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For those who self-manage their nest egg - what funds do you use??
Old 10-03-2020, 08:22 AM   #1
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For those who self-manage their nest egg - what funds do you use??

This is a followup of another thread I started last year ... "How many totally manage their own nest egg??"

For those who self-manage (do not use a FA service at all), what funds (or other investments) do you have your retirement nest egg invested in?

I am curious since, Vanguard and Fidelity Index funds seem to be highly popular. I am also curious about which index funds folks pick, and why.

Thanks.
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Old 10-03-2020, 08:51 AM   #2
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Research consistently shows that the best predictor of fund performance is low fees. Here is a Morningstar paper on fund fees: https://www.morningstar.com/articles...r-failure.html

Research also shows that total market funds are the best long-term performers, since the performance of sectors is fairly random. The "quilt chart" illustrates: https://www.callan.com/periodic-table/

From that, you really only need two or possibly just one equity fund. Our one-fund choice is VTWAX, which holds all the tradeable stocks in the world on a cap-weighted basis. That gives us roughly 45% international holdings.

That's a little unusual here. More common is a strong holding in a US total market fund, seasoned to taste with an international fund holding at, for example, 30%.

Here is some Vanguard research: "Global equity investing:The benefits of diversification and sizing your allocation" https://www.vanguard.com/pdf/ISGGEB.pdf and here is a good video: https://famafrench.dimensional.com/v...home-bias.aspx

We see here from time to time posters listing five or ten US market funds. Small cap, large cap, S&P 500, REIT, etc. Often some of these funds almost exactly duplicate each other. From time to time I have backtested some of these at portfoliovisualizer.com and found that they perform almost exactly the same as a single US total market fund. That's really no surprise, since the large caps/aka S&P 500 comprise about 80% of the market just on their own. So I don't see any point in this type of multifund approach.
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Old 10-03-2020, 08:59 AM   #3
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In agreement with the previous post, a large proportion of my holdings are in several of the zero-fee Fidelity index funds. If it werenít for accrued capital gains in my taxable portfolio, probably almost all of my holdings would be there.
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Old 10-03-2020, 09:06 AM   #4
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In agreement with the previous post, a large proportion of my holdings are in several of the zero-fee Fidelity index funds. If it weren’t for accrued capital gains in my taxable portfolio, probably almost all of my holdings would be there.
Ditto, but not as many index funds. At Fidelity;
SPAXX for cash
FSKAX for Dow
FTIAX for international
FXAIX for S&P 500
FXNAX for bond

Work out your allocation for your risk tolerance.

My retirement is funded with a pension and early SS. This leave my IRA to grow untouched until RMA. The allocation for International and Bond are mere place holder amounts. Cash is at $100,000 for quick access. I can do an EFT and have it in my checking account almost instantly. The bulk is split between the two equity funds 50/50. The difference between them is about .25% in favor of the S&P after several years. There's no need to rebalance with my allocation. I have a small inheritance of under $100,000 in the next year or two and about $50,000 in my checking account.
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Old 10-03-2020, 09:10 AM   #5
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VG Total Stock Index and VG Tax Advantaged Capital Appreciation Fund. Their holdings and performance are very similar.


I also hold about 15% in VG Balanced Fund. I consider this part of my Emergency Fund (I can't get myself to hold a straight bond fund) 10 year avg. over 9%.
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Old 10-03-2020, 09:25 AM   #6
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For those who self-manage their nest egg - what funds do you use??

The majority of our nest egg is in two Vanguard funds: Wellesley and Wellington

OldShooter will be along shortly to explain the problem with my choices.
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Old 10-03-2020, 09:30 AM   #7
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... OldShooter will be along shortly to explain the problem with my choices.
It's only a problem if you want to assess the performance of the equity portion of your investment. You can't.
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Old 10-03-2020, 10:06 AM   #8
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Originally Posted by albireo13 View Post
I am curious since, Vanguard and Fidelity Index funds seem to be highly popular. I am also curious about which index funds folks pick, and why.
As with others upthread, I primarily choose low-cost, broad index funds. When I can, that means VTSAX (Vanguard's total US market fund) and VFWAX (one of Vanguard's total international funds, VTIAX being another good choice).

Due to limitations in choices in some of our tax-deferred accounts, I need to use a S&P 500 fund, that I choose to supplement with a mid/small-cap index fund, like Fidelity's FUSEX + FSEMX.
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Old 10-03-2020, 10:14 AM   #9
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You can google "marotta gone fishing portfolio". This is a fee-only financial planner that offers-up specific funds based on where your assets already are. So he (actually "they" offer up...it's a family business) a portfolio that would be easy to construct if you were a Vanguard customer, if you were a Fidelity customer, etc.

And absolutely true...low fees are key. The above recommendations are driven by lowest fees. Also, and I'm not sure everybody would agree with this "spin", they believe that countries with the most freedom to let capital flow without government restrictions is going to be better in the long-run. So the international tilts toward countries that rank high in this kind of freedom. But even if you choose not to allocate internationally, I think the fund choices listed will offer ideas for people in the position of embarking on self-managing their nest egg.
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Old 10-03-2020, 10:15 AM   #10
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You have to decide for yourself what AA fits your needs, so my percentages aren't useful to anyone else - the broad stroke is in my sig line. I am not recommending this many funds for anyone. I'd be perfectly happy with 4-5 funds and the only reason I haven't done so already is capital gains, I'll slowly reduce the number eventually. I have more funds because I wanted a small cap and value tilt when I was in accumulation, and some tax managed funds when useful when I was working. In no particular order we're holding:
  • Van Int Term Tax Exempt Adm VWIUX
  • Van TM Small-Cap Adm VTMSX
  • Van TM Capital Appreciation Fund Adm VTCLX
  • Van Total Stock Market Index Adm VTSAX
  • Van Small-Cap Value Adm VSIAX
  • Van Value Index Adm VVIAX
  • Van Dev Mkts Idx Adm VTMGX
  • Van Short-Term Invest-Grade Fund Adm VFSUX
  • Van Total Bond Mkt Index Fund Adm VBTLX
  • Van REIT Index Adm VGSLX
  • Online Savings Ally
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Old 10-03-2020, 10:38 AM   #11
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Quote:
Originally Posted by albireo13 View Post
For those who self-manage (do not use a FA service at all), what funds (or other investments) do you have your retirement nest egg invested in?
VTSAX Vanguard Total Stock Market Index
VBTLX Vanguard Total Bond Market Index
VFWAX Vanguard FTSE All-World Ex-US Index
VWIAX Vanguard Wellesley
VMMXX Vanguard Prime Money Market Fund
VMFXX Vanguard Federal Money Market Fund
VWELX Vanguard Wellington
TSP "G Fund"
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Old 10-03-2020, 10:40 AM   #12
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Vanguard Total Stock Market Index for my stock portion.
Vanguard Ginnie Mae/Doubleline Low Duration for my fixed income.
Vanguard MM for my cash/emergency fund.
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Old 10-03-2020, 10:40 AM   #13
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You can google "marotta gone fishing portfolio". This is a fee-only financial planner that offers-up specific funds based on where your assets already are. So he (actually "they" offer up...it's a family business) a portfolio that would be easy to construct if you were a Vanguard customer, if you were a Fidelity customer, etc.

I had never heard of this, so I did as you suggested. His suggestions seem, ummm, unduly complicated to me:

Quote:
Marotta's 2020 Gone-Fishing Asset Allocation

50% stocks (appreciation) and 50% bonds (stability)

29.0% Schwab U.S. Aggregate Bond ETF (SCHZ) $29,000
20.8% Vanguard Emerging Markets Gov't Bond ETF (VWOB) $20,800
5.5% SPDR MSCI USA StrategicFactors ETF (QUS) $5,500
4.1% Vanguard Mid Cap Value ETF (VOE) $4,100
4.1% SPDR S&P 600 Small Cap Value ETF (SLYV) $4,100
1.9% SPDR Solactive Hong Kong ETF (ZHOK) $1,900
1.6% iShares Singapore ETF (EWS) $1,600
1.5% iShares MSCI New Zealand ETF (ENZL) $1,500
2.2% Franklin FTSE Switzerland ETF (FLSW) $2,200
2.2% Franklin FTSE Australia ETF (FLAU) $2,200
1.5% iShares MSCI Ireland ETF (EIRL) $1,500
4.6% Vanguard Emerging Markets ETF (VWO) $4,600
12.6% Vanguard Energy ETF (VDE) $12,600
8.4% Vanguard REIT ETF (VNQ) $8,400


100% TOTAL $100,000
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Old 10-03-2020, 12:14 PM   #14
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... His suggestions seem, ummm, unduly complicated to me:
Yeah. No surprise really. FAs have to make investing look complicated because it is fear of the complexity that motivates people to hire them. Carrying out the percentages to tenths also shows a sense of humor. If an FA picks two equity funds and one or two bond funds, then just sits on them as he should, with no trading, the customer will soon start to wonder what he is paying for. So the FA has to make a complicated list and show some activity so it looks like he is earning his keep.

I'm involved with a nonprofit and I reviewed their $20M portfolio with RBC. I stopped counting at about 200 individual stocks. The reports are terrifyingly complex for anyone not in on the joke. I am certain that I could beat the RBC performance net of fees with a two-fund portfolio with US and International in the same proportions as they are in the 200 stock list. My plan at the next investment committee meeting is to challenge them to provide a 5-year backtest of their equity performance against the simple portfolio. See also "Closet Indexing:" https://www.investopedia.com/terms/c/closetindexing.asp
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Old 10-03-2020, 12:16 PM   #15
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Have always managed my own stuff. The equity portion in modern times has been held to SPY's. In the 80' & 90's when I was young and working maybe 80% was in one large cap fund and the other 20% I'd play with. A little here, a little there.

The non-equity stuff is mostly in a money market fund. FireCalc says there's hardly a diff between withdrawal rates and survival between cash, medium bonds, and long bonds so I decided to stop searching for the perfect mix and duration of bonds because there ain't one.

10% is in i-Bonds and another approx 10% is in a short-term gov bond fund.
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Old 10-03-2020, 12:40 PM   #16
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I moved all investments to VWELX (Wellington) when things started going bad. Asset allocation didn't change a lot. I moved a little bit more to cash/money market but bonds stayed about the same. I did this mainly to let someone smarter than me manage the bond portion of my portfolio and get out of my VGT sector bet.

No one should use me as an example.
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Old 10-03-2020, 12:45 PM   #17
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Like skipro33, our expenses are covered by a pension. Unlike many here we are not wealthy. DH has no interest in things having to do with money so it's just me deciding on investments. I am a fairly conservative investor. I'm also learning as I go along.

Our investments are all in IRAs at Vanguard right now, a small Trad, a medium sized Roth and a larger Inherited. I use Vanguard STAR, Wellington, Life Strategy Growth (80/20) and Life Strategy Moderate (60/40) for balanced funds. For some better risk/reward I have 500 Index and Total Stock Market Index. And for bouts of scaredy pants I have some in Federal Money Market. Also, outside of the Vanguard IRAs right now we have a large amount of cash in FDIC insured "high interest savings accounts" which used to pay some real interest and are now just pretending to be "high interest."

That may not make much sense to some but this works fine for now.
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Old 10-03-2020, 01:40 PM   #18
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Other than a few thousand in a money market fund, my portfolio is as follows:

60% VTWAX-Vanguard Total World

20% VFIAX-Vanguard 500 index

20% 1 year CD at a credit union

There may be better ideas out there but this works for me.
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For those who self-manage their nest egg - what funds do you use??
Old 10-03-2020, 02:05 PM   #19
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For those who self-manage their nest egg - what funds do you use??

Here is our mix:

S&P 500 VINIX 28%
Vanguard Windsor II VWNAX 17%
T.Rowe Growth Stock Trust GAT 17%
Vanguard Equity Income VEIRX 13%
Stable Value and CDís 25%

Mostly random picks with a little bit of thought as follows:

The stable value and CDís along with SS and pensions cover all of our expected lifetime expenses.

The remaining is all stock funds. I have active management for the growth stocks (T.Rowe) and value stocks (Vanguard) with the remainder in market index.

Some consolidation could be done but not possible due to funds being in multiple types of accounts (401k, IRA, DCA, taxable, Roth, HSA, etc).
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Old 10-03-2020, 02:14 PM   #20
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Taxable:
VFIAX Van 500 Index
VTIAX Van Total International Stock Index
VTSAX Van Total Stock Market Index
Vanguard Federal Money Market Fund

IRA:
VBTLX Van Total Bond Market Index
VEXAX Van Extended Market Index
VFIDX Intermediate Term Investment Grade
VFSUX Short Term Investment Grade Fund
VTIAX Van Total International Stock Index
VTSAX Van Total Stock Market Index

Roth
VTSAX Van Total Stock Market Index

IRA mix was suggested by Vanguard rep when I rolled over my 401 7 years ago and I've kept the same mix. No interaction with rep since.
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