Will You Share What Funds You're In?

[WhiskyDave]

Consider something even simpler than the 3 fund portfolio:
A single Vanguard LifeStrategy all-in-one fund is the ultimate in simplicity.
They have four of these with various asset allocations ranging from 80/20 to 20/80.
Another all-in-one option is the Vanguard Target Retirement funds.
There are pros and cons of the all-in-one versus 3 fund portfolio.
Good luck,
DD

To the OP's original question....I'm about to consolidate two 401K's (620k) into an IRA and as DD posted above, I too like the Vanguard LifeStategy fund VASGX

VASGX breaks out as 80/20:
Total Stock Market Fund 48.6%
Total International stock Fund 32.3%
Total Bond Fund 13.6%
Total Intl Bond 5.%

Planning to do 90% in the above VASGX for simplicity and broad reach in one do it all fund and will invest around 10% in ARKK or Bershire BFOCX.

Thoughts?

 

[ExFlyBoy5]

Ours is pretty darn simple, however my military pension covers 100% of our ordinary (and then some) expenses so we don't hold any bonds and are a little more aggressive than some folks might want to be.

We are currently:

95% VTI/VTSAX
2.5% Cash
2.5% AMZN (only single stock holding; was a smaller % a few years ago, but value has increased by a decent amount)

DW also has a new 401K through Transamerica that is matched but the offerings aren't great. It's a targeted retirement fund that while has good returns, has a nearly 1% annual fee..BOO!!! It is fairly small since it was only opened a few months ago.

I also have a little gambling money (less than $5K) that I use for crypto/GME/speculation type stuff.

 

[ArmchairMillionaire23]

Although I'd appreciate hearing from anyone, I'd especially be interested in folks like us, with a ~$1M portfolio, who started this strategy in the past few years, and for whom it seems to be working well. The previous decade of crazy gains was waaaay too much of a best-case scenario, so I'm less comfortable with data from those years.

20 years ago I read "The Millionaire Next Door" and that book inspired me to start taking control of my saving and investing. Then I read "The Armchair Millionaire" and that book gave me direction on how to invest for my future.

The basic premise of "The Armchair Millionaire" is simple:
1/3 in a Large-Cap US Index fund.
1/3 in a Small-Cap US Index fund.
1/3 in an International Index fund.
(feel free to choose funds from whatever brokerage you use)

While "Armchair" recommends 100% in equities, (which I did from age 30 to 45) you can still follow their strategy within the equities portion of your portfolio. At age 45 I switched to a 75/25 stock/bond ratio which was allocated as follows:

25% in a Total Bond Market Index fund
25% in a S&P 500 benchmarked index fund
25% in a Small-Cap Index fund
25% in an International Stock Index fund

Currently I'm at a 60/40 stock/bond ratio but I still use the same strategy as shown below:

40% in a Total Bond Market Index fund
20% in a S&P 500 benchmarked index fund
20% in a Small-Cap Index fund
20% in an International Stock Index fund

This is what I've done from the early 2000s. My funds are primarily in Vanguard and John Hancock 401(k) accounts and a Vanguard Roth IRA. If I review my performance from the past 10 years (that's as far as the calculator will let me go back) I'm averaging 11.2% rate of return. I'm sure others will have allocations which are similar to this, and others will have completely different allocations. In the year 2000 I had ~$12K in my first 401(k). I've contributed as much as I could afford over the past 21 years. Some years I have been able to max-out my contributions and other years I wasn't able to reach the limit but I always contributed at least 10% of my income. Today I'm at $1.3M and looking to retire in 2025 at age 54.

As a wise person on this site likes to say, "YMMV"

 

[gayl]

We started investing in funds a few decades ago - both taxable and non taxable accounts. We corrected the expensive, actively traded fund choices in the non taxable accounts as we got smarter, but have so much in the taxable accounts the tax burden would be pretty painful, so just let them ride … waaaaay too many, and a lot of duplication in holdings (the mistakes of relative childhood) - our process was to review funds doing well over 3-5 years and then pick the best rated by whatever magazines we had - made mistakes, but kept saved money going into them, so I guess that was good.

I chuckle - sadly - about how haphazardly all this was done as we worked, raised kids, etc … but, still a bit of chuckle ...

Taxable
EGINX
FAMVX
GABGX
GABGX
HACAX
JACTX
JAENX
JAGIX
JAMRX
JORNX
KAUFX
NGSSX
NICSX
NMANX
OAKIX
OAKMX
PRSCX
SFAAX
STAFX
TWCUX
TWIEX
WFDAXks
ETFS and stocks

Non Taxable
FIENX
FSKAX
VTIAX
VTSAX
ETFS and stocks

You're in 28 mutual funds!!!! [emoji15] How do you pick which one to draw from or do you do the same % from each? How do you monitor overlap?

I learned to simplify into basically 2 + play money from others here

 

[Time2]

Mostly VTSAX (and VTI), some in VOO, (and VFIAX) and VWILX.
Then a few REITs, land and cash.

 

[Qs Laptop]

I've got quite an eclectic mix of mutual funds, but my go-to funds are:

Large Cap growth
CPOAX, Morgan Stanley Insight Fund
FBGRX, Fidelity Blue Chip Growth
FKDNX, Franklin DynaTech

Small Cap Growth
WAMCX

Fidelity Sector Funds
FSELX, Fidelity Select Semiconductor (what a beast!)
FSMEX, Fidelity Select Medical Technologies and Devices

Bond Funds
PONAX Pimco Income Fund
FTBFX, Fidelity Total Bond




If you want to get market average returns, and only market average returns, then yes, by all means invest in the three total index funds that most people here recommend. Realize that you are getting market average returns.

But if you have a long runway and want to earn more than what market index yields and keep it simple, and since you are at Fidelity i would suggest:

FBGRX, Fidelity Blue Chip Growth (large cap growth)
FIVFX, Fidelity International Capital Appreciation (large cap international growth)
FTBFX, Fidelity Total Bond (broad spectrum bond fund)
FMDGX, Fidelity Mid-Cap Growth Index Fund

BTW, most, if not all, of those non-Fidelity funds that I listed can be bought through Fidelity with no transaction fee and no load.

 

[kevink]

Echoing several replies here touting the virtues of picking something and sticking with it, this great post from the White Coat Investor site is well worth at least a skim:

https://www.whitecoatinvestor.com/150-portfolios-better-than-yours/

 

[24601NoMore]

The 3 fund portfolio is exactly what I am doing. I have -

62% VTSAX
5% VTIAX
30% VBTLX
3% CASH

I used to have more VTIAX, but am slowly selling it off. In a few years, I'll just have VTSAX and VBTLX. Simple is good! I also used to have a few different individual equities, such as Google/Alphabet, but the amounts were small. I've been doing the simple 3-fund thing for around 10 years or so now. It has been working well so far. I have a useful ability to ignore my investments when the market is down, which I think will help keep me invested like this. I spend about 20 minutes a year on portfolio maintenance/rebalancing. Maybe 30 minutes. Not really sure. It's not much.

PS - you wanted to hear from people who have ~$1M. I have a little more than that, but not much more. I'm in the ballpark.

Why would you sell off all of your International equities (VTIAX)? Even Vanguard allocation strategies hold individual International funds..

I personally think International diversification (via International funds, not just holding US Large Cap companies in VTSAX or similar that have diversified international businesses) will outperform US-only the next decade or two.

In fact, I believe that so much that I'm increasing my allocation to Internationals - particularly EM and Developed AsiaPac - especially China..

Hate to say it, but the odds are pretty darn high that China is going to outperform us hugely in the next decade or two..US equities are just priced too darn high relative to historical levels, and valuations are far better outside the US. Plus, the US currently seems intent on spending our way into bankruptcy while China is much more conservative from a geopolitical and fiscal perspective, so there's that as well..

 

[24601NoMore]

We started investing in funds a few decades ago - both taxable and non taxable accounts. We corrected the expensive, actively traded fund choices in the non taxable accounts as we got smarter, but have so much in the taxable accounts the tax burden would be pretty painful, so just let them ride … waaaaay too many, and a lot of duplication in holdings (the mistakes of relative childhood) - our process was to review funds doing well over 3-5 years and then pick the best rated by whatever magazines we had - made mistakes, but kept saved money going into them, so I guess that was good.

I chuckle - sadly - about how haphazardly all this was done as we worked, raised kids, etc … but, still a bit of chuckle ...

Taxable
EGINX
FAMVX
GABGX
GABGX
HACAX
JACTX
JAENX
JAGIX
JAMRX
JORNX
KAUFX
NGSSX
NICSX
NMANX
OAKIX
OAKMX
PRSCX
SFAAX
STAFX
TWCUX
TWIEX
WFDAXks
ETFS and stocks

Non Taxable
FIENX
FSKAX
VTIAX
VTSAX
ETFS and stocks

Good to see another Oakmark investor (OAKIX and OAKMX). It's been a pretty painful ride the past few (OK, 5) years or so for us, but Value seems to be making a comeback...

Check out the "1 year" return on OAKIX..86 (!) percent.

Of course, OAKIX was totally crushed and melted at this time last year, so all relative..

I've come SO. CLOSE to bailing totally on OAKIX over the past several years. It's DEFINITELY a (very) long term hold. We also hold OAKMX and that's at least thankfully been a BIT more consistent.

At times, the diversification strategy to hold Value as well as Growth can be hard to do..I think this could be the year it starts to pay off..

 

[target2019]

In order to know where you're going, we must know where you've been.

There's a path from complexity to simplified. What is your complex arrangement now?

 

[SoReadyToRetire]

The 3 fund portfolio is a great choice for your Roth or tax deferred accounts, but you may have a lot of capital gains taxes if you try to change your taxable accounts, so you will have to consider what to do there (maybe move some money each year) so you don't get slammed with excess taxes.

Can you elaborate on this, please? I'm not thinking about taking any money OUT of my retirements accounts (I have a really small Roth IRA ($30K) and an IRA.) So how will changing to different mutual funds/ETFs generate more taxes? Or do you mean when I eventually withdraw the money?

Thanks to everybody for the continuing suggestions in this post--much appreciated!

 

[target2019]

There are taxable, tax-deferred, and tax-free accounts in most investing portfolios. If you specify what's in which now, and what you are trying to accomplish, answers will make more sense.

Plan	Calc. AA	Sym/Prt%
Roth-T	3.5%	VTRIX
401k	3.2%	VEMIX
401k	6.1%	VTMGX
* * * * * * * * * * *	Int'l Stock	13.9%
403b	6.1%	PEOPX
IRA-S/D	1.9%	UMAFX
SEP+Roth-T	9.2%	VTSAX
IRA-S	0.5%	VGSTX
Roth-S	2.5%	VWIAX
SEP	1.9%	VWINX
Roth-T	4.6%	VGSLX
401k	3.0%	VEXAX
Roth-S	1.3%	VSIAX
Taxable	9.3%	VASGX
* * * * * * * * * * *	US Stock	40.2%
SEP	5.8%	VBTLX
T-Free	3.1%	VNJTX
SEP	2.9%	VWINX
IRA-S	0.3%	VGSTX
R-IRA-T	5.3%	RLBGX
Roth-S	3.7%	VWIAX
Taxable	1.0%	VASGX
* * * * * * * * * * *	IT/LT Bond	22.0%
Cash	7.6%	CASH$
Annuity	3.6%	VFSTX
401k	7.6%	BSV
403b	5.1%	VWSTX
* * * * * * * * * * *	ST Bond	23.9%
		100.0%

 

[LOL!]

I am happy to read about all the 3-fund portfolio folks in this thread. I suppose it is not unexpected, but you never know.

For myself, I also hold the bulk of my portfolio in Total US Stock Market Index, Total US Bond Market Index, and broad-market International Index (though not a Total Int'l Index) funds.

In order to make things more interesting though I have some portions of the portfolio in MTUM (large-cap US Momentum) and AVUV (small-cap value) funds. Also I have decided to temporarily put some of the bond portion into a short-term corporate bond index fund earlier this year. That alone has avoided some bigger loss in the Total US Bond Market Index fund.

So that might be called a 6-fund portfolio.

 

[Out-to-Lunch]

The 3 fund portfolio is a great choice for your Roth or tax deferred accounts, but you may have a lot of capital gains taxes if you try to change your taxable accounts, so you will have to consider what to do there (maybe move some money each year) so you don't get slammed with excess taxes.

Can you elaborate on this, please? I'm not thinking about taking any money OUT of my retirements accounts (I have a really small Roth IRA ($30K) and an IRA.) So how will changing to different mutual funds/ETFs generate more taxes? Or do you mean when I eventually withdraw the money?

Thanks to everybody for the continuing suggestions in this post--much appreciated!

Exchme was only talking about capital gains in a taxable account. For Roth and tax-deferred (tIRA), changing funds does not cause a taxable event, as you noted.

 

[Blue531]

All the ARK Invest ETFs are doing really well, with one year returns ranging from 154% to 182%. ArkW 5 yr return is 52 % ....ArkK is 46 %...ArkG is 40 %.

 

[CincyDave]

We started investing in funds a few decades ago - both taxable and non taxable accounts. We corrected the expensive, actively traded fund choices in the non taxable accounts as we got smarter, but have so much in the taxable accounts the tax burden would be pretty painful, so just let them ride … waaaaay too many, and a lot of duplication in holdings (the mistakes of relative childhood) - our process was to review funds doing well over 3-5 years and then pick the best rated by whatever magazines we had - made mistakes, but kept saved money going into them, so I guess that was good.

I chuckle - sadly - about how haphazardly all this was done as we worked, raised kids, etc … but, still a bit of chuckle ...

Taxable
EGINX
FAMVX
GABGX
GABGX
HACAX
JACTX
JAENX
JAGIX
JAMRX
JORNX
KAUFX
NGSSX
NICSX
NMANX
OAKIX
OAKMX
PRSCX
SFAAX
STAFX
TWCUX
TWIEX
WFDAXks
ETFS and stocks

Non Taxable
FIENX
FSKAX
VTIAX
VTSAX
ETFS and stocks

This sounds just like me. I'd pour over the various mutual fund rating publications and invest a few grand in a lot of different funds over the years. It's actually worked out well, and have a lot of diversification between growth and value, market caps and domestic and international. Have about 25 funds, many of which I've had over 30 years and selling will generate a lot of capital gains. I plan to use retirement funds first and leave the non-retirement funds grow, and hopefully the step up in basis will still be around when "the time comes".

To the OP....I wouldn't advise doing what I've done. Keep it simple. Figure out what AA you want and pick a few index funds to get you there,

 

[F.I.R.E User]

VTSAX only in my taxable account. That’s outside of my 401k traditional and Roth IRA.

 

[gooddog]

Great thread.

 

[jasg]

Another 3 fund devotee here.

After 20 years with a major-firm advisor/broker who took care of my old IRA, I dropped him and went 3-fund. Did that eight years ago when he proposed a portfolio combined with my larger 401k. The 1% fee for that would have equaled 25% of my SWR!

After 12 years of retirement withdrawals, account balance has more than doubled.

Vanguard funds are:

VITSX
VTSNX
VBTIX

 

[angelfly55]

I studied the Bogle head method and other 3 fund portfolios. Look at the expense ratio, the cost of the fund, and the returns. Do it sooner than later. I did and I only check mine occasionally, maybe every 6 months doing fine...so far. A lot less headache.

 

[indiajust]

Do the rebalance effort across your entire portfolio. Just do it inside the IRA. Each year try to pull the taxable side toward your benchmark allocation, taking however much cap gains you feel comfy. Adjust IRA to suit. Lather rinse repeat.

 

[PatrickW]

QQQ - 37%
VTI - 13%
SPY - 19%
VTWO - 17%
GLD - 14%


Split about 50/50 between an IRA and my employers 401k. As soon as I leave my current employer I'll put it all in my IRA and consolidate the SPY into VTI.

58 years old. 1.5M total. Maybe a year from retirement.

 

[Diver]

We are all in on VWENX (Wellington) + 5% cash. Wellington has our preferred 60/40 allocation without us having to even rebalance, just set & forget. Worth the bit higher fee to me for that, totally stress-free. Would be similar with a Lifestrategy fund. We are early retired with a bit more than you.