Vanguard Financial Plan

[AlmostDone]

We received our Financial Plan from VG. Our scheduled appointment with the planner is this Monday. There were 2 plans recommended.

1. 100% in the Life Strategy Conservative Growth Fund.
2. Allocate as follows:
6% VG Total International Stock Index (taxable)
7% Merrill Lynch Glabal Allocation (annuity we already own - taxable)
2% Individual stocks we already own
1% a CD we already own
Next is IRAs and current 403Bs
50% VG Total Bond Market Index
19% VG Total International Stock Index
1.5% VG Morgan Growth Fund
2% VG U.S. Value Fund
5% Fidelity Mid Cap Value (currently owned)
1.5% Fidelity Capital & Income (currently owned)
4% Fidelity U.S. Bond Index (currently owned)
1% Legg Mason Limited Duration Bond Prim (currently owned)


May I have your thoughts on this? I guess there are so many small amounts because we already own them. Thanks in advance!

[free4now]

You'll need to provide info on what your financial goals and timelines are to get any useful feedback. Summarize to us what you told VG when you filled out their questionaire.

[AlmostDone]

We said that we wanted a 50/50 mix, that we plan to begin withdrawals in 1 year, but for the next 5 years we will each work part time earning about 10k each. We are 57 and 60. We do not have pensions. SS should be about 14k each starting at 62.

[Nords]

I'm always bemused by a plan that insists one should have 1%, 1.5%, or 2% in a particular mutual fund. Who the heck will be able to tell the difference? What happens if it rises to 3% or falls to 0.5% or pokes along at 1.57636457%-- should you rebalance?!?

I can barely see the wisdom of 1% allocations to individual stocks. But funds-- not at all...

[FinanceDude]

Quote:

Originally Posted by Nords I'm always bemused by a plan that insists one should have 1%, 1.5%, or 2% in a particular mutual fund. Who the heck will be able to tell the difference? What happens if it rises to 3% or falls to 0.5% or pokes along at 1.57636457%-- should you rebalance?!? I can barely see the wisdom of 1% allocations to individual stocks. But funds-- not at all...

Well, if that's what the software generates, and you can't override it, then there you are. Sounds like they need better software...........

BTW, do you get Monte Carlo Simulation with the Vanguard plan?

[yakers]

I tend to like one fund solutions if you find one that suits you. My largest fund is in a Lifcycle fund. An easy way to proceed and this would presumably not have any tax implications would be to not sell your current holdings in the lst 4 funds and put the rest in a one fund (Life Stratedgy, Target Retirement or balanced) .

[Poundkey]

Without going into detail about my goals and such my VG planner had me "clean up" a lot of my smaller positions that were overlapping. Also had me "up" my percentages in some lacking areas.
I ended up with 3 VG index funds, 3 VG managed funds in my IRA (told them I didn't want to change these), and MM Prime. this gave me a more correct allocation and lower expenses.
All in all I thought it was a good move.

[AlmostDone]

One thing that I question is only a 9% allocation to international/Global. I had more like 20% in mind.

Would there be a good reason to put small amounts into the Morgan Growth and US Value instead of just adding those amoutns to the Total Stock Market Index Fund?

[Poundkey]

Quote:

Originally Posted by AlmostDone One thing that I question is only a 9% allocation to international/Global. I had more like 20% in mind. Would there be a good reason to put small amounts into the Morgan Growth and US Value instead of just adding those amoutns to the Total Stock Market Index Fund?

Questions like these are the reason you have the telephone visit with the planner. Make a list of everything you may be concerned with...... or are not clear about. Ask lots of questions. In my case I was sent a 2nd updated plan after the phone visit.
I can't say enough about my planner Jeffrey Denison. He not only addressed all my questions, but discussed financial matters in general. He was very patient. The phone visit was scheduled to last for about 45 min. We talked for over an hour.
My impression is that the online form you fill out is more or less a starting point. The phone appointment is when you and the planner get to the meat of the matter.
Hope this helps.......

[AlmostDone]

PoundKey, that is very helpful. I have a list of questions ready and expect the time with him to be very productive. Thanks!

[AlmostDone]

We had our phone conversation with the planner. I had more questions than he had time, so I didn't get through them all.

He recommends no more than 10% international allocation. I was thinking more in terms of 20%, but he thought that was too risky.

One question that I didn't get to ask was why he did not include TIPS in the plan. We currently have 15% of our portfolio in TIPS and the recommendation is to sell those and put it into the VG bond index fund.

Any thoughts?

[2B]

IMHO -- Any more than 5 or 6 funds and why bother? Buy 48 stocks!

I'm a big believer in index funds but not in bond funds. If you are going the funds route get diversification in the US and foreign markets. That can be done effectively with 6 or fewer funds.

TIPS is a personal decision. I personally don't have them but I also don't believe we are facing a high risk of inflation. I may be wrong but then I'll lose a few % of my fixed income return which won't be a major hit to my NAV.

[saluki9]

Quote:

Originally Posted by Nords I'm always bemused by a plan that insists one should have 1%, 1.5%, or 2% in a particular mutual fund. Who the heck will be able to tell the difference? What happens if it rises to 3% or falls to 0.5% or pokes along at 1.57636457%-- should you rebalance?!? I can barely see the wisdom of 1% allocations to individual stocks. But funds-- not at all...

Nords, this is the crap you get when you let asset allocation to be determined entirely by an optimizer.

[2B]

Quote:

Originally Posted by saluki9 Nords, this is the crap you get when you let asset allocation to be determined entirely by an optimizer.

This is similar to what my 401k administrator sends every quarter. Their "recommended portfolios" divide a piece of the assets to every fund they have available -- 15. Most of these funds are very specialized and have high management fees.

[rs0460a]

Quote:

Originally Posted by AlmostDone He recommends no more than 10% international allocation. I was thinking more in terms of 20%, but he thought that was too risky.

Same with my review. I'm at 17.5% international and the Vanguard rep thought it should be "pared down". I told her after traveling for work 10+ years in Western Europe, I could not see an advantage to being just "US centeric".

Again, what she gave was (IMHO) her opinion, nothing else. While I welcomed her comments (also on my "over exposure" to health care), she did not give me an "aha moment!!". That being the case, I still remain confident with my investment scheme, for "my life" and keep my portfolio as is, at this time...

- Ron

[saluki9]

Quote:

Originally Posted by Ron'Da Same with my review. I'm at 17.5% international and the Vanguard rep thought it should be "pared down". I told her after traveling for work 10+ years in Western Europe, I could not see an advantage to being just "US centeric". Again, what she gave was (IMHO) her opinion, nothing else. While I welcomed her comments (also on my "over exposure" to health care), she did not give me an "aha moment!!". That being the case, I still remain confident with my investment scheme, for "my life" and keep my portfolio as is, at this time... - Ron

Just don't ask the Vanguard planner about international bonds!