My VG Financial Plan.....so far

[Poundkey]

I just received my online report from VG. My phone appointment is for May 24th. This thing is 13 pages long so I'll try to give it in a nutshell.
Before I get into numbers......the first surprise was that they suggest I completely do away with my cash reserves (mainly MM Prime) and plow that into their mix. I did mark "retired" for myself and wife on their form.*

They are (as expected) suggesting a stock/bond mix of 60/40.

As it stands now I'm 40% stocks, 23% bonds, and 37% cash. I'm aware that 37% cash is a bit much and have been using a modified DCA to lower that number......although cash is not a bad deal these days.

The funds they suggested (non IRA) were pretty much what I expected. Essentially a consolidation of funds like Index 500, Wellington, GNMA, etc. into Total Stock Market Index and Total Bond Index.

They also suggested raising my international stocks from 3% to 12%.......not a bad idea, and something I'm working on.

I had marked our traditional IRA funds as something I did not want to change, but will be open to discussion on them during the phone consultation.
They are: Primecap, WindsorII, and Explorer.

Something I found interesting. They evaluated my current portfolio with thier suggested allocation:
Average total return (1960-2005): Mine.....8.3%* theirs.....9.4%

Volatitlity.......Best single year........Mine......21.1% theirs....29.6%
* * * * * * * * * * *Worst single year......Mine.....-8.4%* *theirs....-17%

Number and percentage of years with loss: Mine: 7 of 46 (15.2%)
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *Theirs 11 of 46 (23.9%)

Will check back after the phone session. In the mean time ......any thoughts?
Thanks

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[bwtucker83]

Have you thought about putting any of that money into real estate?

[Poundkey]

Originally Posted by bwtucker83

Have you thought about putting any of that money into real estate?

For whatever reason I've never seriously considered it. Not sure if you're meaning REIT funds or actual property. Besides my home I do own the lot next door which has appreciated quite a bit. The sale of that could come in handy some day if needed. We also own (inherited) a farm in Iowa. I doubt I would ever sell that. It has been in the family since 1875 and produces a decent income.

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[bwtucker83]

I would urge you to look into it. You can get into an apartment complex that is fully occupied, higher a managment company and essentially never have to think about it again. On top of that you could be looking at getting a 15 to 30% cash on cash return and your tenants would be paying down your loan and creating thousands of dollars in equity each month. The great things about apartments are they are not really affected by the real estate bubble because their worth is determined by their net operating income, not some appraisers opinion or homeowners demands. I feel like it is one of the safest and most rewarding investments out there. Not to mention you get tax benefits.

Brad