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Old 10-26-2015, 06:28 AM   #21
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So I'm deciding if I need to have Vanguard manage the portfolio for annual fee of 0.03% or just purchase a Life Strategy Fund and add the REIT and HealthCare funds.
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Maybe a typo there. Vanguard charges 0.30% and not just 0.03%.
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Old 10-26-2015, 06:30 AM   #22
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I sold all but one of them on Friday. The only security we still hold from our old portfolio is PIMCO Total Return which he has listed under U.S. short-term bond, U.S. intermediate-term bond, and U.S. long-term bond on his proposal.

I am looking to sell PIMCO, too, when it's trending up.
I do not see any reason to wait to switch from PIMCO Total Return to a Vanguard bond fund. If the Pimco fund trends up, so will the Vanguard fund. In the meantime, you will get to enjoy the higher expense ratio of the Pimco fund.
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Old 10-26-2015, 08:21 AM   #23
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Thanks to all for your feedback on the portfolio proposal, especially the bond portion.

The VG advisor who is just helping us set up the portfolio indicated that we would draw from the short-term bond fund for RMDs and living expenses, but is there a reason I cannot simply draw from Total Bond Market and eliminate the short-term bond fund?

Do any of you own the Ultra short bond fund?

I wanted to get the forum's response to the preliminary portfolio proposal. Now that I have had a number of responses, I will tell you that my husband and I are not at all comfortable with a 50/50 AA. We would like to keep up with inflation, but mainly we do not want to lose principal and be worse off. We fear the market, and bonds aren't yielding much.

What are the safest places for the bulk of our savings where we don't have to worry about a loss of value during down or flat markets and poor bond performance?

Thanks guys.
Not sure why Vanguard would have used a 50:50 asset allocation if you didn't agree to it.

You probably know this as you've used FIRECALC, but here are the 30 yr probabilities at several withdrawal rates (I did not pick up what your target WR is) for the full range of equity allocations.

As others have replied, the only safe assets that are unlikely to lose value are CD's or online savings.
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Old 10-26-2015, 01:19 PM   #24
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Please keep us updated on the progress of your portfolio, wyecrabber1. Yes, it is very similar to my own Vanguard proposal.

When I read portfolio report cards, they grade down for including Total Stock Mkt and 500 Index as being duplication. Just parroting what I read.

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Old 10-26-2015, 01:54 PM   #25
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Old 10-26-2015, 06:32 PM   #26
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Goldenmom -- in a prior thread you asked about making a Swedroe style portfolio with tilts to value, small, and international funds. The vanguard advisor portfolio is significantly different from this. Why the change? If you believe in the benefits of value/size/int diversification, the vanguard advisor portfolio won't give you much exposure to that.

For simple portfolios that are easy to manage, I would look at this page: https://www.bogleheads.org/wiki/Lazy_portfolios and I would consider all of them except the permanent portfolio.

FYI It's hard to recommend a portfolio without knowing about a persons investing goals, timeframe, risk tolerance, interest in investing, ability to self-manage, ability to stay the course, etc. So look at any advice here critically and realize it may not apply to your situation.

Regarding the vanguard advisor suggestions, I would drop all of the different bond funds and stick with VBTLX (US total bond fund) or CDs (for simplicity). I would definitely drop the international bond fund and put that into either VBTLX or increase the allocation to international equities. That would leave you with 3 funds: US total stock, Int total Stock, and US total bond.

I do believe in the benefits of diversifying according to size, value and internationally. So if I was willing to tolerate a more complicated portfolio (which I do personally), I would diversify by adding funds such as US small value (VISVX or VBR), international small (VSS), and international value (iShares EFV).
Photoguy, what do you think about the Vanguard High Yield Corporate bond fund - VWEAX? I have read that it has a low default rate with a moderate amount of risk. As you know, the investment grade bonds have unattractive yields and rate increase risk.

I keep reading that even the riskier bond funds are not anywhere near the risk of stock funds. I'm wondering if I could increase portfolio income by including some riskier high-yield corporate bonds while minimizing equity exposure.

Also, a question about small value tilt. Did you recommend US Small Value - VISVX because Vanguard's International Value Fund - VTRIX has a .44% expense ratio and a risk level of 5?

I seeing where many are moving away from U.S. securities. What international and/or global Vanguard funds would you recommend to replace or supplement Total US Stock Market Index- VTSAX? I see that Vanguard has Total International Stock Index, Total World Stock Index, and Global Minimum Volatility funds.

Thanks for your help. I am carefully considering your suggestions.
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Old 10-26-2015, 06:46 PM   #27
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I use total us, total us bond, total intl as core funds. I then tilt to us mid/small, add reit , and tilt to EM. Also add tax free muni as well as hi yield.

With six investing spaces, this works for us. When I retire, there will be some opportunity to combine a few spaces.
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Old 10-26-2015, 07:08 PM   #28
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I use total us, total us bond, total intl as core funds. I then tilt to us mid/small, add reit , and tilt to EM. Also add tax free muni as well as hi yield.

With six investing spaces, this works for us. When I retire, there will be some opportunity to combine a few spaces.
Can you list fund names and tickers for your tilts? (I know the core funds.) Thanks so much!
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Old 10-26-2015, 11:13 PM   #29
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I use total us, total us bond, total intl as core funds. I then tilt to us mid/small, add reit , and tilt to EM. Also add tax free muni as well as hi yield.

With six investing spaces, this works for us. When I retire, there will be some opportunity to combine a few spaces.
Exact same strategy and tilts as we are! Great minds...?
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Old 10-27-2015, 05:11 AM   #30
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Can you list fund names and tickers for your tilts? (I know the core funds.) Thanks so much!
Sure. Take a look. Some of the symbols are proxies.
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Old 10-27-2015, 07:29 AM   #31
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Goldenmom,
Would you mind sharing the approximate withdrawal rate you need? The answer to this question allows people to run some models with the historical return data and provide information on how various asset mixes might have performed. Your posts indicate you have jumped to the micro level (ticker symbols) when it is always best to start with a basic foundation: objectives, timeframe, tolerance for volatility, desired/required withdrawal rate, etc.

General: Once you make investing efficient (as you're doing by getting rid of expensive "advisors" and high-cost mutual funds), you've reaped the low hanging fruit (and gone a long way toward making your investments work hard). There are no other substantial "bargains" to be had--expected returns of any particular investment are fairly well linked to volatility/risk. But, you can reduce the volatility of your portfolio as a whole by mixing assets that tend to move independently or even in opposite directions. And, if your timeframe is long enough, the short-term volatility of various assets becomes inconsequential.
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Old 10-27-2015, 08:15 AM   #32
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In addition to WR as samclem asks, other income sources (Soc Sec, pensions, other) would be a significant consideration. How much 'floor income' is provided by other income sources would influence portfolio risk tolerance for most people. E.g. if portfolio is entirely above and beyond floor income, more risk may not be a serious concern. If the OP has no other income sources, less risk might be prudent.
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Old 10-27-2015, 01:08 PM   #33
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Exact same strategy and tilts as we are! Great minds...?

Most definitely.

I think OP is in the research stage, and trying to understand why some say 3 funds, VG says 10, and great minds may have other approaches.

So, my path is not right for OP. But revealing my SS of many colors will help establish some baseline understanding.
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Old 10-27-2015, 04:10 PM   #34
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I seeing where many are moving away from U.S. securities. What international and/or global Vanguard funds would you recommend to replace or supplement Total US Stock Market Index- VTSAX? I see that Vanguard has Total International Stock Index, Total World Stock Index, and Global Minimum Volatility funds.

Thanks for your help. I am carefully considering your suggestions.
I'd go with VFWAX or VEU. All-world ex-U.S.. That should be a nice one fund solution for international. It does seem a little short on small-cap.
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Old 10-28-2015, 12:25 PM   #35
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Goldenmom,
Would you mind sharing the approximate withdrawal rate you need? The answer to this question allows people to run some models with the historical return data and provide information on how various asset mixes might have performed. Your posts indicate you have jumped to the micro level (ticker symbols) when it is always best to start with a basic foundation: objectives, timeframe, tolerance for volatility, desired/required withdrawal rate, etc.

General: Once you make investing efficient (as you're doing by getting rid of expensive "advisors" and high-cost mutual funds), you've reaped the low hanging fruit (and gone a long way toward making your investments work hard). There are no other substantial "bargains" to be had--expected returns of any particular investment are fairly well linked to volatility/risk. But, you can reduce the volatility of your portfolio as a whole by mixing assets that tend to move independently or even in opposite directions. And, if your timeframe is long enough, the short-term volatility of various assets becomes inconsequential.
My husband will be 70 1/2 in Feb. 2016 so there will be a RMD soon. We have cut living expenses drastically and can manage on pensions and SS with an additional 1K per month from our portfolio. If my husband is able to continue working after his surgery next month, we will take nothing from the IRAs except for the RMDs to allow the nest egg to grow. Unexpected health problems related to his surgery could turn our current requirements upside down, however.
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Old 10-28-2015, 12:26 PM   #36
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My husband will be 70 1/2 in Feb. 2016 so there will be a RMD soon. We have cut living expenses drastically and can manage on pensions and SS with an additional 1K per month from our portfolio. If my husband is able to continue working after his surgery next month, we will take nothing from the IRAs except for the RMDs to allow the nest egg to grow. Unexpected health problems related to his surgery could turn our current requirements upside down, however.
I know we will need to take some risks, but I want to take smart risks.
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Old 10-28-2015, 12:50 PM   #37
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I know we will need to take some risks, but I want to take smart risks.
Is this discussion entirely about what is in an IRA? Just checking to see if there are other accounts to take into mind, such as taxable, 401(k), etc.

If all investments are in the IRA, you can easily go from 3 funds to add'l no. of funds for 'smart risk'. I think you know that means 'more risk'. It's easier to go from fewer to more funds.

The original advice from VG is fine in most people's eyes. I think John Bogle (and others) might question the need for foreign investments.
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Old 10-28-2015, 05:30 PM   #38
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Is this discussion entirely about what is in an IRA? Just checking to see if there are other accounts to take into mind, such as taxable, 401(k), etc.

If all investments are in the IRA, you can easily go from 3 funds to add'l no. of funds for 'smart risk'. I think you know that means 'more risk'. It's easier to go from fewer to more funds.
Per an earlier thread, it's virtually all in traditional IRAs (hers and his).

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My husband will be 70 1/2 in Feb. 2016 so there will be a RMD soon. We have cut living expenses drastically and can manage on pensions and SS with an additional 1K per month from our portfolio. If my husband is able to continue working after his surgery next month, we will take nothing from the IRAs except for the RMDs to allow the nest egg to grow. Unexpected health problems related to his surgery could turn our current requirements upside down, however.
As you’ve probably read, there are two “pure’ ways to take your withdrawals: 1) As a starting amount adjusted each year for inflation, or 2) as a percent of the year-end portfolio value every year. The first method gives you a very predictable income stream, but it’s possible that you’ll run out of money if your investments don’t keep up with inflation. It’s impossible to entirely run out of money using the second method (since you’ll always be taking just, say, 4% off the top of the portfolio, it can’t be run dry), but if the withdrawal rates are higher than the real growth of the portfolio, you’ll slowly kill the goose that is laying the eggs and your annual withdrawal amounts will be worth less and less. Obviously using the second method will give you variable withdrawal amounts every year—it goes up when your accounts grow, it goes down when they decline. Most people increase the annual percentage withdrawn as they get older to increase the chances they’ll spend as much of it as possible (unless they deliberately want to leave a “legacy” to an heir, etc)

There are all kinds of variations between these two extremes—a particularly popular one is “VPW”—you can search this forum and Bogleheads for more on that, it allows higher withdrawal rates. Another popular withdrawal method is Bob Clyatt’s “95% rule”, which uses the “year end %” approach, but smooths out the bumps so you always get to withdraw at least 95% of the nominal dollars you had the previous year.

I recommend you try to find the time to explore FIRECalc (here: FIRECalc ). You can try different mixes of assets, try a couple different withdrawal methods (Fixed dollar amount adjusted for inflation, % of year end portfolio, Bob Clyatt's 95% rule, etc). I think you'll find a couple of things:

1) Stocks >really< improve a portfolio's ability to continue to keep up with inflation, and grow, over time.

2) If you can accept a varying amount of withdrawals each year (95% rule, etc), it ultimately results in higher average total withdrawals and it significantly improves the portfolio's survival prospects (because the portfolio has a chance to recover from the occasional dip).

I can do some illustrative FIRECalc runs for you if you'd like, but I'd be shooting in the dark without knowing your portfolio size (because the withdrawal rate is fundamental to getting meaningul results). That's a bit of information you may be reluctant to share, which is fine. But if you try FIRECalc and havre any questions, just post them here, as there are a lot of people who know how to make the program sing.
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Old 10-28-2015, 07:37 PM   #39
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Is this discussion entirely about what is in an IRA? Just checking to see if there are other accounts to take into mind, such as taxable, 401(k), etc.

If all investments are in the IRA, you can easily go from 3 funds to add'l no. of funds for 'smart risk'. I think you know that means 'more risk'. It's easier to go from fewer to more funds.

The original advice from VG is fine in most people's eyes. I think John Bogle (and others) might question the need for foreign investments.
We have 2 IRAs totaling nearly 800K and a small individual 401k with 24K. I'm researching the lazy portfolios and am interested in adding a small value tilt. The only fund I have bought so far is Vanguard Intermediate-Term Treasury Fund Admiral Shares in my husband's account. I like the idea of a lazy portfolio that will do OK if the bear is growling. Coffeehouse?
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Old 10-28-2015, 07:48 PM   #40
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Per an earlier thread, it's virtually all in traditional IRAs (hers and his).


As you’ve probably read, there are two “pure’ ways to take your withdrawals: 1) As a starting amount adjusted each year for inflation, or 2) as a percent of the year-end portfolio value every year. The first method gives you a very predictable income stream, but it’s possible that you’ll run out of money if your investments don’t keep up with inflation. It’s impossible to entirely run out of money using the second method (since you’ll always be taking just, say, 4% off the top of the portfolio, it can’t be run dry), but if the withdrawal rates are higher than the real growth of the portfolio, you’ll slowly kill the goose that is laying the eggs and your annual withdrawal amounts will be worth less and less. Obviously using the second method will give you variable withdrawal amounts every year—it goes up when your accounts grow, it goes down when they decline. Most people increase the annual percentage withdrawn as they get older to increase the chances they’ll spend as much of it as possible (unless they deliberately want to leave a “legacy” to an heir, etc)

There are all kinds of variations between these two extremes—a particularly popular one is “VPW”—you can search this forum and Bogleheads for more on that, it allows higher withdrawal rates. Another popular withdrawal method is Bob Clyatt’s “95% rule”, which uses the “year end %” approach, but smooths out the bumps so you always get to withdraw at least 95% of the nominal dollars you had the previous year.

I recommend you try to find the time to explore FIRECalc (here: FIRECalc ). You can try different mixes of assets, try a couple different withdrawal methods (Fixed dollar amount adjusted for inflation, % of year end portfolio, Bob Clyatt's 95% rule, etc). I think you'll find a couple of things:

1) Stocks >really< improve a portfolio's ability to continue to keep up with inflation, and grow, over time.

2) If you can accept a varying amount of withdrawals each year (95% rule, etc), it ultimately results in higher average total withdrawals and it significantly improves the portfolio's survival prospects (because the portfolio has a chance to recover from the occasional dip).

I can do some illustrative FIRECalc runs for you if you'd like, but I'd be shooting in the dark without knowing your portfolio size (because the withdrawal rate is fundamental to getting meaningul results). That's a bit of information you may be reluctant to share, which is fine. But if you try FIRECalc and havre any questions, just post them here, as there are a lot of people who know how to make the program sing.
I'd be delighted for you to run the FireCalc. Thanks for taking the time. Hope guests on this forum will benefit as well. Can you remind me what portfolio(s) you favor?
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