Author Topic: Vanguard Bonds and International Index Funds?  (Read 823 times)

Roks

  • 5 O'Clock Shadow
  • *
  • Posts: 17
  • Location: California
Vanguard Bonds and International Index Funds?
« on: May 31, 2019, 03:06:42 PM »
Hello mastermind Mustachians, I can use your help. I had a preliminary phone call with a Vanguard Investment Advisor yesterday who suggested my Roth IRA and traditional IRA portfolio be a mix of 85% stock and 15% bonds.

My question is which international index and bonds (domestic and international) should I invest?   

The IA recommends the following percentage:

Stocks
  - 36% U.S. large-cap stock
  - 15%U.S. mid/small-cap stock
  - 34% International stock

Bonds
  - 4% U.S. short-term bond
  - 4% U.S. intermediate-term bond
  - 2% U.S. long-term bond (corporate)
  - 5% International bond

My investment breakdown with Vanguard: 

  - VTSAX - $15k
  - Roth IRA - $17k
  - Traditional IRA - $22k

I plan to significantly invest in my VTSAX over the next five years, and invest $6,000 in my Roth IRA every year for as long as I can.  He presented compelling points to diversify my portfolio to include more international investments because there will be greater market progression in many developed and developing countries within the next 10 years.

I would like to do this without having to turn to an IA and pay fees. Thanks in advance for any help you can provide!
« Last Edit: May 31, 2019, 03:09:40 PM by Roks »

AdrianC

  • Handlebar Stache
  • *****
  • Posts: 1024
  • Location: Cincinnati
Re: Vanguard Bonds and International Index Funds?
« Reply #1 on: May 31, 2019, 06:45:16 PM »
A Vanguard IA recommended all that? I am surprised.

Seems overly complicated to me. Look at Vanguard Lifestrategy Growth (80/20).

Indexer

  • Handlebar Stache
  • *****
  • Posts: 1437
Re: Vanguard Bonds and International Index Funds?
« Reply #2 on: May 31, 2019, 06:47:57 PM »
Those recommendations are an overly complicated way of saying...

51% Total Stock index
34% Total international stock index
10% Total bond index
5% Total international bond index

That's pretty standard Vanguard or Boglehead advice, lots of diversification at very low expense ratios using total market index funds. I went through the process a few years ago, got the free Financial Plan, and they used those 4 funds. It's fine by me since I use 3 of them anyway.

JTColton

  • 5 O'Clock Shadow
  • *
  • Posts: 34
Re: Vanguard Bonds and International Index Funds?
« Reply #3 on: May 31, 2019, 11:31:13 PM »
Those stock numbers could be realized with the total world fund VTWAX/VT. Then add BND or BNDX to get you to your AA of choice. If you want one fund, the LS Growth mentioned above has it all and will automatically rebalance.

Roks

  • 5 O'Clock Shadow
  • *
  • Posts: 17
  • Location: California
Re: Vanguard Bonds and International Index Funds?
« Reply #4 on: June 01, 2019, 12:15:25 AM »
Thank you. I was initially thinking:

- VTSAX - 51%
- VGTSX - 34%
- VBTLX - 15%

But Iíll checkout LS Growth.

Indexer

  • Handlebar Stache
  • *****
  • Posts: 1437
Re: Vanguard Bonds and International Index Funds?
« Reply #5 on: June 01, 2019, 05:50:06 AM »
While I love the LS funds if the entire portfolio is a Traditional or Roth, balanced funds like the LS funds are not the best option if you have a mix of account types. If you follow the rules you will never pay taxes on the Roth and you (or your heirs) will pay taxes on the Traditional. Given that, you want the high growth investments, your stocks, in the Roth and the conservative investments, the bonds, in the Traditional.


This is a good selection of funds.
- VTSAX - 51%
- VGTSX - 34%  Except this is closed, I assume you mean VTIAX.
- VBTLX - 15%

Now just put the stock funds in the Roth, and the bond fund and remaining stock allocation in the Traditional.

Roks

  • 5 O'Clock Shadow
  • *
  • Posts: 17
  • Location: California
Re: Vanguard Bonds and International Index Funds?
« Reply #6 on: June 02, 2019, 06:42:56 PM »
I didn't know  VGTSX was closed; I'll look into VITAX.  Thanks so much!