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Please help: how to correctly re-allocate my messy Portfolio?
Old 02-26-2021, 11:39 AM   #1
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Please help: how to correctly re-allocate my messy Portfolio?

After generating savings in my Bank Account over the years and realizing I need to invest, I think I may have gotten off-target or possibly overlapping with my investments.

A brief background:
1. 7-8 years away from Retirement. I turn 50 this year.
2. Educator- will be receiving Teacher Pension which will cover 70% of salary, but my current expenses are only 40-50% of salary.
3. I will be able to meet the bare minimum to receive Social Security but it will be very small due to Windfall Elimination Provisions.
4. Plan to sell home and use the equity to by new home out of the country (live overseas).
5. I have enough in my Emergency Fund to cover a full year.

Current Investments with Vanguard:
tIRA:
35k- Wellington (25%) & Wellesley (75%)

403b Roth
1k-VBIAX (25%), VDIGX (30%), Wellesley (20%), Wellington (25%)

Roth IRA
5k- VTSAX (100%)

M1
(Roth IRA)
$500- VOO
$500- Dividend Growth PIE- a few Growth & Income ETFs and a few Individual Stocks

I realized that my original mutual fund (FGINX) with Edward Jones was a Growth & Income Fund. I moved it to Vanguard and invested it into the Wellesley and Wellington. Now I'm wondering if I should have rolled all of it into one of Vanguard Growth and Income Dividend Funds?

I still have 1k from my 2020 Roth and the full 7k for 2021 Roth unspent. I also am investing 1k a month into my 403b Roth since my job doesn't have a 401k.
I would like be a little risky since my Pension will cover the majority of my costs. But I don't want to be too risky where I lose everything. I would also like to have something for my kids when I kick the bucket. I had them in mind when I invested in VTSAX and VOO.

Should I be investing in something else?
Am I being too conservative with Wellesley?
Are Dividends are smart Retirement allocation and is VDIGX a good fund to invest in?

What should my Portfolio look like?

Sorry with so many questions. I have a new fond interest in investing, but I think I might have gotten a little carried away with my allocations.

Thank you in advance for any advice.
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Old 02-26-2021, 12:24 PM   #2
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Vanguard has a Portfolio analysis tool under "Porftolio Watch" on the website where you can enter all of your investments and get a good summary of your overall allocation of equities and fixed income, and it will analyze how your equities are spread out across different sectors.

Try running this tool and see what information you can get from it. Post the results here if you want us to provide more meaningful feedback. Ultimately you have to decide what comfort level you have with risk versus return in choosing any future investment allocations.
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Old 02-26-2021, 12:32 PM   #3
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Originally Posted by Stillwater007 View Post
... Sorry with so many questions. I have a new fond interest in investing, but I think I might have gotten a little carried away with my allocations. ..
No worries. I think most of us went through a similar phase. IMO your portfolio is not particularly bad. Just unnecessarily cluttered. BtW, good job on escaping Eddie's clutches.

Quote:
Originally Posted by Stillwater007 View Post
... What should my Portfolio look like?
My standard two book recommendations for situations like this is:

"The Coffee House Investor" by Bill Schultheis https://www.coffeehouseinvestor.com/

"The Bogleheads Guide to Investing" by Taylor Larimore et al https://www.amazon.com/Bogleheads-Gu.../dp/0470067365

These are easy reading and will help you to develop a philosophy and a sense of purpose for your portfolio, from which you will find it easy to clear the clutter and simplify.
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Old 02-26-2021, 12:49 PM   #4
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I may have missed it, but do you have an asset allocation target? It'll be easier to restructure if you have a specific goal in mind.

As an alternative to selling/buying to reach that target, I just keep a spreadsheet with columns for each asset class, so I know my asset allocation at any given time, even with a bunch of oddball investments scattered over several accounts.
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Old 02-26-2021, 03:52 PM   #5
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Quote:
Originally Posted by Ready View Post
Vanguard has a Portfolio analysis tool under "Porftolio Watch" on the website where you can enter all of your investments and get a good summary of your overall allocation of equities and fixed income, and it will analyze how your equities are spread out across different sectors.

Try running this tool and see what information you can get from it. Post the results here if you want us to provide more meaningful feedback. Ultimately you have to decide what comfort level you have with risk versus return in choosing any future investment allocations.
I had no idea there was an analysis tool! There's just so much information on the website, I just never was aware.

I ran the tool and it had me at 50/50 with stocks and bonds right now. That's just too conservative for me. I am thinking more 60/40 or even 70/30 since I can be a little more riskier.
To rebalance things, should I just hold on to Wellesley but stop investing into it and put future investments elsewhere? Or should I sell it within my IRA and but a new and more aggressive fund?
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Old 02-26-2021, 04:02 PM   #6
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Originally Posted by twaddle View Post
I may have missed it, but do you have an asset allocation target? It'll be easier to restructure if you have a specific goal in mind.

As an alternative to selling/buying to reach that target, I just keep a spreadsheet with columns for each asset class, so I know my asset allocation at any given time, even with a bunch of oddball investments scattered over several accounts.
Good question. My goal would be to have supplemental income ranging from $3600- 12k a year for likely the next 20 years. 6k would be the sweet spot I suppose. I also hope I can leave a little something left for my kids when I eventually pass.
It seems by the 100/110 rule that I should have around 60% in equities, but I don't mind being a little more aggressive.

I hope that answers the question regarding asset allocation target.
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Old 02-26-2021, 05:01 PM   #7
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Wellington is around 65% stocks, isn't it?

If you're optimizing for simple, 100% Wellington is hard to beat.

If you want more control over asset allocation, rebalancing, tax efficiency, etc, then break it down into asset-specific funds.

I lean toward the latter approach, but that's just me.
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Old 02-26-2021, 06:14 PM   #8
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Stillwater, You've got a big chunk in fixed income (EDIT: I'm referring to the pension) that the run of the mill AA calculator might not account for. Check out https://www.aacalc.com It is a bit more complicated (and an older website), but accounts for large fixed income streams and will probably more align with your 70/30 thinking. Good Luck
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Old 02-27-2021, 05:20 AM   #9
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Thank you in advance for any advice.
Sounds like you have some reading to do. Start here:

https://www.bogleheads.org/wiki/Bogl...g_start-up_kit
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Old 02-27-2021, 06:11 AM   #10
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Originally Posted by Stillwater007 View Post
2. Educator- will be receiving Teacher Pension which will cover 70% of salary, but my current expenses are only 40-50% of salary.
........
I would like be a little risky since my Pension will cover the majority of my costs. But I don't want to be too risky where I lose everything.
.......
I have a new fond interest in investing, but I think I might have gotten a little carried away with my allocations.
.......
You can afford to play around a little as your pension covers your expenses and many here are actually living off their investments. With that in mind, IMHO I'd divide investments into 2 categories. Keep a 'reasonable amount' in a core account split between one broad stock market index fund or ETF & bond. It'll be over a number of accounts but in the same 2 investments. Then break out a much smaller amount (that you'd be okay losing) to trade with in just 1 account (easier to track). In that it sounds like these are all tax deferred investments, once you've decided on an allocation I'd just bite the bullet and reallocate

FWIW: I'm also on a pension that covers my wants + needs and no SSA yet. So investments are 90% core (SCHB) + 10% trading split all over the place like yours but in individual stocks/bonds
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Old 02-27-2021, 06:30 AM   #11
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Quote:
Originally Posted by Stillwater007 View Post
I had no idea there was an analysis tool! There's just so much information on the website, I just never was aware.

I ran the tool and it had me at 50/50 with stocks and bonds right now. That's just too conservative for me. I am thinking more 60/40 or even 70/30 since I can be a little more riskier.
To rebalance things, should I just hold on to Wellesley but stop investing into it and put future investments elsewhere? Or should I sell it within my IRA and but a new and more aggressive fund?
You'll receive much advice here, and find even more on Vanguard site. Putting it all together will take some planning. And no one here can calculate much since the totals are not known for each account.

Since you're 50, each year that you add to your Roth at 100% VTSAX the stock allocation will drift higher. How much will be affected by growth or loss each year in other parts of your portfolio.

If you put all of your holdings into a spreadsheet, and calculate the percentage of AA for each holding, you'll find that moving some or all of Wellesley to Wellington will bump your stock allocation in the desired allocation. It sounds like you could try this in the Vanguard portfolio analyzer mentioned.

I'd hold off on buying more funds until you have a specific endgame allocation target. Why do you hold this and that? As someone mentioned more reading is recommended.
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Old 02-27-2021, 10:31 AM   #12
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You'll receive much advice here, and find even more on Vanguard site. Putting it all together will take some planning. And no one here can calculate much since the totals are not known for each account.

Since you're 50, each year that you add to your Roth at 100% VTSAX the stock allocation will drift higher. How much will be affected by growth or loss each year in other parts of your portfolio.

If you put all of your holdings into a spreadsheet, and calculate the percentage of AA for each holding, you'll find that moving some or all of Wellesley to Wellington will bump your stock allocation in the desired allocation. It sounds like you could try this in the Vanguard portfolio analyzer mentioned.

I'd hold off on buying more funds until you have a specific endgame allocation target. Why do you hold this and that? As someone mentioned more reading is recommended.
I'll be creating an excel/Google Spreadsheet which was great advice on here to help me have a better idea what is allocated. The Vanguard Portfolio Analyzer is great, but the only drawback is that it doesn't include my 403b Roth account that I also hold in my Vanguard accounts.

As for the why do I hold this and that? That's a good question. The Internet has tons of advice of which funds you should be investing in and why it's better than the other. However, what I've also found is that the advice is too broad. What may work for one, may not work for another.

I mentioned my situation as retiring early in 7-8 years and receiving a pension. I've tried googling "which current funds to invest in with target horizon 8 years with teacher pension at retirement". But surprisingly, I don't get any solid hits. Just bits and pieces that has too many missing parts to the answer I'm seeking.
I know I can't be the only soon to be pensioner who is looking for funds to pair with the pension.
I guess that's why I'm here to get good advice. The other option is investment planners, but the ones who visit my school are the shady insurance annuity types. I'll check out the books as they seem to offer great advice as well.
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Old 02-27-2021, 10:34 AM   #13
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Originally Posted by Stillwater007 View Post
I'll be creating an excel/Google Spreadsheet which was great advice on here to help me have a better idea what is allocated. The Vanguard Portfolio Analyzer is great, but the only drawback is that it doesn't include my 403b Roth account that I also hold in my Vanguard accounts. ........

...... looking for funds to pair with the pension.
I guess that's why I'm here to get good advice. The other option is investment planners, but the ones who visit my school are the shady insurance annuity types. I'll check out the books as they seem to offer great advice as well.
1000%
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