Revised $1.5M asset allocation for Traditional IRA

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Topic Author
trkloon
Posts: 3
Joined: Wed Jun 22, 2022 5:31 pm

Revised $1.5M asset allocation for Traditional IRA

Post by trkloon »

Hi Bogleheads,

Thank you for all the wisdom and support in this community! I wish I’d found it sooner. Last year I came into a windfall at work. I’ve done a lot of research and lurking, and I would like some advice on revising my asset allocation in a traditional IRA. 

I am 32 and single, no debt, but I also don't own any real estate. I have a six month emergency fund held in a high yield savings account, a 401k that I max in a target date fund, an HSA that I max in 100% domestic equities, a Roth IRA with a 60/40 domestic/international equity split, and $10k in I-Bonds. Aside from this, I have a traditional IRA - and this is where it gets messy since I invested before I found the Boglehead approach. Here is my current asset allocation: 
  • 43k BCOIX - Baird Core Plus Bond Fund Class Institutional Fund
  • $43k MWTRX - Metropolitan West Total Return Bond Fund
  • $10k VIPSX - Vanguard Inflation-Protected Securities Fund 
  • $43k VTABX - Vanguard Total International Bond Index Fund 
  • $196k VTMGX - Vanguard Developed Markets Index Fund
  • $28k VWEHX - Vanguard High-Yield Corporate Fund
  • $32k VNQ - Vanguard Real Estate Index Fund 
  • $35k VNQI - Vanguard Global ex-US Real Estate Index Fund 
  • $256k VO - Vanguard Mid-Cap Index Fund ETF
  • $387k VOO - Vanguard 500 Index Fund
  • $195k VT - Vanguard Total World Stock Index Fund ETF
  • $154k VWO - Vanguard Emerging Markets Stock Index Fund ETF
I have a few specific questions that I'd appreciate your thoughts on - 

1. What is the best way to simplify my traditional IRA? I am planning to move to a four-bond fund. How does this look? Should I add a REIT (e.g., VNQ and VNQI)?
  • 90% equities (of which 70% VTI - Vanguard Total Stock Market Index Fund and 30% VXUS - Vanguard Total International Stock Index Fund)
  • 10% BND - Vanguard Total Bond Market Index Fund ETF
2. Are there more appropriate or specific bond funds I should use? Do I need TIPS? I have a long-term investment horizon of ~30 years, as I won't access these funds until I reach retirement age. 

3. I am currently at a 60/40 domestic/international split across my total portfolio, but moving towards a 70/30 after doing more research. Thoughts? I'll do this in tax advantaged accounts and via future contributions. 

4. Is there anything in my portfolio that's tax inefficient and should be reevaluated? 

5. Given the size of my portfolio - do I need a financial advisor? I’ve talked to so many people but cannot find anyone willing to do a monthly or annual rate - everyone wants to do an AUM arrangement, which I am deeply opposed to given my age and the impacts of compounding.

Thanks all for any advice - I appreciate it!
tibbitts
Posts: 17580
Joined: Tue Feb 27, 2007 6:50 pm

Re: Revised $1.5M asset allocation for Traditional IRA

Post by tibbitts »

My inclination is to think there's a reason you have all the funds you have: you like to tweak your allocation for a hobby, and that's fine. So just leave it as it is, or even add a few funds. Maybe revisit that in fifty years when you realize that sandwich you're eating is a little extra chewy because it's actually your wallet.

I'm not buying the "more research" story for changing your domestic vs. international allocation, but if that's the story you're telling yourself, okay.
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FiveK
Posts: 12863
Joined: Sun Mar 16, 2014 2:43 pm

Re: Revised $1.5M asset allocation for Traditional IRA

Post by FiveK »

trkloon wrote: Wed Jun 22, 2022 5:39 pm 1. What is the best way to simplify my traditional IRA?
Sell what you don't want and buy what you do want. Because it's all in the IRA, there are no tax consequences (other than a possible wash sale if you buy/sell identical things in any taxable accounts).

As for what to buy, you don't "need" anything specific. See
- Three-fund portfolio - Bogleheads for some suggestions,
- Tax-efficient fund placement - Bogleheads for the "sharper pencil" look, and
- Callan periodic table of investment returns - Bogleheads for why today's hot sector probably won't (but might) be tomorrow's.
Topic Author
trkloon
Posts: 3
Joined: Wed Jun 22, 2022 5:31 pm

Re: Revised $1.5M asset allocation for Traditional IRA

Post by trkloon »

tibbitts wrote: Wed Jun 22, 2022 7:56 pm My inclination is to think there's a reason you have all the funds you have: you like to tweak your allocation for a hobby, and that's fine. So just leave it as it is, or even add a few funds. Maybe revisit that in fifty years when you realize that sandwich you're eating is a little extra chewy because it's actually your wallet.

I'm not buying the "more research" story for changing your domestic vs. international allocation, but if that's the story you're telling yourself, okay.
Thanks for the input. The initial allocations I did were based on a sample portfolio I was trying to replicate. No terrible decisions but it’s more complicated than I want to manage going forward.
Topic Author
trkloon
Posts: 3
Joined: Wed Jun 22, 2022 5:31 pm

Re: Revised $1.5M asset allocation for Traditional IRA

Post by trkloon »

FiveK wrote: Wed Jun 22, 2022 8:08 pm
trkloon wrote: Wed Jun 22, 2022 5:39 pm 1. What is the best way to simplify my traditional IRA?
Sell what you don't want and buy what you do want. Because it's all in the IRA, there are no tax consequences (other than a possible wash sale if you buy/sell identical things in any taxable accounts).

As for what to buy, you don't "need" anything specific. See
- Three-fund portfolio - Bogleheads for some suggestions,
- Tax-efficient fund placement - Bogleheads for the "sharper pencil" look, and
- Callan periodic table of investment returns - Bogleheads for why today's hot sector probably won't (but might) be tomorrow's.
Thanks for the advice and info!
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