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Allocation analysis
Old 02-15-2009, 07:11 AM   #1
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Allocation analysis

Need critique of a Vanguard IRA allocation.....any suggestions. How would you re-allocate within the Vanguard family.

Target Retirement 2015
Target Retirement 2045
Wellington Fund
Index Funds: 500 Index, Mid-cap, Small cap, REIT, Total Int'l, Total Stock Market.

A Waddell Reed "FA" recently advised going with his family of funds with a 1.3% expense ratio.
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Old 02-15-2009, 07:46 AM   #2
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What are you trying to accomplish? In general, you should not look at a single account (i.e. a Vanguard IRA) by itself. For example, my spouse has an IRA that is 100% VFSUX (short term investment grade bond fund), another that is 100% VFIIX (GNMA fund), and I have an IRA that is 100% VIPSX (inflation-protected securities). Three fixed income funds look kind of strange by themselves, but they are part of our overall asset allocation which calls for 62% equities, 31% fixed income, 7% commercial real estate.

I think one has to tell us about ALL their accounts and investments to get good advice. That way, asset allocation and asset location can be addressed. You should probably just use the best personalized portfolio and asset allocation analysis web forum found here: Bogleheads :: View Forum - Investing - Help with Personal Investments
but you will need to do your homework. Don't take short-cuts with this. Good luck!
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Old 02-15-2009, 09:21 AM   #3
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Originally Posted by ferco View Post
Need critique of a Vanguard IRA allocation.....any suggestions. How would you re-allocate within the Vanguard family.

Target Retirement 2015
Target Retirement 2045
Wellington Fund
Index Funds: 500 Index, Mid-cap, Small cap, REIT, Total Int'l, Total Stock Market.

A Waddell Reed "FA" recently advised going with his family of funds with a 1.3% expense ratio.
IMO any fund with an expense ratio that high is a complete rip off. I won't even consider a fund if the expense ratio is over .75%, most funds I own are through vanguard with ER's between .15-.35
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Old 02-15-2009, 09:27 AM   #4
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Originally Posted by ferco View Post
Need critique of a Vanguard IRA allocation.....any suggestions. How would you re-allocate within the Vanguard family.

Target Retirement 2015
Target Retirement 2045
Wellington Fund
Index Funds: 500 Index, Mid-cap, Small cap, REIT, Total Int'l, Total Stock Market.

A Waddell Reed "FA" recently advised going with his family of funds with a 1.3% expense ratio.
You've been here long enough to know you won't get any encouragement to go with the 1.3% fee funds. You neglected to mention whether the FA also charges you a wrap fee or if the funds he's recommending are load funds.

Target retirement accounts don't do anything you can't easily do yourself with lower fees at Vanguard or with Vanguard ETFs. There are numerous threads on asset allocation strategies you should look over. What you do will have a lot to do with your view of risk.

I personally have my stock portion in 60% VTI/VTSMX (total market index), 10% VB (small US cap), 20% VEA (large foreign cap), and 10% VWO (emerging mkts). My cash/fixed portion is a fixed dollar amount based on the greater of my "minimum retirement plan" or 40% of portfolio. Because of the market fall, my fixed is about 55% with 5% more in preferred closed end funds. My equities are about 40% of my current portfolio with new 401k and SERP money going into equities.
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Old 02-15-2009, 09:36 AM   #5
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Target retirement accounts don't do anything you can't easily do yourself with lower fees at Vanguard or with Vanguard ETFs. There are numerous threads on asset allocation strategies you should look over. What you do will have a lot to do with your view of risk.
You're right, but I'd simply add that for the most part I don't think these target funds are intended for people who are intensely hands-on DIYers with respect to their portfolio or their AA.

These are designed for the folks who want an appropriate investment vehicle they can buy into and forget about it. It may seem odd to many of us, but a lot of people would rather go to the dentist than educate themselves about investing, financial planning and asset allocation. I, on the other hand, eat that stuff up. So I roll my own AA and I've recommended to my wife (who'd rather go to the dentist and shudders at talk of asset allocation and rebalancing) that if I unexpectedly kick the bucket, she should put the IRA money (and my rolled over 401K) in to a Vanguard Target 2020 fund (which is slightly more conservative than I'd do on my own but would probably help her stay the course in times like these).

So target funds do what they do fairly well for those who are disinclined to be actively monitors of their investments. My main objection to them isn't the higher fees but the fact that many fund families offering the target funds use many of the clunkers in their family instead of their better funds (or their index funds). At least the Vanguard funds use the index and have expenses only in the 0.2% range.
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