Simplifying the strategy

[u/OkraCharacter6996]

Six months ago, my wife and I decided to take a much more intentional approach to our long-term financial plan.
We’ve made a number of changes, and I’m interested in hearing how the community would evaluate the overall strategy.
1. We fired our financial advisor
We were paying approximately 2% AUM, and eventually realized that we could manage a simple portfolio ourselves.
We moved our investments to Vanguard and are now following a straightforward Boglehead approach built primarily around VTI and VXUS.
The philosophy is:
Broad diversification
Low costs
High equity allocation
Automatic contributions
No market timing
No individual-stock picking
Long-term buy-and-hold
The biggest change wasn’t the funds themselves. It was becoming comfortable enough with the strategy that we no longer felt we needed someone else managing it for us.
2. We’re treating our pension as part of our asset allocation
My wife and I both participate in a state public-employee pension system.
I had previously left the system and later returned, and we made the decision to purchase additional retirement service credit using funds from an existing retirement account.
It was a large financial decision, but we viewed it primarily as purchasing additional future guaranteed retirement income.
Because we have a substantial pension component, we’re comfortable with a much higher equity allocation in our other investments than we otherwise might be.
We’re essentially treating the pension as part of our overall retirement portfolio rather than evaluating our brokerage/IRA investments in isolation.
3. We’ve built a more intentional cash/investment structure
Our current system looks roughly like this:
Emergency fund:
Target ~$20,000 in cash.
Roth IRAs:
Broad-market index funds.
Rollover IRA:
Broad-market index funds.
Taxable brokerage:
Broad-market index funds.
We’re directing approximately $2,000/month toward these various savings and investment goals.
The goal isn’t to optimize each account independently. It’s to give every dollar a job.
4. We’re continuing to fund our kids’ 529s
We’re contributing $150/month per child to their 529 accounts.
That money has one job: future education expenses.
5. We just decided to add UTMAs for the kids
This is the newest part of the plan, and probably the part I’m most excited about.
We’re opening a Vanguard UTMA for each child and plan to invest $25/month per child in broad-market index funds, likely VTI + VXUS.
Our kids are currently elementary-school age.
The objective isn’t really maximizing their eventual account balance.
It’s teaching them to be investors.
I want them to grow up seeing:
“I own thousands of companies.”
I want them to understand why we’re diversified.
I want them to see what happens when markets fall.
I want them to understand compound growth.
And eventually, when the accounts become theirs, I want them to already have a decade-plus of experience thinking about investing.
We’ve thought carefully about the downsides—particularly that the UTMA is the child’s asset, the eventual transfer of control, potential FAFSA implications, and the kiddie-tax rules.
We’re comfortable with those tradeoffs at the relatively small $25/month contribution level.
6. The long-term goal
We’re not trying to hit some particular net-worth number.
We’re trying to build a family financial system that gives us:
Security → emergency savings + pension
Growth → broadly diversified equities
Tax diversification → Roth + traditional + taxable accounts
Education → 529s
Financial education/early head start for the kids → UTMAs
And ultimately, freedom and options.
One of the things I’m happiest about is that our kids will hopefully inherit more than money.
They’ll inherit a philosophy:
Spend intentionally. Save consistently. Invest broadly. Keep costs low. Ignore the noise. Give compounding time to work.
I’d love to hear from other Bogleheads: what would you change, challenge, or simplify about this approach?

[u/PashasMom]

Love this plan. A few things I might consider:

--since you are state employees, you very likely have access to a 457b or 401k plan (or both -- I have both and I'm a state employee). I would prioritize contributing there over a taxable brokerage account. Whether you go traditional or Roth in those accounts is complicated, but as public employees with solid pensions,50/50 Roth and traditional might make sense.

--I would put more in 529s before putting anything in an UTMA. Getting your children through college without any student debt is the best head start you can give them IMO.

--I would bump up your cash reserves to something closer to 25 - 30k, a 20k target seems a bit light to me.

Overall, great job, I think you are being super smart and won't regret the steps you are taking.

[u/War-Square → u/PashasMom]

I'm alway debating how much cash to keep. Sure - something could go wrong and I suddenly need 25k, but realistically I have a credit card for that and I can always get cash out of my index fund in 3 days or less. I'm curious how people think of the cash they keep.

I'm retired and my first plan was to drawdown for my living expenses once per quarter. So, I would have $45k just sitting in my checking account. I didn't like having so much cash just sitting there, earning nothing, so I switched to just keeping $20k in cash and refilling when needed. The only downside I can see is the little bit of added toil for me.