Your Comments Please

[eleighj]

I have been reading the posts on this board for a while and would like your comments on the following. I have an IRA with a value of +$200,000. Currently it is invested with Vanguard as follows:

1. S&P 500 Index Fund – 40%
2. Extended Market Index – 40%
3. Total Bond Index – 20%.

I am wondering if it would be better to (1) move this to the Vanguard Target Retirement Fund either 2015 or 2025 and just let it ride for the next 10 - 20 years with the Vanguard computers handling the rebalancing, (2) move it to the Coffeehouse Portfolio which has 7 funds, or (3) leave it where it is.

For the record I am 51, totally debt free, college funds for our two children fully funded, all 401(k)s, Roth IRAs and SEP IRAs are funded to the maximum allowed annually and I have a pension from a previous employer which as of this date is fully funded and not in harms way. I expect to retire from the corporate scene within the next 5 years and start a part-time consulting gig at that time with my wife runs her own consulting business. Our net worth is in excess of $1MM.

Please let me know what you think.

eleighj

[wabmester]

Is there some reason you chose the combination of SP500 + Extended rather than just going with TSM? And 80% in cap-weighted US stocks isn't very diversified.

I think you'd be better off with Target 2015 or Coffeehouse. Anything to give you more exposure to other asset classes.

[ShokWaveRider]

With Reference to the Coffeehouse portfolio, is there a specific choice of Vanguard funds that encorporate all 7 asset classes that anyone could recommend?

SWR

[eleighj]

The Coffeehouse Portfolio basically consists of the following Vanguard Index Funds and their corresponding percentages:

Total Bond Index Fund 40%
500 Index Fund 10%
Large Cap Value Index Fund 10%
Small Cap Growth Index Fund 10%
Small Cap Value Index Fund 10%
Total International Index Fund 10%
REIT Index Fund 10%

eleighj

[brewer12345]

The Coffeehouse Portfolio basically consists of the following Vanguard Index Funds and their corresponding percentages:

Total Bond Index Fund * * * * *40%
500 Index Fund * * * * * * * * * * * * *10%
Large Cap Value Index Fund * * * * *10%
Small Cap Growth Index Fund * * * * *10%
Small Cap Value Index Fund * * * * *10%
Total International Index Fund * *10%
REIT Index Fund * * * * * * * * * * * * *10%

eleighj

eleighj, it is difficult to comment without knowing what your portfolio goals are. Is this supposed to be providing income in the next 5 years? Invested for the next 30 years? Something else? From your comments about consulting after retirement I would guess that you will not be tapping the portfolio, but we don't really know.

FWIW, I set up my MIL's IRA in roughly the same split as the coffeehouse portfolio, although with a lower allocation to bonds. Then again, she has a state pension for more than she can spend.

[eleighj]

As I am 51, I am not going to touch for it for a minimum of 10 years. At that time re-evaluate and hopefully let it ride for another 10 years until mandatory distributions are required. It is not for current income.

That is also why I am considering the Target 2015 fund. The less I evaluate/ re-evaluate / rebalance a portfolio, the better. Just looking for some thoughts.

eleighj

[charlie]

I believe the "coffeehouse" uses the Small Cap Index
fund rather than the Small Cap Growth Index.

In my IRA "coffeehouse" I elected to use the Large
Cap Index instead of the 500 Index fund and I
am using Windsor II instead of Large Cap Value.
Both tweaks are very minor.

If you are in the accumulation phase, Target Retirement
2025 will be far less hassle. I am 70 and drawing
down the "coffeehouse" for living expenses. Hopefully
my strategy for withdrawal will avoid the "reverse" DCA
effect.

Cheers,

Charlie