Author Topic: Asset Allocation  (Read 2543 times)

southboundfishing

  • 5 O'Clock Shadow
  • *
  • Posts: 1
Asset Allocation
« on: March 11, 2017, 06:48:24 PM »
Need some advice on putting together a simplified portfolio.

40 yrs old
$1,400,000 to invest

I am thinking a 85/15(vti/fbnd) mix. Want to get suggestions/advice.

thanks in advance.

Frankies Girl

  • Magnum Stache
  • ******
  • Posts: 2905
  • Age: 81
  • Location: The laboratory
  • Typical Ghoul Next Door
Re: Asset Allocation
« Reply #1 on: March 11, 2017, 08:27:58 PM »
We can't tell you what you should be comfortable with; that's on you to figure out.

And if you're not sure why you should be holding what funds, then you need to do more reading, research and decide what works best for your personal goals, time line, and comfort levels.

Start here: http://jlcollinsnh.com/stock-series/ with either Mr. Collins' book or read through the series on his website. Then head over to Bogleheads site, and read about how to write an investment policy statement, and figure out your asset allocation. Do some research on lazy portfolios there as well.

SwedishMoustache

  • 5 O'Clock Shadow
  • *
  • Posts: 27
Re: Asset Allocation
« Reply #2 on: March 12, 2017, 03:10:21 AM »
One of the most fun things in becoming an investor and aiming for/reaching FIRE is of course doing the research to understand the market! As above poster suggested, do some research. I think you'll find it fun!

Since most people here are primarily index investors, i as a dividend investor can't give you much advice beyond - do your research prior to investing, like with anything else.

Good luck!

Villanelle

  • Magnum Stache
  • ******
  • Posts: 2531
Re: Asset Allocation
« Reply #3 on: March 12, 2017, 03:22:27 AM »
How many years until projected retirement?  Are you comfortable with a 4% withdraw or are you planning for higher or lower than that?   Will you have any other income streams (real estate, pension...)?

I would look in to the lazy portfolios above and choose one of those, or at least use it as a starting point.  Or I'd select a Vanguard lifestyle fund that worked for my retirement plans.  (The one targeted at the year you plan on retiring isn't always best.  For example, if you have an inflation adjusted pension, that serves some of the same purpose as bonds, you might be more aggressive, meaning picking a fund with a later date than your actual FIRE plans.)

tiberius

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Re: Asset Allocation
« Reply #4 on: March 12, 2017, 01:24:11 PM »
Try various asset allocations and their historical outcomes using:
portfoliovisualizer.com and portfoliocharts.com

I think 85% in the stock market is a very brave thing to do at present but not necessarily wise.

MustacheAndaHalf

  • Handlebar Stache
  • *****
  • Posts: 1691
Re: Asset Allocation
« Reply #5 on: March 12, 2017, 07:15:28 PM »
Definitely do some book reading, like A Random Walk Down Wall Street, if you haven't already.  You want to get some data that backs up what you'll do, so you can resist pressure to change when things are bad.  People never call it "sell low, buy high" but rather they felt like they couldn't hold on any longer (the low).  Data will provide additional confidence, especially data that goes back decades.

Is all $1.4M in taxable?  I'll assume so until you clarify.  With taxable investing, stock yields are ~2% and bond interest ~2%.  So you're looking at $28k/year in dividends and income.  It might be better to either put the bond funds in tax deferred, or use tax-exempt bond funds.  That way the few thousand in bond interest won't be at ordinary income tax rates.

Buying VTI (Vanguard Total Stock Market ETF) is tax efficient.  It doesn't need to buy or sell since it's market weighted.  It just provides stock dividends, which are taxed at qualified dividend rates.  When you wait years and sell, the gains are also taxed at better rates (long-term capital gains tax).

Have you considered adding international to your portfolio?  Maybe 20% international to start, and more if you're comfortable?  Some international diversification is the main thing missing from a pure US portfolio.

It will help to know how much of your portfolio is in tax deferred (Roth IRA, 401(k) plan, etc) versus taxable.

bizkitgto

  • 5 O'Clock Shadow
  • *
  • Posts: 3
Re: Asset Allocation
« Reply #6 on: March 14, 2017, 05:27:32 PM »
Need some advice on putting together a simplified portfolio.

40 yrs old
$1,400,000 to invest

I am thinking a 85/15(vti/fbnd) mix. Want to get suggestions/advice.

thanks in advance.


You may only need to invest in the all-star Vanguard Wellington Fund: $VWELX

My asset allocation is as follows:

25% bonds - $BND (I am considering adding some $TIP, but have none yet)
50% US - $VTI
25% World - $VXUS




SeattleCPA

  • Handlebar Stache
  • *****
  • Posts: 1324
  • Age: 59
  • Location: Redmond, WA
    • Evergreen Small Business
Re: Asset Allocation
« Reply #7 on: March 16, 2017, 07:09:13 AM »
Try various asset allocations and their historical outcomes using:
portfoliovisualizer.com and portfoliocharts.com

I think 85% in the stock market is a very brave thing to do at present but not necessarily wise.

+1

frugledoc

  • Pencil Stache
  • ****
  • Posts: 625
Re: Asset Allocation
« Reply #8 on: March 16, 2017, 09:23:52 AM »
Try various asset allocations and their historical outcomes using:
portfoliovisualizer.com and portfoliocharts.com

I think 85% in the stock market is a very brave thing to do at present but not necessarily wise.

+1

-1. There is nothing unwise about 85% upwards.  It's not brave either unless you are unable to stomach a 30-40% drawdown at a couple of points over the next several decades.