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Asset Allocation opinions
Old 09-11-2011, 04:18 PM   #1
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Asset Allocation opinions

Hi all,

I wanted to get your opinions on the following asset strategy. I am fairly conservative and like to invest more in bonds than many of you might like. I am currently with Fidelity but am thinking of moving everything to Vanguard and doing the following:
  • 22.5% in VWINX: Wellesley Balanced Fund
  • 7.5% in VGTSX: Vanguard International
  • 10% in VTSMX: Total Market Index
  • 7.5% in metals: divided as 50% VGPMX Precious Metals & Mining and 50% GLD ETF
  • 7.5% in VGSIX: Vanguard REIT Index
  • 45% in bonds: divided as 35% VBMFX Total Bond Market; 10% VWALX High Yield Muni; and 55% specific individual muniís
Any advice would be appreciated ... and thanks in advance.
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Old 09-11-2011, 06:22 PM   #2
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Doesn't seem particularly harmful, so why not? Why all the muni bonds? Do you not have enough assets in tax-advantaged for all the bonds and Wellesley that you can stomach?

It sure seems strange to say you like bonds because you are fairly conservative, then turn around and buy into a Gold bubble.
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Old 09-11-2011, 06:45 PM   #3
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thanks, LOL for the response. Regarding gold, my GLD investment is up about 50% so it has done good for me. Maybe I should sell it and not look back. But the way I look at it, the GLD protects against inflation, US economy issues, and global concerns/fear. Conversely the munis give me guaranteed returns with low risk (but can get destroyed by very high inflation). I am looking to try and maintain capital and get an avg 4% return and not necessarily looking for growth risk/reward.
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Old 09-11-2011, 06:57 PM   #4
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It is probably time to rebalance your GLD back to your desired asset allocation then.

Munis are fine if you need bonds in taxable, but if they all fit in tax-advantaged, why bother? You really did not address this comment.
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Old 09-11-2011, 07:03 PM   #5
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We have a lot more investment funds in taxable than in our tax-advantaged account. So, I would only invest taxable funds in the muni's.
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Old 09-11-2011, 07:21 PM   #6
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For more info: Principles of Tax-Efficient Fund Placement - Bogleheads
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Old 09-11-2011, 07:35 PM   #7
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Thanks - very helpful!
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Old 09-11-2011, 11:11 PM   #8
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Just a side question - why the switch from FIDO to VG? Is it just because you want to own a lot of VG funds? I find the (free) service from FIDO to be much better than VG, and I use ETF's which usually have a lower ER than the VG funds. Just curious.
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Old 09-12-2011, 08:33 AM   #9
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Hi Packman,
Honestly, the main reason for switching is that I am not very good at this investing stuff. I really just need to pick an asset allocation and stick with it. There seems to be more guidance on FIRE for Vangaurd asset allocation than FIDO. I tried to come up with an equivalent FIDO asset allocation match to the above and looking at the historical numbers, Vangaurd seemed to outperform. At one time, FIDO called me and assigned me a free advisor I could meet with in person and he indicated he would call me every quarter to meet. Sounded great but after not hearing back from the advisor after we met the first time, I called Fidelity and found out he is no longer there. So not terribly happy with their customer service. Figured I would give Vangaurd a try.
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Old 09-12-2011, 08:34 AM   #10
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And with that previous post I moved from a Dryer Sheet Aficionado to a recycler. Woohoo!
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Old 09-12-2011, 09:55 AM   #11
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Quote:
Originally Posted by LOL! View Post
It is probably time to rebalance your GLD back to your desired asset allocation then.
I agree. While I don't think any gold holding will have a major drop in value in the immediate future, I've found that any holding with that much of an increase in perceived value is worth "harvesting", time to time. The idea of "let it ride" for any investment (be it equity, bonds, or RE) usually is a mistake, in the long run.

As for your comment on support from FIDO? I/DW have investments in both firms (VG/FIDO) and over the years have used both for "suggestions" on our investments. Both had (in our case) poor support, regardless of advertised services. Heck, regardless of our "status" (Flagship at VG, Private Client at FIDO) does not mean the "free service/advice" will be worth anything.

Over the years, we learned to invest for ourselves, without any support from either company (or a third party advisor). And as far as products/returns (including expenses) a review of our joint portfolio (A/O Friday's close) shows for the top six positions, three are VG and three are FIDO. Both companies have offerings (again, current returns include expenses) that can support your goals - assuming you can invest on your own and don't need "hand holding" from either major company.

Just my $.02.
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Old 09-12-2011, 04:04 PM   #12
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I don't like metals per se as I view them as pure speculation, but VGPMX is for an industry--mining--but GLD has been a more steady performer since 2005 than VGPMX. VGPMX dropped off a cliff in 2008. That makes sense, mining being highly cyclical. But GLD's performance does not make sense to me.

I also do not like bonds and have 50% of my equities international.

Aside from that, your AA looks OK.
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