Starting from scratch. 401K to IRA.

[almost there]

Pulled the plug Aug. 2nd after 30 yrs..........
Am now faced with where to put my IRA (401k rollover that's now with Vanguard) After an hour long discussion with a free Vanguard CFP, here's what he came up with based on my situation. 52, not interested in too much risk. Do not need the $$ for several yrs down the road. A 5% return is my target. Plan to pull $20k per year via 72t during annual re balancing.
(To free up a tiny portion just in case I need it or fund another outside investment and avoid the 10% penalty)

50% stocks / 50% bonds.
ETF symbols:
35% VTI - 15% VXUS - 40% BND - 10% BNDX

Opened a brokerage account today. Will have access tomorrow.

Looking at the overall big picture, I really don't mind being in a money market all that much during this time of, well whatever it is.. LOL LOL

Just wanted to share what I was advised today.

Thoughts?

 

[2B]

My first question is why the ETFs and not just buy the Vanguard admiral fund equivalents? If nothing else, it's easier to rebalance with mutual funds.

My second question is why a bond fund when it's likely to have its NAV go down as interest rates likely (finally) to rise? You could do laddered CDs and reduce the risk. This has been debated extansively so I expect someone will tell you to stay with your bond fund.

Third, did you not want more asset classes? You have a very simple asset allocation.

 

[Animorph]

Perfectly fine simple portfolio. What 2B said is also valid, but only if you want to worry about those kinds of things.

 

[eta2020]

I love VTI and VXUS. Those 2 funds fully cover US and International equities at very low cost. I also like going with ETFs. I would consider placing some money into either VIG or SCHD. ( Index of High quality US companies. American Rembrands )

But I would not put 50% into bonds. This is way too much in bonds IMO.

 

[Jackanory]

On Monday I started the process of rolling an old 401K held at Ing, my first time doing this. After reading further and discovering that IRA's aren't very well protected here in California, today I bought my first ever umbrella policy. Next week, I'm thinking of doing an in-service rollover to get a hefty chunk out of MegaCorp's Merrill Lynch account! I'm on a roll ... over!

 

[eta2020]

Keep in consideration one more thing "Asset Protection"
401k is fully protected from creditors. IRA protection is not as good.

So in case of lawsuit if you have LOT of money you are better off with 401k. Megacorps have cheap 401ks. Personally I will NOT convert to IRA because of Asset Protection that 401k gives you.

 

[almost there]

"You could do laddered CDs"
I would love to!
But really do not want to tie up much money with rates the way they are.
That was the orig. plan for the past 30 yrs! But who knew the Gov. would pull a Japan on us? All I am after is a safe 4-5%.
I am not saying I plan to follow the above 1st post, but was told "they" estamate
2-3% on bonds going forward and 6-8% on stocks........ The 50% in bonds was for safety I am assuming. VG's plan anyway......... I am not worried about IRA protection. If things go that bad, nothing would be safe. Banks included. So why worry?

 

[eta2020]

"asset protection" will not protect you from market crash or government default.
It will protect you if somebody decides to sue you And the more money you have the more likely somebody will sue you.

Now you can protect assets in things like "irrevocable trust". But creating such trust will not help you once you are sued. It is too late at that point. So I think having in mind asset protection BEFORE something happens is part of prudent investment strategy.

 

[seraphim]

Same question about ETFs as 2B - what the advantage over admiral shares? But I assume pretty much the same either way. A good basic portfolio. We use a 60s/40b mix because we have pension to cover our basic needs. Currently, though, it's more like 60s/11b and the rest of the bond allocation in SV accounts, which effectively act as fixed income. Yields are a bit better than bonds, currently. I'm not comfortable moving new money into Bonds momentarily until I know more about the whys, whens and effects of QE tapering.

 

[nun]

My second question is why a bond fund when it's likely to have its NAV go down as interest rates likely (finally) to rise? You could do laddered CDs and reduce the risk. This has been debated extansively so I expect someone will tell you to stay with your bond fund.

If you have the discipline to stick with your bonds when the NAV falls with rising interest rates rather than panic selling you'll be ok.

I think those 4 core ETFs give you good diversification, but what about a cash reserve of a few years in CDs as a back stop.