Too Much Cash, Too Many Funds? Portfolio

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Topic Author
Notme
Posts: 6
Joined: Thu Mar 21, 2019 7:50 pm
Location: New England

Too Much Cash, Too Many Funds? Portfolio

Post by Notme »

Hello,

I got nervous early this year and moved a lot of money into cash just before things crashed and everything was shut down. I have recently hit full retirement age, but I am not fully retired. I would like advice on simplifying my holdings, and on how much cash I really need. I don't mind having a lot of liquidity right now but maybe not all in Money Markets?

I am also wondering about how much money I should have with any individual broker? I have a lot more in Vanguard than Fidelity. The reason I have some of my funds with Citizens Brokerage is just to get low rates on my HELOC and checking accounts. I think I need a minimum $35,000 with them for that.

My AA is currently 62.1% Equity, 29.2% Bonds, 8.7% Short term reserves
Emergency funds: 2-3 years if I consider short term reserves my EF, but the money is all in sweep funds within my IRA brokerage accounts.
Debt: HELOC mid 5 figures 2.75% interest (Prime -.05%)

Tax Filing Status: Single

Tax Rate: 12% Federal, .0375% State

State of Residence: RI

Age: 66

Desired Asset allocation: Unsure 55% stocks/40% bonds 5% short term ???
Desired International allocation: 10 % of stocks?

Current total portfolio between mid and high six figures

Current retirement assets

Vanguard Traditional IRA Brokerage Acct
6.7% Vanguard Federal Money Mkt Fund (.11%)
4.7% Vanguard Tot Intl Bond Index Admiral (.11%)
21.6% Vanguard Total Bond Mkt Index Adm (.05%)
24.7% Vanguard 500 Index Fund Adm (.04%)
3.8% Vanguard Health Care Fund Adm (.27%)
3.1% Vanguard Real Estate Index Admiral (.12%)

Vanguard SEP IRA Brokerage Acct
2.1% Vanguard Global Equity Fund (.48%)

Fidelity SEP IRA Brokerage
7.9% Apple AAPL
.5% Hasbro HAS
6.3% Fidelity Balanced Fund (.53%)
4.3% Fidelity Select IT Services Portfolio (.73%)
3% Fidelity Mid Cap Enhanced Index Fund (.59%)
2.3% Fidelity Select Defense & Aerospace (.75%)
1.9% Fidelity Government Cash Reserves (.38%)

Citizens Bank Traditional IRA Brokerage Exp (1.43%)! annually
.2% Vanguard Inter-Term Bond ETF
.2% Vanguard Long-Term Bond ETF
.2% Vanguard Mortgage-Backed Sec ETF
.3% Vanguard Short-Term Bond ETF
.3% Vanguard Tot Intl Bond ETF
.6% Vanguard Extended Market ETF
2.9% Vanguard S&P 500 ETF
1.7% Vanguard FTSE Developed Mkts ETF
.6% Vanguard FTSE Emerging Markets ETF
.1% QCCOQ Sweep fund

Contributions None

Thank you,
Barbara
magicrat
Posts: 1059
Joined: Sat Nov 29, 2014 7:04 pm

Re: Too Much Cash, Too Many Funds? Portfolio

Post by magicrat »

Simplify into Total US, Total International, and Total Bond (and Total Intl Bond if you want). No reason to have all of these funds. You need 1 account with all 3 (or 4) funds for rebalancing. Other accounts need only 1 fund.

I don't see any reason to have accounts at Vanguard and Fidelity. Pick one and simplify.

What exactly are you getting from Citizens in exchange for 1.43% expenses per year?

Your target AA is fine if that works for you. However, what was your AA when you panic sold earlier this year? Whatever that was, it was too stock heavy for you. You need an AA that you will stick with when stocks decline 50%+
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JoeRetire
Posts: 5644
Joined: Tue Jan 16, 2018 2:44 pm

Re: Too Much Cash, Too Many Funds? Portfolio

Post by JoeRetire »

Notme wrote: Tue Sep 15, 2020 1:44 pm I got nervous early this year and moved a lot of money into cash just before things crashed and everything was shut down.
Are you still nervous? If not, what has changed?
I would like advice on simplifying my holdings
Why do you want to simplify your holdings? How did you come about having so many funds?
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
pkcrafter
Posts: 14282
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
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Re: Too Much Cash, Too Many Funds? Portfolio

Post by pkcrafter »

Notme wrote: Tue Sep 15, 2020 1:44 pm Hello,

I got nervous early this year and moved a lot of money into cash just before things crashed and everything was shut down. I have recently hit full retirement age, but I am not fully retired. I would like advice on simplifying my holdings, and on how much cash I really need. I don't mind having a lot of liquidity right now but maybe not all in Money Markets?

If you had an AA higher than 55/45 nearing retirement, then it was a good idea to move some into cash. Even 55% in equity might be higher than necessary, but it depends on your withdrawal rate.

I am also wondering about how much money I should have with any individual broker? I have a lot more in Vanguard than Fidelity.

That's probably OK, and not uncommon.

The reason I have some of my funds with Citizens Brokerage is just to get low rates on my HELOC and checking accounts. I think I need a minimum $35,000 with them for that.

You might be getting a lower rate on HELOC, but you are paying more for investments. Not only do you pay expense ratios, but the bank takes a cut as well. 1.43% is too high, and that probably does not count the expense ratios of the funds.

My AA is currently 62.1% Equity, 29.2% Bonds, 8.7% Short term reserves
Emergency funds: 2-3 years if I consider short term reserves my EF, but the money is all in sweep funds within my IRA brokerage accounts.

Is the 2-3 years of cash counted in your asset allocation? Overall, you have far too many funds.
(/quote)
Paul
Last edited by pkcrafter on Tue Sep 15, 2020 4:32 pm, edited 1 time in total.
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
sycamore
Posts: 1112
Joined: Tue May 08, 2018 12:06 pm

Re: Too Much Cash, Too Many Funds? Portfolio

Post by sycamore »

Notme wrote: Tue Sep 15, 2020 1:44 pm ...
The reason I have some of my funds with Citizens Brokerage is just to get low rates on my HELOC and checking accounts. I think I need a minimum $35,000 with them for that.
...
Citizens Bank Traditional IRA Brokerage Exp (1.43%)! annually
.2% Vanguard Inter-Term Bond ETF
.2% Vanguard Long-Term Bond ETF
.2% Vanguard Mortgage-Backed Sec ETF
.3% Vanguard Short-Term Bond ETF
.3% Vanguard Tot Intl Bond ETF
.6% Vanguard Extended Market ETF
2.9% Vanguard S&P 500 ETF
1.7% Vanguard FTSE Developed Mkts ETF
.6% Vanguard FTSE Emerging Markets ETF
.1% QCCOQ Sweep fund
As others pointed out the Citizens Bank IRA is too costly at 1.43%. Suggest you double check with them about what you really need in order to keep your lower rate on the HELOC.

Is this your Citizens Bank HELOC: https://www.citizensbank.com/home-equit ... heloc.aspx? It does promote "Save 0.25% off your rate with automatic monthly payments from a Citizens Bank checking account*" but that refers to a checking account not an IRA. I don't see anything about having a minimum amount of assets with them, but maybe your HELOC agreement is different.

Anyway, if it turns out you don't really need Citizens Brokerage, then I'd transfer that IRA over to the Vanguard IRA. You'll (1) save on fees and (2) make it easier to consolidate and simplify your overall portfolio. That would be a good first step.
Topic Author
Notme
Posts: 6
Joined: Thu Mar 21, 2019 7:50 pm
Location: New England

Re: Too Much Cash, Too Many Funds? Portfolio

Post by Notme »

Thanks for the replies
I don't think I get enough from Citizens to justify the expense. Just free checking accounts and the .5% below prime rate on my HELOC. I had even more funds at Citizens in February but moved a third of it over to Vanguard. I assume the HELOC rate is locked in now.

My AA in February was 75/25. I felt like the market was unrealistically high in February, and I knew I had too much equity. I had this sick feeling that the market would crash just as I was hitting full retirement but before my Social security started. I am self employed and my income has been spotty. This was the first time I'd ever gone to cash. I was 100% in equity until 2016. It did work out that the big crash happened right after I finished selling off what I'd intended to sell off. When stocks were bottomed out my AA was around 59 32 9.

I don't feel any better about the market now than I did then, even though I have benefitted a lot on paper. Apple has been especially insane. But I'm thinking that I could at least be moving some cash into bonds and simplifying my holdings.

The 2-3 years of cash is basically the 8.7% cash I have listed. I have no savings outside of my retirement money, other than the value of my house. So it does give me some peace of mind, I just don't think I need quite so much peace of mind in cash.
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