Distribution Portfolio

[charlie]

I would like to have your comments on the following portfolio
allocations for a couple in RMD. It is assumed that that the
taxable and sheltered accounts are equal and all are with Vanguard.
Also assume that income is needed from both accounts.

Taxable Accounts:

25% Tax Managed Growth & Income
12.5% Tax Managed International
12.5% Tax Managed Small Cap
25 % 5 year CD ladder with Penfed
15% Intermediate Term Bond Index
10% Prime Money Market

Sheltered:

25% Windsor II
12.5% Small Cap Value
12.5% REIT
10% Prime Money Market
10% Unhedged Foreign Bond (GIM)
30% CPI linked bonds paying 2+% plus CPI

Another alternative would be to split the stock accounts up
as per the "coffeehouse" approach with 8.33% to each
account. Thus the 3 tax managed funds in the taxable
account would have equal weight with the 3 value funds
in the sheltered account and the combined ports would be 50/50.

Some of you may recall that my IRA is currently allocated
via coffeehouse with equal weight to Large Cap, Windsor II
Small Cap, Small Cap Value, Small Cap International, Total
international and REIT while the taxable account is in
Wellesley.

I believe the 1st approach would be a little more conservative
than the 2nd and it would allow me to go with the Admiral
class on Windsor II and Tax Managed Growth and Income.
8.33% of the combined ports would be allocated to each
stock fund under the coffeehouse method.

My thinking on the S&D taxable account is to rebalance stocks with
income from the bonds/cash and just let them drift higher (I hope)
until the 5 year penalty period has expired. In any case if we hit
a bad downturn I can add to the stocks with money from bonds/cash.

My hope is to let the taxable stock funds grow and pass on to
my children that which will inevitably come from my Mom in the
next few years.

To some, this exercise may be "counting your chickens too soon",
but I have enough in my taxable account now to start the clock
ticking on the penalty and just add to the funds later.

I am looking forward to your comments.

Cheers,

Charlie

[MRGALT2U]

Quote:

Originally Posted by charlie I would like to have your comments on the following portfolio allocations for a couple in RMD.* It is assumed that that the taxable and sheltered accounts are equal and all are with Vanguard. Also assume that income is needed from both accounts. Taxable Accounts: 25% Tax Managed Growth & Income 12.5% Tax Managed International 12.5% Tax Managed Small Cap 25 % 5 year CD ladder with Penfed 15% Intermediate Term Bond Index 10% Prime Money Market Sheltered: 25% Windsor II 12.5% Small Cap Value 12.5% REIT 10% Prime Money Market 10% Unhedged Foreign Bond (GIM) 30% CPI linked bonds paying 2+% plus CPI Another alternative would be to split the stock accounts up as per the "coffeehouse" approach with 8.33% to each account.* *Thus the 3 tax managed funds in the taxable account would have equal weight with the 3 value funds in the sheltered account and the combined ports would be 50/50. Some of you may recall that my IRA is currently allocated via coffeehouse with equal weight to Large Cap, Windsor II Small Cap, Small Cap Value, Small Cap International, Total international and REIT while the taxable account is in Wellesley.* I believe the 1st approach would be a little more conservative than the 2nd and it would allow me to go with the Admiral class on Windsor II and Tax Managed Growth and Income. 8.33% of the combined ports would be allocated to each stock fund under the coffeehouse method.* My thinking on the S&D taxable account is to rebalance stocks with income from the bonds/cash and just let them drift higher (I hope) until the 5 year penalty period has expired.* In any case if we hit a bad downturn I can add to the stocks with money from bonds/cash. My hope is to let the taxable stock funds grow and pass on to my children that which will inevitably come from my Mom in the next few years.* To some, this exercise may be "counting your chickens too soon", but I have enough in my taxable account now to start the clock ticking on the penalty and just add to the funds later. I am looking forward to your comments. Cheers, Charlie* *

I am happy someone enjoys dealing with this. I do not! But, if you do,
God bless...............I would rather have my toenails pulled out

JG

[MRGALT2U]

Quote:

Originally Posted by charlie I would like to have your comments on the following portfolio allocations for a couple in RMD.* It is assumed that that the taxable and sheltered accounts are equal and all are with Vanguard. Also assume that income is needed from both accounts. Taxable Accounts: 25% Tax Managed Growth & Income 12.5% Tax Managed International 12.5% Tax Managed Small Cap 25 % 5 year CD ladder with Penfed 15% Intermediate Term Bond Index 10% Prime Money Market Sheltered: 25% Windsor II 12.5% Small Cap Value 12.5% REIT 10% Prime Money Market 10% Unhedged Foreign Bond (GIM) 30% CPI linked bonds paying 2+% plus CPI Another alternative would be to split the stock accounts up as per the "coffeehouse" approach with 8.33% to each account.* *Thus the 3 tax managed funds in the taxable account would have equal weight with the 3 value funds in the sheltered account and the combined ports would be 50/50. Some of you may recall that my IRA is currently allocated via coffeehouse with equal weight to Large Cap, Windsor II Small Cap, Small Cap Value, Small Cap International, Total international and REIT while the taxable account is in Wellesley.* I believe the 1st approach would be a little more conservative than the 2nd and it would allow me to go with the Admiral class on Windsor II and Tax Managed Growth and Income. 8.33% of the combined ports would be allocated to each stock fund under the coffeehouse method.* My thinking on the S&D taxable account is to rebalance stocks with income from the bonds/cash and just let them drift higher (I hope) until the 5 year penalty period has expired.* In any case if we hit a bad downturn I can add to the stocks with money from bonds/cash. My hope is to let the taxable stock funds grow and pass on to my children that which will inevitably come from my Mom in the next few years.* To some, this exercise may be "counting your chickens too soon", but I have enough in my taxable account now to start the clock ticking on the penalty and just add to the funds later. I am looking forward to your comments. Cheers, Charlie* *

I am happy someone enjoys dealing with this. I do not! *But, if you do,
God bless...............I would rather have my toenails pulled out *

JG

[unclemick]

Charlie - a couple of random shots - given that I lean toward simple.

One case - is Ben Grahamesque(not a real word Al) and the other is Da Coffee House as you mentioned. Looks like you have thought the matter thru - Soooooo

My two cents - if your crystal ball says the ride forward will be rougher than -say the last five yrs. - and/or you may have to push your take out/vs your weighted portfolio calculated SD harder - then go the more conservative.

On the other hand - your Coffee House has stood you in good stead to date - right - so if your crystal ball says more of the same or wishy washy - why not stick with the horse you rode in on.

One thing - outside the box - you have your 'management team' trained to work either plan - just in case you're out of pocket for any reason.

In my case - Vanguard Lifestrategy taxable and IRA - the SO has absolutely zero interest in investing of any kind - hence my tendency toward simple and auto deduct to checking/savings.

[laurence]

I'm not nearly as sophisticated as you, Charlie, but my two cents are, if the more conservative portfolio meets your targets, go for it. I'm all about target investing, once you reach the numbers that allow to to acomplish your goals, it's foolish to take additional risk for no other reason than "more". But like unclemick2 said, coffeehouse is not exactly a hedge fund, so your not taking undo risk there. So is there something you would be able to do with the best case scenario of the riskier approach that you couldn't do with the less risky approach? That would be the key for me.

[preben]

Charlie; great portfolio no matter what!

But since we are at the tinkering stage (I can't help it either! I WANT my value twist no matter what) I would go for the coffee house approach myself - having the same % allocation to each asset class/group is very comforting for my soul (10*10% in my case) as I admit that I have no clue what will do best in the future...

Cheers!

[charlie]

Before this thread fades to oblivion, I want to thank those who
responded ..... Lawrence, unclemick, Ben and even JG.

What I have decided to do is leave the current IRA alone for now
invested a la coffehouse and revisit the issue of expanding the
approach to include both taxable accounts and sheltered when
the need arises.

In the meantime, I have exchanged the Wellesley in my taxable
to equal value of Tax Managed International, Tax managed Small
Cap and Tax Managed Growth and Income plus Intermediate
Term Bond Index.* This brings the taxable port to a 50/50
allocation.* This will start the clock running on the penalty period.

Unclemick, I appreciate your comments about the wife's eyes
glazing over.* I have told her to just collect the income from the
taxable accounts and not sell any of the stock unless she has to.

As for the IRA, I have asked her to fold my IRA into hers and put
it all into Wellesley, drawing a regular amount monthly by automatic
transfer to our taxable money market.* I have been bringing my daughter
along in her investment education (she has my genes, mostly) and
she will be able to help her Mom if/when* that becomes necessary.

Cheers,

Charlie*