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Old 09-02-2020, 09:22 AM   #21
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Thanks all. I definitely appreciate the candid advice. I'm a bit surprised nobody mentioned using M1 Finance. M1 an online brokerage, similar to Etrade, but what makes them unique is instead of buying and selling individual securities, you create a 'pie' that is made up of as many securities as you like and can be made up of individual stocks, mutuals or ETFs. You allocate a percentage to each to total 100%. When you fund your pie, it automatically allocates your deposit across the pie and does the same for distributions. You can reallocate as often as you like with the click of a mouse. It just seemed to me to be an ideal solution for managing IRAs.

The FAs I've spoken to indicate the biggest reason to pay for their services is that they will assist with distributions to help reduce the overall tax burden. I know traditional wisdom says to take from taxable accounts first, then trad IRA, then ROTH, but that's a rule of thumb. The correct answer is surely a combination of those, and how does one determine the correct mix?
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Old 09-02-2020, 09:43 AM   #22
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Quote:
Originally Posted by Crnhzkr View Post
Thanks all. I definitely appreciate the candid advice. I'm a bit surprised nobody mentioned using M1 Finance. M1 an online brokerage, similar to Etrade, but what makes them unique is instead of buying and selling individual securities, you create a 'pie' that is made up of as many securities as you like and can be made up of individual stocks, mutuals or ETFs. You allocate a percentage to each to total 100%. When you fund your pie, it automatically allocates your deposit across the pie and does the same for distributions. You can reallocate as often as you like with the click of a mouse. It just seemed to me to be an ideal solution for managing IRAs.
Never heard of M1 Finance so I looked them up. They seem relatively small and focused on young investors. Total invested assets of less than $2b and 150,000 customers or about $13k per. I would be much more comfortable using one of the big three.
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Old 09-02-2020, 10:05 AM   #23
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Originally Posted by Crnhzkr View Post
Thanks all. I definitely appreciate the candid advice. I'm a bit surprised nobody mentioned using M1 Finance. M1 an online brokerage, similar to Etrade, but what makes them unique is instead of buying and selling individual securities, you create a 'pie' that is made up of as many securities as you like and can be made up of individual stocks, mutuals or ETFs. You allocate a percentage to each to total 100%. When you fund your pie, it automatically allocates your deposit across the pie and does the same for distributions. You can reallocate as often as you like with the click of a mouse. It just seemed to me to be an ideal solution for managing IRAs.

The FAs I've spoken to indicate the biggest reason to pay for their services is that they will assist with distributions to help reduce the overall tax burden. I know traditional wisdom says to take from taxable accounts first, then trad IRA, then ROTH, but that's a rule of thumb. The correct answer is surely a combination of those, and how does one determine the correct mix?
Schwab has stock slices too.

Unless you understand the tax implications for now and later, how do you know the FA is recommending an optimum strategy? That also applies to the asset allocation. You'll see a lot of charts and reports for sure.

But it is your decision. DIY or pay an FA.

Eddie is nailing you for 2% at least. Fidelity has you for about 1%. That my WAG. If you look at the cost for the next 25 years, it's significant for you.
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Old 09-02-2020, 11:04 AM   #24
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Originally Posted by pb4uski View Post
Most people would transfer their 401k money to their traditional IRA.

Before you do that, see if your 401k plan has a stable value fund and if so, what it is currently paying and has paid in the past. IF your 401k offers a stable value fund that provides a good interest rate, you would want to keep it as you can't get a stable value fund that pays a decent interest rate in an IRA.

In fact, IF your 401k offers a stable value fund that provides a good interest rate, you might want to transfer money from your IRA to the 401k to take full advantage of it.
One caution: Some 401Ks have annual participant fees. I have seen them as high as 1.5%. Make sure there are no such fees from your 401K custodian or the advantage @pb4 sees with the stable value fund might be blown away.

Second Topic: I don't think anyone has commented on the relatively complex fund mix you proposed. The most common thing I see with that type of approach is that the complexity provides no benefit and that is roughly true of yours. I did a PortfolioVisualizer run comparing your equity funds to a much simpler portfolio:



As you can see, for the first five years of the run, your complex portfolio essentially mirrors the simple one. Then for the last three years the complex portfolio falls behind. This is probably because the complex portfolio underweights large caps.

My point here is simply that complexity is not necessarily rewarded. In fact, usually it is not. So it is worthwhile to backtest and see what the portfolio would have done in the past compared to a simpler one. Maybe you want to underweight large caps. Nothing wrong with that if that's your choice, but adding some of a "not-the-S&P500-fund" (Fidelity has one I know; there are probably others) to the simple two-fund portfolio will probably take you where you want to go with only three funds.
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Old 09-02-2020, 11:10 AM   #25
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Others have already commented on fund mix, asset allocation, expenses, etc.

I would only add to this to be careful with your taxable accounts. You have close to $500K in taxable accounts - any planning you do should include careful analysis regarding tax consequences of selling holdings (even if to acquire similar holdings).

This doesn't prevent you from combining accounts - just make sure the securities are transferred "in kind" from the source account to the destination.
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Old 09-02-2020, 11:18 AM   #26
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I would consolidate at Fidelity or E-Trade since you know them (which do you like?),

Or

Go to Td Ameritrade. They have some really nice tools. I would not go with a really small brokerage just from a SWAN viewpoint. I do not want to be thinking about my brokerage.

Oh and these brokers other than Fidelity will give you money to move assets there. As about that. I always do at E-Trade and they always give me money to add funds.

On distributions, you need tax advice paid as needed, not FA fees that never end.

Good luck.
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Old 09-02-2020, 03:21 PM   #27
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..... I know traditional wisdom says to take from taxable accounts first, then trad IRA, then ROTH, but that's a rule of thumb. The correct answer is surely a combination of those, and how does one determine the correct mix?
For us it is pretty easy... we live on taxable account... then we do Roth conversions from tax-deferred accounts (currently) to the $80,000 top of the 0% preferenced income tax bracket (that's $104,800 of total income for a couple filing jointly in 2020) so our Roth conversion is $104,800 less interest, dividends, pension, etc.
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Old 09-02-2020, 05:32 PM   #28
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I think Fidelity or etrade would be the best since they both offer checking accounts. It just makes it handy went you need money. You might want to look into Vanguard LifeStrategy Moderate Growth fund. It is also 40% bonds. That would be super simple for you. More taxes than a three fund portfolio but so simple and no fees from Ed J. That is if you want super easy. You would just have to look at the taxes to see if you are ok with that. That way you could go with one brokerage and one fund.
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Try speaking to a Vanguard Personal Advisor
Old 09-11-2020, 03:39 PM   #29
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Try speaking to a Vanguard Personal Advisor

I would suggest calling Vanguard and setting up a 30 minute conversation with Vanguard‘s personal advisor service. They will do a free analysis and even provide you with a proposed allocation of their ETFs and funds. They will also make recommendations on how to withdraw funds (taxable accounts first, then IRA’s, then Roth’s).

The analysis and report they give you are free.
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Old 09-11-2020, 04:08 PM   #30
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I agree with consolidation (I happen to like Vanguard) AND getting away from FAs who are, in effect, sales people. If you want FA assistance, I suggest hiring a fee only FA to help in your moves and overall planning.

I talked to a so-called FA who made money on fees and on sales. This was many years ago. In essence I was told that they would get me in and out in such a way that I would make more money. I asked "what if you mess up - do I get my money back.?" Crickets! So, my take, you WILL be responsible for your own results no matter who you "hire" to help you. You might as well hire yourself. No one will be more interested in doing it right than you will - even if you don't "know" as much as the "experts."

I happen to like (more or less) set and forget indexes. They aren't sexy and they probably won't make outstanding returns. But they're unlikely to tank unless the markets tank. You can wake up in the morning, check the markets and know about where you stand. You don't have to "do" anything except rebalance according to your plan. I consider myself a good saver but lousy investor. So "auto pilot" works for me. As always, YMMV.
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Old 09-11-2020, 04:28 PM   #31
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... I happen to like (more or less) set and forget indexes. They aren't sexy and they probably won't make outstanding returns. ...
Indexes for me too, but I beg to differ on returns. I get returns that over 10 years beat 90+% of professional stock picker funds. I call that outstanding.
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Old 09-11-2020, 04:38 PM   #32
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Indexes for me too, but I beg to differ on returns. I get returns that over 10 years beat 90+% of professional stock picker funds. I call that outstanding.
Yeah, I agree. Just sayin, with indexes, you probably won't be getting 14% when the market is making 8%. I'll settle for the 8% without worrying about the 14% suddenly becoming -6% the next quarter. I'm not smart enough to pick individual stocks so I'm not smart enough to pick this year's "high flying" MF. YMMV
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Old 09-11-2020, 04:45 PM   #33
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... I'm not smart enough to pick individual stocks so I'm not smart enough to pick this year's "high flying" MF. YMMV
You're too hard on yourself. Picking winners is strictly a matter of luck, and luck is not predictable. Nobel prize winner Eugene Fama and his research partner Kenneth French tried to identify winning MF managers ( https://famafrench.dimensional.com/v...-managers.aspx ) and failed.
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Old 09-11-2020, 05:27 PM   #34
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I'm 59 and hoping to retire next spring. I have about 2.3m, but it's spread out in three piles and I want to consolidate it into one big pile and am trying to figure out if I should DIY or turn it all over to a FA. I've opened an account with M1 Finance (anyone else using this online brokerage?) and what I am considering doing is to create a pie made up of Vangaurd ETFs something like this:

Vangaurd ETF Asset Class % Allocation
VOO Large Blend 10%
VOOV Large Value 10%
VIOO Small Blend 10%
VB Small Value 10%
VXUS Total Intl 10%
VNQ REIT 10%
BND Total Bond 40%
Currently, my holdings are spread across Fidelity, Ed Jones, and Etrade and they look like this (in Ks):

Fidelity:
Taxable - 123
Trad IRA - 1134
401K - 127
Ed Jones:
Taxable - 47
Wife's IRA - 58
Wife's ROTH - 142
My ROTH - 138
ETRADE:
Taxable (stocks) - 311
Wife's ROTH - 88
My ROTH - 88
Right now, I'm paying Fidelity to manage my IRA and some of the other money, and of course I'm paying Ed Jones. I was thinking I would close out my Ed Jones money and move my IRA into the pie above and my ROTHs into a similar pie. I think I'm paying Fidelity about .83% and I don't even know what I'm paying EJ, but I know it ain't cheap.

So I guess my questions are, does it make sense to do this? Is this basically what others are doing?

A big concern I have with DIY retirement investing is, how do you know which account to draw from to minimize your tax liability? If I turned it all over to a FA, they would be able to help with this. Thank you for the input and advise!

My suggestions:

1. Since your are considering a FA, passive index fund investments with low fees may be suitable if you want to DIY.
2. Since you both ROTH accounts and taxible accounts, you have flexibility how you want to withdraw. Some people would withdraw from a taxible account first until they hit a higher tax bracket...and then they stop, and start withdrawing from the tax free ROTH to make up the difference.
3. I would separate your accounts and your wife accounts into different investments. Remember to "sell high". If your wife's account are relatively higher compared to yours, then withdraw from her accounts more...and vice visa. Your wife should agree to this strategy.
4. Consolation makes life simple...but make sure your fees do not go up.
5. I am a proponent of the bucket strategy: First bucket has a time horizon of 0 to 5 years which consists of low risk bonds for liquidity since you should be withdrawing from the first bucket. Second bucket has a time horizon of 5 to 10 years which consists of a target retirement fund or a balanced index fund. The last bucket has a time horizon of 10 years plus which you can invest aggressively in the S&P500.
6. Another withdrawal option is to keep your diversified portfolio of large blend, large value, small blend, small value, total INTL, REIT and Total bond...except add a treasury fund to this mix. When you retire, select the fund that is the highest relative to the others to withdraw. This will be consistent with the "sell high" strategy.
7. Since you are concerned about tax liabilities, I suggest consulting a Certified Public Accountant or CPA. A CPA generally charge $75 to $150 an hour in California and they know the tax laws better than a FA. A FA also has a conflict of interest because they want to manage your savings and get a small percentage of your nest egg. I personally had better advice from a CPA than a FA regarding tax issues.

You will get a lot of advice on this subject so select the one that makes sense to you. Good luck.
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Old 09-11-2020, 06:24 PM   #35
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If you are a disciplined investor you can save significant money if you diy.

If you are not a disciplined investor and need someone to do the asset reallocations when things get out of whack, talk you out of panicking when the next correction or bear market happens, consider using a cheap FA at somewhere like Vanguard where they only charge something like 0.3% vs whatever exorbitant rate EJ charges - plus you don't have to worry about being put into funds that your FA is grabbing commissions on over and above their AUM fee.

As far as your asset allocation goes - I'd argue that it's overly complicated, just use a three fund portfolio (total market, total international, total bond). That way you aren't taking a risk that your value and reit overweighting underperforms.

As far as tax issues go - consider keeping as much of your bond allocation in your traditional IRA portion of your portfolio as is practical, so the RMDs you will eventually get hit up for will be minimized.
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Old 09-11-2020, 07:29 PM   #36
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I would consolidate at Fidelity, and DIY. I did just that myself.
+1. Did this myself a year ago.
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Old 09-11-2020, 07:50 PM   #37
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It sounds like you lack the confidence to manage things on your own and there's nothing wrong with that. You're just paying too much for help. #1 Stop paying Edward Jones. #2. If you are enrolled in Fidelity Portfolio Advisory Services (PAS) that product is way overpriced. #3 - If you are comfortable with doing things online and don't mind 10% of your allocation in cash, take a look at Schwab Intelligent Portfolios Premium. #4 Ask Vanguard if they can help you with your preferred allocation thru their PAS service #5 If you don't like the Schwab or Vanguard options, Fidelity has a lower cost service called "Fidelity Go" that may fit the bill. Good Luck.
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Old 09-11-2020, 08:52 PM   #38
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I would want to know what M1 charges before I moved anything.
Read up on various portfolio allocations. Educate yourself with reading like https://www.bogleheads.org/wiki/Lazy_portfolios

Also you have a bulk in Fidelity so I would think about moving it all to Fidelity or moving it all to Vanguard. I had a Fidelity account thru my employer and started a Vanguard to roll my buyout. I ended up rolling my Fidelity over to Vanguard to cut my expense down to .10%.
You have handled this part, now take charge of your own investments. Vanguard also offers investment advice like Fidelity does. Either firm should do you well if you take on the management yourself. If you don't like handling your own investment after a while, you go back to Fidelity or Vanguard and let them handle it.
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Old 09-12-2020, 08:57 AM   #39
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Some FA's are not permitted to give tax advice, even if they have that knowledge, because of their company policies. A FA with CFP certification could help you manage taxes as well as investment choices and estate planning.
If your 401(k) has stock from the company, check into NUA tax advantage before removing any funds from that account.
I have been comparing myself to a colleague for the past 8 years. He is DIY with 7 index funds. I use FA and pay .85% of AUM. After fees, I have 8.8% ROI compared to my colleague who has 8.4% ROI...but you have to understand all the different ways fees are collected/harvested to make sure you understand whether an FA adds value.
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Old 09-13-2020, 10:46 AM   #40
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I noticed that you will have something over $1m in an IRA at retirement. While that is commendable it will cause you some issues with taxes. Your RMDs will in effect make you Social Security possibly taxable. You might want to consider doing some Roth Conversions to lower the RMD level. I am 59 and my income will go up significantly when I turn 72. I am making some changes to avoid that issue. Tax rates will be going up in the future no matter who is elected.
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