Vanguard fund suggestions

[calichica]

Hi,

This is my first post as I have lurked for some time. DH and I have been diligently saving and planning to retire by 50 but reading these forums and running i-orp and FIRE calc and every time value of money calculator under the sun has me pushing for FI by 40 with RE at my leisure.

I searched these boards for fund suggestions and found posts from 2004 and 2007 about the "normal" suggestions for funds (ie: total stock market and total international stock market). Are there any others that you would recommend for taxable or tax sheltered investments??

Age 27 and 28. DH will likely exit the rat race in 5 years if we decide to adopt. $175-200k gross income currently. We had anticipated a reduction in income coming but recent changes have made increased income much more likely.

Currently maxing out 401k's and roths and putting around $10k into taxable funds and the rest was being saved and spent somewhat frivolously (compared to most ER posters at least). Have been building CASH reserves due to uncertainty of job market but may begin to invest cash since there is more certainty in our lives and get back to a 10-12 month emergency fund.

Need about $4k per month to live on currently. We just sold our home and are renting closer to work and have no real desire to buy again as the numbers just don't work toward FIRE in our neighborhood to be anywhere near a good school district.

Anticipate future savings of $35k maxed 401, $11k maxed roth and $14k+ taxable investments as we get a grasp on new income prospects.

Here is us, any other Vanguard suggestions for us to get into or are those 2 funds along with our target funds enough "diversification" for now seeing as how we are NOT AT ALL risk averse?

$75,000 cash
$128,000 401k that needs to be rolled over...left job a few months ago and have not figured out where to roll this money...currently invested in Fidelity Lifepath 2050
$17,200 pension that needs to be rolled over...this is cash value possibly sitting in mm/bond fund? I had no choice in investments (Fidelity interest credit 10 year)
$46,200 401k husband currently on track to max out in December (Vanguard Target 2050 VFIFX)
$28,000 Roth husband (Vanguard Target 2050 VFIFX)
$22,500 Roth me (Vanguard Target 2050 VFIFX)
$11,327 Traditional IRA (non-deductible from years I exceeded Roth max...I need to recharacterize to Roth soon)
$10,400 (VTSAX total stock market index admiral) Taxable account I would like to continue to add to and maybe diversify?
$14,600 Rollover IRA from husband's previous 401k (VTSAX total stock market index admiral)
$8,000 401k for new job, just started contributing in June but will max out next month between this and old company's 401k contributions
$1850 BAC stock...this was my first adventure into stocks...poured in $2500 and never saw the money again

 

[2B]

I'll start with suggesting you read William Bernstein's Investor Manifesto and/or Andrew Hallam's Millionaire Teacher. They both discuss asset allocations and fund selection.

I personally don't think much of target date funds but many here do. I also don't like bond mutual funds because of the potential interest rate risk to principal. I hold a CD ladder for my fixed income.

My holdings are very simple. I have 60% fixed/cash and 40% equities but I'm over 60. Of my equities, VTSAX - 60%, VSMAX - 10%, VDMAX - 20% and VEMAX - 10%. You can certainly get more involved and put in more of a value tilt. I'm working at keeping it very simple for my DW.

I bought a small bank stock many, many years ago. It was acquired twice and ended up being bought by BAC. A relatively small investment with about a decade of growth and nice acquisitions along the way paid for about half of my kid's college. I transferred the stock to their own brokerage accounts for the sale so there was no or very little taxes due. I ended up with 300 shares of BAC when the collapse hit. I ended up selling for $13/share but my cost basis was about $7. Even then I had to pay capital gains! It was my last individual stock holding and it was my only one for many years before then. I've only owned mutual funds since then.

 

[travelover]

I think that you are doing pretty well with your allocations. You could save a few bucks in fees by just buying similar assets directly that are in the Target Fund, but then you'd have to do the re-balancing manually.

 

[Ed_The_Gypsy]

You are my daughter's age. Last year, I gave her $5k in a Vanguard Roth for Wellesley. If she continues to do the same, she will be very happy some day. (Yes, it has a high bond component, but it has performed a little better than the S&P with much less volatility. [Thanks, Uncle Mick!] I did not want to frighten her.)

Personally, I am 100% equities: 50/50 US/non-US, mostly Vanguard index funds. (I am older than 2B, too.) I rebalance every year or two. You could do a lot worse. I did, before I wised up. When interest rates return to reality, things like bond funds will become more attractive and a Margarita Portfolio (1/3 US, 1/3 foreign, 1/3 bonds) will become more attractive. Right now, no.

I do not think much of target funds, either. I am pedal-to-the-metal until I retire, then I will get more conservative. I like CD ladders better than bonds when interest rates are good.

 

[Ed_The_Gypsy]

By the way, I also think you are doing fine. Muy bueno, in fact.

Carry on!

 

[Koolau]

calichica,

Nice to have you on the forum. It sounds like you are well on your way to FIRE.

If UncleMick joins in, he will most likely suggest Psssst! Wellesley

It sounds like you are saving a very good amount. One caution: It will take a while for the magic of compounding to turn your current savings into a sizable stash from which to supply your (inflation adjusted) $4K/month. I say this because, usually, it is difficult to "save" your way to FI and subsequently ER. Usually, it is necessary to save AND invest AND let time do the heavy lifting.

Best of luck to you. Check back often and let us know about "you" as well as your ER plans.

As usual, YMMV.

 

[Animorph]

A total market fund won't diversify you any more than a target fund, probably just make it worse since that should be much of what's in your target funds. If you would like to tilt toward value or small-cap or international or emerging markets or add REIT's or energy or natural resources, now is the time.

 

[Lsbcal]

At 28 I would be 100% equities. At least do this until intermediate bonds pay historically average real rates (10 year TIPS at maybe 2.3%). Maybe at least 40% in internationals (VFWAX or VEU in etf's).

You two have done great at such a young age. Good luck.

 

[calichica]

Thanks all. I am going to add the books to my kindle app and check out Wellsley. Thanks for the encouragement, I had wanted to be pedal to the metal as I roll over and reallocate but started to have doubts. Doubts be gone.

 

[pb4uski]

At 28 I would be 100% equities. At least do this until intermediate bonds pay historically average real rates (10 year TIPS at maybe 2.3%). Maybe at least 40% in internationals (VFWAX or VEU in etf's).

You two have done great at such a young age. Good luck.

+1

 

[travelover]

Thanks all. I am going to add the books to my kindle app and check out Wellsley. Thanks for the encouragement, I had wanted to be pedal to the metal as I roll over and reallocate but started to have doubts. Doubts be gone.

Wellesley is a great fund, but it may be bond heavy for someone as young as you. As others have said, you may well do better by being heavier into stocks. I believe that about 80% is a sweet spot for maximum growth.

 

[Dwhit]

Wellesley is a great fund, but it may be bond heavy for someone as young as you. As others have said, you may well do better by being heavier into stocks. I believe that about 80% is a sweet spot for maximum growth.

You could look at Wellington instead of Wellesley for more stock emphasis. I think it's around 65 to 35 stock to bond ratio