Ready To FIRE - Would Value Your Opinions: Kinda Long Post

[megacorp-firee]

I am decloaking today, after lurking for about 1 ½ years. First I would like to thank you all for your outstanding input. This site has been one of my primary retirement financial tutoring tools. You have answered a lot of my questions as well as made me comfortable with my decision to retire.

I am planning on FIRE'ing at the end of June. I will have 30 years with Megacorp, so I guess the RE side of it is technically incorrect. I am married with adult children who are doing well and don't need any financial assistance from us. DW will be 57 and I will be 56.

$1,725,000 assets not including house (equity about $650,000), cars, or personal property
Total portfolio allocations as follows:
US Stocks - 38%
Intl Stocks - 18%
REITs - 6%
Bonds - 19.6%
Municipals - 7.5%
Cash Equiv. (stable value fund, CDs, Bank Accts) - 10.9%
$ 1,010,000 of it in 401K
US Stocks - 34%
Intl Stocks - 31%
REITs - 10%
Bonds - 15 %
Cash Equiv. (stable value fund) - 10%
$715,000 in taxable accounts
I will get a pension from Megacorp to the tune of about $50,000 a year, non-cola'ed.
I think I have the health insurance figured out (as much as one can ... Wow big ticket!)

About 3 years ago, after decades of buying individual stocks in taxable accounts, playing with options, semi-day trading, ...etc. (investment Las Vegas style), along with systematically putting max into 401K and Megacorp stock plan (relatively sane safe investing), I went to a FA for help.
I had no bonds or other fixed income investments. He helped me balance things out (both taxable account and 401K) and get to the AA that I needed to better guarantee a safer retirement. We put $280K of taxable money in preferreds, municipals, and some Canadian oil trusts (hey ... It's hard going cold turkey). I get a bit over 7% annualized return on this part of the portfolio. He also helped open my eyes to a better 401k AA. I was 100% in equities and now have some balance in my life.

PLANS:
After years of LBYM, we have, what I think, is a adequate nest egg to do what we want to do.
Our current plans are to travel extensively for the first 4 or 5 years, but as predictably, on the relative 'cheap'. Billy and Akaisha Kaderli's web site has been an inspiration. We estimate that location overseas (Asia) initially will cost us about $50K/year for Billy and Akaisha type traveling (we're not as experienced as they are ... yet).. We think we will splurge and would have a maximum total budget of about $100K a year, but could go up to $130K per year for the 1st 5 years if we had wanted to.

On retirement, we plan on converting our 401k to IRA's for estate purposes. We will convert IRAs to Roth IRAs as 'taxable situation' dictates (at this time I plan on perhaps converting up to 20% effective tax rate level). Specific plans for 401K is to roll it to a Vanguard account (see I have been paying attention). I was planning on rolling the entire 401K into Vanguard index funds (but see ETF alternative below). I am playing with the idea of tossing about $200K of taxable money into the FA account (for some more fixed income and for the flexibility of talking to some 'knowledgeable' financial person from time to time). He charges me by the transaction. Usually under $90 for a $20,000 investment, $60 for a $10,000 investment. These are buy and hold type of investments, income producing, so I have not worried about the costs so far. So far he seems to be working in my best interest and has found/did the leg work on investments I would not have found on my own.

Here is how my FA account is distributed:
BPP - $30,000
GDV - $18,000
IKL - $14,000
HGM - $16,000
PYI - $15,000
TVC - $14,000
NQU - $48,000
FFC - $26,000
HTE - $25,000
MNP - $39,500
PWE - $23,000
3 mth T-Bill - $45,000
Total: ~ $314,000

Could you please comment upon this as the fixed income portion of my FA account. Am I taking too much risk?

I have about $400,000 in other taxable accounts, CDs, ....etc., which, as I had previously stated, am considering putting $200,000 into the FA account for more income. The balance I would probably throw into some CD ladders or ? As part of an emergency fund.

Back to the 401K rollover. My understanding is that for estate reasons, you don't want to hold the 401K but roll it over to an IRA (ala our living trust lawyer)
However, while 'studying' the new ETFs (I have dabbled in vti, agg, and veu, for the small (50K) in my Roth IRAs), I am now wondering if that would be the way to go (lower fees, ....etc.) Originally I was looking at the following for Vanguard account (which sort of mirrors my 401k equities allocation):
MUTUAL FUND Alternatives:
VFINX - 25%
VISVX - 25%
VGSIX - 14%
VEURX - 9%
VPACX - 9%
VEIEX - 9%
VTRIX - 9%
ETF Alternatives:
VTI - 50%
VNQ - 14%
VEU - 27%
VWO - 9%
Could I please get a comment on these alternatives. Thank you.

I have run FIRECALC and at a 100% success rate
Confession being good for the soul and all of that ... I believe I am a recovering market timer re-allocator. I would consider re-adjusting from a 60/40 allocation to a more conservative allocation given the right signals.

Sorry for the long and rambling post, and thanks again for all of your knowledge and assistance.
This is a GREAT public service.

[newguy88]

I believe you are in fantastic shape. It really does depend on what you and your wife want to do when you stop working. Many will live on a heck of alot less than you are thinking about living on.

Hey I say if you are ready, money wise you are right on target.

Congrats man!

[Nords]

Welcome to the board, MCF.

That's a lot of tickers for someone to look up, but if it makes you happy to work with a FA then that's what you should do. Otherwise if you're not generating commissions for them you'd be forcing them to look for some other way to earn money from your account, and that situation always seems more expensive than going it on your own.

Hopefully your asset allocation has divested you of Megastock.

[megacorp-firee]

Thanks 888 and Nords.

My FA was deferential to us as we had done ok with our portfolio up until we went to see him. He gave us 3 different options for 'paying him'. 1) flat fee about $800/year for quarterly or more consultations, 2) 1% of our assets, 3) open account and pay brokerage fees. Since we were going to be doing buy and hold, I chose door number 3. I think he realizes that we can go anywhere so he is trying to glean as much as he can from us. Small return but little work.

About 5 or 6 years ago, I notice I was getting top heavy in Megacorp stock and started to divest. Have about 9% left and a plan to get out it by 2008 (tax reasons). Going to do Index funds or ETFs for easy diversification.

Back to my questions: can anyone help me with:
1) risk assessment of income portfolio with FA
2) Vanguard mutual funds vs. ETFs
a) do I have the equivalents correct?
b) which would be better for buy and hold
c) allocation risk assessment

Thanks.

[lswswein]

hi
you ask good questions but I think you will get more replies if you post them in the FIRE & money board than here. Also you might want to ask them seperately so as not to confuse all the issues at once. Not everyone visits this forum as much

-h

[megacorp-firee]

Thanks lswswein. I figured that out ... but not the 'one at a time' ... which I did not do .... Appreciate the suggestion.

[tricky88]

I can't answer your series of questions, but wanted to say congrats on amassing a nice portfolio and exiting the workforce in your 50s. Good for you. Hope to join you some day.

[megacorp-firee]

Thanks Tricky ... I truly appreciate the good wishes. .... as I have said, after quite some time of lurking and trying to get over the 'what have I missed' feeling, I finally came to the conclusion that I could do this. With a little fine tuning over the last few weeks and the help, advice, and encouragement of members of this forum, I am there.

Thanks again to all who have given me help. ... 67 days and a wake-up

[Meadbh]

You absolutely can do this. I have a NW that's a bit more than yours with a similiarly diversified portfolio. I need to get to $3m mininum because I have no pension, but when you factor in the $50K pension the numbers add up to a great lifestyle. Pity the pension isn't COLA'd, but otherwise you are in fine shape.

Good luck!

[megacorp-firee]

Thanks Mead, ... yeah that 50K pension has put the E in RE. It is non-cola'ed, but ya can't have everything. ... life is good Best of luck to you too.