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Hi all, Queenie here...
Old 07-26-2011, 12:12 PM   #1
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Hi all, Queenie here...

Hi Everyone!


I have been lurking for quite some time and recently joined. Thank you all for enlightening me to so many things and sparking my curiosity to go and “study up” on all the gibberish important points regarding investments. I can't say I am totally knowledgeable yet, nowhere near there, still have so much to learn but must say it is quite thrilling and interesting,who would have ever thought! Anyway, am about to embark on my first portfoglio before my savings account gets chipped away at.


I will initially be investing $100,000 with Vanguard and this is the recommendation they have come up with (doing the on line questionnaire, haven't spoke with anyone yet)”


42% Total Stock Market Index ETF
18% Total International Stock Index ETF
40% Total Bond Market Index


Since I have dual citizenship I would actually like to make a separate investment in my other country where I hold a bank account so thought to drop the above International Stock and substitute it with a Wellington so it would look as follows:


40% Total Stock Market Index ETF
20% Wellington
40% Total Bond Market Index


A little bit about myself I know would be helpful for you keen minds to enable comments to my particular situation, so here goes.


I am single 55 years, retired since 2009. I have a very nice pension which I started collecting from April of this year and healthcare package so will not be depending on this money as an income, although occasionally splurging is not out of the question. I live well within my means. I have no debt and my children are all grown and are not usually a financial burden (cough-cough). The only big expense I would like to perhaps incur in the future is for a home purchase in the US. Have been advised that it is still too early to dive into that and I should wait further until the market shows a real return. I have been until recently a US non resident citizen and won't be till next year that I file tax without the nice Non-resident deduction... I have no real experience in investing and would consider myself moderately conservative due to my total ignorance. Seems the more I learn from this site, Bogleheads , morningstar, etc the more I question my ability. On the other hand, monies sitting in a USAA savings account are just going to be whittled away in one way or another.


So I think my question is what do you all think of my proposal as opposed to the Vanguard recommendation and my idea, would you invest anything new now before the debt crisis is settled or would you wait until it is settled. Any and all constructive comments would be appreciated. Also appreciated would be answers to questions I haven't even asked...


Please don't hesitate to ask me any other questions if you feel I have left out any information.


Again thanks to you all, this site has engaged my brain and given me a few good chuckles, too. I am glad I found you.


Queenie
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Old 07-26-2011, 03:40 PM   #2
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Welcome Queenie!
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Old 07-26-2011, 05:50 PM   #3
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Welcome, Queenie.
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Old 07-26-2011, 06:44 PM   #4
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Welcome. Not sure what you want your total asset allocation to be, but the substitution of Wellington in place of international stock index fund bumps up your bond allocation %.
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Old 07-26-2011, 07:28 PM   #5
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Welcome. Not sure what you want your total asset allocation to be, but the substitution of Wellington in place of international stock index fund bumps up your bond allocation %.

Thank you for your reply travelover. I realize the change to Wellington disrupts the 60-40 AA that was the Vanguard recommendation, but was thinking for a first plunge it might be a little less frightening? I would then, in the next few months probably raise the % in stocks when I make my overseas investments on the European market, separate to the above. Not sure yet what that will look like, but will be speaking to my bank in September about it.

In a nutshell, not really sure what I want the end AA allocation to look like, want to test the waters and see how far I can go and feel comfortable. I do enjoy a good nights sleep and don't want to put that in jeopardy by higher risk investments until I feel more comfortable. Does that make sense?

Thanks again! Queenie
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Old 07-26-2011, 07:47 PM   #6
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Quote:
Originally Posted by Queenie View Post
Thank you for your reply travelover. I realize the change to Wellington disrupts the 60-40 AA that was the Vanguard recommendation, but was thinking for a first plunge it might be a little less frightening? I would then, in the next few months probably raise the % in stocks when I make my overseas investments on the European market, separate to the above. Not sure yet what that will look like, but will be speaking to my bank in September about it.

In a nutshell, not really sure what I want the end AA allocation to look like, want to test the waters and see how far I can go and feel comfortable. I do enjoy a good nights sleep and don't want to put that in jeopardy by higher risk investments until I feel more comfortable. Does that make sense?

Thanks again! Queenie
Quote:
42% Total Stock Market Index ETF
18% Total International Stock Index ETF
40% Total Bond Market Index
You should decide the allocation BEFORE you pick the funds. Search the forum for asset allocation tutorial. It is 1-2 years old I think.

The above allocation is 60% stocks 40% bonds
the allocation is also 82% domestic and 18% foreign

There is a tool called x-ray which will break it down for you on morningstar.
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Old 07-26-2011, 08:01 PM   #7
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Welcome to our forum. I think your asset allocation will be fine. However, you are investing a large amount of money into an aging bull market all at once. I have all of my investments with Vanguard and think it is a great company.

Why not consider dollar cost averaging? You could perhaps start with 10% of your money in Total Stock Market, 10% in Wellington, and 10% in Total Bond Market. The remaining 70% could be placed into a money market fund with an automatic transfer program to Total Stock Market, Wellington, and Total Bond Market. For example, each month you could have $1,500 transferred to Total Stock Market, $1,500 transferred to Wellington, and $1,500 transferred to Total Bond Market. In that way, you could possibly end up buying shares at a lower price, should we enter another bear market. It's kind of a gamble to invest a large sum at the same time, because if the market goes down in the near future, you could face large losses of your investment.

Just wanted to give you my two cents worth.
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Old 07-26-2011, 08:41 PM   #8
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Thank you jIMOh,

I am looking for the AA reference you mentioned and found one with a link that is no longer valid. did find reference also to a book by Richard Ferri "All about Asset Allocation", so will be taking a stroll to the library tomorrow.) The % of allocation made by Vanguard was 60-40 heavy on the stocks, my proposal turned it 40-60 as an initial getting my feet wet, so to speak. I am happy with the initial breakdown of the foreign investment portion as I will have a separate foreign investment a bit later.

I will also look up this xray at morningstar. In the morning though, as the ole brains fire better then. ;-) I will also re-read your post as I may have missed something, just in case, I do apologize.

Thank you again. Queenie
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Old 07-26-2011, 08:45 PM   #9
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Thank you Retire Soon,

Your idea is actually brilliant, I think. Would certainly help me slide into this whole idea with greater peace of mind. Taking it slowly. I will look at money market with vanguard, as I have not given it consideration as of yet. Thank you so much for your advice.

Queenie
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