Author Topic: Allocations after a rollover  (Read 374 times)

OzzieandHarriet

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Allocations after a rollover
« on: June 04, 2018, 07:59:19 AM »
I have rolled my 401k/403b from my former employer into a Vanguard IRA, and now I need to choose funds. I am 60, working part time and self-employed (earning <$10k/year), but not drawing on savings yet because my husband is still working full time. This is what I was thinking of doing for a mix of 60% stocks/40% bonds:

50% Total World Stock ETF (VT)
10% Total Stock ETF (VTI)
40% Short-Term Corporate Bonds (VCSH, or VSCSX Admiral)

I also have Roth and traditional IRAs with Vanguard (both in Life Strategy Moderate Growth, VSMGX). Would it make sense to combine what I have in the traditional IRA (it's only about $15k) with this rollover money?

Any comments or suggestions? TIA

MustacheAndaHalf

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Re: Allocations after a rollover
« Reply #1 on: June 04, 2018, 09:55:31 AM »
Vanguard Total World is half US stock, but has the same expense ratio as a Total International fund.  You already want a slightly custom allocation, so I'd just go with two ETFs:

36% Vanguard Total Stock market ETF (VTI), 0.04% expense
24% Vanguard Total International ETF (VXUS), 0.11% expense
40% bond fund of your choice

Note corporate bonds are lower quality than government bonds, so during a crisis they might not be as good a counter balance to stocks.  When stocks panic the market, people buy US Treasuries - the safest bonds.  They don't flock to short-term corporate bonds.

OzzieandHarriet

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Re: Allocations after a rollover
« Reply #2 on: June 05, 2018, 10:24:42 AM »
So reading more about ETFs ... the part that concerns me is having to deal with the dividends because they are not automatically reinvested. I really want to set it and forget it, which has worked fine for me thus far. Now I'm thinking I should just go with mutual funds because they do that well.

Any opinions about this?

OzzieandHarriet

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Re: Allocations after a rollover
« Reply #3 on: June 05, 2018, 10:34:43 AM »
This paper covers everything but my concern:

https://personal.vanguard.com/pdf/ISGCETF.pdf

OzzieandHarriet

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Re: Allocations after a rollover
« Reply #4 on: June 05, 2018, 01:39:09 PM »
I'm considering now just putting it all into VSMGX (Vanguard Life Strategy Moderate Growth Fund).

OzzieandHarriet

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Re: Allocations after a rollover
« Reply #5 on: June 07, 2018, 10:59:08 PM »
I just did this ... and immediately lost a few hundred bucks when the share price went down 2 cents. Ah well, that's how this works.