Switching to Self Managed Investments

[INTJ10]

I have finally decided to avoid account management fees by moving my IRA to Vanguard and picking my own funds. I have been studying up on asset allocation and feel I am ready now. My accounts are with a major banker. I wasn't terribly upset with the way they managed my money but I am paying a 1% fee and that adds up after a while.

Are there any tips you might have or pitfalls to avoid when moving your funds? I am a bit concerned since I have some Roth IRA's that were converted. Is there any information that I need to obtain?

[David1961]

Contact Vanguard and they will walk you through the process and answer any questions you have. I did this recently and was happy with the move.

[mathjak107]

picking allocations is very easy. having the discipline to call the shots and be in charge of your money is another.

even the most hard core investors were finding it hard to stay put in 2008-2009 and those investors who picked allocations greater than their pucker factor lost a lot of money by baling.


i can put portfolios together in my sleep but i use a newsletter . why? discipline.

left to my own devices i would think about things 24/7 2nd guessing my moves and always thinking about what to do next.

by getting a 3rd party to call the shots the last 25 years it has allowed me to not even think about things. once a week i read a 15 second update and a few times a year swap a fund or two.

100k back in 1986 is now almost 2 million just staying the course and riding things up and down with some fund swaps as the big picture changes.

the real question is do you have the pucker factor and discipline to do this on your own.

[travelover]

You can do a lot worse than simply investing in Vanguard's Wellington, Wellesley or a Target Retirement fund and let them do all the reallocation automatically.

[mathjak107]

while i always like wellesley i think going forward in to current conditions is going to take a lot more flexibility.

after 36 years of having bonds and stocks combined in to one fund doing well my opinion is low interest rates and high stock valuations may require a lot more adjusting to the big picture as rates rise than funds with allocation restrictions can give you with one stop shopping.

nothing wrong with wellesley as part of a total portfolio of things where you can adjust things to taste but i think the days of one fund only are numbered.

[yakers]

Quote:

Originally Posted by mathjak107 i think the days of one fund only are numbered.

While I don't necessarily disagree there isn't an obvious way forward for me. Bonds offer 'return free risk', stocks are overvalued and my international funds have been taking a beating. One fund may not look good but two or three or more don't look better to me.
For simplicity I tell DW that if I fall over its OK to just put everything into Wellesley. Maybe not optimal but easy to manage and probably will do as well as trying to manage several funds.

[mathjak107]

at least with an assortment of different types of bond funds you can shift as the tide turns. as of now capital appreciation on intermediate term bond funds has been very good.

that may continue for a while and a black swan event certainly may make them the place to be .

on the other hand if intermediate term rates rise or stocks fall high yield and short term bonds may be the place to be .

the point is you have options which you do not have in only one fund.

the only one fund i would do would be something along the lines of the permanent portfolio where once a trend starts in anything you can profit no matter what the scenario.

in my opinion it is awfully late to the party to bet on one fund and one outcome. if the party is going to 12 we may be at 10 or 11pm at this point.

[INTJ10]

Quote:

Originally Posted by mathjak107 picking allocations is very easy. having the discipline to call the shots and be in charge of your money is another. even the most hard core investors were finding it hard to stay put in 2008-2009 and those investors who picked allocations greater than their pucker factor lost a lot of money by baling. i can put portfolios together in my sleep but i use a newsletter . why? discipline. left to my own devices i would think about things 24/7 2nd guessing my moves and always thinking about what to do next. by getting a 3rd party to call the shots the last 25 years it has allowed me to not even think about things. once a week i read a 15 second update and a few times a year swap a fund or two. 100k back in 1986 is now almost 2 million just staying the course and riding things up and down with some fund swaps as the big picture changes. the real question is do you have the pucker factor and discipline to do this on your own.

Thanks all for the comments. My advisor only handles about 1/3 of our portfolio because the rest is tied up 401ks and real estate so I feel I have manage my "pucker factor" anyway.

One other question. Do you include real estate when you do your portfolio analysis? When I have been doing firecalc runs, I leave real estate out but it is there so maybe I am being too conservative. We have our house and partial ownership of two properties that we will sell at some point.

[mathjak107]

i am just about done with real estate selling it all off before retiring and was a huge special situation investor in real estate here in nyc.

buying out rent stabilized leases on co-ops in prestigious buildings by central park and commercial lease rights was my thing. so nooo i don't count any of it when working with my portfolio and its allocations.

[Animorph]

Fidelity kind of screwed up the transfer of my mom's accounts from her old-time broker. We told the broker to go all cash, and Fidelity started the transfer the next day. The broker was a little slow and Fido was too fast (it takes three business days for stock sales to settle), and inexplicably requested in-kind transfers on some accounts. They managed to pull in two accounts with a bunch of individual stocks. They did give us 100 free trades for each account with the stocks, so I was able to sell with no cost but three days of my time. I was the only trade in 3 days for one or two of the stocks, which was somewhat of a pain.

Not as smooth as I expected, but nothing got lost, exactly. Setting up the beneficiaries was a minor problem since we didn't have that info from the old accounts. She actually made about 3% being in cash for a week or so.

I ended up with this portfolio, since she hardly ever withdraws from her portfolio but may in an emergency:

25% S&P 500 index
25% Total US ex-S&P 500 index
25% All World ex-US index
25% US bond index

[rodi]

Quote:

Originally Posted by INTJ10 One other question. Do you include real estate when you do your portfolio analysis? When I have been doing firecalc runs, I leave real estate out but it is there so maybe I am being too conservative. We have our house and partial ownership of two properties that we will sell at some point.

I don't include my primary home in my firecalc assets. I do include rental income in my offsets (I put the net rent as a COLAd pension. - so it offsets the amount I need to draw from the portfolio to cover my spending.

If I planned to sell - there's a tab for "portfolio changes" - you could input the amount you expect to get from selling the partial ownership property.

Personally, I'm looking at our paid for house as LTCI... if one of us needs long term care for an extended time period - the other party could downsize the house and use the equity difference to pay for several years of LTC. If we both go - the house would pay for some serious time in LTC for 2 people.

[clifp]

Quote:

Originally Posted by yakers While I don't necessarily disagree there isn't an obvious way forward for me. Bonds offer 'return free risk', stocks are overvalued and my international funds have been taking a beating. One fund may not look good but two or three or more don't look better to me. For simplicity I tell DW that if I fall over its OK to just put everything into Wellesley. Maybe not optimal but easy to manage and probably will do as well as trying to manage several funds.

For the DW, (or DH, DD,DS depending on your situation), I think Wellesley is still a fine choice for simplicity.

It has been a challenging (but rewarding for those with high equity AA, and most real estate investors ) last couple of years. It isn't going to get any easier in the next couple of years. I suspect less profitable because there isn't an obvious way forward.

[cooch96]

I traded all my Amerip*ise accounts to vanguard a couple months ago (I guess that's my little FI milestone). It required a Medallion Signature Guarantee, so I had to reopen my account with Capital One to get the documents signed and sealed.

That was a bit of a hassle. I don't know if your current institution will require you to get medallion Signature before pulling your funds, but it took a bit of digging. I had to research to find a bank that would do it as neither of my Credit Unions would.