Where to park wifes 401 in Vanguard

[rocks911]

My wife has stopped working and I have moved her 401 to vanguard. I have about 20% of her money in mid and small cap funds with the bulk in the 2015 target fund (As I moved her money into vanguard I just wanted it to sit initially in something stable) but I am becoming concerned about the Fed, specifically Yellen and her rookie days ahead (I'm concerned the market is going to take a substantial hit) I cant take another 2008, I'm not that young.

Where to park the bulk of my wifes money?

Our timeline for this is considerable, she cant touch the money for another decade, but I just cant stomach another precipitous drop, its taken 5 years to get back to where we were prior to 2008 and I dont want to do that again.

As I just moved into Vanguard I havent had the time to thoroughly research the various options and I'm afraid with Yellens statements about raising interest rates that a significant drop is looming and I dont currently have the time to research my best options....quite busy these days, so...any thoughts would be appreciated.

Please dont blaze me, I'm just spitballing here.

 

[pb4uski]

What asset class was it in when it was in the 401k?

You really need to assess how it fits into your overall joint AA.

For tax efficiency typically you would want your fixed income allocation to be in your tax-deferred accounts. Fixed income is challenging these days but most people are staying away of long-duration funds.

 

[NanoSour]

I caution you against wasting energy worrying about what the market is going to do in the next year or two. It may go up or may go down. I too just moved a substantial 401K to Vanguard and have a 50/50 asset allocation. I parked the money in:

35% VTSAX (Total Stock Market)
15% VTIAX (Total International Stock Market)
50% VTBLX (Total Bond Market)

Simple 3 Fund portfolio. My expectation is for 3-5% real return over time and I'm confident I'll get that return without concerning myself with near term market gyrations.

 

[pb4uski]

I caution you against wasting energy worrying about what the market is going to do in the next year or two. It may go up or may go down. I too just moved a substantial 401K to Vanguard and have a 50/50 asset allocation. I parked the money in:

35% VTSAX (Total Stock Market)
15% VTIAX (Total International Stock Market)
50% VTBLX (Total Bond Market)

Simple 3 Fund portfolio. My expectation is for 3-5% real return over time and I'm confident I'll get that return without concerning myself with near term market gyrations.

Bravo!!! Move NanoSour to the head of the class!

 

[Tailgate]

Bravo!!! Move NanoSour to the head of the class!

+1 for NanoSour... sounds like a Scott Burns lazy portfolio... link here is their various historical returns for the lazy investor like me!

 

[RetireAge50]

Also +1 to OP. His portfolio ends up being:
30% Total Stock
25% Total Bond
13% International Stock
7% International Bond
5% Cash
20% Small/Mid Stock

Only .16% in fees and I like the addition of extra Small and Mid Stocks

 

[Animorph]

My wife has stopped working and I have moved her 401 to vanguard. I have about 20% of her money in mid and small cap funds with the bulk in the 2015 target fund (As I moved her money into vanguard I just wanted it to sit initially in something stable) but I am becoming concerned about the Fed, specifically Yellen and her rookie days ahead (I'm concerned the market is going to take a substantial hit) I cant take another 2008, I'm not that young.

Where to park the bulk of my wifes money?

Our timeline for this is considerable, she cant touch the money for another decade, but I just cant stomach another precipitous drop, its taken 5 years to get back to where we were prior to 2008 and I dont want to do that again.

As I just moved into Vanguard I havent had the time to thoroughly research the various options and I'm afraid with Yellens statements about raising interest rates that a significant drop is looming and I dont currently have the time to research my best options....quite busy these days, so...any thoughts would be appreciated.

Please dont blaze me, I'm just spitballing here.

If you went all cash in 2007 you would be in about the same place you were 5 years later, unless you jumped into the market when it was down. The path you take is not important.

You might prefer a 50/50 portfolio or so. A balanced fund like Wellesley or your target date fund might also help you maintain your AA through tick and thin. If you don't like bonds you can use cash instead, such as an online savings account. But no bonds and no equities doesn't leave you much to invest in.

 

[Big_Hitter]

not that I'm giving advice but I just put a chunk in vasgx

they have a lot of lifecycle funds that have very low expense ratios

 

[Walt34]

35% VTSAX (Total Stock Market)
15% VTIAX (Total International Stock Market)
50% VTBLX (Total Bond Market)

Great minds think alike!

I just did the same thing to exact same funds, slightly different AA but very close.

 

[nun]

Don't try to time the market, just put the 401k money in an asset allocation appropriate for your age and risk/reward specs.

I like the suggested lazy portfolio, but.............

psssst

Wellington or Wellesley would be ok too.

 

[panacea]

I agree with other posters. The time horizon is actually quite long so the short-term noise shouldn't really matter. As long as you maintain your target allocation you'll be in good shape. In other words, if you have a 50-50 portfolio and the stock market has a crushing 50% decline, your portfolio will drop 25%. As long as you periodically rebalance your funds to the original targets you'll recover in short order (buy low, sell high).

 

[In-control]

Timing

I am in a similar situation and this is what I have learned and executed.

Personally I would have the majority in Wellesly Income(80%) and the VG Total Stock(10%) and VG Total Bond(10%) funds(All Admiral) to toggle my allocation. Which is 40% stocks, 50% bonds and 10% cash(5 yrs of budget in laddered CD's).

It has stood the test of time and, while boring, provides steady income. I sleep well at night and don't really worry too much about the market daily fluctuations.

During the 2002 and 2008 messes I had the above model in a rollover IRA and the basic model(VG Total Index(40%), VG Total Bond(50%) and VG Total International(10%) in a regular account. I did well as I keep funding this models to the MAX 401k contributions during for 25 years. My income needs were low.

In Comparison I have found that the model with Wellesley(my current model) gave me more income, was stewarded by the pro's for a very low cost and required very little re-balancing. One thing I like about it is that it's stock portfolio is primarily in Large Value companies that are projected to increase dividends and grow, typically large international companies. That and they have a large global exposure to Bonds and work to mitigate risk. Sounds simple and it works for me.

These are just my observations and what I have done. I'm sure that you could build a similar model with a index funds but this has worked for me.

Now, I am planning on ER'ing in August, my needs are set and the income I will depend on to build the next 5 yr CD.

good luck

 

[seraphim]

We run a 60s/40b using VTSAX, VTIAX and VBTLX - similar to NanoSour.

Wellesly and Wellington are good balanced accounts, that do the same thing at a higher ER, but I prefer the ability to select from which asset I take my withdrawals, and to strategically change the AA should I choose.

We have a .12% ER. If we removed some expensive Oppenheimer accounts I can't ditch yet, the actual VG ratio would be under .10%. Wellesly's ER is .25%

We are not income oriented, but look at total returns.

No point in fooling with mid and small caps when they're already included in Total Stocks.

 

[Rich]

My wife has a modest Vanguard account ($77K). I put it all into Wellesly. Worked out well for her.

Rich

 

[dm]

I put my wifes into a target retirement date fund. One fund, no fuss.

 

[martyb]

About 5 yrs ago, I took a job transfer & wife had to quit her job. We rolled her 401k into a Vanguard Retirement 2015 target fund. We eventually moved back to the same area & she got her old job back. She got her 401k going again, but 5 years later, we've not moved the previous funds out of Vanguard & back to her old employer's 401k. The Vanguard moneys been growing just fine, and we saw no reason not to just leave it where it is. She'll most likely retire in the next 2 yrs or so & then will roll everything into the Vanguard fund. Not sure if it will be the exact same fund, but it will be something within Vanguard. Frankly, I'm not so crazy about her employer's 401k administration, and I'd just as soon not have all of the funds in their system.

 

[rocks911]

Thanks for all the replies, much to think about.
I would say to those who say would suggest not to try to time the market that there are tens of thousands of retirees across this nation and indeed the globe that suferred catastrophic losses in 2008 and have had to go back to work as a result.
My "returns" were not very different than what most experienced at that time of collapse and I would have done just as well to bury my money in a coffee can in the back yard. I calculated my performance over the decade and a half that I had been participating in my 457 and I would have done just as well having put it in a savings account. Actually a savings account would have resulted in better performance.

Because the "too big to fail" banks are even bigger than the last time the market collapsed it is just a matter of time until it happens again. Without meaningful reform we will revisit the economic tragedy.

I think I'll keep my money in a virtual coffee can as the scam that is the 401/457 will see the average Joe suffering tragic losses again in the not too distant future.

Thanks for taking the time to reply, I really do appreciate it.

 

[nun]

Thanks for all the replies, much to think about.
I would say to those who say would suggest not to try to time the market that there are tens of thousands of retirees across this nation and indeed the globe that suferred catastrophic losses in 2008 and have had to go back to work as a result.
My "returns" were not very different than what most experienced at that time of collapse and I would have done just as well to bury my money in a coffee can in the back yard. I calculated my performance over the decade and a half that I had been participating in my 457 and I would have done just as well having put it in a savings account. Actually a savings account would have resulted in better performance.

Because the "too big to fail" banks are even bigger than the last time the market collapsed it is just a matter of time until it happens again. Without meaningful reform we will revisit the economic tragedy.

I think I'll keep my money in a virtual coffee can as the scam that is the 401/457 will see the average Joe suffering tragic losses again in the not too distant future.

Thanks for taking the time to reply, I really do appreciate it.

I don't think you are making the right decision, but good luck.

 

[pb4uski]

I don't think you are making the right decision, but good luck.

+1 $10,000 invested in Wellesley in 2004 would be worth $20,086.61 today with dividends reinvested (7.22% annual return), a lot better than under a mattress for those who didn't hit the panic/sell button.

 

[REWahoo]

I would say to those who say would suggest not to try to time the market that there are tens of thousands of retirees across this nation and indeed the globe that suferred catastrophic losses in 2008 and have had to go back to work as a result.

I hear this over and over in the media. The truth is those who suffered catastrophic losses only did so because they tried to time the market, panicked, and sold when the market was down. Those who held on and rode out the downturn ended up better off than they were in 2007 - but the media never mentions it because it doesn't sound sexy.

 

[rocks911]

The oracles come out of the woodwork years later.

It reminds me of people who left my chosen career (firefighter) for either other departments or other jobs, to a man none of them regret it, or so they say, and you know that cant be the truth.

You never hear from the people that took a spanking.

I think its ridiculous to assert that everybody who took a beating were somehow timing the market or otherwise "foolish", but then again maybe I am.

 

[nun]

The oracles come out of the woodwork years later.

It reminds me of people who left my chosen career (firefighter) for either other departments or other jobs, to a man none of them regret it, or so they say, and you know that cant be the truth.

You never hear from the people that took a spanking.

I think its ridiculous to assert that everybody who took a beating were somehow timing the market or otherwise "foolish", but then again maybe I am.

You have a useful resource on this Board of people who have lost and made money in saving for retirement. Many have been successful using simple rules and investing methods and have come out the other side of 2008 in good financial shape and with asset allocations that can survive down turns.

My advice would be to put your wife's 401k money in to a 60/40 balance of low cost index funds, a suitable target date fund or Vanguard Wellesley or Wellington and be disciplined in rebalancing.

 

[REWahoo]

I think its ridiculous to assert that everybody who took a beating were somehow timing the market or otherwise "foolish", but then again maybe I am.

I'm not going to get into a debate over the accuracy of your statement, nor am I going to debate market history and the success of those who adhered to an equity/bond AA and a buy/hold/rebalance strategy. The facts speak for themselves.

 

[RetireAge50]

If I put my my money in a can I will have to keep working let alone go back to work.

I'm certain there have been zero "tragic" or "catastrophic" results over reasonable length holding periods. If someone sell stocks after holding for short periods then sure they can call it tragic for them but can only blame themselves.

 

[pb4uski]

....Our timeline for this is considerable, she cant touch the money for another decade, but I just cant stomach another precipitous drop, its taken 5 years to get back to where we were prior to 2008 and I dont want to do that again.

As I just moved into Vanguard I havent had the time to thoroughly research the various options and I'm afraid with Yellens statements about raising interest rates that a significant drop is looming and I dont currently have the time to research my best options....quite busy these days, so...any thoughts would be appreciated....

(emphasis added)

You asked, we answered. You obviously think you know better than us who have successfully retired. So if you know it all why bother to ask to begin with?

The oracles come out of the woodwork years later.......

If you google back to threads from that era you will see that the general consensus was to stay the course, but please don't let facts get in the way of your opinion.