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photoguy · 08-06-2013, 07:30 PM

I didn't know vanguard had a portfolio tester -- I will check it out.

The only thing that I see which might be controversial is the amount in international bonds. The material I've seen from vanguard on this has not been particularly convincing (to me) but I haven't researched this in depth. In any case, a 20% allocation of 40% is not going to make/break a portfolio.

panhead · 08-07-2013, 07:17 AM

The AA looks good to me and is somewhat similar to what I presented to the forum months ago (that's why it looks good to me, lol!). My only suggestions are that:

1) Before you do anything, understand the tax implications of buying/selling what you have if some of this is in taxable.
2) Understand tax efficient placement before you do this so you can get this right the first time.
3) Write up an IPS (investment policy statement, search bogleheads). This will be something you can go back and look at when things get crazy and you don't understand what you did and why. It will also give you directions on rebalancing, and anything else you want to track.
4) Once you feel you have decided on your AA, sit on it without doing anything for a little while (week, month, whatever) to see if it still looks good after that time period.

Good luck to you!

-Pan-

Lsbcal · 08-07-2013, 09:06 AM

A very smart poster on Bogleheads some years ago posted that he had some of his large cap allocated to mid cap. He also value tilted so this was in mid value.

The reasoning: large cap value (in French-Fama "speak") was negatively loaded on size whereas mid cap value was not. So by moving some of the LV to MV he could hit his targeted size/value loading for his overall portfolio. Most of us including me do not use size/loading numbers to construct our portfolio. Still I think pushing some large to midcaps is a good idea.

Over the last 21 years (of my data sample) midcap value has beaten large cap value and even small cap value. This seems to be lost on so many or explained away as recency bias. Seems to me that 21 years is a good enough sample.

Chuckanut · 08-07-2013, 09:43 AM

Quote:

Originally Posted by pb4uski

Another thing to consider is tax efficient placement of your portfolio. Luckily, my tax deferred accounts are large enough to hold my entire bond allocation plus some equities and my taxable and tax-free accounts are all equities.

+1

A good point. There is no reason to turn tax advantaged capital gains into more highly taxed regular income. Just make sure that as far as possible you use a tax efficient stock fund that doesn't generate taxable gains from excessive trading.

Bonds? I am sticking with a an intermediate fund and a short term fund since I do think rates have to go up sooner than later. But, I have been wrong about this for quite a while.

ER Eddie · 08-07-2013, 08:35 PM

Quote:

Originally Posted by photoguy

I didn't know vanguard had a portfolio tester -- I will check it out.

Yeah, if you go to "Portfolio Watch," the link is at the bottom of the page. It's a nice little tool, especially if you're doing some major reshuffling.

Quote:

The only thing that I see which might be controversial is the amount in international bonds. The material I've seen from vanguard on this has not been particularly convincing (to me) but I haven't researched this in depth. In any case, a 20% allocation of 40% is not going to make/break a portfolio.

Hmm. Ok, thanks for the input. I did see that Vanguard suggested 20% as being a reasonable figure. I'll keep my ears open, though.

Quote:

Originally Posted by panhead

The AA looks good to me and is somewhat similar to what I presented to the forum months ago (that's why it looks good to me, lol!). My only suggestions are that:

1) Before you do anything, understand the tax implications of buying/selling what you have if some of this is in taxable.

Woops, too late. I already made the move.

Quote:

2) Understand tax efficient placement before you do this so you can get this right the first time.

I'll have to settle for getting it right the third or fourth time. Par for the course for me, lol.

I tend to get lost in tax talk. I am good at math, but I'm not good at translating foreign languages into English, so I have trouble understanding taxbabble. I have trouble staying awake during it, too. They ought to bottle that stuff as a sleep aid. I know I need to know it, but my god, you'd think someone could explain it clearly and simply for us non-accountants.

Something my CPA said rang true, though -- he thinks they keep the terms and formulas intentionally vague to keep people confused and off balance. Wouldn't surprise me.

edit: I'll have to spend some time at this page, which pb4uski kindly linked for me earlier:
http://www.bogleheads.org/wiki/Princ...Fund_Placement

Quote:

3) Write up an IPS (investment policy statement, search bogleheads). This will be something you can go back and look at when things get crazy and you don't understand what you did and why. It will also give you directions on rebalancing, and anything else you want to track.

Hm, okay, I'll check that out.

Quote:

4) Once you feel you have decided on your AA, sit on it without doing anything for a little while (week, month, whatever) to see if it still looks good after that time period.

Yeah, well, where were you four days ago.

Quote:

Good luck to you!

Thank you!