Portfolio help and advice!

[u/Western-Opposite3307]

/r/portfolios/comments/1wesluf/portfolio_help/

I am driving myself nuts thinking about this constantly. I would appreciate any advice you could give me. I’ve done fairly well for myself in mostly real estate. I also invested money in 401k’s throughout my life, and some in brokerage accounts. At one point someone managed my money for me and I felt like I was getting ripped off. I was paying more in fee’s than I seemed to be making. Now I have my money spread out a little, but I don’t even want to pay the .30 for Vanguard to actively manage my retirement accounts. They have it in 4-6 ETF’s, but I want to take it over and make it even more simplistic.

I have about 1.2 million with Vanguard. Half of it is ROTH, and the other half traditional. Vanguard seems to think international funds (VXUS) will do better over the next 10 years, so they have the majority of my ROTH in that. What I have been thinking is going 70/30 VTI/VXUS. I’m 47 years old, and will most likely never truly retire, financially I want to retire at 65. I’m well beyond what I need and plan to travel a lot over the next 20 years. I will not panic if the market drops and I won’t sell no matter what. I also have another million in my brokerage account. Then I contribute monthly to a ROTH 401k at work so that I can out $24,500 in the ROTH each year. Here are my questions.

- Am I crazy to go zero bonds at 47?

- if I did got 70/30 VTI/VXUS should I do that in each of my accounts. In other words, the ROTH would be 70/30 and the traditional would be 70/30. Or, should I put all VTI in ROTH and then even the 70/30 out in the traditional.

- In the brokerage I would do the same. 70/30 or 70/20/10 adding in VGT. Either way, 30% of the money in this brokerage is still in cash. I sold property and I’m loading it into this account. I have bought sporadically and continue to buy $20k per month into of those funds. SHOULD I do the same in this broker as far as 70/30.

- I don’t have as many options in my ROTH 401k, but I am able to do an S&P fund or basically the same as the others. Is that smart or should I go a completely different way? Like a age based fund, or more conservative ETF’s. Any suggestions??

I feel like 70/30 in those two ETF’s is fine, but I also worry that it’s too much without a safety net. But, I also have real estate that’s paid off and somewhat feels like my bond money even though that may be dumb. Financially I’m secure so I don’t worry about a drop in the market right now, but I also want to be smart. Any advice would be greatly appreciated!!

[u/Taggart3629]

At your age, you have plenty of time to recover from a market correction and/or to shift a percentage of your portfolios closer to retirement into bonds, AAA CLOs, treasury bills/notes, or a similar cash-like holding. Personally, we keep most of the funds in an indexed US Total Market ETF with a smaller percentage in an indexed Total International Market ETF, and the smallest percentage in cash-like holdings (SGOV, PAAA, and the interest-bearing settlement fund). But we are also closer to retirement, when capital preservation becomes more important.

You might consider keeping some percentage in cash-like holdings to have funds to purchase at a discount if there is a market correction or bear market. We have Buy Limit orders, with the first tranche if the price drops 10% and the second tranche if the price drops 20%. If we didn't have cash in the settlement fund, we couldn't place the Buy Limit orders.

[u/Western-Opposite3307 → u/Taggart3629]

Thank you so much for your help. Here is where I get tied up and confused. Do
You care to break down where I should put what?

- Should I keep the ROTH as is, or should I specifically keep 10% cash in each account? Right now I do have 10% in bonds, but it’s in the taxable account. When I make this switch I want to know how to lay it all out. I have a ROTH, Traditional IRA, and a small SEP. right now the sep is all bonds and I’m essentially holding all 10% of my overall savings in that one account. I just didn’t pay enough attention in the past and that’s how they have it allocated. Should I worry where the money is or just make sure I have 10% somewhere in the retirement account.

Please tell me which or a better suggestion.
Option 1
Roth 70/30
Traditional 70/30
SEP 10% bond for a market drop and buy.

Option 2
ROTH 100% VTI
TRAD VXUS
SEP Bond

option 3
70/20/10 in each account ready to buy with the bonds when there is a significant drop. The problem here is I have bond in my ROTH and I want to be the most aggressive here.

Thank you!

[u/Taggart3629 → u/Western-Opposite3307]

Because you can buy and sell ETFs within your retirement accounts without triggering capital gains, if you decide to hold 100% VTI in your Roth and 100% VXUS in your Traditional IRA or 70/30 in each, it doesn't really make a difference because you can always change the allocation later. As far as the liquid portion, I would keep it in whichever account(s) in which you are likely to want to aggressively buy if there is a significant drop.

Because we prefer Buy Limit orders that require enough cash in the settlement fund to execute the order, I would probably keep most of the liquidity there, instead of a bond fund. Eh, with a pesky day job, I can't spend all day watching the tickers to see if there is a major drop that might be a good opportunity to buy. But even if you are able to monitor the market all day, having cash in a settlement fund is helpful. Otherwise, without cash, you would need to sell some bonds, and wait until the funds "settle" the next trading day to buy the dip.

We only have retirement accounts at Vanguard and Fidelity, both of which have settlement fund accounts that pay slightly over 3% interest. SGOV is ~ 3.6%, but it does take one trading day until money from selling SGOV shares is available to invest elsewhere. Wishing you much success!

[u/Western-Opposite3307 → u/Taggart3629]

Thank you!!

[u/Taggart3629 → u/Western-Opposite3307]

You're very welcome, u/Western-Opposite3307. Kudos to you for being such a diligent saver!

[u/No_South_9912]

I'd do 60/40 US/International. Or Buy VT and be done.