This is just for 1 of my parents and just 1 account but all money for parent will go to 1 Vanguard account, looking for idea on asset allocation and which bond fund or bonds to buy.
63 y.o retired looking to rebalance portfolio after decades of having never invested in bonds. After giving them advice but not really picking anything for them, this is what it is now after a month.
14% in VFIAX ER 0.05
29% in VBLTX (long term bond index) ER 0.20
14% in VLGSX (long term gov't bond index admiral) ER 0.12
14.6% in VWESX (long-term investment grade) ER 0.22
29% in Vanguard money market ER 0.16, still deciding where to go.
So total right now is 86% bonds, 14% stock, obviously very conservative.
I advised them to look long term though they are retired at 63 and 61 so not sure how much long-term is left. They are pretty healthy thankfully. When I said long-term I think they interpreted it long-term bond index/gov't bond index/investment grade shares, not long-term view. They're doing well with it surprisingly compared to others but it's not diversified right?
I was thinking of combining all bond funds into VBTLX and be done with it. My concern was the long-term bond/corporate bond holdings which reading boglehead actually recommends only short or intermediate term. Is this a good idea?
I was also thinking of buying them I-bonds from TreasuryDirect to just protect the money from inflation. I'm not sure how to invest in TIPS but is TIPS already in the bond funds they would hold?
Note: They are NOT PLANNING to withdraw from this account as they already have decent pension and still haven't touched social security. It's more just a nest egg to keep intact for emergencies.
Since they already have VFIAX I thought about adding VEXAX but it's ER is a bit higher, maybe just do only VTSAX instead?
For international I was thinking VGTSX, not sure about international bonds though. Probably add a dividend and REITs fund too?
And are bonds still the way to go? There was a debate on Boglehead wiki on whether bonds are worth it anymore with soon to rise interest rates. But are bonds safer in the sense that they are less volatile and suffer less "heavy" damage than stocks?
The money is coming from their 401K. Is there any point to keeping a 401K if you're not working or can contribute to it anymore? Can you contribute money from other outside sources to a 401K or do you have to have a job? I was thinking of opening a Roth IRA for them but I don't think they can, there is some restriction (not income related).
Thanks!