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Old 04-16-2012, 08:21 PM   #41
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Originally Posted by yakers View Post
Which funds are in tax deferred/free and which taxable?
I didn't try to fit these into my account sizes, but here is a good reference to tell you where to put each:

Principles of Tax-Efficient Fund Placement - Bogleheads

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Old 04-17-2012, 09:39 AM   #42
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Yakers -

All my RIP emulation is in tax-deferred Roth Acct. I don't own each and every security listed above in the RIP list- I usually own only the cheapest security in each class, and I've simplified the bond portion using AGG, BWX, plus supplementing w/ Lending Club as a quasi-bond holding (I also see zero upside in owning 30-year government bonds right now).

My (taxable) brokerage acct is much simpler with zero bonds and little re-balancing. I figure I can always overweight bonds in my tax-deferred accts as I approach ER.

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Old 04-19-2012, 09:18 AM   #43
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RE Attempt -- thanks so much for pulling these updated numbers together. It is interesting to see what looks like a material added benefit from the full RIP Portfolio in the past few years-- sometimes complexity does help?

To answer your original question, the risk of coming inflation (and lower bond prices) does feel real to me -- how to tweak the RIP portfolio holdings to be safer from that? In fairness I have been personally defending on that for a number of years and, like most things, too clever by half. I basically cranked down the maturity/duration of my overall US bond holdings vis-a-vis the published portfolio and the result has been underperformance. But I believe the day will come when the yield curve starts to move up again (presumably from inflation) and bonds will get hurt. CDs were my answer at first since they are 'bond-like' but yields are essentially zero now, so that doesn't work. Short term bond funds like Vanguard's at least get you a bit of yield at what looks like safe levels of risk of default and rising interest rates.

The other thing I have been doing personally is moving toward more international bonds, treating the two domestic Medium Term and International Medium Term as one target asset allocation. To that end I have been shifting out of the US Medium term bonds into better yielding (and lower-deficit economies with less-risk-of-depreciation) currencies such as Aussie and Canadian dollars, and the fund FAX which holds Pacific Rim currencies from strong economies. That has given me comfort not only from better yields but also from currency appreciation against the dollar.

You have to decide whether you believe that currencies from these types of economies will do well against the dollar medium term. Personally I think with the world's economies becoming closer the dollar bias in most historical portfolios is fair to question, as is long-term dollar strength. RIP is non-dollar heavy compared to most things people recommend to Americans, but I am comfortable going even further out of the dollar at times like this.

Again, these are my personal tweaks in my own investing -- I am not trying to re-vamp the published portfolio -- it has done well and I continue to believe it is a sound basis for successful long term retirement investing.

Hope this helps!

ER for 10 years; living off 4.3% of savings (and a few book royalties ;-)
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Old 04-26-2012, 11:17 AM   #44
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Originally Posted by nun View Post
I'm completely biased in my analysis here, but I've had success with a couch potato portfolio of index funds. RIP looks way too complicated to keep an eye on overall asset allocation easily. I like DFA's idea that steady strategic investing, rather than tactical jumping about is the way to go.....but why do you need them to do that...and you can only buy their funds through financial advisers. More fees there. They are repackaging indexing, but saying hey we look for value too and like small can do that with any low cost index fund company

1) Wow that's really slicing and dicing.
2) If DFA was a retail fund company ie selling to the public I would like it better, why do the hide behind those financial advisors.
3) Use broad index funds, it's simpler and cheaper.
I agree. I read this book and enjoyed it, but to me, the asset allocation model is a bit complicated. For example, take emerging mkts. Vanguard's total International fund is comprised of about 25% emerging mkts. If 30% of your EQUITY portfolio is in International, you are well represented in this area. With bonds, Vanguard recommends their Intermediate Bond fund as the sweet spot. This will also give you the safety of US treasuries.
With respect to Gas and utilities... they are included in Vanguard's total stock market Index fund- at least solid companies that produce and manufacture. If you decide to purchase a separate fund for emerging and commodities, you best know what you are doing.

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