This forum is amazing; thank you for all the help over the years!
Why am I posting?
I am getting my financial house in better order and need some advice.
What am I cleaning up financially?
- I've been using Betterment for 55% of my portfolio, but I am going to move to Vanguard ETFs as there is no reason to keep paying their management fee of 0.25%.
- I put ~20% of my portfolio with an advisor five years ago. I did it because I had followed them for 8 years, and they had a Buffet value-driven approach that I liked. And I liked the idea of them thinking about what they were doing every day. But the fees were high (1.25%), and after 5 years, I realized they were underperforming the market given those fees. I've ended that relationship. My yearly R.O.I. was ~4.6%.
- I have a small amount in crypto, ~2% of my portfolio, and I am getting rid of that as I can't find any value in crypto beyond it serving as an investment in the global grey market.
- I have ~20% of my portfolio in direct stock picks that I've let grow over the last 10 years. I am debating dumping those entirely or trimming those back to ~5% of my portfolio. I am in tech, and when I had a business exit 10 years ago, I put ~7.5% of my money in companies I used and believed in. I enjoyed doing that, but it has since grown without any rebalancing.
I am a long-time entrepreneur with a few exits under my belt.
I am semi-retired and working on a passion project that I love. I don't expect the passion project to earn much money. My hope is that in 2 to 3 years, it can pay me around $3,000 to $4,000 a month of income (while giving me something fun to do). But there is a chance it might not ever make enough to pay me anything.
My wife has been a stay-at-home mom but is now looking for what is next now that our daughter started school.
- Tax filing status: Married filing jointly w/ 1 kid.
- Ages: Early 40s
- Location: American living in Portugal (moved in 2021 - dual citizens).
- USA Tax Rate: No state taxes & federal super low as we don't have any income (apart from dividends and capital gains)
- Portugal Tax Rate: None, as under NHS status.
- Debt: None
- Income: Currently, only the income from dividends and capital gains from investments
- Home: Renting an apartment.
- Real estate: We own a vacation apartment in the EU and rent it out when we are not using it.
- Taxable: $6.2M (96%)
- Non-Taxable: $300k (4%).
- 70% Total US Stocks (VTI)
- 20% Total Non-USA Stocks (VXUS)
- 10% Some type of Bond ETF (not sure which) - The idea is that if the market crashes, we can live for 5+ years off just the bonds while it recovers.
- No additional contributions are planned unless one of my angel investments I made pays off (IPO/acquisition). I don't count on any gains here. It is fun to invest in people doing cool things. Realistically I can expect ~$200k at some point from the ones that are doing well.
Expenses & what money means to me...
We are currently living on $96,000 a year net. That is a little tight, and we would like to increase that to $120,000 a year net.
We are looking to move to a big city in another part of Europe in the next 18 months. That is going to cost ~5x more in rent (or we might buy a place).
My wife and I love to travel and eat good food. No big vices beyond that.
Cash: ~300k currently.
~$120k of that cash is set aside for funding the new passion project I am working on. I am hoping to break even on costs in 2024. But, if I don't, I would love to be able to add another ~$120k in 2025. The project is currently covering ~35% of its monthly costs.
I would love to be able to put $120k a year into new projects if I could afford it.
What bond ETF would you recommend?
The idea is that if the market crashes, we can live for 5+ years off, just the bonds, until it recovers. Would you go BND? Or VGIT? Why would you pick that one? Would you be looking to move from something if the Fed decreases interest rates dramatically over the next 2 years?
We want to buy a house/apartment at some point. Can we afford a $1.1 million dollar house?
The type of place we want in the expensive new city will likely cost $1.1 million. That would come out of our taxable portfolio and reduce that to ~$5.4 million. Can we afford that?
If you were in my position, would you increase international exposure from 20% to 30%?
I am aware of the USA versus international argument, so just curious on what you personally would do in this situation .
- My wife would like us to take $150k net out a year (she spends more than me). Can we afford that? It makes me nervous...