IRA Rollover and picking funds - Sanity check

[tmm99]

I am moving money out of my old 401K finally. (I am leaving some there until 59.5 yrs old just in case, but slowly getting most of my money out.) I say "finally" because my 401K provider only allows me to take money out from all funds proportionately (you cannot pick which fund to take the money out of), so I waited until DJIA came back up to ~18000 and all my funds were going better.

Anyway, my old 401K is filled with some strange/obscure mutual funds, and they don't have broader/diversified funds so I ended up having a dozen funds to make it work for me. Now that I can have my money in the rollover IRA at Fidelity, the list below is what I am thinking of doing (kind of a lazy/passive investing...)

VTI (Total Stock) 36%
VXUS (Total Int'l) 6%
BND (Total bond) 18%
VCIT(intermediate corp bond) 18%
VWINX (Wellesley) 19%
VNQ (REIT) 3%

This is about 50/50 asset allocation which the Fidelity advisor said would give me almost as good a result as having it at 65/35 when I had the free consultation last spring. (I did move over to 50/50 after the consultation, which I thought was a good idea also especially because I was also going to start the draw-down phase...)

Does this look OK? I am thinking of going in after the market settles *down*....

 

[pb4uski]

If it were me and I was looking to get to 50/50 then I would go either 1) 35% VTI, 15% VXUS and 50% VCIT or 2) 50% Wellesley and 50% Wellington (these are 35/65 and 65/35 respectively as I recall so the net would be 50/50)

 

[tmm99]

If it were me and I was looking to get to 50/50 then I would go either 1) 35% VTI, 15% VXUS and 50% VCIT or 2) 50% Wellesley and 50% Wellington (these are 35/65 and 65/35 respectively as I recall so the net would be 50/50)

Thank you very much for your post! Can I ask you a couple of questions?

Q1: You would do either 1) or 2) to simply? (I am asking just to clarify.)
Q2: I like that you removed BND and kept VCIT. I don't really like BND (lower yield), but here is the question. I am supposed to have funds that negatively correlate (or have no correlation) with equity. For this hedging purpose, I was assuming BND is better, only because VCIT contain corp bonds and they may move in the similar direction as equity? That was just my guess and that was the only reason I added BND to VCIT on the list. I would love to hear your opinion.

 

[Senator]

If you are at Fidelity, look for commission free ETFs and funds. IVV is the S&P Ishares fund. DVY is the dividend aristocrats.

 

[pb4uski]

Thank you very much for your post! Can I ask you a couple of questions?

Q1: You would do either 1) or 2) to simply? (I am asking just to clarify.)
Q2: I like that you removed BND and kept VCIT. I don't really like BND (lower yield), but here is the question. I am supposed to have funds that negatively correlate (or have no correlation) with equity. For this hedging purpose, I was assuming BND is better, only because VCIT contain corp bonds and they may move in the similar direction as equity? That was just my guess and that was the only reason I added BND to VCIT on the list. I would love to hear your opinion.

Q1: To me, six of one or a half dozen of the other. Both are pretty simple, but 1 probably has a lower ER but 2 has the advantage of active management.

Q2: I'm not keen on BND because it has so many Treasuries which has low returns.... Warren Buffett characterized Treasuries as "return-free risk" a couple years ago and I agree... I like corporates better.

 

[tmm99]

If you are at Fidelity, look for commission free ETFs and funds. IVV is the S&P Ishares fund. DVY is the dividend aristocrats.

Thank you for your comment, Senator. I do have DVY in my taxable - I have had it for several years and I love it. I am planning to keep my tax-deferred as broad as possible, however.

 

[tmm99]

Q1: To me, six of one or a half dozen of the other. Both are pretty simple, but 1 probably has a lower ER but 2 has the advantage of active management.

Q2: I'm not keen on BND because it has so many Treasuries which has low returns.... Warren Buffett characterized Treasuries as "return-free risk" a couple years ago and I agree... I like corporates better.

Thank you, pb4uski. I can relate - I like corporate bonds better also, but I am not sure if they act like a hedge for stocks (maybe no bonds act as a protection against possible stock declines anymore anyway...)

 

[PapaBear67]

If you are at Fidelity, look for commission free ETFs and funds. IVV is the S&P Ishares fund. DVY is the dividend aristocrats.

I am with Fidelity (now thanks to great advice from this board) IVV & DVY are core holdings as are IWV & FUSEX. On the Bond side I am split between FUBFX & FLBAX.

The Spartan funds hold up well to other low expense funds. All my finds are no transaction fee funds and my overall Expense rate is 0.157%. (DVY is the highest at 0.39%)

 

[tmm99]

I am with Fidelity (now thanks to great advice from this board) IVV & DVY are core holdings as are IWV & FUSEX. On the Bond side I am split between FUBFX & FLBAX.

The Spartan funds hold up well to other low expense funds. All my finds are no transaction fee funds and my overall Expense rate is 0.157%. (DVY is the highest at 0.39%)

Thank you PapaBear. Yeah, I do like DVY too. What kind of ratio do you have DVY, S&P and Russell in? I am thinking of getting VTI and maybe I could add DVY, but my stock part of the portfolio would get more convervative as I increase DVY (VTI is a blend while DVY is a value as far as I can tell, but maybe that is a good thing, plus the dividends on DVY compared to VTI is definitely appealing..)

 

[PapaBear67]

Thank you PapaBear. Yeah, I do like DVY too. What kind of ratio do you have DVY, S&P and Russell in? I am thinking of getting VTI and maybe I could add DVY, but my stock part of the portfolio would get more convervative as I increase DVY (VTI is a blend while DVY is a value as far as I can tell, but maybe that is a good thing, plus the dividends on DVY compared to VTI is definitely appealing..)

Overall I am ~ 65-35. My split between IVV, IWV, and DVY is even. It's about 60% of the 65%...about $125k each. For now I'll rebalance once a quarter or so, and keep them even.

 

[tmm99]

Overall I am ~ 65-35. My split between IVV, IWV, and DVY is even. It's about 60% of the 65%...about $125k each. For now I'll rebalance once a quarter or so, and keep them even.

Thank you for sharing. Wow, you have huge holdings of those funds including DVY. Like I said, I have DVY, but a fraction of what you have. I got most of the shares in 2009 and 2010, and I haven't bought many since then because prices were so much higher but I am thinking of starting again because of the high dividends.