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Taking a fresh look at portfolio... sugestions?
Old 03-30-2016, 05:31 AM   #1
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Taking a fresh look at portfolio... sugestions?

Quick & dirty background first...

- 52... today actually!
- Think I can hit my targeted FI at 55, which has always been this arbitrary goal of mine, but anticipate working in some capacity until maybe 60 (max).
- IF I choose to work after 55 for another 5 yrs, I feel pretty confident I can produce my targeted RE income for those years or at least come close without having to dip into my stash. Only thing is, in my business, I really can't quit for 1 or 2 years and then jump back in and reproduce my income. I would pretty much have to choose to stay plugged in, but could perhaps downshift and start delegating more. Before you say it, I know, its a good problem to have which I can decide on at 55.
- Historically I have been an aggressive investor with a portfolio around 75% - 80% stocks and also own some real estate (about 50% getting sold now)... its all on me!
- Without making it complicated, I had to rollover a defined benefit plan into 2 401Ks that required me to liquidate a significant part of my portfolio into cash. As I sit now, I am sitting on 60% cash/40% stocks in my retirement accounts and 32% cash/10% bonds/58% stocks in my taxable accounts. Overall, between the 2 accounts (which are both markets for RE savings) sitting on 52% cash/3% bonds/45% stocks.
- Self-employed, no pensions, wife at home so no additional income, 4 kids (2 out of college/employed of which one married last yr, 2 others in college)
- Remaining college costs covered with 529 plan and I have banked some cash for 2 more of my daughter's weddings... youch!
- No debt other than current home which debt is less than 50% of its value at around 3%... I would pay it off, but I think I can do better in the market. House is too big now, and I would like to sell it by 55 and down size paying cash for next house, but wife is a little reluctant... we will see.
- I have run the FIRE-calc and am tracking based on some of my more lofty RE income goals.

Soooo, with that in mind, I am trying to take a fresh look at 1) best asset allocation moving forward, & 2) number of assets per class (i.e. 1 fund/etf per asset class such as large CAP or 3?). I have experimented thru the years with mutual funds, individual stocks and have come to the conclusion I am a KISS subscriber. I am always interested in finding the best "mouse trap", but over the last 8 yrs have tried to stay with an set asset allocation rebalancing once a yr. I am still leaning towards a 75/10/5 (stocks/bonds/cash) reallocation, but figured now is the time to ask.

Ok, that's my plight, whacha got?

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Old 03-30-2016, 06:01 AM   #2
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I can't tell from your post, but if you have access to a free Vanguard Portfolio Analysis, I'd start there.

No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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Old 03-30-2016, 06:55 AM   #3
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Originally Posted by DawgMan View Post
Quick & dirty background first...

I am still leaning towards a 75/10/5 (stocks/bonds/cash) reallocation, but figured now is the time to ask.

Ok, that's my plight, whacha got?
First... 75/10/5 -> 75+10+5 =90. If you don't need the extra 10%, please send it my way. OK, one suggestion is to find that extra 10%.

A lot of information, but I cannot correlate the information. Its find not to give actual $ amounts. Often putting amounts in some relative term helps.

You said you ran Fire-calc, good. Did you run it for 30 year retirement, 50 year? Being 55, I would not use 85 as a top age. Also, did fire-calc have any failures?

Health insurance -- what are your plans? Have you priced it out? Have you seen what the network of providers looks like? Many individual plans restrict the network over being employed.

In what accounts are you planning on putting what types of investments? Consider cash flow and taxes for this.

What % of assets is your withdraw rate? This actually would provide a much better idea to a reader as to how set you are if they know the # years planned in retirement.

Do you plan on doing any Roth conversion of reduce tax rates at RMD time? Or is the amount in TIRA like accounts?
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Old 03-30-2016, 07:02 AM   #4
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I think your first step is to decide what you want your AA to be when you are retired at age 60. Then do a quick estimate of what it should be now assuming that all future contributions go into fixed income and rebalance to that and put your contributions into fixed income. Inevitably you may need to do some mid-course corrections but that is what I would do.

I was 100% equities until my mid to late 40s and then started changing contributions to fixed income towards getting to a more sensible mix for a retiree by the time I retired.
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Old 03-30-2016, 07:48 AM   #5
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Happy Birthday!

I would say, "Get thee over to and have them pimp your portfolio for you." But be forewarned, you will need to divulge a lot more information than you have in here. They have a "required" format for asking this kind of question.
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