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Lazy Portfolio for Retirees?
Old 08-25-2007, 09:05 AM   #1
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Lazy Portfolio for Retirees?

I am trying to simplify the overall tax deferred IRA for my DW in case something happens to me. Are there any retirees using a 4 Fund Couch Potato type Portfolio?
25% TIPS
25% Total Bond
25% TSM
25% Total Intnl ( Or possibly 20% and add 5% REIT Index)

This would be easy for her to keep balanced and should be safe for the 3.5% withdrawal rate we currently use.

I can't bring myself to do a straight "Target Retirement" portfolio. However, a few appropriate external Funds centered around a Wellesley Fund core might be appealing.

This would cut things back from a current 10 Fund Portfolio.
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Old 08-25-2007, 09:45 AM   #2
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Seems like you have 3 good choices, the 4 funds you indicated, Wellesley + some compatible fund (my wife's IRA is Wellesley + Star) or a Target Retirement type fund (don't know what you don't like about them, do you figure they don't capture enough rebalance benefit?) my main retirement fund is a TR type fund but we do have some stocks too. Any of these would be simpler than a 10 fund portfolio.
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Old 08-25-2007, 09:49 AM   #3
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Quote:
Originally Posted by Maneiac View Post
I am trying to simplify the overall tax deferred IRA for my DW in case something happens to me. Are there any retirees using a 4 Fund Couch Potato type Portfolio?
25% TIPS
25% Total Bond
25% TSM
25% Total Intnl ( Or possibly 20% and add 5% REIT Index)
I like it for your stated needs.

Personally I'd lighten up a bit on TIPs. My philosophy is to have enough TIPS for a year or two worth of expenses. My understanding is that stocks historically do poorly early in an inflation cycle, then actually tend to do well; my strategy is to have enough TIPs to see me through the stock adjustment period only given their otherwise ho-hum return.

Go for it - Bogle and Dolin would approve.
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Old 08-25-2007, 11:42 AM   #4
 
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My written instructions to my wife are to either get into a taget retirement fund or to go to a similar portfolio that you show with instructions on how to rebalance the AA as she gets older, I just haven't decided what funds I want in the simple portfolio.
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Old 08-25-2007, 11:55 AM   #5
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I like the lazy portfolio as well. Only problem, I'm too lazy to make the conversion.
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Thanks all
Old 08-26-2007, 08:03 AM   #6
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Thanks all

As long as I leave good enough instructions as to why I selected these funds and the appropriate percentages to use for rebalancing things should be better than the convoluted set of instructions I currently have for 10 Funds:confused:

Possibly before all is said and done, the simplest method certainly would be to have everything in a Target Retirement fund for her.......at least there are no fees involved to change this IRA around a bit. (Simplify it )


Thanks R-I-T...You have given me something to think about as far as TIPS allocation. My allocation was based on Larry Swedroe's recent bond book pg.226 but even a 25% allocation would be enough for 5 years expenses.

Larry
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Old 08-26-2007, 11:01 AM   #7
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55.47%
44.53%
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Old 08-26-2007, 11:49 AM   #8
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Maneiac,

Your proposed 4-fund portfolio is very similar to that advocated by Taylor from the Bogglehead forum. It is simple but yet diversified. A 50/50 (equity/fixed income) allocation seems appropriate for someone in his/her 50s or someone who is conservative. An equal split between TIPS and Total Bond Market is a good idea to provide inflation protection and income.
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Old 08-26-2007, 04:14 PM   #9
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It looks very conservative, but OK. I believe that Vanguard will rebalance for you once a year. Check on that. They will also do an automatic RMD for you. Makes it easy for her.

I like the 50/50 US/intl.

But the 50/50 fixed income/equities looks too conservative for me. How about 30/30/20/20 US/intl/bonds/TIPS? (=60/40 equities/FI.)

How about a Margarita portfolio? 1/3 US, 1/3 intl, 1/3 bonds or TIPS.

My 2 cents:

I have never been a fan of bond funds. I see SS as my fixed income component. Individual bonds I don't like either. They can be called. I can see individual TIPS as a bucket.

Even though I own Vanguard's REIT fund, I would not choose that one for my one sector fund. I prefer VGENX, Vanguard's energy index fund.

For now, I am all equities, 50/50 US/intl. SS will be my 'bond fund'.
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