Sun May 03, 2020 12:49 am, edited 1 time in total.
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Super super helpful! Thanks a ton!typical.investor wrote: ↑Sun May 03, 2020 12:44 amSorry. My terminology is poor. It's qualified dividends vs ordinary.mjuszczak wrote: ↑Sun May 03, 2020 12:14 amHelpful, thank you.typical.investor wrote: ↑Sun May 03, 2020 12:12 amVXUS is market cap weighted. DLS and DGS select for dividend payers. I prefer a value fund (FNDC) that does not select for dividend instead of DLS. For DGS, I see no alternative. DLS and DGS are both distribute 5% or so. VXUS 3.5%.
FNDC has about 87% QDI for 2019. Can't find DLS
It gets complicated. I didn't go all the way to consider how much was qualified. I assume less for the small cap funds.
If in taxable, can you claim the foreign tax credit? I can not. That's another factor.
So I use FNDC in taxable and DGS in tax deferred. My positions are larger than 5% though.
I need to understand the difference between non-qualified and ordinary dividends. That will help in my research. Is ordinary qualified dividends but you didn’t hold them for 61 days prior? Or is that non-qualified?
87% of dividends from FNDC were qualified assuming you met holding period requirements.
For rebalancing, I would do something more like this.
Taxable:
39% VTI (Vanguard Total US)
15% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US)
10% (Long or Intermediate) Term Treasuries
IRA:
6% BND (Vanguard Bond)
8% VNQ (Vanguard REIT)
5% DLS/DGS (International Small Cap Value/Dividend)
5% SLYV (Sm cap value ETF)
(hope the totals are correct ... anyway you get the idea)
BNDX holds little appeal to me. It will only be useful if the US has inflation and the rest of the world doesn't. Treasuries are better to rebalance from.
If you are worried about inflation, I suggest 1) your high equity allocation will serve you well, 2) your value and REIT holding won't be hurt as much when the current value of future expected growth is discounted when inflation hits
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
I would only put Total Stock in with the bonds.mjuszczak wrote: ↑Sat May 02, 2020 7:42 pmI just reviewed all of the funds.
SLYV, DGS, DLS, VTI, VXUS, BND, BNDX... all pay dividends. Some of them are 4 - 5%, but the lowest they go is like 2%.
Should I just own a little of each in both accounts for rebalancing purposes? And maybe just try to have slightly more of the allocation of the higher dividend ones in my tax advantaged?
The only important ratio is stocks to bonds. The ratios of US stock to foreign or large cap to small cap is relatively unimportant and does not change quickly anyway. Having some total stock in with the bonds gives you a way to rebalance your stock to bond ratio easily.
If you do start a plan at work, some of this rigidity will go away.
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Thanks! But now I'm reading that $BND (my major bond holding) isn't best for a taxable account, which is where I would put most of my TSM. So sounds like I need to maybe put LTT in my taxable alongside TSM and keep BND in tax advantaged?retiredjg wrote: ↑Sun May 03, 2020 6:24 amI would only put Total Stock in with the bonds.mjuszczak wrote: ↑Sat May 02, 2020 7:42 pmI just reviewed all of the funds.
SLYV, DGS, DLS, VTI, VXUS, BND, BNDX... all pay dividends. Some of them are 4 - 5%, but the lowest they go is like 2%.
Should I just own a little of each in both accounts for rebalancing purposes? And maybe just try to have slightly more of the allocation of the higher dividend ones in my tax advantaged?
The only important ratio is stocks to bonds. The ratios of US stock to foreign or large cap to small cap is relatively unimportant and does not change quickly anyway. Having some total stock in with the bonds gives you a way to rebalance your stock to bond ratio easily.
If you do start a plan at work, some of this rigidity will go away.
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
I was suggesting putting some total stock market- maybe a 5% slice - in the IRA.
But you could also put some bonds in taxable if you want. If that 30ish tax bracket is correct, it should be a tax-exempt bond fund although I guess some might use treasuries. I don't recommend long term bonds, even treasuries.
But you could also put some bonds in taxable if you want. If that 30ish tax bracket is correct, it should be a tax-exempt bond fund although I guess some might use treasuries. I don't recommend long term bonds, even treasuries.
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
OK, I did a lot of read this morning and understand a lot more now:
https://www.bogleheads.org/wiki/Vanguar ... tributions
https://www.bogleheads.org/wiki/Tax-eff ... _placement
However, I am still not sure where to put DLS or DGS. On one side of the fence, they pay high dividends. On the other side of the fence, their capital gains distributions are low/non-existant and their dividends are qualified. According to one of the links above, it makes sense to prioritize that in a taxable account?
https://www.bogleheads.org/wiki/Vanguar ... tributions
https://www.bogleheads.org/wiki/Tax-eff ... _placement
However, I am still not sure where to put DLS or DGS. On one side of the fence, they pay high dividends. On the other side of the fence, their capital gains distributions are low/non-existant and their dividends are qualified. According to one of the links above, it makes sense to prioritize that in a taxable account?
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
I used to tilt towards SCV and REITs (US and international), but just recently I got rid of the REITs and bumped up US TSM and US SCV a bit. One reason was to simplify a bit. I didn't have a huge slice of REITs to begin with, it was 8% of equities which was about 6.4% of total portfolio, so it probably wasn't having a huge impact anyway. Another is that some think that much of the REIT behavior is similar to SCV, and since I'm tilting toward SCV anyway, it might not be worth doing both. Third is that if you look at IJS for example on Morningstar, it's already at 10% Real Estate compared to 4% Real Estate in VTI, so there is some overweighting to REITs just by virtue of holding SCV, though only a very small amount relative to the overall portfolio.
So now I just have 4 funds: US TSM, Total International, Total US Bond, and US SCV.
So now I just have 4 funds: US TSM, Total International, Total US Bond, and US SCV.
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Awesome and helpful! Do you mind if I ask where you hold your SCV funds, particularly international? Taxable or tax advantaged?decapod10 wrote: ↑Sun May 03, 2020 11:37 am I used to tilt towards SCV and REITs (US and international), but just recently I got rid of the REITs and bumped up US TSM and US SCV a bit. One reason was to simplify a bit. I didn't have a huge slice of REITs to begin with, it was 8% of equities which was about 6.4% of total portfolio, so it probably wasn't having a huge impact anyway. Another is that some think that much of the REIT behavior is similar to SCV, and since I'm tilting toward SCV anyway, it might not be worth doing both. Third is that if you look at IJS for example on Morningstar, it's already at 10% Real Estate compared to 4% Real Estate in VTI, so there is some overweighting to REITs just by virtue of holding SCV, though only a very small amount relative to the overall portfolio.
So now I just have 4 funds: US TSM, Total International, Total US Bond, and US SCV.
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
I should have said to put some 500 index in the IRA....
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
I think you may be trying to juggle too many balls with this inflexible portfolio. You cannot have all the funds you want and have maximum tax efficiency. That does not mean you can't achieve reasonable tax efficiency.
You need to decide what is important and what would be nice to have.
A lot of things would be easier if you just dropped 5% DLS/DGS (International Small Cap Value/Dividend) from your portfolio. The slices are too small to be more than just clutter and neither is particularly necessary. You already have enough sprinkles on the icing (SCV and REIT) and don't need more.
With your current arrangement, your tax-advantaged account is going to be small in relation to taxable and I suspect that will get worse, not better. Maybe you should concentrate on just a core portfolio for now and add on this other stuff when you have more tax-advantaged space.
You need to decide what is important and what would be nice to have.
A lot of things would be easier if you just dropped 5% DLS/DGS (International Small Cap Value/Dividend) from your portfolio. The slices are too small to be more than just clutter and neither is particularly necessary. You already have enough sprinkles on the icing (SCV and REIT) and don't need more.
With your current arrangement, your tax-advantaged account is going to be small in relation to taxable and I suspect that will get worse, not better. Maybe you should concentrate on just a core portfolio for now and add on this other stuff when you have more tax-advantaged space.
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
OK. So if hypothetically speaking I dropped DLS/DGS and was left with:retiredjg wrote: ↑Sun May 03, 2020 12:17 pm I think you may be trying to juggle too many balls with this inflexible portfolio. You cannot have all the funds you want and have maximum tax efficiency. That does not mean you can't achieve reasonable tax efficiency.
You need to decide what is important and what would be nice to have.
A lot of things would be easier if you just dropped 5% DLS/DGS (International Small Cap Value/Dividend) from your portfolio. The slices are too small to be more than just clutter and neither is particularly necessary. You already have enough sprinkles on the icing (SCV and REIT) and don't need more.
With your current arrangement, your tax-advantaged account is going to be small in relation to taxable and I suspect that will get worse, not better. Maybe you should concentrate on just a core portfolio for now and add on this other stuff when you have more tax-advantaged space.
VTI, VXUS, BND, BNDX, SLYV, VNQ
... it's obvious to me that VTI/VXUS/SLYV would be primarily in taxable and VNQ would be in tax advantaged.
Probably makes sense to keep BND and BNDX in tax advantaged as well, and then add a little VOO to tax-advantaged for rebalancing? Done?
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Yes. You'll have to give up something to get there.
How about....
Taxable 76%
39% VTI (Vanguard Total US)
20% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US) <<<----this is only half of the international allocation you said you wanted...why?
5% Tax Exempt bonds
IRA 24%
8% 500 index
7% BND (Vanguard Bond)
4% BNDX (Vanguard Intl Bond)
5% VNQ (Vanguard REIT)
Having an 8% slice of stock in the IRA will not be enough to rebalance when the market is changing a lot, but it is plenty during normal times.
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
I don't have a significant taxable account, so it's basically all in tax advantaged accounts, so unfortunately can't be much help there. Also, this wasn't clear but I didn't have any international SCV, only US SCV (I had US and international REITs which I have sold).mjuszczak wrote: ↑Sun May 03, 2020 11:46 amAwesome and helpful! Do you mind if I ask where you hold your SCV funds, particularly international? Taxable or tax advantaged?decapod10 wrote: ↑Sun May 03, 2020 11:37 am I used to tilt towards SCV and REITs (US and international), but just recently I got rid of the REITs and bumped up US TSM and US SCV a bit. One reason was to simplify a bit. I didn't have a huge slice of REITs to begin with, it was 8% of equities which was about 6.4% of total portfolio, so it probably wasn't having a huge impact anyway. Another is that some think that much of the REIT behavior is similar to SCV, and since I'm tilting toward SCV anyway, it might not be worth doing both. Third is that if you look at IJS for example on Morningstar, it's already at 10% Real Estate compared to 4% Real Estate in VTI, so there is some overweighting to REITs just by virtue of holding SCV, though only a very small amount relative to the overall portfolio.
So now I just have 4 funds: US TSM, Total International, Total US Bond, and US SCV.
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Regarding VXUS -- because DGS/DLS were international and are now no longer part of that allocation. But that's where the additional 8% had come from.retiredjg wrote: ↑Sun May 03, 2020 12:26 pmYes. You'll have to give up something to get there.
How about....
Taxable 76%
39% VTI (Vanguard Total US)
20% SLYV (Sm cap value ETF)
12% VXUS (Vanguard Total Ex-US) <<<----this is only half of the international allocation you said you wanted...why?
5% Tax Exempt bonds
IRA 24%
8% 500 index
7% BND (Vanguard Bond)
4% BNDX (Vanguard Intl Bond)
5% VNQ (Vanguard REIT)
Having an 8% slice of stock in the IRA will not be enough to rebalance when the market is changing a lot, but it is plenty during normal times.
Thanks w.r.t. the 8% suggestion! I'll do that!
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Sorry, I had read that you wanted 30% of your stocks in international, but that was wrong.
But you may need to take a little out of the small cap value to get the international up to your target. The problem is you are trying to divey up your 84% in stocks into a lot of things. If you put 20% of it into international and 30% into small cap value and 10% into REIT....how much space does that leave for a core holding?
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Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Maybe I was mis-representing how I want things divided. My ultimate goal was:retiredjg wrote: ↑Sun May 03, 2020 12:41 pmSorry, I had read that you wanted 30% of your stocks in international, but that was wrong.
But you may need to take a little out of the small cap value to get the international up to your target. The problem is you are trying to divey up your 84% in stocks into a lot of things. If you put 20% of it into international and 30% into small cap value and 10% into REIT....how much space does that leave for a core holding?
80% US, 20% International
US Split:
US REIT 10% allocation of US (8% overall)
US SCV 30% allocation of US (24% overall)
US TSM 60% allocation of US (48% overall)
International Split:
International SCV 30% allocation of International (6% overall)
International TSM 70% allocation of International (14% overall)
8 + 24 + 48 + 6 + 14 = 100%
Re: Finally simplified. Looking for feedback on my lifelong portfolio.
Small caps make up only 18% if the overall US stock market, SCV is half that, so 9%. You are allocating 30% to SCV that is one heck of a tilt towards SCV. You sure you want to tilt that strongly?
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