Portfolio suggestions

[livingalmostlarge]

age 38 and 40. MFJ with 2 kids 8 and 5. We have 6+month EF cash. Actually right now very cash heavy. We are about to spend down the cash and have about $50-75k to invest more in taxable accounts. Our portfolio is low 7 figures. Both our kids have college funds(coverdell esa) invested 100% in VTI about $30k and $20k respectively.

Tax rate 34%-37% in 2018
Desired AA: 90/10%

I have 78% Retirement and 22% in taxable accounts

22% Taxable is subdivided
60% Cash
Biogen BIIB 14%
ishare mid Cap ETF IJH 6.5%
Vanguard Small Cap ETF VBR 6 %
vanguard developed markets ETF VEA 5%
Vanguard Total Stock market ETF 7.2%

77% Retirement is split between

401k 51% of total the holdings below

Vangaurd Target 2035 Investor Shares VTTHX 23.84% total
Vanguard Institutional Index Investor Shares VINIX 12.98%
Vanguard Emerging Market Index Investor Shares VEMAX .96%
Vanguard REIT Index Investor Shares VGSNX .81%
Vanguard Extended Market Index Investor Shares VIEIX 12.52%

DH Roth IRA 34.28% of retirement assets and holdings below

Goog 1.83%
googl 1.84%
ishares mid-cap index IJH .64%
ishares small-cap index IJS 5.59%
intel INTC 2.33%
paypal PYPL 1.81%
spider russell 2000 SPSM .77%
Vanguard REIT ETF VNQ 1.65%
Vanguard Total Stock ETF VTI 16.43%
Vanguard high dividend ETF VYM 1.39%

LAL Roth IRA 14.62% of Retirement assets, holdings below

Disney DIS 3.11%
ishares mid-cap ETF IJH 4.20%
Vanguard total stock etf VTI 6.20%
Vanguard Emerging Markets ETF VWO 0.87%

DH 401k options
DFA US LG CAP VAL (DFLVX)
FID CONTRAFUND K (FCNKX)
VANGUARD INST INDEX (VINIX)
VANG EXT MKT IDX INS (VIEIX)
JPM SM CAP GROWTH R6 (JGSMX)
VANG EM STK IDX ADM (VEMAX)
VANG INTL GROWTH ADM (VWILX)
VANG TOT INTL STK IS (VTSNX)
VANG REIT IDX INST (VGSNX)
TRP INTL VALUE EQ I (TRTIX)
VANGUARD TARGET 2015
VANGUARD TARGET 2020
VANGUARD TARGET 2025
VANGUARD TARGET 2030
VANGUARD TARGET 2035
VANGUARD TARGET 2040
VANGUARD TARGET 2045
VANGUARD TARGET 2050
VANGUARD TARGET 2055
VANGUARD TARGET 2060
VANGUARD TARGET 2065
VANGUARD TARGET RET Fund
PIM TOTAL RT INST (PTTRX)
VANG TOT BD MKT INST (VBTIX)

I'm trying to simplify my investments. I understand the 3 fund, but I think I'm active enough to want something a little more diversified. Right now we aren't into becoming landlords. This mess started when I had my first child and allowed my DH free rein to play with our money. I used to be only into etfs/index funds until 2010. Then he tried to make money from investing in individual stocks and 2 years ago he gave up. I finally have time to streamline our finances more. I've been a bit complacent I admit.

Suggestions on streamlining to maybe 10 etfs/stocks. I'm happy to watch and rebalance. However right now I'm leaning to leaving the individual stocks alone because they amount to 11% of our portfolio and just moving other stuff. I'm also wanting to leave our taxable account alone for now because I have to be care with tax harvesting. I need less overlap and less things to balance and watch. It's a mess because of my DH.

No we aren't ER anytime soon. DH plans to work 15 more years until the youngest is done with college. FWIW, i just see us more as FI than ER. We've always been more FI then ER and we like it well enough. When he decides to say FU he does. So no plans to RE right now.

 

[travelover]

You'll get a better answer if you don't expect someone to decipher all the symbols. We are mostly retired and / or lazy.

 

[livingalmostlarge]

thanks sorry. I edited it.

 

[fgtayl01]

Ten individual stocks isn't enough to be well diversified. Some guidelines I'd use: Minimum 25 stocks. No more than 5% in any one. No more than 15% in any sector.

I prefer etfs or the mutual funds you have over individual stocks. Since they're diversified it's easier to have fewer.

With etfs/mutual funds watch the cost...Cost will eat you up over 30 years. You have some overlap and high correlation in the ones you have. Put them in major groups (large/mid/small, growth/value, sector, overseas, ballast (bonds, and alternatives) and just go with the lowest cost in that group.

Have some foreign exposure. And above all, don't panic when your statement is cut in half. You'll have a long time to recover and it always does for those who wait.

Individual stocks are fine but you have to enjoy spending more time nurturing your selections and have a temperament for it.

 

[livingalmostlarge]

I don't want to do individual stocks it takes too much time. I want to cut down the number of index/ETFs.

I'd like suggestions on a portfolio maybe a few ETFs and leaving the stocks for now. 5-10?

 

[gayl]

VINIX / VTI 70%-90%
VBTIX 30%-10%

That sets your core account, trade only with dividends if at all (I'm 92% stocks, 95% core account --- only actively trade 5% --- but then I'm aggressive)

If you really want 3 then:
VINIX or VTI 70%
VBTIX or Bond 20%
Cash 10%

 

[OldShooter]

A single ACWI (all country world index) fund gets you near-perfect diversification in equities. Problem solved.

 

[livingalmostlarge]

How do I do it across the taxable, IRAs, and 401k? I'm trying also to not sell anything right now in our taxable account because I don't want the tax repercussions right now.

 

[gayl]

Ignoring taxable for a moment, move all tax deferred / Roth into suggested ETFs / Mutual Funds mirroring them keeping ratio the same in all accounts. Given your age I'd skip any cash there. Simple (along the KISS concept) I chose options that you had listed in each account.

Moving onto taxable:
Stop auto reinvest on all except VTI.
Put trailing stop loss on all others so that you capture increases / stop potential losses. Put their dividends into VTI

KISS

 

[gayl]

IMHO this really is a 2 brain approach. Along the lines of a core and trade philosophy. Your retirement account is your core account. That needs to be rock-solid in index funds. A boring retirement account is not necessarily a bad thing. Your taxable account can incorporate your trading account. More along the lines of exploring different stock options out there and actively using a trailing stop-loss. I use the trailing stop loss factor of 10%. That said, I'm willing to lose 10% in any one of my investments. As the stock goes up 10 to 15 to 20% my trailing stop follows it. Read up on trailing stop losses. I know a lot of investment houses don't like them but I personally do. It has served me very well. It enables me to capture more and more profit as I continually limit my downside. As I have stated earlier I am 95% core 5% explore. 92% stock and index ETF, with 8% bonds / cash / options. Lets me play a little bit. Without actually risking much of anything.

 

[pb4uski]

How do I do it across the taxable, IRAs, and 401k? I'm trying also to not sell anything right now in our taxable account because I don't want the tax repercussions right now.

So keep your taxable as-is for now and get as close as you can to your goal by changes to tax-deferred and tax-free. Then stop any div reinv on the taxable and go the rest of the way with new money and address the existing tickers in taxable as opportunities allow.

Don't let the perfect be the enemy of the good or better.

 

[LOL!]

Ignoring taxable for a moment, move all tax deferred / Roth into suggested ETFs / Mutual Funds mirroring them keeping ratio the same in all accounts. Given your age I'd skip any cash there. Simple (along the KISS concept) I chose options that you had listed in each account.

Moving onto taxable:
Stop auto reinvest on all except VTI.
Put trailing stop loss on all others so that you capture increases / stop potential losses. Put their dividends into VTI

KISS

I do not mirror in every account because it is too complicated. I try to have one fund per account except the largest tax-deferred account where I can do all necessary rebalancing without tax consequences.

Trailing stops are a way to lose money. If you think you will sell low, then just have alerts sent to your smart phone if things drop. At least then it won't be automatic and you can make your own decision.

In your taxable account, VTI and VEA are quite tax efficient. With VEA you will also get the foreign tax credit for taxes paid. Both will have some non-qualified dividends which are taxed higher than qualified dividends, so if that is a concern then you might want to do something else. VBR is less tax-efficient than either VTI or VEA.

To streamline: Sell all stocks in tax-advantaged. Use only the following ETFs or funds:
VTI, VBR (or IJS), VSS (small-cap foreign), and a total international like VTSNX. Plus a bond fund VBTIX.

LAL Roth IRA could be 100% VTI and nothing else. DH Roth could be VTI, VBR/IJS, VSS and nothing else.

You can check asset allocation for total portfolio with morningstar.com instant X-ray or tools at your broker.

 

[gayl]

I do not mirror in every account because it is too complicated. ....Trailing stops are a way to lose money.

Well we certainly won't agree

If I want 90% SPY / 10% PWZ then I just set each account as 90% SPY / 10% PWZ. Faster than trying to figure out otherwise. KISS core accounts

My last trade:

Bought CANN @ 8.05
Would your stop would be at 7.24 (hard 10%)
My trailing stop put me out at 10.08 (trailing 10%)
Not bad for a few days
FWIW: it's now 6.90 but I made $$

 

[gayl]

"If you think you will sell low, then just have alerts sent to your smart phone if things drop. At least then it won't be automatic and you can make your own decision."

I didn't include this as I thought you might be saying you constantly monitor every position? I cant. Sometimes I'm on a traveling, hiking, kayaking, out living life.

 

[OldShooter]

Well we certainly won't agree

If I want 90% SPY / 10% PWZ then I just set each account as 90% SPY / 10% PWZ. Faster than trying to figure out otherwise. KISS core accounts

My last trade:

Bought CANN @ 8.05
Would your stop would be at 7.24 (hard 10%)
My trailing stop put me out at 10.08 (trailing 10%)
Not bad for a few days
FWIW: it's now 6.90 but I made $$

With respect this is worse than misleading. Anyone can cherry-pick a lucky trade and crow about it.

Show us a five or ten year history IRR for your strategy versus an appropriate benchmark like the Russell 3000. Few stock pickers, including professionals, look good when objectively measured over a statistically significant period.

The issue here is that inexperienced investors might see this kind of cherry picking and draw erroneous conclusions from it. Another risk is that someone who has gotten lucky will, from that, conclude that he/she is a genius. This is a recipe for losing lots of money.

 

[gayl]

I wasn't trying to cherry pick a trade but to illustrate the benefit of a trailing stop over a stop loss.

If you like constantly monitoring all your individual stocks in the active trading portion of your portfolio on a constant hourly basis, go for it!

 

[redduck]

Target Date Funds are rarely mentioned as an option to streamline a portfolio. Reasons for that are...?

 

[OldShooter]

I wasn't trying to cherry pick a trade but to illustrate the benefit of a trailing stop over a stop loss.

No difference IMO. There will be plenty of trades that appear to prove the opposite. The plural of "anecdote" is not "data."

 

[gayl]

Can we agree to disagree

 

[gayl]

Target Date Funds are rarely mentioned as an option to streamline a portfolio. Reasons for that are...?

excellent choice for the core portfolio (retirement account portion) or for the part not interested in actively trading ..... I'm not a bogle so I don't know if they have an issue with it

 

[livingalmostlarge]

I can't sell the stocks my DH is attached to them. UGGGH. Pick my battles.

Second I'm not doing trailing stop loss. I'm okay losing 10% in fact in some stocks we lost more than 6 figures a few years ago in oil. Yes I had baby brain and let my DH lose A LOT of money. I'd rather not look at the statements because at that time we had a lot on our plate. It's water under the bridge.

I'm trying to ease him into not looking at any investments and get him off of beating the markets. We've been together 17 years and this stems from when we met and his mother telling him she's always done better.

Anyway it's moot and i've managed to wrestle control away and now I'm doing this slowly to not upset the boat.

Right now I"m thinking

BIIB tax
IJH tax 5%
VBR tax 5%
VEA tax 20%
VTI tax 20%
VINIX 401k 20%
VBTIX 401k 10%
VGSNX 401k 10%
VEMAX 401k 10%
Goog DH IRA
googl DH IRA
INTC DH IRA
PYPL DH IRA
UNP DH IRA
VYM DH IRA 10%
VXUS DH IRA 20%
DIS LAL IRA
IJH LAL IRA 5%
VBR LAL IRA 5 %
VWO LAL IRA 10%

Trying to keep this balanced. Then slowly ease out of things as he gets used to the idea. Right now i sent money to the accounts and he hasn't a clue. He's been super busy working and we are renovating the house so he's got a lot of other things to worry about.

 

[OldShooter]

Can we agree to disagree

Sure.

 

[ERD50]

Target Date Funds are rarely mentioned as an option to streamline a portfolio. Reasons for that are...?

I think they are a good option. I think I've seen expense ratios lower than what you could do with 2-3 funds to replicate them. I think the ERs are low, because someone investing in a retirement fund just keeps the money there.

But in a taxable account, they could throw off gains with internal rebalancing, and you may decide to change AA, so they aren't quite as flexible. But still an option well worth consideration.

And maybe rarely mentioned as they are a subset of a subset?

-ERD50