Cancelled VPAS. Should I stay the course for self management.

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p&wman
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Cancelled VPAS. Should I stay the course for self management.

Post by p&wman »

This post is more for the purpose of a confidence builder in managing a larger portfolio.
Been 12+ years since last post on BH forum. Recently cancelled VPAS after 2.5 years. 1.1M under advisement in taxable account.
It's in the standard vanilla portfolio (VBTLX, BND, BNDX, VTI, VXUS). I'm happy with the AA approx 60/40 but it will change to lower equities as time progresses.
I stay the course and rebalance yearly. Don't know why I utilized VPAS; thought I would get more questions answered about tax issues, health care, etc. That's not in their job description.
My questions:
1. Do I switch to the basic digital robo service with no human advice so as to make rebalancing simple or go it alone?
I also have .8M in self managed that I will merge into those investments at the set ratios and I don't want to pay fees on that also.
Non taxable accounts 401k - his 600k, hers 300k. Both in balanced plans.
None of this is money we need as we live off SSI, pensions and rents.
2. Is this a recommended portfolio? Could it be simpler? Originally, as per advice from forum members, I was a 3 fund investor (VTSAX, VTIAX, VBTLX).
TY in advance for any advice.

About me: Married file jointly, age 66/65, no debt, 12% federal, 7.5% state.
senex
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by senex »

Twelve years between posts -- impressive! Welcome back.

1. Given that your portfolio is simple, I like the idea of rebalancing manually. I find that engaging myself once/year is a good practice to keep my mind fresh, to exercise their system, to ensure I still know how to use their website, to spend a little deliberate time in contemplation.

2. In my mind, 3-fund and 5-fund are both really nice and simple in the grand scheme. I aim for 3 funds, and actually have 5 or 6 (due to some funds I acquired long ago and would cause tax liability to remove) -- and I don't worry about it. I personally would not pay tax to reduce from 5 funds to 3, but if I could do it in a tax-free way I would consider it.

Best wishes.
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p&wman
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by p&wman »

Yes. 12 years. Very long time. Well up to now everything has been ok.
I was never a "knowledgeable" investor so I stuck with tried and true. Boring but reliable . Then came the advisor and complicated things with 2 more funds.
I will harvest a small loss if necessary to bring it back to 3 fund.
Where I shined in life is work ethic and save/invest what I made.
I will have more ??? along the way because I've reached a critical point in life.
Thank you for replying I thought that I might be boycotted after all these years
Kendall
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by Kendall »

I think you should give rebalancing on your own a try instead of signing up right away with a digital robo service. You already know one of the key concerns, which is minding any tax consequences. Those tax-deferred 401k accounts should be ample enough to allow rebalancing when you don't have tax losses to capture in other accounts. Remember the total asset allocation is what matters. Some people discount tax deferred holdings since the government will eventually take a share when distributions are taxed, and some don't.

You say you have enough to live on with SS, pensions and rents - congrats! Breathe easy and feel free to update this thread with any questions that come up later.
bonesly
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by bonesly »

p&wman wrote: Mon Feb 05, 2024 5:40 am 1. Do I switch to the basic digital robo service with no human advice so as to make rebalancing simple or go it alone?
I would say "go it alone" and if check in here if you have questions about what you're doing (or are concerned what you did might have been a mistake). If you don't have the time or don't want to spend the effort on annual rebalancing, a robo-advisor could make sense, but the cost savings for 15-30 minutes a year seems worth it to do it yourself.
p&wman wrote: Mon Feb 05, 2024 5:40 am 2. Is this a recommended portfolio? Could it be simpler? Originally, as per advice from forum members, I was a 3 fund investor (VTSAX, VTIAX, VBTLX).
The basic 3-fund portfolio is pretty diverse and can bet tailored for any desired AA, so it's a solid pick that I don't think could be simpler (I guess if you skipped international stocks it would reduce to a 2-fund portfolio). Regarding the complexity/simplicity of your current taxable holdings

VBTLX - Vanguard Total Bond Market Index
BND - Vanguard Total Bond Market Index (ETF version)
BNDX - Vanguard Total International Bond Index (ETF)
VTI - Vanguard Total US Stock Market Index
VXUS - Vanguard Total International Stock Index

The only simplification I see is that the 3-fund portfolio doesn't call for international bonds (BNDX) and VBTLX and BND are essentially the same fund, just different share classes (which seems like an odd choice for the VPAS folks to have split that). You could move VBTLX into BND or vice-versa to get down to 4 funds. You could move BNDX into whichever US bond index variant you picked to get down to 3 funds. Both moves are optional, so any of those choices (including doing nothing) is fine.
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p&wman
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by p&wman »

This is what I want to hear. I would be taking substantial losses in BND ($19k) and modest loss in BNDX ($7.5k) but going into VBTLX at the same time.
Would that be looked at as a lateral move with about the same upside in VBTLX only with the benefit of harvesting a loss.
Might be a question for my taxman next month..
What's you're opinion on this strategy.
Thank you
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p&wman
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by p&wman »

I'd like to point out one very important aspect with this group and the individuals that respond.
This is such a a great resource for people like my wife and myself.
Some people preceive growing or even just protecting the large sum of money we've accumulated as greed.
It's the furthest thing from that. It's a safety net; a form of protection protecting us from ever needing assistance, help, money or care from the very people that think that of us.
To the knowledgeable people on this site thank you for the service you provide.
bonesly
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by bonesly »

p&wman wrote: Tue Feb 06, 2024 7:15 pm I would be taking substantial losses in BND ($19k) and modest loss in BNDX ($7.5k) but going into VBTLX at the same time.
Would that be looked at as a lateral move with about the same upside in VBTLX only with the benefit of harvesting a loss.
I think you're asking if moving BND into VBTLX is a "lateral move... with the benefit of harvesting a loss." Yes, that's correct.

If you want to harvest the loss however, you'd have to wait 31 days after the sale of BND to laterally move back into VBTLX to avoid the Wash Sale Rule (which would disallow that $19K loss on your tax return if you immediately purchased VBTLX). That means the proceeds from BND are either sitting in a MMF for 31 days -OR- invested in very short-term treasuries (4-week T-Bills if you're conservative or VGSH if you don't mind some potential volatility with a 1.9-yr avg duration) until the 31 days are up and you can exchange into VBTLX.

If you don't want international bonds, then you're free to sell BNDX and immediately exchange the proceeds into VBTLX and there's no Wash Sale in play as those two funds are not "substantially identical." That locks in the harvested loss of $7.5K on that fund.

It seems likely the Fed will cut rates in March and/or April and when that happens the NAV on bond funds will likely go up proportionally to the average duration of the fund (which for BND/VBTLX is about 6.4 years, so -1% rate cut -> +6.4% NAV increase; -0.5% -> +3.2% NAV).
Topic Author
p&wman
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by p&wman »

I will be selling BNDX and harvesting the 7.5k loss which I will benefit from but undecided on moving into the etf BND or VBTLX.. Volatility doesn't bother me - they seem to offer the same long term.
If moving into BND I would eventually want to move VBTLX there also thus keeping all with in the etf structure but a much greater loss on the VBTLX fund. Waiting 31 days worries me.
Other option is to move BNDX into VBTLX and eventually move BND there also (much smaller position and less to fret with 31 day wait)
Does anyone see an advantage of the etf over mutual fund .
Am I over thinking this??
I wasn't happy about my former personal advisor putting me into two of the same when I stressed simplicity.
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happysteward
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by happysteward »

Hi OP,

Why specifically does waiting 31 days worry you? The bond funds shouldn’t be that volatile over that time period and the sweep fund at Vanguard pays a decent interest rate…
"How much money is enough?", John Rockefeller responded, "...just a little bit more."
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p&wman
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by p&wman »

I think I'm just being apprehensive about leaving VBTLX even if it's to go into basically the same. I've seen that symbol for so long in my portfolio I almost feel I'm being unfaithful.
I gotta get over this!!
I want someone to tell me BND is better for my personal needs and I don't think that's gonna happen.
The money market will probably pay a higher dividend for that month (I think)
Kendall
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by Kendall »

p&wman wrote: Tue Feb 06, 2024 7:15 pm I would be taking substantial losses in BND ($19k) and modest loss in BNDX ($7.5k) but going into VBTLX at the same time.
As others have pointed out, any tax loss will be disallowed to the extent that you purchase a "substantially identical" investment within 31 days before or after the tax loss sale. This includes dividend distributions. BND and VBTLX are share classes of the same fund, thus as "substantially identical" as it gets. If you want to tax loss harvest the BND or VBTLX, you'll have to wait 31 days before repurchasing either. Money market rates are quite high right now, and I personally would not worry about staying in a money market fund for 31 days.

Most people agree that ETF versus mutual fund is a personal choice without major consequence. Mutual fund purchases can be made any time day or night and will take effect on the next close of business day. ETF purchases happen as soon as someone accepts your order, and transactions outside of regular business hours could have large price mark-ups. Mutual funds settle transactions in 1 day, and ETFs settle transactions in 2 days. As far as I know, most brokerages credit you the proceeds of a sale if you are purchasing an equal or smaller amount with those funds prior to settlement.
bonesly
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by bonesly »

p&wman wrote: Thu Feb 08, 2024 6:29 am I've seen that symbol for so long in my portfolio I almost feel I'm being unfaithful.
Try not to be emotionally attached to investments. Have a rule-set and apply the rules without attachment (without such rules, people can hang on to losers "until they at least break even," but a bad company doesn't magically get better with time alone). BND and VBTLX are the same fund, just different share classes (like retail shares vs institutional shares). There's no betrayal in deciding to consolidate into one or the other; that's a simplification for your benefit; Vanguard doesn't care how many funds/ETFs you own.
p&wman wrote: Thu Feb 08, 2024 6:29 am I gotta get over this!!
Yes!
p&wman wrote: Thu Feb 08, 2024 6:29 am I want someone to tell me BND is better for my personal needs and I don't think that's gonna happen.
I think you're right; only you can determine if the benefit of simplification and a tax-loss to offset your gains and/or income on the 2024 tax return (for next year's filing) is worth it to you. Logically, it seems pretty obvious to be the right path, but people have feelings around their investments and as much as we might say "don't be an emotional investor," that's up to you to overcome or embrace.
p&wman wrote: Thu Feb 08, 2024 6:29 am The money market will probably pay a higher dividend for that month (I think)
BND's 30-day SEC yield is 4.37%
VMFXX's 7-day SEC yield is 5.26% (VMFXX is the default settlement fund, you could have changed this to some other MMF)
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p&wman
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by p&wman »

BNDX is now 0 in my taxable account. It will go into BND.
My and my wife's tax deferred accounts are all in BNDX. 100%.
Next plan of action is to eliminate BNDX in both accounts in favor of BND.
BNDX is what the advisor placed me in. I'm left wondering if there's a good reason for that since he is the cfp and he should/would know.
I realize diversification with international is standard practice with a robo platform like VPAS but I don't get it.
I want to extend my portfolio simplification plan to tax deferred accounts . Does this make sense or should I keep low yield and unstable international exposure in the tax deferred accounts??
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by Northern Flicker »

With a 7.5% state tax bracket, you may want to consider an intermediate treasury bond fund like VGIT or SCHR for the taxable account instead of BND for the exemption of interest from state taxes.

You could hold corporate bonds or corporate bonds plus mortgages in the tax-deferred accounts, holding an overall portfolio similar to BIV or BND but decomposing it into bond subclasses to maximize the state tax exemption in the taxable account.

Based on percentage weights of taxable and 401K space, could simplify and just hold BND in tax-deferred space, and VTI, VXUS, and VGIT in the taxable account. Could also move $20K/year from VGIT to Series I Savings Bonds to extend tax-deferred space.
bonesly
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by bonesly »

p&wman wrote: Fri Feb 09, 2024 12:00 am BNDX is what the advisor placed me in. I'm left wondering if there's a good reason for that since he is the cfp and he should/would know.
I realize diversification with international is standard practice with a robo platform like VPAS but I don't get it.
Regardless of his credentials, he's working for Vanguard's advisor service. There are policies he must follow, as long as they don't conflict with the ethics he signed onto as a CFP. Vanguard typically pushes 40% international exposure, in both stocks and bonds, because 40% of the World Market is outside the US... it's simply market-cap weighting, which is a good enough reason, although many US investors have "home country bias" and think they'll do better with little or no int'l exposure.
p&wman wrote: Fri Feb 09, 2024 12:00 am I want to extend my portfolio simplification plan to tax deferred accounts . Does this make sense or should I keep low yield and unstable international exposure in the tax deferred accounts??
I think before you can answer "does this make sense" you need to ask "what's my plan?'

You have a basic asset allocation decision to make: % in stocks & bonds = 100%; % of stocks in int'l & % of bonds in int'l = 100%. For the int'l part, it's already been stated that Vanguard defaults to 60% US & 40% int'l on both stocks & bonds (with VPAS, Target Date Funds, and Life Strategy Funds) as that reflects the World Market cap-weighting (see portfolio composition section of Vanguard Total World Stock Index - VT).

If you believe in int'l exposure, make it part of your investment plan/AA and stick to it. If you're just looking at US dominance over the last decade, that's chasing recent history hoping it will repeat for your entire investing time-horizon. All one need do is look further back and see that int'l will likely have periods of outperformance in the future, like it has in the past.
Image

Vanguard Whitepaper on Int'l Investing
Vanguard - The Case for Int'l Equity Allocations
Google Search on "The Case for International Investing"

Or you could skip the research and keep working with your crystal ball that says Int'l will never outperform again in my lifetime.
Northern Flicker
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by Northern Flicker »

Northern Flicker wrote: Fri Feb 09, 2024 12:06 am With a 7.5% state tax bracket, you may want to consider an intermediate treasury bond fund like VGIT or SCHR for the taxable account instead of BND for the exemption of interest from state taxes.

You could hold corporate bonds or corporate bonds plus mortgages in the tax-deferred accounts, holding an overall portfolio similar to BIV or BND but decomposing it into bond subclasses to maximize the state tax exemption in the taxable account.

Based on percentage weights of taxable and 401K space, could simplify and just hold BND in tax-deferred space, and VTI, VXUS, and VGIT in the taxable account. Could also move $20K/year from VGIT to Series I Savings Bonds to extend tax-deferred space.
I misread your original posting. You do not need to hold bonds in a taxable account. Would suggest holding just VTI and VXUS in the taxable account, and a bond fund and stocks funds in the 401K's in proportion that your overall allocation across all accounts is at your target.

Because VPAS is not making a recommendation that includes the 401K allocations, you did not have an optimal asset location placement. There is no reason to hold bonds in a taxable account with tour current account weightings snd desired asset allocation.
Outer Marker
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by Outer Marker »

Welcome back! You can totally do this yourself, and there's probably some opportunity for clean-up.

It is generally not optimal to hold bonds in taxable accounts because they are subject to income tax at your marginal rate. Odd that VPAS would do that. If you feel like posting your situation for review in the standard format, I'm sure you'll get some good suggestions. viewtopic.php?t=6212

Bonds recently had their worst year in 150+ years, so it is not surprising that you have some losses to harvest if they're in taxable. I would use either:
Vanguard Intermediate Term Bond Index https://investor.vanguard.com/investmen ... file/vbilx ,or
Vanguard Intermediate-Term Treasury Index Fund https://investor.vanguard.com/investmen ... file/vsigx

Either will work for tax loss harvesting purposes, and I prefer both of them to Total Bond for the long haul. Total Bond holds a lot of Mortgage Backed Securities, which have special characteristics I don't like. Intermediate Bond is similar in other respects, but eleminates these. I like the Treasury Index even better. It provides better protection in troubled times, which is what you have Bonds for - and corprate bonds are subject to many of the same pressures as equities during a major crash. Warren Buffet holds all his reserves in short treasuries.

Another thing you may want to look at is the % of internatoinal equities VPAS had you in. It is likely around 40%, which is on the high side of reasonable. 20% is more the standard default around here. Though, I must say, foreign equities are a value compared to U.S. these days, so it would be disappointing to make the switch just as long-suffering international is about to have its day. Anyway, something to consider.
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by dogagility »

p&wman wrote: Mon Feb 05, 2024 5:40 am Could it be simpler?
Yes, it could be simpler by investing in one fund... a Vanguard LifeStrategy Fund. https://investor.vanguard.com/investmen ... tegy-funds
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p&wman
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by p&wman »

I have thoroughly digested all replies. Took a while but I have the time. Thank you all for suggestions. Some really stand out.
I will post my situation as suggested by outer marker, his and hers 401k's included.
Most importantly I will post my needs from this portfolio. That always gives a good understanding of what best fits an individual.
This is something that a PAS can't really consider due to the fact that they have to follow guidelines that suit the average or normal individual. The fact that I grow my food, hunt my land, fix my cars/house, wear garage sale clothes, no golf travel or vacations and still make a very modest income doesn't come into play when the robo takes control.
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by Outer Marker »

As part of your portfolio review, I'd recommend taking the Vanguard asset allocation questionnaire. https://investor.vanguard.com/tools-cal ... stionnaire Takes only 5 minutes and, at least in my case, is remarkably accurate to what I've concluded on my own.

It's great that you have low draw requirements. On the one hand, you have less need to take risk. On the other hand, you have more ability to take risk. It's more a matter of how you are likely to react in the face of a major drawdown, and also if your objectives are to build wealth and leave a legacy. You could argue that if you've won the game, no need to keep playing. But, as my mom used to say, "you can never be too rich or too thin."
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by tibbitts »

p&wman wrote: Fri Feb 09, 2024 6:48 am The fact that I grow my food, hunt my land, fix my cars/house, wear garage sale clothes, no golf travel or vacations and still make a very modest income doesn't come into play when the robo takes control.
None of that matters. The objective is to invest to obtain the most after-tax money for whoever it's intended for, consistent with your risk tolerance. So for example what would matter is if you plan on gifting to charity, where you'd want to leave more in deferred vs. someone else who might want to do more Roth conversions.
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p&wman
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by p&wman »

Continuation... CURRENT FINANCIAL SITUATION

After reviewing suggestions I'm posting current investment situation.
RE: Vanguards AA questionnaire. Apparently I/we can stomach much risk. But why? As this unfolds many will see that for a couple who accumulated a great deal we have a very unstructured portfolio - to the point of being irrational.
Currently retired. He - 9 years, She - 12 years

Pensions. He 900 mo, She 600 mo
SSI. She 1720. mo
Rent inc. 950. mo
Debt no debt
Assets. primary residence , rental house, capital equipment

Taxable Portfolio
VMFXX. 76k. 3.4%
VBTLX. 173k 7.5%
BND. 103k 4.5%
VTI. 447k 19.4%
VXUS. 210k 9.1%
DNP. 167k. 7.2% duffs & Phelps income fund
PG. 14.5k .6%. Proctor and Gamble
RTX. 27.2k 1.2% Ratheon technology
Treasury 351k 15% 1 year. Renew 2/22
Local bank. 110k. 4.4%

Tax Deferred portfolio
BNDX. 70.1k 3.1%. His
BNDX. 16k .7% Hers

401k. - his
TDF. 62k 2.7%
Bond fund. 254k 11%.
RTX. 79k 3.4%

401k - her
American funds growth income fund 146. 7%.

Our Needs
Very little, modest house w/low taxes, self sustainable farm.
older cars with very low miles. No home or car repair expenses. Very low food expenses. No restaurants or formal vacations. The only legacy will be to the care giving association for when we age and modest annuities to our 2 children. No grandchildren
Sounds boring huh?? But it's what we love.
Hope I can get some suggestions for cleaning this up.
I'm not adverse to moving everything into vanguard
Last edited by p&wman on Sun Feb 11, 2024 1:17 pm, edited 1 time in total.
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dogagility
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by dogagility »

p&wman wrote: Sun Feb 11, 2024 2:41 am Taxable Portfolio
What is the cost basis for these investments... what are your capital gains amounts, and are these short-term or long-term gains?
Hope I can get some suggestions for cleaning this up.
Roll the 401k plans into your IRAs.

Identify an appropriate asset allocation. Implement this asset allocation across your entire portfolio; each type of investment (IRA, 401k; taxable) does not need to adhere to your overall asset allocation... consider it all as one bucket of money.

Sell the taxable investments while being mindful of taxes.
I'm not adverse to moving everything into vanguard
Good idea. At Vanguard, invest all of your portfolio in a LifeStrategy fund or in 2 - 3 total market index funds.

Simple :beer
Make sure you check out my list of certifications. The list is short, and there aren't any. - Eric 0. from SMA
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by Outer Marker »

OP, thanks for the additional information. Could you please edit the post to include the fund names - most of us don't have ticker symbols memorized. A few line breaks between the accounts would make it more readable.

What does this mean? Rent inc. 950. mo
Is that outgoing rent payments you make, or income you are collecting?

What did the Asset Allocation Questionaire return for you? Higher than the 60/40 you're at? Personally, I find 70/30 to be the sweet spot on the risk/reward curve, but everyone is different. That's you single most important investing decision.
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by HMSVictory »

p&wman wrote: Tue Feb 06, 2024 7:43 pm Some people preceive growing or even just protecting the large sum of money we've accumulated as greed.
It's the furthest thing from that. It's a safety net; a form of protection protecting us from ever needing assistance, help, money or care from the very people that think that of us.
You do not have to apologize for being wise and saving, investing and growing your wealth.

I would assume this has taken you many decades of discipline and wisdom to accomplish. Good for you. Whomever thinks this is greed is a fool.

You have it right - you are making sure your own house is in order. Envy is the thief of joy.

You do not need VPAS or digital advisor and can implement the 3 fund portfolio on your own.

You may want to setup a contingency plan that your spouse rolls the funds back to VPAS if you were to predecease them. Just a thought.
Stay the course!
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p&wman
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by p&wman »

In replying to the last few questions:

Rent inc. is rental income from a house we own

Vanguards AA gave me a 70/30 split. I'm leaning towards 40/60

Wife and I don't consider the discipline that was involved. We enjoyed the work and did a lot of it. Also it helped to be insomniacs. We both only ever needed 5 hrs of sleep or less. I worked 3rd shift mechanic, 7 hr shift. Then built houses during the day. She started work at 4:30 full time then 4-5 hrs at home. Moved every 3 - 4 years to grab the gain exemption and always had 3 rentals. Drove older cars that I repaired. Fixed our houses on the cheap myself and didn't eat red meat. Warren buffet would be proud. LOL.
I will edit my situation post now. Maybe make it a little easier to understand.

I believe in the 3 fund portfolio for taxable. Our 401's mirror that sentiment.

Before I move in the taxable accounts I'm going to talk to our accountant. For now I'm going to move VBTLX to VMFXX for 31 days then to BND.

I'll keep BNDX in both our vanguard Ira's. When I move my (his) 401 over I will ask for suggestions on funds that satisfy my goals.

My wife's 401 is staying put for now
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by Outer Marker »

p&wman wrote: Sun Feb 11, 2024 1:09 pm Vanguards AA gave me a 60/40 split. I'm leaning towards 40/60
I'd stay the course at 60/40 -- and consider at least 50/50 unless you are really risk adverse. One thing you could consider is using a less volatile bond fund with short term treasuries if you want less ups and downs. Nearly all of your long term expected return is going to come from equities, and bonds are there to help you sleep at night and provide a source of funds to spend from when equities are down. If you held 50% of your portfolio in fixed income, how many years of spend does that give you? I'm guessing 10+ years or more, especially with your social security and other income. Market downturns of more than 10 years are pretty rare, though not unheard of.
livesoft
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by livesoft »

bonesly wrote: Tue Feb 06, 2024 9:37 pmIf you want to harvest the loss however, you'd have to wait 31 days after the sale of BND to laterally move back into VBTLX to avoid the Wash Sale Rule (which would disallow that $19K loss on your tax return if you immediately purchased VBTLX).
The OP mentioned "non taxable", so the above will only apply to selling for a loss in a taxable account. But selling BND and BNDX in a taxable account and letting it sit in a money market fund for 31 days waiting to buy VBTLX is not a problem. For myself, I would avoid VBTLX in a taxable account even in the tax bracket of the OP.
Before I move in the taxable accounts I'm going to talk to our accountant. For now I'm going to move VBTLX to VMFXX for 31 days then to BND.
Yep.

Also, I suspect that you will be fine without any rebalancing going forward with a 60/40 forward.
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bonesly
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by bonesly »

livesoft wrote: Sun Feb 11, 2024 2:00 pm The OP mentioned "non taxable", so the above will only apply to selling for a loss in a taxable account.
The first post said "1.1M under advisement in taxable account. It's in the standard vanilla portfolio (VBTLX, BND, BNDX, VTI, VXUS)." so I thought that's the account the OP was talking about for potentially simplifying VBTLX/BND (duplicate) and BNDX (int'l bonds aren't part of the 3-Fund portfolio). The first post did mention "non taxable" (Roth?) 401Ks, but didn't identify holdings for those, so again it seemed the question was about the taxable account.

I see the OP posted a more complete picture, including 401K holdings, after the response of mine that you quoted. This statement from the OP, "I would be taking substantial losses in BND ($19k) and modest loss in BNDX ($7.5k) but going into VBTLX at the same time." could have referred to either taxable or non-taxable account, but without clarification I assumed the taxable account since it was the only identification of holdings to that point.
livesoft
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by livesoft »

^Yep, you are right.
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Topic Author
p&wman
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by p&wman »

:arrow:
Outer Marker wrote: Sun Feb 11, 2024 1:40 pm
p&wman wrote: Sun Feb 11, 2024 1:09 pm Vanguards AA gave me a 60/40 split. I'm leaning towards 40/60
I'd stay the course at 60/40 -- and consider at least 50/50 unless you are really risk adverse. One thing you could consider is using a less volatile bond fund with short term treasuries if you want less ups and downs. Nearly all of your long term expected return is going to come from equities, and bonds are there to help you sleep at night and provide a source of funds to spend from when equities are down. If you held 50% of your portfolio in fixed income, how many years of spend does that give you? I'm guessing 10+ years or more, especially with your social security and other income. Market downturns of more than 10 years are pretty rare, though not unheard of.
50/50 would be a good allocation; I'll be closer to that. As far as spending any of the investments - it's probably not going to happen. It's mainly for the purpose of quality care at home when that time comes.
Topic Author
p&wman
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Re: Cancelled VPAS. Should I stay the course for self management.

Post by p&wman »

bonesly wrote: Sun Feb 11, 2024 3:23 pm
livesoft wrote: Sun Feb 11, 2024 2:00 pm The OP mentioned "non taxable", so the above will only apply to selling for a loss in a taxable account.
The first post said "1.1M under advisement in taxable account. It's in the standard vanilla portfolio (VBTLX, BND, BNDX, VTI, VXUS)." so I thought that's the account the OP was talking about for potentially simplifying VBTLX/BND (duplicate) and BNDX (int'l bonds aren't part of the 3-Fund portfolio). The first post did mention "non taxable" (Roth?) 401Ks, but didn't identify holdings for those, so again it seemed the question was about the taxable account.

I see the OP posted a more complete picture, including 401K holdings, after the response of mine that you quoted. This statement from the OP, "I would be taking substantial losses in BND ($19k) and modest loss in BNDX ($7.5k) but going into VBTLX at the same time." could have referred to either taxable or non-taxable account, but without clarification I assumed the taxable account since it was the only identification of holdings to that point.
The losses would be in taxable account. 19k loss in VBTLX and 7.5k in BNDX which is now sold and in VMFXX.
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