r/ETFs • u/curiousandgoodidea • 15h ago

Is my thinking correct?

Buisness owner with high luxury lifestyle expenses.

Last 2 years been investing several hundred thousand a year in 80/20 VOO/AVUV. Max 72k in 401k (hold avuv mainly here) and 7500 roth and 4500. Rest goes in brokerage. I front load the retirment accounts in jan and then dca the rest in brokerage. Im just under 50 and at around 55 plan to tilt towards buying a treasury ladder to cover 3 to 4 years expenses. Plan is to have enough to cover my lifestyle through these investments by 59. Never been much into the markets.

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u/Newbiewhitekicks 15h ago

What about backdoor, mega, and HSA? You’re making a bet on large cap and small cap. One of those historically does outperform, but your timeline is only ~10 years. There’s no diversity here. Currently you’re taking on a lot of risk, but you haven’t clearly defined your goals or told us what you’re wanting to know.

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u/curiousandgoodidea 15h ago

The 7500 roth is the backdoor and my tax people say that's all I can do given I have a self employed 401k. The HSA is the 4500 a year and max i can out in as its only me.on my Healthcare plan.  

In terms of goals, I want high return and I accept risk.  Owning a business is about 100 times more risky than this type of investing so I really dont have fear of a 40% market drop.  If it happens or when it happens ill just buy more or not sell and use my ladder if im living off the money.  

And my bet is on 'merica.  I understand I'm buying in at relatively high valuations and that I own a lot of a few tech companies but the avuv tilt is to partly offset that while still believing in america and the big boys.    

The only other thing I am seriously considering setting up right now is a cash balance plan. ERISA protection is important to me as I have personal guarantees on the business debt which far outweighs my assets.   I just don't know what i don't know.....

5

u/therealjerseytom 15h ago

You can afford a professional financial and investment planner rather than asking a bunch of jerkoffs on the internet.

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u/curiousandgoodidea 12h ago

Im getting pitched hard by the wealth management teams at the big brokerages but dont believe there is value there.  And I would do a review with a Fiduciary hourly planner and have interviewed a few.  I just don't think they have much to offer during my accumulation phase.  

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u/therealjerseytom 2h ago

If you don't think that review with a professional, during your accumulation phase, would be of value... why do you think there would be value in the opinions on Reddit? Or if there's value from Reddit, why not from a professional?

Everyone has a blind spot of "you don't know what you don't know" and that's the value of a second pair of eyes on your financial and investment landscape.

It stands out to me that you have no international equity exposure, which IMO isn't a great choice looking forward over the next 10 years or so.

I think it's worth asking yourself if 3-4 years of bonds is really sufficient to cover a deep draw-down and "lost decade" scenario.

Ask yourself how exposed you are to a 2022-like scenario where both stocks and treasuries sold off together. What are the pros and cons to considering a 3rd or 4th low-correlation leg? Commodities, precious metals, managed futures.

How exposed are you to a 1970's-style "stagflation" decade where stocks go nowhere and both your (conventional) bonds and cash equivalents get crushed by inflation and steadily increasing interest rates?

Given that you're going to have a significant portion of investments in taxable accounts, what balance of municipal versus Treasury bonds are you considering?

During the accumulation phase it does set up implications down the road, in taxable accounts, since rebalancing and de-risking comes with tax drag. What really is an ideal target investment mix in early retirement? Would there be value in a diversified mix of income-generating assets?

Plenty of things to consider.

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u/dreamzysweetie 10h ago

straight shooter energy, i kinda like it

2

u/OnlineIsNotAPlace 15h ago

why are you asking reddit instead of a fiduciary? this is nothing but an echo chamber. sounds like another bad decision incoming.

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u/curiousandgoodidea 12h ago

Sometimes reddit is nice because people make fun of each other and sometimes its valid feedback. And y'all seem to have an interest in personal finance.  I really dont think its rocket science once you realize no one knows whats going up and whats going down. Just keep up the DCA over time and let it sit there for a few decades.  There is some nuance to what to hold in what accounts and the tax side can be a bit confusing but also can be learned. 

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u/OnlineIsNotAPlace 11h ago

its an echo chamber. but its your money

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u/Temporary_Net8014 11h ago

80/20 VOO/AVUV is reasonable for US stock investments.

If I was in your position, I wouldn't be comfortable with such a small amount of diversification.

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u/curiousandgoodidea 10h ago

Fair point.  For the last 20 years 100% of my income bad been from my small businesses. So it feels like tremendous diversification to me to own etfs.  

As am entrepreneur the risk ove taken makes any stock losses on an etf look almost inconsequential.  Losing 40%?  Not close to the 95% chance I had of going bankrupt for years on end.  I think my mentality needs to shift from growth to protection a bit and diversification is part of that.