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IRA Portfolio in retirement
Old 09-08-2006, 02:44 PM   #1
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IRA Portfolio in retirement

I had time on my hands so I took a look our IRA portfolio and concluded that our Oakmark Global could be better replaced by Dodge & Cox International (DODFX) or Vanguard Global Equity (FHGEX).

Then I was surprised at how much of our portfolio is foreign stocks so thought maybe I should consider moving some of my foreign to either of my balanced funds (could do also Fidelity Balanced to avoid transaction fee).* Here is where we are (MM + TIPs represent 3 years withdrawals):

Dodge & Cox Balanced 37.1%
Oakmark Equity Income 21.2%
Oakmark Global * * * * * * * * 12.6%
MM * * * * * * * * * * * * * * * * 10.2%
Tips * * * * * * * * * * * * * * * * * 6.7%
Pacific/India funds * * * * * * * * * 3.1%
Fid Low Priced * * * * * * * * * 0.4%

Running through a profolio analy:
Large Value 24.3%
Large Blend 10.6%
Small /Mid Stocks * 0.8%
Foreign Stocks 24.2%
Bonds * * * * * * * * 23.8%
Short Term 16.3%

I like the India Fund because I am interested in the country, and it is really just chump change.* I want to keep the Oakmark and Dodge & Cox balanced funds, MM and TIPS (to give me that cushion to ride out a down swing).* We have SS and a modest pension (and our home) as other assetts.

Were you me what you do?* My target return for the total IRA portfolio is at least 8% compounded (those TIPS and MM slow things down a bit - maybe I should put at least half of the MM into CDs).

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Re: IRA Portfolio in retirement
Old 09-08-2006, 02:50 PM   #2
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Re: IRA Portfolio in retirement

Personally, I would mix in some non-USD bonds (GIM or BEGBX) and some commodities exposure. I'd probably take it out of some of the large caps and some of the foreign stocks.
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Re: IRA Portfolio in retirement
Old 09-08-2006, 03:29 PM   #3
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Re: IRA Portfolio in retirement

I forgot to list 8.6% in Fid CN, which is in large part commodities. Would that do the job Brewer?

I will add BEGBX to my go to list.
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Re: IRA Portfolio in retirement
Old 09-08-2006, 03:36 PM   #4
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Re: IRA Portfolio in retirement

I think international stocks deserve up to 50% of your equity allocation, so you are not overweighted.
See, e.g. *http://home.flash.net/~factoids/fact6/fact.htm

I see you appear to dislike small/mid-cap equities. *I have about 9% of total assets in small/mid foreign stock funds.

Another good international value fund is the Vanguard one: VTRIX. *We have VTRIX in 529 plans, DODFX in both an IRA and after-tax account. *VTRIX has alot more stocks in its fund, while DODFX has under 100 issues (I think).
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Re: IRA Portfolio in retirement
Old 09-08-2006, 03:53 PM   #5
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Re: IRA Portfolio in retirement

Quote:
Originally Posted by LOL!
I think international stocks deserve up to 50% of your equity allocation, so you are not overweighted.
See, e.g. *http://home.flash.net/~factoids/fact6/fact.htm
...
Another good international value fund is the Vanguard one: VTRIX. *We have VTRIX in 529 plans, DODFX in both an IRA and after-tax account. *VTRIX has alot more stocks in its fund, while DODFX has under 100 issues (I think).
It is comforting to know that someone doesn't think I let the international % get too high.*

Quote:
Originally Posted by LOL!
I see you appear to dislike small/mid-cap equities.* I have about 9% of total assets in small/mid foreign stock funds.
Its not that I dislike small/mid-caps but I do like the decisions made by the managers of the two balanced funds I hold.* When I bought them one was more large cap, the other mid-cap.* I think there has been some migration over the years.*
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Re: IRA Portfolio in retirement
Old 09-08-2006, 05:40 PM   #6
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Re: IRA Portfolio in retirement

Quote:
Originally Posted by Brat

Its not that I dislike small/mid-caps but I do like the decisions made by the managers of the two balanced funds I hold. When I bought them one was more large cap, the other mid-cap. I think there has been some migration over the years.
We own DODBX as well, but I do not think it is the decisions made by the managers that make them go all large cap.

Since DODBX is so huge, the managers cannot buy a small cap stock and have it contribute materially to their bottom line. They probably cannot buy more than 5% of the outstanding shares of any single company and that might only amount to a miniscule amount of money in the DODBX itself.

Anyways, many times the hands of managers are tied.
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Re: IRA Portfolio in retirement
Old 09-08-2006, 06:00 PM   #7
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Re: IRA Portfolio in retirement

Good point.* I did notice in the Fidelity analysis that there is some small cap representation but I didn't include it as it was sooo small.* I do have a few shares of a small cap tec stock but it too even a smaller portion of the portfolio than my India fund, so wasn't worth mentioning.

Frankly, I have more confidence in the two balanced funds returns and preservation of capital than I have in the retirement target funds.
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Re: IRA Portfolio in retirement
Old 09-08-2006, 07:34 PM   #8
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Re: IRA Portfolio in retirement

Remember that most US companies are very international. Much of their income comes from overseas.

I'm very pedestrian. I like the following breakdown:

Large Caps -- 40% (Vanguard Total Market or S&P Index)
Small Caps -- 20% (Vanguard Small Cap Index)
International - 20% (D&C plus Vanguard Emerging Mkts)
Fixed Income - 20% (CDs and Ind Bonds 2/3 yrs living)

I don't like balance funds because they are equivalent to a bond mutual fund. Bond funds don't mature so you can never be sure when you will get all of your money back. I use fixed income for a ladder for living expenses for about 3 years.

I like to keep it simple.

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Re: IRA Portfolio in retirement
Old 09-08-2006, 08:02 PM   #9
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Re: IRA Portfolio in retirement

Quote:
Originally Posted by 2B
Remember that most US companies are very international. Much of their income comes from overseas.
Remember also that many overseas companies are very exposed to the US. Much of their income comes from the US.

However, in practice, the performance of a company's stock depends much more on where they are headquartered (or is it where their stock is primarily listed?) than on where their markets are located.

(Strange as this may seem... and now I am wondering about those Chinese companies which incorporated and listed in the US, while doing all of their business in China... how do they behave?)

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Re: IRA Portfolio in retirement
Old 09-08-2006, 08:32 PM   #10
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Re: IRA Portfolio in retirement

Quote:
Originally Posted by 2B
Remember that most US companies are very international. Much of their income comes from overseas.

I'm very pedestrian. I like the following breakdown:

Large Caps -- 40% (Vanguard Total Market or S&P Index)
Small Caps -- 20% (Vanguard Small Cap Index)
International - 20% (D&C plus Vanguard Emerging Mkts)
Fixed Income - 20% (CDs and Ind Bonds 2/3 yrs living)

I don't like balance funds because they are equivalent to a bond mutual fund. Bond funds don't mature so you can never be sure when you will get all of your money back. I use fixed income for a ladder for living expenses for about 3 years.

I like to keep it simple.
2B,

You have 80% in equities. Are you going to keep that high percentage into retirement? What is a "Ind" bond? How specifically do you have your fixed income ladders set up?

Thanks
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Re: IRA Portfolio in retirement
Old 09-08-2006, 10:29 PM   #11
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Re: IRA Portfolio in retirement

I presume he means individual bonds.
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Re: IRA Portfolio in retirement
Old 09-09-2006, 06:30 AM   #12
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Re: IRA Portfolio in retirement

Quote:
Originally Posted by Brat
I presume he means individual bonds.
True. I swore off bond funds when I owned some many years ago and interest rates just about doubled. Almost half of my principal disappeared forever. I decided that if I bought 5 yr bonds or CDs I would know what my principal was going to be in 5 yrs.

I realize 80% in equities is high and I've not decided how much I'll carry into official retirement. Since I am "actively" investing, my fixed income level is low because interest rates are low. My fixed income level will creep up because I'll look at more years of living expenses in cash equivalents. I am also considering a CD "annuity" to cover the time between retirement and being eligable for social security and medicare. That in itself would be almost 40% of my portfolio.
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Re: IRA Portfolio in retirement
Old 09-10-2006, 06:29 PM   #13
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Re: IRA Portfolio in retirement

Quote:
Originally Posted by 2B
T I am also considering a CD "annuity" to cover the time between retirement and being eligable for social security and medicare. That in itself would be almost 40% of my portfolio.
So you are considering putting 40% of our portfolio into CDs during retirement? No bonds? Are you restricting your bond investments to treasuries or?
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