Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Vanguard Index ETF diversification fee based acct vs winging it
Old 02-28-2015, 03:37 PM   #1
Confused about dryer sheets
 
Join Date: Jan 2015
Posts: 7
Vanguard Index ETF diversification fee based acct vs winging it

62, retired, living off IRAs. Getting out of a fee-based acct, mainly due to the fact most holdings are Vanguard. Deciding which is best--transfer in kind all holdings, then add 4 Vanguard funds, or liquidate and invest all in Vanguard recommended 4 funds:

Fee Based (not sure why there are so many Vanguard account breakouts):
5% Cash
3% Mutual Fund FPACX FPA Crescent
4% IEF Ishares 7-10 yr treasuries
10% IEI Ishares 3-7 yr treasuries
4% IJH Ishares core S&P mid
10% Mutual Fund MWCIX Metropolitan West
3% PKW Powershares Dynamic
7% SFLNX Schwab US Large
5% SCHD Schwab US Dividend
1% DXJ Wisdomtree Japan Hedged
1% HEDJ Wisdomtree Trust
5% VEU Vanguard All World
7% VUG Vanguard Growth
1% VGT Vanguard IT
3% VCIT Vanguard Intermediate
5% VV Vanguard Large Cap
8% VCSH Vanguard Short Term Corp
19% BND Vanguard Total Bond

vs

14% VTI Vanguard US Stocks
6% VXUS Vanguard Foreign Stocks
45% BND Vanguard Total Bond
5% BNDX Vanguard Foreign Bonds
30% Cash/Short Term
__________________

__________________
Silverlocks is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-28-2015, 04:12 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Posts: 1,661
Quote:
Originally Posted by Silverlocks View Post
62, retired, living off IRAs. Getting out of a fee-based acct, mainly due to the fact most holdings are Vanguard. Deciding which is best--transfer in kind all holdings, then add 4 Vanguard funds, or liquidate and invest all in Vanguard recommended 4 funds:

Fee Based (not sure why there are so many Vanguard account breakouts):
not sure what you mean about vanguard breakouts. Or do you just mean they uses several vanguard ETFs in the account?

The two portfolios are so different by allocation that it is not reasonable to compare directly. What allocation are you wanting?
__________________

__________________
bingybear is offline   Reply With Quote
Old 02-28-2015, 04:13 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
"Powershares Dynamic" sounds very POWERFUL!

Is this all in IRAs or an after-tax acct? That's a big factor in your next step, due to cap gains considerations.

Just 20% equities, and you're kinda young. . .
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 02-28-2015, 04:38 PM   #4
Confused about dryer sheets
 
Join Date: Jan 2015
Posts: 7
all in IRAs.
Thank you for compliment "you're kinda young"...lol I am also kinda real skittish....exempt for the fee pd account, this has been sitting doing nothing since Dec. Don't know what I freak out about more....stocks, bonds, or foreign investments. Hence, why I am looking at 30% cash/short term; maybe stupid, but I could sleep better at nite.
I think I know just enough to be dangerous, but last time I was happy with my returns was 4 years ago, when I was the one doing all the diversification.
When I spoke to Vanguard rep, he didn't understand why fee-based advisor had chosen those Vanguard ETFs. He said some were redundant.
__________________
Silverlocks is offline   Reply With Quote
Old 02-28-2015, 04:47 PM   #5
Confused about dryer sheets
 
Join Date: Jan 2015
Posts: 7
speaking of cash....what are your opinions on how much total portfolio should be in cash? Some have told me 3-5 years living expenses (for me, $150k-$250k on $1.2m tl)

Elsewhere, I have read max 1 year.

Considering ultra-conservative!
__________________
Silverlocks is offline   Reply With Quote
Old 02-28-2015, 07:54 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,862
I always try to stay in the market while I'm making changes to my portfolio. If you can make the transfer piecemeal, you could use the 5% cash to purchase replacement shares in your new account while you simultaneously sell them in the old account. Transfer the new cash from the old account to the new account and repeat until everything is transferred.


If that is impractical, I'd sell shares wherever it is cheapest. That may be your fee-based account if that fee covers all commissions. That's what I did when we moved my mom's portfolio. We just told them to liquidate. That makes it very easy, though you will be out of the market for a few days.


For an in-kind transfer you'll need to see which funds Vanguard is willing to accept.
__________________
Animorph is offline   Reply With Quote
Old 03-01-2015, 06:36 AM   #7
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
To Silverlocks,

You have what I would consider an unmanageable mess. The only reason I can see this is that the guy you're paying is using the totally unnecessary complexity to justify the fee. I would definitely recommend you simplify and save the fees you are paying. Putting everything in Vanguard lets you use Admiral shares which match the Vanguard ETFs and probably beat most, if not all, of the other funds. The most complicated investment allocation I would not grump about is Paul Merriman's 10 fund allocation. Google him or PM me for a link if interested.

At your "young age" (same as mine ) you should probably have more than 20% in equities but it really comes down to your risk tolerance. I personally have 45% in equities - 50% V. Total Mkt, 10% V. REIT, 10% V. Sm Cap, 30% V. World Stk - all Admiral. My fixed income is mostly in a CD ladder going out 6 yrs. Cash is intended for this years spending a small emergency fund.

If you haven't read Andrew Hallam's Millionaire Teacher, I suggest you do. Then go for William Bernstein's Investors' Manifesto.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Old 03-01-2015, 10:14 AM   #8
Full time employment: Posting here.
GTFan's Avatar
 
Join Date: Apr 2013
Location: Atlanta
Posts: 636
Quote:
Originally Posted by Silverlocks View Post
speaking of cash....what are your opinions on how much total portfolio should be in cash? Some have told me 3-5 years living expenses (for me, $150k-$250k on $1.2m tl)

Elsewhere, I have read max 1 year.

Considering ultra-conservative!
Well, holding 30% in cash would be what I would consider way ultra-conservative especially given your age. A couple of years expenses in a high-yield savings account is all you need IMO. But note there have been some recent studies by Kitces and others that have shown that sticking to your AA with yearly (or banded) rebalancing is more efficient over the long term than holding cash as a buffer. Cash is more of a psychological crutch than a way to better returns, in other words, even if you religiously tap it only in down years (and refill in up).

Don't forget that the bond funds often hold 15-20% in cash too.
__________________
GTFan is offline   Reply With Quote
Old 03-01-2015, 10:25 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by Silverlocks View Post
speaking of cash....what are your opinions on how much total portfolio should be in cash? Some have told me 3-5 years living expenses (for me, $150k-$250k on $1.2m tl)

Elsewhere, I have read max 1 year.

Considering ultra-conservative!
I'd recommend only a small amount in cash (maybe 5%). It's a drag on your returns, and you can get better returns on short-term bond funds without incurring much more volatility.

Just to say it: A very small equity allocation does not decrease risk, though it may decrease year-to-year volatility. They aren't the same thing. The typical retirement investor doesn't sell his portfolio every year, so year-to-year ups and downs shouldn't be much of a concern. He's concerned about decades, and a major "risk" is failing to keep up with inflation and to grow the portfolio's real value to support future required spending. A low allocation to equities increases that risk. Play around with FIRECalc a bit before making any final decision on your asset allocation. Given your stated 4.1% withdrawal rate, a portfolio with 20s/80b has run out of money about 45% of the time over a 30 year window. A portfolio set at 60s/40b failed less than 10% of the time. And, aside from the failure rate, the higher stock allocations provide considerably higher average ending values (= more likely to be successful beyond 30 years, more likely to have gained enough money to provide a "cushion" for a big drop, more likey to provide dough for that trip to Europe, etc).
40s/60B and 60s/40b portfolios have, historically, done a great job of recovering from losses in a very reasonable timeframe (less than 5 years), especially when we consider the impact or reinvested dividends. We recently talked about that here.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 03-01-2015, 08:18 PM   #10
Dryer sheet aficionado
 
Join Date: Jun 2012
Location: Los Angeles, CA
Posts: 48
Quote:
Vanguard Index ETF diversification fee based acct vs winging it
I am amazed at people who agree to shave 1% off their investments per year to have some "adviser" hold their hand and rebalance, because that's essentially all that an adviser does. If you do have personal finance questions then hire a fiduciary adviser for a ONE time consultation -- not to CONSTANTLY manage your money!

Read this article by Vanguard about what an adviser does. All they do is rebalance (which ANYBODY can do) and prevent you from doing stupid things like attempt to sell all of your stocks after then market crashes (Do you have the descipline to do that?). Notice that an adviser does NOT "time the market", pull your money to safety in advance of a market crash, or anything like that. Therefore any adviser who claims to have helped his clients BEAT the market is selling snake oil. If they really have, then all they are doing is taking on greater risk.
https://pressroom.vanguard.com/conte...3.10.2014.html
__________________
ReadySkiDaddy is offline   Reply With Quote
Old 03-01-2015, 08:26 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by ReadySkiDaddy View Post
I am amazed at people who agree to shave 1% off their investments per year to have some "adviser" hold their hand and rebalance, because that's essentially all that an adviser does.
?? I think the OP knows this, it's what he said and probably why he posted his question, right?

Quote:
Originally Posted by ReadySkiDaddy View Post
Read this article by Vanguard about what an adviser does. All they do is rebalance (which ANYBODY can do) and prevent you from doing stupid things like attempt to sell all of your stocks after then market crashes.
If you are lucky that's all they do.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 03-01-2015, 08:27 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by ReadySkiDaddy View Post
I am amazed at people who agree to shave 1% off their investments per year to have some "adviser" hold their hand and rebalance, because that's essentially all that an adviser does.
?? I think the OP knows this, it's what he said in other posts and probably why he posted his question, right?

Quote:
Originally Posted by ReadySkiDaddy View Post
Read this article by Vanguard about what an adviser does. All they do is rebalance (which ANYBODY can do) and prevent you from doing stupid things like attempt to sell all of your stocks after then market crashes.
If you are lucky that's all they do.
__________________

__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Index Fund vs. Index ETF ? Delawaredave5 FIRE and Money 5 05-03-2014 10:39 AM
What if your w/d strategy is "winging it'? rodiy2k FIRE and Money 27 05-27-2013 05:56 PM
Vanguard ETFs and fee-based advisors..... FinanceDude FIRE and Money 6 03-02-2011 07:32 AM
Winging it with Indexing Gerbil Wheel FIRE and Money 15 07-19-2010 08:22 AM
Re: Asset based or dividend based Bob_Smith FIRE and Money 21 01-05-2004 01:50 PM

 

 
All times are GMT -6. The time now is 01:47 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.