Author Topic: Making Already Opened Accounts Match Wanted AA, Is This Right?  (Read 1944 times)

engineerjourney

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Making Already Opened Accounts Match Wanted AA, Is This Right?
« on: November 06, 2013, 04:36:57 PM »
Want:
10% Cash (extra to invest when there is a downturn, percentage will decrease when total investment amount is higher, not our emergency fund, will help fix AA in the future)
15% Bonds
20% International Stocks
55% US Stocks
I am completely disregarding my real estate holdings from my allocation as I donít consider them investments per say, they are expenses that I enjoy and hope the sale of will be beneficial in the future.

Current status of accounts:
Cash
$24,000

Roths
$11,000 US Stocks + $11,000 US Stocks (on Jan 2014, currently in cash, earmarked to get admiral shares)

401Ks
$15,325 2050 Target (63% US Stock, 27% Int Stock, 10% Bonds)  ER 0.12
$4,900 Fixed Income Fund  ER 0.36 <-- Need to get rid of? Should probably stick with the Domestic Bond Index for my bonds due to lower ER
$4,800 Domestic Bond Index ER 0.08
$3,650 2035 Target (60% US Stock, 25% Int Stock, 13% Bonds)  ER 0.12
$3,475 SM/MID CAP EQ Index ER 0.06
$2,375 S&P 500 Equity Index  ER 0.04
$2,325 Large Cap Eq Fund ER 0.51  <-- Need to get rid of
$2,200 Company Stock  ER N/A <-- Need to get rid of
= $39,050

Taxable
Not opened, $0

Currently at:
$85,050
28% Cash
14% Bonds
6% International Stock
52% US Stock
Not quite right

So I will go with this:
Cash: $8,500
Roths: $22,000 Vanguard Total Stock Market, in less than two months
Taxable: $15,510 International Stocks, probably VFWIX
401K:  $12,750 in Bonds -> Domestic Bond Index ER 0.08
            $1,500 in International -> International Equity Index with ER 0.14
            $24,790 in US Stocks -> $10000 SM/MID CAP EQ Index ER 0.06
                                                   $14790 S&P 500 Equity Index  ER 0.04

Which gets me to my AA goal.  Will sell and move around in the 401K to get this. 

Does anything look wrong?  Anyone else have recommendations for International Stock fund in taxable account?
Thanks!

Siamond

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Re: Making Already Opened Accounts Match Wanted AA, Is This Right?
« Reply #1 on: November 07, 2013, 11:04:33 PM »
Anyone else have recommendations for International Stock fund in taxable account?

Personally, my AA calls for separating Developed Int'l market from Emerging markets, and I use VTMGX (VEA is the ETF version) and VWO, both on a taxable account. 0.10% and 0.18% expense ratios, respectively.

For a reason I cannot understand, VFWIX has a pretty high expense ratio for a Vanguard Index fund.

Siamond

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Re: Making Already Opened Accounts Match Wanted AA, Is This Right?
« Reply #2 on: November 07, 2013, 11:09:43 PM »
10% Cash (extra to invest when there is a downturn, percentage will decrease when total investment amount is higher, not our emergency fund, will help fix AA in the future)

To each their own investment approach, but... every year for the rest of your life, those 10% of cash will stay idle, slowly losing money to inflation. Seems to me you're trying to do a mild form of market timing. Which just never really works (to put it nicely). Instead, you could invest this 1/10th of your portfolio, and get a fairly guaranteed return on the long run. I don't know... Think about it... Do some math... Just my 2 cents (and 10% of you hard won savings!!).

capital

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Re: Making Already Opened Accounts Match Wanted AA, Is This Right?
« Reply #3 on: November 09, 2013, 12:38:32 PM »
Vanguard's target-date funds use VGTSX, which seems to be very similar to VFWIX except with a .12% lower expense ratio.

the fixer

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Re: Making Already Opened Accounts Match Wanted AA, Is This Right?
« Reply #4 on: November 09, 2013, 01:12:44 PM »
I also prefer using VGTSX (aka VTIAX for admiral shares), but otherwise it looks good to me. Your holdings in each account appear to be minimizing expenses: you have one tax-advantaged account that holds almost everything so you can rebalance easily, and as many of your Vanguard holdings as possible have balances over $10k to qualify you for admiral shares. Your holdings are also tax efficient. Now pull the trigger.

You might want to think about ways to maximize returns on your cash balance. For instance, open a rewards checking account. thefinancebuff.com has done several posts this year on strategies to get 3-6% returns on cash in exchange for jumping through various hoops.