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Vanguard's Recommendation
Old 12-19-2004, 03:47 PM   #1
 
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Vanguard's Recommendation

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Re: Vanguard's Recommendation
Old 12-19-2004, 05:24 PM   #2
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Re: Vanguard's Recommendation

If I understand this correctly you paid Vanguard $1,500 for how to invest your money so that you can retire at 46 with a 4% WR?

It appears that bond funds equal 60% and stock funds 40%

The rule of subtracting your age from 100 should be your allocation to stocks with the remainder to bonds would have worked just as good.
OK you're 46 so the allocation would be closer to 50/50.
What about pensions and Social Security - They should factor into the computations.
Keep it simple - use the 100-age rule
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Re: Vanguard's Recommendation
Old 12-19-2004, 06:27 PM   #3
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Re: Vanguard's Recommendation

My first reaction (aside from the fact I like 50-50 better than 40-60) is that you have a lot of tax exempt bonds in this allocation, and if you are actually in ER, you wont have the taxable income (unless this is built on a 5-10 million dollar portfolio) that puts you in tax brackets where the tax exempts would be worth it.

Are you in fact still employed, looking to get to ER with this portfolio, or is this a portfolio for someone in ER?

Coincidentally I am also 46, so I was intrigued.

If you are in ER, and are interested, I will share my portfolio allocations with you fwiw.

Let me know
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Re: Vanguard's Recommendation
Old 12-19-2004, 08:36 PM   #4
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Re: Vanguard's Recommendation

I also took Vanguard up on their free portfolio planning a while back. * Not even a little bit impressed. * They don't have high-pressure sales tactics like some brokerages, but they are definitely looking after their own interests, which don't necessarily align with yours, or Bogle's (which surprised me). It was also very cookie-cutter, which I expected it would be.
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Re: Vanguard's Recommendation
Old 12-19-2004, 09:04 PM   #5
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Re: Vanguard's Recommendation

Stay away from Vanguard US Growth. It is a DOG! Vanguard has hired at least 2, and maybe 3, different firms over the past 5 years to turn it around without success.
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Re: Vanguard's Recommendation
Old 12-20-2004, 11:33 AM   #6
 
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Re: Vanguard's Recommendation

Don't use their recommendations, but stick with their index funds. Try www.diehards.org or www.coffeehouseinvestor.com. Also search for the "couch potato portfolio" for much easier and cheaper diversified portfolios. Good luck.
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Re: Vanguard's Recommendation
Old 12-20-2004, 09:14 PM   #7
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Re: Vanguard's Recommendation

Vanguard has a free tool via financialengines.com. The program provides an option whether to use only index funds. I was not impressed with its recommendation since it favors the use of S&P500 funds as the bulk of stock allocation.
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Re: Vanguard's Recommendation
Old 12-21-2004, 10:34 AM   #8
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Re: Vanguard's Recommendation

I understand that if you are doing a plan with Vanguard you can advise the planner that you do not want anything except index funds in the plan ( other than a money market fund) and that if they think that a managed fund should be recomended that they need to have a good reason as to why it fits into YOUR plan.

I have a free Vanguard plan out there in my future and will probably take them up on it within the next year so that I can compare it to my already-perfect plan!
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Re: Vanguard's Recommendation
Old 12-27-2004, 04:25 PM   #9
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Re: Vanguard's Recommendation

BabyApe,

I am slogging through the Vang. Profile myself and I know that their recommendations are going to be compu-genned from the way I answer the inane questions like:

#6. I would invest in a mutual fund based solely on a brief conversation with a friend, coworker, or relative.

Now I get FIVE answer choices, basically from hell yes to hell no. What if a friend, relative or coworker is a highly informed, well respected market guru? Like maybe some here? so you answer "hell yes". OTOH even a novice investor should know that theres more to fund picks than casual conversation. So you answer "hell no" then what? Your profile results will be skewed one way or the other even though you have done the homework yourself or had it done by a trusted mentor. Some other questions are even dummer.

I would rather get the computer's dump on HOW the recommendations are generated based on the investor's input. But thats not likely to happen anytime soon.

This plan is free and I think its probably worth every penny.

BUM
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Re: Vanguard's Recommendation
Old 01-02-2005, 04:11 AM   #10
 
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Re: Vanguard's Recommendation

I would like to jump back to the "tax-free/nontaxable/
pre-income tax/post-income tax" issues.

When I finally started thinking seriously about ER,
one thing that occupied my brain was income taxes.
I had been used to creative tax planning for many years
in an attempt to hold down my tax hit. I was totally
unprepared for this problem to disappear in ER.
Having a very low income and total control over the
amount has eliminated this as an issue. A surprise,
but a happy one.

JG
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Re: Vanguard's Recommendation
Old 01-04-2005, 03:40 AM   #11
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Re: Vanguard's Recommendation

Quote:
Yeah, I thought the questionaire was really worthless
BabyApe,

After spending way too much time with this questionaire, I decided to take mickeyd's approach: I'll make my choices now and later compare their advice to my picks.

I also need to make my move NOW. I've ER'ed and will need the income stream setup to kick in early in Q2'05. Too young to touch IRAs w/o 72t. Most of my assets are in cash and real estate. I've been moving cash to VG as CDs mature. Will make some decisions today. My totals suggest that 4% won't cut it. So I may have to tilt towards equities and HiYield bonds.

BUM
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