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Old 04-07-2012, 01:30 PM   #21
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Originally Posted by Earl E Retyre View Post
First, thanks for all the replies. Let me give you a little more information about my situation. Total net worth = $2.1M. Currently planning on the following asset allocation:
(1) Total Bond Index (VBTLX) and/or other fixed income: 43%
(2) Wellesley VWIAX: 34%
(3) Total Market Index VTSAX: 10%
(4) REIT: 1%
(5) International VTIAX: 3%
(6) Cash/CDs: 9% (I know this is a lot but want to start this way)

I will be 49 years old this year and semiretiring at the end of this year. Plan to work part time to cover whatever difference I need to live/travel which I currently calculate at 4 months/year working depending on the above. So, I would be putting over $700k in VBTLX. Now that you know my situation - would you put that much in VBTLX? If not, and assuming I want to keep $700k of my portfolio in a relatively safe investment (safe from losing principal and/or large fluctations yet wanting to get as much return as possible so I can work less), what would you do?
This is an extremely conservative portfolio. Your overall equity/bond ratio is 27/73, and you are looking at potentially 35-50 years of semiretirement/retirement.

Keep in mind that VWIAX is 39/61 equity/bond currently.

Therefore, you may need to re-allocate a greater percentage of your portfolio toward equities (perhaps increase your exposure to VWIAX and decrease your straight bond exposure). If not, you may need to consider accepting greater bond risk for greater returns.

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Old 04-07-2012, 02:25 PM   #22
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If you are a Vanguard customer you can input your proposed portfolio into Portfolio Tester and see what recommendations are made and then tweak is as needed. You need to go to Portfolio watch in order to access Portfolio Tester.

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Old 04-07-2012, 02:48 PM   #23
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I am happy with VBTLX, and have 16% of my portfolio in this fund (or, 29% of my fixed income allocation). The rest of my fixed income is in Wellesley VWIAX and the TSP "G Fund", a government bond fund available to federal employees and retirees.

Your decision depends a lot on your own personal risk tolerance and your viewpoint concerning interest rates, among other things. VBTLX is not an inherently bad choice. I'd suggest reading from the Bogleheads' book list, Investment Books as you contemplate the situation and the ideas posted in this thread.
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Old 04-08-2012, 10:23 AM   #24
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Originally Posted by Earl E Retyre View Post
First, thanks for all the replies. Let me give you a little more information about my situation. Total net worth = $2.1M. Currently planning on the following asset allocation:
(4) REIT: 1%
(5) International VTIAX: 3%
On a different note, I'd look hard at owning only 1% of any asset (even 3% seems low). It such as small amount that it probably won't make a difference in the overall portfolio, but it adds another fund that you have to manage.

1% of $2.1M = $21,000. That's a small amount. Let's say the asset doubles and everything else in your portfolio stays the same. You are now at $2.121M. Your portfolio has gone up by 1%. And you need the asset to double in order to get this gain. If you pick a more reasonable gain, let's say 10% ($2,100), then your portfolio has gained 0.1%.

You might have a good reason to own this asset in a small percentage. But in running the numbers, it doesn't appear beneficial.

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