Portfolio for career military officer

moneymaker

Recycles dryer sheets
Joined
Mar 13, 2013
Messages
106
Hi all,

What would be a good portfolio for a career military guy with both fidelity and vanguard accounts? Looking to go all mutual funds, with cheap expenses. I've mainly been an individual stock picking guy but with less and less time to focus on research I'm ready to just sit back.
Thanks in advance.

I'm 10 yrs in and plan on doing atleast 10 more.

Have approx $210 in retirement broken up as follows: $60k taxable, $60k Roth, and $90k trad 401k/Ira.
 
Yes. I have been maxing out the tsp for the past 2 years. 60% c fund 30% s And 10% intl.
 
15yrs in with at least 5 more, obviously, invested as follows:

~30% in TSP:
10% F
25% G
30% I
25% C
10% S

~25% IRAs (Mostly Roth, some Trad (spouse))
Split of VTSAX and VTIAX

~40% taxable
Split of VTSAX and VTIAX, and one S&P 500 fund that I haven't sold for tax purposes.

Rest is in wife's retirement and 403(b) accounts which is a controlled fund.

Overall AA, including all accounts, is 85/15 (target - currently 81/19) equity/bond allocation, aiming for 30% of equity as international. I use TSP G (and a little F), and the bond allocation of wife's retirement/403b for the entire bond allocation. No bonds in taxable or IRAs.

Fund allocation maximizes tax efficiency by keeping low income producers in taxable accounts. Minimizes fees by maxing TSP use and using Admiral shares elsewhere. This allocation along with our savings should have us FI when I hit retirement age (including pension).

Tough to give a recommendation without knowing marital status, kids, home ownership, etc., but in my younger 30s I was single and 100/0. Shifted to 85/15 about 2 years ago. I prefer fund simplicity as much as I can get it, hence just VTSAX and VTIAX for the majority of the accounts outside of TSP.
 
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Retired USAF here. Some thoughts to consider that may be more fundamental than jumping right into considerations of a portfolio. ( I'm assuming you intend to "fully retire" once you leave the military)

1) Will your expected military retirement meet your "must have/baseline" needs in retirement? If so, then you can tolerate a lot more variability ("risk" in the not-very-accurate terminology often used) in the value of your other investments. This will usually produce higher expected returns. So, you might be fine with 80% stocks/20% bonds (because you can live with very small withdrawals from your portfolio while you wait for the market to return).

2) TSP has very low costs and the unique "G" fund. But the withdrawal options from the TSP are not very flexible, and you won't have access to that money until you reach 59.5 years old (except through a rollover to an IRA and then use of a 72T). So, even if you love the TSP, you'll need some money elsewhere to get you from retirement to age 59.5.

If you don't want to spend much time thinking about this, you could put it all in a Vanguard target-date retirement fund. You won't have to think about it at all, they will automatically rebalance everything for you as the value of various assets changes.

If you want a bit more hands-on, pick any of the moderate "Lazy Portfolios" offered by respected financial writers/blogs. Here's some good coverage/discussion. My own portfolio is based on Rick Ferri's "core four" lazy portfolio (also described in the first link) with some added exposure to small stocks and value stocks (VSIAX= Small Cap Value, VTMSX= Small, and some old Vgd Windsor II for value--today I'd probably pick VVIAX--Large Cap Value Index instead). That's really more complicate than it needs to be. I would recommend that you substitute the very good TSP "G Fund" for a portion of the ST bonds in any of these portfolios, since you have access to it. As you have at least 10 years before you'll need the money, and it will need to keep up with inflation for a very long time, you'll probably want an allocation that is heavy in equities (including exposure to intl, small, and value stocks)

The main things: Get a firm grounding in the advantages of low-cost investing and the value of automatic rebalancing (rather then trying to time the market or guess which sector/stock is going to go through the roof). Pick an allocation and leave it alone. If the entire weighted expense ratio of your portfolio is over 0.20%, then (IMO) you are paying too much. There are plenty of great books on this (see the FAQs in this forum). If you are going to be tempted to re-jgger your allocations every time you hear something on CNBC or the market drops 10%, then there's not much point in going down this road.

Good luck!
 
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I'm not military but you are getting away from individual stocks for the same reason I did, I had better things to do with my free time than research stocks and read 10ks. One thing to pay attention to is tax efficient placement. See Principles of tax-efficient fund placement - Bogleheads

You could put together a pretty good and easy to manage portfolio with Vanguard Total Stock, Total International Stock, Total Bond and Total International Bond.... which by coincidence are the core funds that Vanguard uses in their target date retirement offerings. Or similar offerings from Fidelity or in your TSP.

I also add in some emerging markets equity and fixed income funds for a little spice but it really isn't necessary.
 
Someone have a link to Nords site? Anyone retiring from the military probably wants to read that as well.
 
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