Author Topic: Need Help Simplifying My Investments  (Read 2768 times)

Truthseeker

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Need Help Simplifying My Investments
« on: December 03, 2016, 05:39:55 PM »
Hoping to get help from some investors far more knowledgeable than myself. My wife and I have accounts with WealthFront, Personal Capital, separate Vanguard accounts, and separate Fidelity accounts. I was hoping transferring my Government TSP 401k to Personal Capital (30k) would allow me to get some free financial advice, but they basically want to manage all my funds to give advice on anything they don't manage (makes sense I suppose) and keep saying "that's really a question for an accountant" whenever I try to get creative. Anyways, I'm trying to consolidate all of this into a diversified group of index funds with low expense ratios that maximize my potential returns.

Investing Philosophy: More of a Buffett philosophy - I don't want to try and pick individual stocks or do a lot of trading, I just want to keep pumping money into retirement accounts, pump even more in when the market dips, and let it ride for many years with low expenses.

Current Situation:
- My wife has a 401k account with Fidelity so that is locked
- I just opened a solo 401k account with Fidelity (but haven't contributed yet)
- All other accounts can be moved
- Maxing out my wife's 401k, my own employee and employer contributions for solo 401k, paying down mortgage in next 5 years, and have some left over for taxable investments

Current Portfolio:
Vanguard Traditional IRA
    Vanguard Intermediate-Term Investment-Grade Fund Investor Shares
    Vanguard Growth Index Fund Admiral Shares
    Vanguard Mid-Cap Growth Fund Investor Shares
    Vanguard International Growth Fund Investor Shares

Wealthfront Roth IRA :
    J.P. Morgan USD Emerging Markets Bond ETF
    Investment Grade Corporate Bond ETF
    Vanguard MSCI EAFE ETF
    Vanguard Dividend Appreciation ETF
    Vanguard REIT ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard FTSE Emerging Markets Index Fund ETF Shares

Vanguard Roth IRA
    Vanguard Emerging Markets Stock Index Fund Investor Shares (high expense ratio and performed horribly since 2008)
    Vanguard REIT Index Fund Admiral Shares

Fidelity 401k
    FidelityŽ 500 Index Fund Institutional Class
    Vanguard FTSE All-World ex-US Index Fund Admiral Shares
    Vanguard Mid-Cap Index Fund Admiral Shares
    Vanguard Small-Cap Index Fund Admiral Shares

Fidelity Solo 401k
    Money ready to invest but not sure what to choose

Another Vanguard Roth IRA
    Vanguard High Dividend Yield Index Fund ETF Shares

Personal Capital
    Too many to list and not performing any better then when I had it in a "Lifecycle Government TSP 401k account"

Thanks so much to anyone who has some good experience with index funds and is willing to help me simplify!




MDM

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Re: Need Help Simplifying My Investments
« Reply #1 on: December 03, 2016, 10:26:39 PM »
You'll have to hold the various IRA, active 401k, and taxable funds in different accounts, although that doesn't have to mean different brokers.

See https://www.bogleheads.org/wiki/Three-fund_portfolio and https://www.bogleheads.org/wiki/Asset_allocation_in_multiple_accounts for some thoughts that seem applicable to your situation.

Telecaster

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Re: Need Help Simplifying My Investments
« Reply #2 on: December 03, 2016, 11:58:59 PM »
Yes, you definitely need to simplify, you've got way too much going on.   Vanguard and Fidelity are pretty similar, so pick one or the other and consolidate as best you can.

Next, you need a strategy.  Figure out what you are holding and why.   I keep seeing the words " emerging markets."   That's not bad, but there is a reason why the markets are "emerging."   And the reason is that the markets historically haven't worked well.  Keep that in mind.  Don't rule it out, but keep it in mind. IMO  emerging markets should be a small-ish fraction of your portfolio. 

Next, all your bond funds could be one or two bond funds.  The purpose of a fund is diversification.  So if you are going to have more than one or two, you need a solid reason why the different funds are necessary.  The reason to hold bonds is low volatility and safety, right?  So ditch the emerging markets bonds and hold the safe stuff, in whatever percentage your strategy dictates.  80/20 or 60/40 or whatever it is.  If things go south, they will go south in the emerging markets first, so that's not where you want to go for safety. 

Next, for stocks you want to hold the broader market, which it looks like you are doing, but you can do it more simply.  Fidelity and Vanguard both offer total stock market index funds.  So do that, and ditch the small cap and mid-cap funds separately.  Unless your strategy says to overweight in those areas (it probably shouldn't) Ditch the dividend fund, most large caps pay dividends anyway, so you are likely just doubling up on stuff you already own. 

REITs are fine. Hold in whatever percentage your strategy dictates.  But REITs work best inside an IRA or 401(k). 

 

Rubyvroom

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Re: Need Help Simplifying My Investments
« Reply #3 on: December 04, 2016, 06:57:05 AM »
I would suggest going through the steps to form a solid Investment Policy Statement to help you assess what allocation of funds are important in your situation. For me, I essentially hold two funds (or the approximation of two funds) across a variety of investment accounts and am perfectly fine with that (total U.S. stock market index and total bond market index). Some people like to dabble in international or REITs, and that is a totally valid strategy, it's just not what I deemed to be important. Creating an IPS will help you determine which funds are a priority to you and then you can find a way to work with what you have in each of those buckets.

Without knowing what % of your investments are in each account, it's hard to offer a recommendation, but I do think it's in your best interest to simplify down to maybe 2-4 funds across the entire portfolio depending on what you decide in your IPS. This Approximating total stock market wiki may help as well, as you may not have a total U.S. stock market fund available in each investment category.

TomTX

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Re: Need Help Simplifying My Investments
« Reply #4 on: December 04, 2016, 07:01:15 AM »
What's the total dollar amount here?

If it's under $50k, I would just put everything in a Total Stock Market fund.

If it's $50-$250k, I would think about  putting ~20% in a Total Bond fund and performing an annual rebalance. No rush though.

If it's over $250k, that 20% Bond would probably be a good idea.

Interest Compound

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Re: Need Help Simplifying My Investments
« Reply #5 on: December 04, 2016, 07:07:12 AM »
You'll have to hold the various IRA, active 401k, and taxable funds in different accounts, although that doesn't have to mean different brokers.

See https://www.bogleheads.org/wiki/Three-fund_portfolio and https://www.bogleheads.org/wiki/Asset_allocation_in_multiple_accounts for some thoughts that seem applicable to your situation.

+1

Three Fund Portfolio. I'd keep all the accounts besides WealthFront, and PersonalCapital. Move those over to either Vanguard or Fidelity. Normally I'd say to consolidate everything under Vanguard, but I see you're in the Fidelity Solo 401k, which might be better for you than the Vanguard Solo 401k.

Then figure out your stocks/bonds split, and you're done :)

If you REALLY want to simplify things, I'd move EVERYTHING to Vanguard, and go with their Target Retirement fund in each one of your accounts, based on your age (not your early retirement date):



Fidelity isn't good for this, as their Target Retirement funds have really high fees (another reason I stay clear of Fidelity, their interests are not aligned with yours).

arebelspy

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Re: Need Help Simplifying My Investments
« Reply #6 on: December 04, 2016, 08:05:44 AM »
Vanguard.

Not any of that other junk.

Not Personal Capital.

Vanguard.

:)
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Metric Mouse

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Re: Need Help Simplifying My Investments
« Reply #7 on: December 04, 2016, 08:26:00 AM »
You'll have to hold the various IRA, active 401k, and taxable funds in different accounts, although that doesn't have to mean different brokers.

See https://www.bogleheads.org/wiki/Three-fund_portfolio and https://www.bogleheads.org/wiki/Asset_allocation_in_multiple_accounts for some thoughts that seem applicable to your situation.

+1

Three Fund Portfolio. I'd keep all the accounts besides WealthFront, and PersonalCapital. Move those over to either Vanguard or Fidelity. Normally I'd say to consolidate everything under Vanguard, but I see you're in the Fidelity Solo 401k, which might be better for you than the Vanguard Solo 401k.

Then figure out your stocks/bonds split, and you're done :)

If you REALLY want to simplify things, I'd move EVERYTHING to Vanguard, and go with their Target Retirement fund in each one of your accounts, based on your age (not your early retirement date):



Fidelity isn't good for this, as their Target Retirement funds have really high fees (another reason I stay clear of Fidelity, their interests are not aligned with yours).

About as simple as it gets!

tralfamadorian

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Re: Need Help Simplifying My Investments
« Reply #8 on: December 04, 2016, 08:31:42 AM »
Vanguard.

or the Fidelity (formerly known as Spartan) funds, which are Vanguard copycats, if Vanguard is not available.

MustacheAndaHalf

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Re: Need Help Simplifying My Investments
« Reply #9 on: December 04, 2016, 08:39:35 AM »
"... Government TSP 401k ..."

Does that account have things like the "I fund", "S fund", etc?
If so... don't move!  Those funds are not available anywhere else, and they are even lower expense ratios than Vanguard.  Go ahead and try and find an international fund with a 0.029% expense ratio, like the "I fund".  I think those are very good reasons to keep your government TSP where it is as long as possible.

Investigate expense ratios before you make changes.  Also keep in mind any money you push into a full service broker (!) or to an advisory service (better) is going to charge a percentage of your money every year.

arebelspy

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Re: Need Help Simplifying My Investments
« Reply #10 on: December 04, 2016, 08:41:21 AM »
Vanguard.

or the Fidelity (formerly known as Spartan) funds, which are Vanguard copycats, if Vanguard is not available.

Sure, that works. They said they have accounts at both, so if you're simplifying, I'd go with Vanguard, but Fidelity is a fine chocie too, or Schwab.

Either way, DIY and ditch the blood suckers advisers.  :)
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Re: Need Help Simplifying My Investments
« Reply #11 on: December 04, 2016, 08:43:10 AM »
Vanguard.

or the Fidelity (formerly known as Spartan) funds, which are Vanguard copycats, if Vanguard is not available.

One locked 401K with Fidelity, according to OP, so at least some will have to stay there.

tralfamadorian

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Re: Need Help Simplifying My Investments
« Reply #12 on: December 04, 2016, 10:19:10 AM »

One locked 401K with Fidelity, according to OP, so at least some will have to stay there.

As well as a Fidelity 401K with Fidelity that may or may not be easy to move.  (I have a solo 401K with Fidelity that I cannot move elsewhere but have been happy with them so far)

Truthseeker

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Re: Need Help Simplifying My Investments
« Reply #13 on: December 13, 2016, 06:20:22 PM »
Thank you all for taking time to respond to my question. I clearly have a ton to learn and have started reading JL Collins stock series and the Bogleheads wiki investment startup kit to educate myself. I do have around $200k across the various investments I listed. Wealthfront is free since I have under $15k there, but I may still move it. Is there any advantage to moving it based on the allocation I've listed or just leave it since it's being managed for free until it reaches $15k ($12k right now).

I took the approach across multiple accounts of trying to use the mirrored asset allocation approach suggested in a Bogleheads link.

I went ahead and simplified my solo 401k with Fidelity to 60% of their Premium Class Total U.S. Stock Market Index Mutual Fund (FSTVX) and 40% to their Premium Class Total International Index Mutual Fund (FTIPX).

I also went ahead and changed my Vanguard Traditional IRA to 55% VTSAX, 35% VTIAX, 7% VBTLX, and 3% VTIBX.

My wife's Fidelity 401k I left as it is simply because they didn't offer a Total Market Index Mutual Fund option.

The Vanguard Roth IRA I kept the Admiral shares of the REIT (I want to have at least some real estate exposure), but I did sell the emerging markets fund in for a split between VTSAX and VTIAX.

I'll be calling Personal Capital tomorrow and letting them know their services will no longer be needed and switching that balance over to Vanguard and distributing across my Vanguard Traditional IRA allocation described above.

It's not perfect, but I think you've all helped me "stop the bleeding" with unnecessary management expenses until I can educate myself further. Thank you again!!!

arebelspy

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Re: Need Help Simplifying My Investments
« Reply #14 on: December 13, 2016, 07:04:08 PM »
Awesome!  Way to take action!  :D
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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