My Portfolio-New Member

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Topic Author
GoCanes
Posts: 4
Joined: Sat Mar 02, 2024 11:32 am

My Portfolio-New Member

Post by GoCanes »

Hi-new here love this forum.
Emergency fund- 4 months
Debt-0
Tax filing/married filing joint
Tax rate -Federal, currently zero, no state
State- Florida
Age 68, wife 62
Desired allocation 60/40 stocks/ bonds with about 20% cash
Current portfolio-about 900k
I like to keep it simple. My plan was to use the 4% rule. I’m actually taking 3.8% now. I’m withdrawing $2,700 per month , balance to meet my expenses so take rest from social security.

Taxable account- 50% of total, 35% in Vanguard Wellington, 16% in Vanguard MM fund
Traditional IRA-28% in Janus balanced fund (held in my Vanguard acct )
Roth- 22% of total
About 13% in Vanguard Wellington, 8% in Vanguard MM fund
By my calculations, I have 24% in the MM fund and balance in Wellington. Which would be about 46% stocks 31% bonds
I plan on withdrawing from MM fund for another year until I reach about 20% cash, then from taxable account, than IRA , than Roth
I would like to maybe add 1-2 more funds or ETF’s to increase my % on the stock side. I do not want to be in International funds.
I am somewhat conservative. What does everyone think of my approach, strategy, etc. Any suggestions on funds. I would like to stay all in Vanguard.
Or should I use the bucket approach. Appreciate any suggestions
Thank you
Topic Author
GoCanes
Posts: 4
Joined: Sat Mar 02, 2024 11:32 am

Re: My Portfolio-New Member

Post by GoCanes »

Also, can someone run Monte Carlo to see how long money will last
Thanks
dorster
Posts: 316
Joined: Tue Aug 15, 2017 4:20 pm

Re: My Portfolio-New Member

Post by dorster »

GoCanes wrote: Tue Mar 26, 2024 12:02 pm Also, can someone run Monte Carlo to see how long money will last
Thanks
Portfolio Visualizer's Financial Goals should be able to do what you want (if I'm understanding your post correctly). Teach a person to fish (use portfolio visualizer) and they'll eat (run simulations) for a lifetime.

Welcome to the forum.
steadyosmosis
Posts: 1051
Joined: Mon Dec 26, 2022 11:45 am

Re: My Portfolio-New Member

Post by steadyosmosis »

GoCanes wrote: Tue Mar 26, 2024 11:55 am ... What does everyone think of my approach, strategy, etc.
Numerous different approaches are acceptable.
I do mine this way.

My simple, self-managed, low-cost, tax-efficient, basically-3-fund portfolio is held mainly at Schwab.
Maximum expense ratio for any single fund/ETF in the portfolio is 0.07% (SGOV).

Taxable brokerage account (Schwab): 100% VTI (Vanguard Total Stock Market ETF).
Roth IRA (Schwab): 64% SCHB (Schwab US Broad Market ETF) and 36% SCHF (Schwab International Index ETF).
Traditional (rollover) IRA (Schwab): 58% 30yr TIPS ladder, 21% BND (Vanguard Total Bond Market ETF), 21% SGOV (iShares 0-3 Month Treasury Bond ETF).
HSA (Optum Bank): 100% VITSX (Vanguard Total Stock Market Index Fund).
Checking account (large national bank): few hundred dollars to pay monthly bills.
Summary below.
Age<59.5. Early-retired. AA ~55/45. Taxable account, Roth IRA, HSA...all are 100% equities. 100% of fixed income is in tIRA. I spend from taxable account and rebalance in tIRA.
Helodriver
Posts: 81
Joined: Tue Feb 10, 2015 6:26 pm

Re: My Portfolio-New Member

Post by Helodriver »

Welcome to the forum.

Depending on which Janus balanced fund share class, the expense ratios vary from 1.63% to .82% with several share classes in between all of which are high expenses in my opinion.
If you have a stated portfolio of $900,000 with 28% in a Janus balanced fund thats approx $252,000 in Janus.

If JABCX 1.63% of $252,000 = $4,100 in fees per year.
Or JABAX .82% of $252,000 = $2,066 in fees per year

Since you stated its within a IRA already held at Vanguard you could sell your Janus and buy the Vanguard balanced fund
VBIAX ER .07% of $252,000 =$176 in fees per year

A cursory glance shows similar holdings in both balanced funds.

Since it'd be within your IRA this shouldn't be a taxable event.

Good luck.
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22twain
Posts: 4047
Joined: Thu May 10, 2012 5:42 pm

Re: My Portfolio-New Member

Post by 22twain »

GoCanes wrote: Tue Mar 26, 2024 12:02 pm Also, can someone run Monte Carlo to see how long money will last
Thanks
Another tool you can try is http://www.firecalc.com/ .
Meet my pet, Peeve, who loves to convert non-acronyms into acronyms: FED, ROTH, CASH, IVY, ...
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ruralavalon
Posts: 26452
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: My Portfolio-New Member

Post by ruralavalon »

Welcome to the forum :D .

GoCanes wrote: Tue Mar 26, 2024 11:55 am Hi-new here love this forum.
Emergency fund- 4 months
Debt-0
Tax filing/married filing joint
Tax rate -Federal, currently zero, no state
State- Florida
Age 68, wife 62
Desired allocation 60/40 stocks/ bonds with about 20% cash
Current portfolio-about 900k
I like to keep it simple. My plan was to use the 4% rule. I’m actually taking 3.8% now. I’m withdrawing $2,700 per month , balance to meet my expenses so take rest from social security.

Taxable account- 50% of total, 35% in Vanguard Wellington, 16% in Vanguard MM fund
Traditional IRA-28% in Janus balanced fund (held in my Vanguard acct )
I suggest dropping Janus Henderson Balanced Fund. It has a very high expense ratio. Which share class do you use, and what is the ticker symbol?

You can consider using bond funds and a money market fund for your fixed income allocation, holding them in your traditional IRA.



GoCanes wrote: Tue Mar 26, 2024 11:55 amRoth- 22% of total
About 13% in Vanguard Wellington, 8% in Vanguard MM fund
By my calculations, I have 24% in the MM fund and balance in Wellington. Which would be about 46% stocks 31% bonds
You can consider using just a stock fund in your Roth IRA.

GoCanes wrote: Tue Mar 26, 2024 11:55 amI plan on withdrawing from MM fund for another year until I reach about 20% cash, then from taxable account, than IRA , than Roth
In my opinion that is a reasonable sequence for withdrawals in retirement.

GoCanes wrote: Tue Mar 26, 2024 11:55 amI would like to maybe add 1-2 more funds or ETF’s to increase my % on the stock side. I do not want to be in International funds.
For investing in U.S. stocks I suggest Vanguard Total Stock Mkt Idx Adm (VTSAX), the ETF share class is VTI.


GoCanes wrote: Tue Mar 26, 2024 11:55 amI am somewhat conservative. What does everyone think of my approach, strategy, etc. Any suggestions on funds. I would like to stay all in Vanguard.
Or should I use the bucket approach. Appreciate any suggestions
Thank you
I do NOT suggest a bucket strategy. In my opinion that's an unnecessary complication and a distraction.

MarketWatch, Do bucket strategies stand the test of time?



GoCanes wrote: Tue Mar 26, 2024 12:02 pm Also, can someone run Monte Carlo to see how long money will last
Thanks
Here are calculators you can use to assess the range of possible outcomes:
1) https://firecalc.com/;
2) https://robberger.com/tools/optimal-retirement-planner/; and
3) http://retirementoptimizer.com/.
Last edited by ruralavalon on Tue Mar 26, 2024 3:05 pm, edited 6 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
livesoft
Posts: 86186
Joined: Thu Mar 01, 2007 7:00 pm

Re: My Portfolio-New Member

Post by livesoft »

While you do not pay Federal and state income taxes now, your portfolio is not particularly tax efficient. You may be able to rearrange asset location to be more tax efficient without a tax cost.

Also you may be able to do Roth conversions at a tax rate of zero.

I would not (and do not) have any money market funds in taxable nor bonds funds in taxable nor balanced funds in taxable. They are all in tax-advantaged accounts instead. In taxable I have only broad-market, low-expense-ratio, passively-managed stock index funds such as Total Stock Market and Developed international Stock Market.

If you are worried about "what happens when stocks drop and I want to access cash and not sell my equities funds" then please read:
https://www.bogleheads.org/wiki/Placing ... ed_account
Wiki This signature message sponsored by sscritic: Learn to fish.
Topic Author
GoCanes
Posts: 4
Joined: Sat Mar 02, 2024 11:32 am

Re: My Portfolio-New Member

Post by GoCanes »

I read about the 3 fund portfolio. I gave a couple of questions:
1- my goal is to keep about 20% in a MMF to be able to sleep and be somewhat conservative. From reading about everyone’s portfolio, it seems no one keeps money in cash. Why? I am 68 and retired.
2-From what I can tell I am basically in a 2 fund portfolio, with Wellington being a good actively managed fund. I have in my tira, Janus balanced and in my Roth some MMF. Should I move some of the cash and Janus to the total market fund or is my asset allocation really bad.
I would appreciate some suggestions
Thanks
bonesly
Posts: 1210
Joined: Mon Dec 18, 2017 9:28 pm
Location: WA

Re: My Portfolio-New Member

Post by bonesly »

GoCanes wrote: Tue Mar 26, 2024 11:55 am My plan was to use the 4% rule. I’m actually taking 3.8% now. I’m withdrawing $2,700 per month , balance to meet my expenses so take rest from social security.
...
can someone run Monte Carlo to see how long money will last
The Trinity Study already shows that a 4% withdrawal rate has >90% chance of success (not running out early) over a 30-year span. $2,700/mo x 12 mo = $32,400/yr which is actually 3.6% of $900,000 (a little lower than 3.8%, unless your $2,700 is after tax withholding?). A 3.6% withdrawal rate in year-1, with +3%/yr increases for inflation every year following, has >90% chance of success over a 37-year span.

I ran that using my own Excel Monte Carlo (linked below), but a a similar analysis from Portfolio Visualizer is HERE.

Data and Models I use for Monte Carlo:
NYU Data Set 1928-2017 with Model Fits
Accumulation Monte Carlo
Withdrawal Monte Carlo

You'll need a MS Excel license; download to your local machine and enable macros (required for the 1,000 random trials and results aggregation).

I'm using my own model as I like to know what's under the hood, but there are other models I like that have public facing website interfaces:
Portfolio Visualizer's Monte Carlo (with distribution modeling rather than the historical returns array),
FiCalc (easy interface, but only historical data array),
TPAW (historical data, but adjusted to avoid limitations of a random index into the historical array),
and many others here seem to like FireCalc (also historical data, but lots more inputs to tailor to your situation).
- - - - -
GoCanes wrote: Tue Mar 26, 2024 11:55 am Taxable account- 50% of total, 35% in Vanguard Wellington, 16% in Vanguard MM fund
Wellington holds bonds, and bonds in a taxable account isn't tax-efficient. Aside from near-term cash for 1-3 years of expenses, your taxable account should be all stocks to be tax-efficient (like Total US Stock Market - VTSAX). It's likely huge tax-cost to switch Welling to Total Stock, and while it would be a more tax-efficient setup, it might not be worth the tax-bill to swap it.
GoCanes wrote: Tue Mar 26, 2024 11:55 am Traditional IRA-28% in Janus balanced fund (held in my Vanguard acct )
This account is probably where all your bonds should go, plus you'll need some in the Roth as all the bonds won't fit here (40% > 28%). I'd swap Janus for Vanguard Total Bond Market (VBTLX) or Vanguard Intermediate Treasury Fund (VFITX).
GoCanes wrote: Tue Mar 26, 2024 11:55 am Roth- 22% of total
About 13% in Vanguard Wellington, 8% in Vanguard MM fund
Holding bonds and/or a MMF in a Roth (tax-free) account isn't optimal placement. If you swap your 28% in Traditional IRA to all bonds you still need 12% in bonds in the Roth to get to 40% overall (again VBTLX or VFTIX or similar). The remaining 10% in the Roth should be stocks (Total US Stock - VTSAX).
- - - - -
Ideally, per Tax-Efficient Fund Placement, ALL of your bonds for the total portfolio would be in your Traditional IRA, but you need 40% and only have room for 28%, so some need to go in Roth. However, with the exception of 1-3 years cash in a MMF, all the rest of Taxable and Roth should be stocks.

The swaps I suggested are just suggestions. If you're comfortable with the active management of Wellington and that tax-drag of bonds and excess cash in taxable (and the loss of tax-free growth with bonds/cash in a Roth compared to all stocks in a Roth), then do what works. If you want to optimize, consider the suggestions given and ask questions if you don't understand why it's a more tax-efficient portfolio structure.
GoCanes wrote: Tue Mar 26, 2024 11:55 am Or should I use the bucket approach.
A bucket approach doesn't provide any improvement to risk-adjusted return, but if it helps you sleep at night (you mentioned being very conservative), then that's fine.
Topic Author
GoCanes
Posts: 4
Joined: Sat Mar 02, 2024 11:32 am

Re: My Portfolio-New Member

Post by GoCanes »

Thanks for all your feedback. A few questions:
1- if I do what you suggest, I’m still stuck with majority of assets in Wellington in my taxable. Since Wellington is about 60/40, I would end up with about 31% in stocks, 54% bonds and 15% MMF
2- I would probably like to be reverse on stocks/ bonds.
3- maybe I can start withdrawing from Wellington instead of MMF to eventually get to that % but that would take a few years
Or should maybe move mine stock fund in tira or Roth to get to my %
4- In my 60/40 scenario, I haven’t included MMF. Should I? Since I want to keep around 20% or so in there. Like I said previously a 35/22/14 AA
5- why doesn’t anyone using the 3 fund approach have any cash equivalents in their portfolio. I assume some people want to somewhat conservative. I don’t get this part??
6- One more point; Since I need to keep Wellington in my taxable, and would like to keep some cash, does this screw up the 3 or 4 fund portfolio of total stock total bond and International ( which I want no
Part of) will my money still
Last into my 90’s
7- what has the pre tax return been using a 60/40/10 split stocks bonds intl been over last 20 years and what would m AA in # 4 would have been

Please advise on any other scenarios on above

Also, when you calculated using Monte Carlo on my 4%, did you take my allocations into account. I would like to know if my allocation will last to a reasonable age
Thanks for your help
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ruralavalon
Posts: 26452
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: My Portfolio-New Member

Post by ruralavalon »

GoCanes wrote: Tue Mar 26, 2024 11:55 amDesired allocation 60/40 stocks/ bonds with about 20% cash
Current portfolio-about 900k
That asset allocation totals 120%. The total must equal 100%

Do you mean the 20% cash to be a part of the 40% bond (fixed income) allocation? If so then that would mean a desired asset allocation of 60% stocks, 20% bonds, 20% cash, total = 100%.

Or do you mean that your desired asset allocation is 40% stocks, 40% bonds, and 20% cash? Total = 100%,

GoCanes wrote: Wed Apr 03, 2024 3:14 pm4- In my 60/40 scenario, I haven’t included MMF. Should I? Since I want to keep around 20% or so in there. Like I said previously a 35/22/14 AA
. . . . .
7- what has the pre tax return been using a 60/40/10 split stocks bonds intl been over last 20 years and what would m AA in # 4 would have been
I can't understand this question as it supposes a portfolio allocation total of 71%, or 110%. The asset allocation must total 100%.


Over the last 20 years a portfolio of 60% stocks, 20% bonds, 20% cash has had a Compound Annual Growth Rate (CAGR) of 7.37%.

Over the last 20 years a portfolio of 40% stocks, 40% bonds, 20% cash has had a Compound Annual Growth Rate (CAGR) of 5.94%.

Portfolio Visualizer, 2004-2024


GoCanes wrote: Wed Apr 03, 2024 3:14 pm6- One more point; Since I need to keep Wellington in my taxable, and would like to keep some cash, does this screw up the 3 or 4 fund portfolio of total stock total bond and International ( which I want no
Part of) will my money still
Last into my 90’s
Here are calculators you can use to assess the range of possible outcomes:
1) https://firecalc.com/;
2) https://robberger.com/tools/optimal-retirement-planner/; and
3) http://retirementoptimizer.com/.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
yogesh
Posts: 718
Joined: Thu Oct 11, 2012 6:20 pm

Re: My Portfolio-New Member

Post by yogesh »

GoCanes wrote: Tue Mar 26, 2024 11:55 am Hi-new here love this forum.
Emergency fund- 4 months
Debt-0
Tax filing/married filing joint
Tax rate -Federal, currently zero, no state
State- Florida
Age 68, wife 62
Desired allocation 60/40 stocks/ bonds with about 20% cash
Current portfolio-about 900k
I like to keep it simple. My plan was to use the 4% rule. I’m actually taking 3.8% now. I’m withdrawing $2,700 per month , balance to meet my expenses so take rest from social security.

Taxable account- 50% of total, 35% in Vanguard Wellington, 16% in Vanguard MM fund
Traditional IRA-28% in Janus balanced fund (held in my Vanguard acct )
Roth- 22% of total
About 13% in Vanguard Wellington, 8% in Vanguard MM fund
By my calculations, I have 24% in the MM fund and balance in Wellington. Which would be about 46% stocks 31% bonds
I plan on withdrawing from MM fund for another year until I reach about 20% cash, then from taxable account, than IRA , than Roth
I would like to maybe add 1-2 more funds or ETF’s to increase my % on the stock side. I do not want to be in International funds.
I am somewhat conservative. What does everyone think of my approach, strategy, etc. Any suggestions on funds. I would like to stay all in Vanguard.
Or should I use the bucket approach. Appreciate any suggestions
Thank you
Taxable account- 50%
30% VTI
20% MM

Traditional IRA-28%
28% BND

Roth- 22%
22% VOO
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040
bonesly
Posts: 1210
Joined: Mon Dec 18, 2017 9:28 pm
Location: WA

Re: My Portfolio-New Member

Post by bonesly »

GoCanes wrote: Wed Apr 03, 2024 3:14 pm 5- why doesn’t anyone using the 3 fund approach have any cash equivalents in their portfolio. I assume some people want to somewhat conservative. I don’t get this part??
I'm sure there are plenty of Bogleheads here that keep at least a year's expenses (if not more, perhaps up to three years) in cash, it's probably just not mentioned in their portfolio because it's safe money to provide for expenses (and maybe helps avoid drawing from the stock/bond portfolio if one or both asset classes are down significantly).

I'm not holding any cash other than an emergency fund; I'm drawing proportionally from funds in my tax-deferred accounts the same way I contributed during my working years (just in reverse). I don't see a need for a big cash position or a bucket strategy, but I was aggressive when I was younger and I suspect many would say I'm aggressive now. If a big cash position or bucket strategy helps you sleep at night, by all means do that!
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ruralavalon
Posts: 26452
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: My Portfolio-New Member

Post by ruralavalon »

GoCanes wrote: Wed Apr 03, 2024 3:14 pm 5- why doesn’t anyone using the 3 fund approach have any cash equivalents in their portfolio. I assume some people want to somewhat conservative. I don’t get this part??
Some do have a large cash position as a part of their fixed income allocation.

Some have a substantial (year or more) emergency fund apart from their investment portfolio.

I do neither. I do not have a cash allocation or a dedicated emergency fund.

Age 78, retired. Social Security benefits plus Required Minimum Distributions (RMDs) from my rollover IRA more than cover my spending needs. I don't have any cash other than wherever happens to be in my bank checking account, currently that's around 6 months of living expenses net of Social Security.

I periodically reinvest the excess cash from my bank checking account in a taxable brokerage account.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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