Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
What do you guys think of this portfolio?
Old 05-23-2009, 09:25 PM   #1
Full time employment: Posting here.
 
Join Date: Jul 2007
Location: ST LOUIS
Posts: 994
What do you guys think of this portfolio?

For a person that is 50 years old and wants some Reits and Natural Resources how would this portfolio be. No debt and in the 15% tax bracket. Have room in non taxable for BSV and VNQ. Tweaks welcome.

Vanguard Total Stock Market... VTI 30%
Vanguard FTSE All-World ex-US... VEU 12%
Vanguard Short-Term Bond ETF BSV 50%
Vanguard REIT (ETF) VNQ 4%
iShares S&P NA Nat. Re. Sc... IGE 4%
__________________

__________________
rec7 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 05-24-2009, 12:51 PM   #2
Moderator Emeritus
 
Join Date: Oct 2007
Posts: 4,929
Well, you've got effectively a 50/50 split between stocks and bonds, a reasonable conservative allocation for your age.

On the equities side, you have 24% foreign, 76% domestic (assuming you are a US person), which is reasonable. The 'sweet spot' on the risk/return efficient frontier for the past 30 years is around 30% foreign, and is pretty broad, with anything from 20-40% looking reasonable.

Putting the least tax-efficient bond and REIT funds, BSV and VNQ, over in a tax deferred account is the right thing to do.

If you are going for a moderately conservative portfolio spiced up with REITs and natural resources, this looks just fine.
__________________

__________________
M Paquette is offline   Reply With Quote
Old 05-26-2009, 09:08 AM   #3
Thinks s/he gets paid by the post
walkinwood's Avatar
 
Join Date: Jul 2006
Location: Denver
Posts: 2,677
That's as good a portfolio allocation as I've seen, but I'm no expert.

From my reading:

Swedroe and Ellis suggest using Treasuries or TIPS in your bond portfolio because corp bonds are correlated to equities. My bond portion is 5% (of portfolio) TIPS and 35% ST. Corp bonds. I plan to migrate to treasuries/TIPS as the opportunities open up.

Ellis, Malkiel & others suggest a higher allocation to ex-US equities and favor a small exposure to emerging markets.
__________________
walkinwood is offline   Reply With Quote
Old 05-26-2009, 11:03 AM   #4
Full time employment: Posting here.
 
Join Date: Jul 2007
Location: ST LOUIS
Posts: 994
I like TIPS but the Average duration of 5.7 years worries me if rates start rising. You bring up a great point about treasuries but right now they are high because of the flight to safety. The treasuries did great in this down turn. In normal times short term treasuries would look great right now.
__________________
rec7 is offline   Reply With Quote
Old 05-26-2009, 11:11 AM   #5
Full time employment: Posting here.
 
Join Date: Jul 2007
Location: ST LOUIS
Posts: 994
Quote:
Originally Posted by M Paquette View Post
Well, you've got effectively a 50/50 split between stocks and bonds, a reasonable conservative allocation for your age.

On the equities side, you have 24% foreign, 76% domestic (assuming you are a US person), which is reasonable. The 'sweet spot' on the risk/return efficient frontier for the past 30 years is around 30% foreign, and is pretty broad, with anything from 20-40% looking reasonable.

Putting the least tax-efficient bond and REIT funds, BSV and VNQ, over in a tax deferred account is the right thing to do.

If you are going for a moderately conservative portfolio spiced up with REITs and natural resources, this looks just fine.

I read that owning about 20% foreign and 80% domestic has less risk than 100% domestic. Owning about 30% foreign is about the same risk as 100% domestic.
__________________
rec7 is offline   Reply With Quote
Old 05-26-2009, 11:38 AM   #6
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,613
Quote:
Originally Posted by rec7 View Post
I read that owning about 20% foreign and 80% domestic has less risk than 100% domestic. Owning about 30% foreign is about the same risk as 100% domestic.
Depends on how much of the foreign is developed markets and how much is emerging. Generally I prefer about 2/3 domestic and 1/3 international, with about 2/3 of the international piece being developed and about 1/3 of it emerging.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 05-26-2009, 04:42 PM   #7
Full time employment: Posting here.
 
Join Date: Jul 2007
Location: ST LOUIS
Posts: 994
You are right Ziggy that foreign emerging risk is spelled with a capital R.
__________________
rec7 is offline   Reply With Quote
Old 05-27-2009, 12:08 PM   #8
Thinks s/he gets paid by the post
charlie's Avatar
 
Join Date: Mar 2004
Location: Dallas
Posts: 1,211
rec7, I think your choices are just fine if they suit your risk tolerance
and goals.

Personally at your age I would consider being a little more agressive
in the amount allocated to equity and would lean toward a 30% allocation
of your total equity to foreign.

Also, for simplicity sake in your taxable account, I would suggest you
use a balanced fund as your core holding. A balanced fund does the
rebalancing for you automatically and avoids the tax consequences
of selling to rebalance. Yes, you will have to pay taxes on income
thrown off, but you could reduce this by using Vanguard's Tax Managed
Balanced Fund (50% Total Stock Market & 50% tax exempt bonds) or
something like Vanguard's new Managed Payout fund that pays 3% of
the trailing 3 year average NAV.

Personally, I like the 3% Managed Payout idea better because it is
more diversified than Vanguard's other balanced funds and the foreign
equity is closer to 30%.

You can always spice up your IRA with REITs, commodities, foreign,
energy, etc. to your heart's content and change your mix as you
grow older and "wiser" .

Believe me, your investment ideas will change as you mature as an
investor. You need to use your IRA as the place to "experiment"
around the edges of your core holdings and keep your taxable
account simple and consistent.

Of course, all of the above is just my opinion and I am not an expert.

Cheers,

charlie
__________________

__________________
charlie 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
Watch Out Guys...........:) FinanceDude Other topics 4 01-18-2007 02:33 PM
High Dividend Portfolio vs Portfolio Diversified Across Asset Classes ScaredtoQuit FIRE and Money 36 01-12-2007 01:24 PM
I Know You Guys Will Like This......... FinanceDude FIRE and Money 15 12-07-2006 03:53 PM
Ok - thanks to you guys.... macnjus Life after FIRE 17 11-23-2006 11:24 AM
Poll for the Guys Indexter Other topics 25 06-23-2006 10:05 AM

 

 
All times are GMT -6. The time now is 12:41 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.