The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: PartTime on July 02, 2016, 11:15:51 AM
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I want to move about $21K out of a full service broker IRA and use that money to start investing in ETFs.
The assets for the $21K traditional IRA is:
Midcap stocks: $7K
Large cap value: $4K
Large cap growth: $4K
Intermediate bonds: $2K
International developed stocks: $2K
Small cap stocks: $1K
International emerging stocks: $1K
Looking at the overall target portfolio my financial adviser (not the broker) recommended I need to increase or (decrease) holdings by:
Large cap value $40K
Large cap growth $26K
Small cap stocks $9K
Short term bonds $3K
Mid cap stocks ($44K)
Intermediate bonds ($13K)
Long term bonds ($3K)
Intnl Developed stocks ($5K)
ETFs I am looking at. I am planning on going into Vanguard or Schwab, I would like to go to Schwab since I would like to see what they are like and I already have investments with Vanguard.
These are examples of some ETFs I am looking at. For $21K - should I just get one or two ETFs?
Any comments on the choices?
Schwab US Broad Market SCHB - large growth/value
Schwab US Small Cap SCHA - small growth/value
Schwab US Dividend Equity SCHD - large value
Schwab Short Term Treasury - SCHO
Vanguard Total Stock Market VTI - large growth/value
Vanguard High Dividend Yield VYM - large value
Vanguard Small Cap Growth VBK - small growth
Vanguard Short Term Bond BSV
Thanks ahead of time!
Attached is a snapshot of the comparison of the current and recommended portfolio
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This is not a question we can answer for you. You need to decide what your asset allocation between different asset classes will be for yourself based on your goals and risk tolerance. Once you have decided that, the exact funds can mostly decide themselves.
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This is not a question we can answer for you. You need to decide what your asset allocation between different asset classes will be for yourself based on your goals and risk tolerance. Once you have decided that, the exact funds can mostly decide themselves.
Understood.
My financial adviser provided a risk tolerance test and we came up with the target portfolio shown on the right side of the attachment. My portfolio has strayed - probably because of my recently increased investing in Vanguard Target Retirement 2030. I want to move my $21K IRA to a low cost provider, I was looking to see if anyone here could see any easy move that would accomplish this and move toward the target portfolio.
To me it is kind of like a puzzle since moving the IRA means moving money out of some asset classes and into other asset classes.
E.g. I could move all of it into SCHB since the large cap value/growth needs the most shoring up for the target portfolio.
OR
E.g. I could move $9K into SCHA and $3K into SCHO and bring small cap growth and short term bond, respectively, to their target amounts and then put the remaining $9K into SCHB.
Eventually, my financial adviser will make adjustments in the investments he manages to bring my overall portfolio in line.
I don't think there are any bad choices in the funds I am looking at (right?).
I figure other more experienced people here can do this sort of thing with one hand tied behind their backs, so I wanted to find out what others here would think. I would probably learn something too, bonus!
Thanks.
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It would help if you used percentages.
Are your total assets in retirement plans, or is some in taxable?
What is your age and planned retirement age? You're switching from 31% bonds to 25% bonds, so it would help to understand if that fits your age and goals.
How does your financial adviser get paid? Is some percentage of your money at the adviser's firm?
As a very general comment I see a value tilt in your target percentages, so I'd recommend reading a book by Larry Swedroe or William Bernstein. Both of those authors cover tilts and why they might help your portfolio. I don't say that to advocate either view - I say it to reinforce the decision I see in your portfolio.
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It would help if you used percentages.
Large Cap Growth Stocks: 6%
Large Cap Value Stocks: 7%
Mid Cap Stocks: 22%
Small Cap Stocks: 5%
US Stocks Total: 40%
Long Term Bonds: 2%
Intermediate Bonds: 15%
Short Term Bonds: 14%
US Bonds Total: 31%
Intntl Developed Stocks: 15%
Intntl Emerging Stocks: 5%
Cash: 6%
Unclassified 3%
Are your total assets in retirement plans, or is some in taxable?
$100K is in taxable accounts (and this is what the advisor manages)
$103K is in retirement accounts
What is your age and planned retirement age? You're switching from 31% bonds to 25% bonds, so it would help to understand if that fits your age and goals.
57 and planning on working as long as possible, I'm hoping for 70.
How does your financial adviser get paid? Is some percentage of your money at the adviser's firm?
Adviser gets paid 1% per year of investments in the taxable account.
As a very general comment I see a value tilt in your target percentages, so I'd recommend reading a book by Larry Swedroe or William Bernstein. Both of those authors cover tilts and why they might help your portfolio. I don't say that to advocate either view - I say it to reinforce the decision I see in your portfolio.
I will check it out.
Thank you.