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  • Portfolio Updates for the novice

    Oh dear, the novice is at it again.  On a slow night shift I finally had some time to sit down and do my own version of PoF's spreadsheet of his portfolio and I am blown away by how complex and off base my own is.  I'm 40 and hope to be FI by 50 with options to go part time or retire fully if I can't find a way to love my job again (struggling with job satisfaction but that's a side topic).  Based on the Vanguard questionairre I should be 80% stocks and 20% bonds (not sure how to fit in REITs and "other" investments since I don't totally understand them).

    As my portfolio currently stands I have:

    45% Stocks (32% US, 13% Int'l)

    26% Bonds

    24% cash (Yes, you read that correctly...I know, I'm aghast too)

    5% REITs

     

    In 5 accounts including taxable, HSA, 2 Roths, and my 401K (not counting my defined benefits because I still have NO IDEA how that money is invested...and it's 13% of my portfolio...emailed my partnership's financial guy to get info because it is nonexistent on Schwab's site) I have over 36 THIRTY SIX! Different allocations!  This is nuts, absolutely nuts, for a novice with limited understanding to have something so complex.

     

    Specific questions:

    1.  Who should I turn to for advice on how to simply and move things around?  If I call the various companies holding my money I feel like I need to know what I want to do or they will lead me astray. I don't particularly want a financial planner for the same reasons. Advice from you experts is much appreciated.  Reading Andrew Tobias for extra help.

    2. How much cash should one have on hand who needs ~30K a quarter for taxes? (In my defense, I'm also hoarding cash for a backyard remodel, but once that is done I need to get rid of some of it)

    3.  I've got an old Roth with USAA and of all my investments it have the highest ERs (up to 1.13%).  Can I move that money into Vanguard without penalties?  I'm planning to call USAA to discuss but want to ask non biased sources.

     

    PS.  For what it's worth, bulk of my money is in 401K with Schwab.  New taxable and HSA are invested in Vanguard funds.  2 Roths...one with USAA and one with Schwab (overly complicated, might I add)

     

    Help!

  • #2
    I'm an outlier here but it sounds like it would be money well spent to get a professional to understand your goals and help craft a long term plan, despite your reticence. Especially if you are not someone with a strong background it may be easier to learn watching someone go through it. You may have confidence if an expert that you can ask questions to is along for the ride. You can learn as you go.
    Ymmv

    I keep a lot of cash.
    You should be able to transfer retirement accounts. When we did it it was a pain in the ******************. They required medallion notaries for some reason. Hard to find in out small town.

    Comment


    • #3
      I don't mind the cash either.  It's just a risk preference. The biggest thing is to get rid of the high ER stuff.  For self-directed retirement accounts, it should be relatively easy to transfer into Vanguard and then simplify with low ER funds.

      For taxable, if any of your investments have losses, you can tax loss harvest and invest into a simpler portfolio.  If they have gains, you are kind of stuck unless they are high ER funds.  Then you should probably sell, eat the tax bill, and invest in low ER stuff.

      The simplest portfolio is the Boglehead three fund portfolio.  Just set an allocation you are comfortable with.

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      • #4
        Asset allocation is a personal decision. I'd agree with about 80% stocks and 20% bonds, and once you hit FI you can consider altering the ratio. Why so much cash?

        Comment


        • #5




          Oh dear, the novice is at it again.  On a slow night shift I finally had some time to sit down and do my own version of PoF’s spreadsheet of his portfolio and I am blown away by how complex and off base my own is.  I’m 40 and hope to be FI by 50 with options to go part time or retire fully if I can’t find a way to love my job again (struggling with job satisfaction but that’s a side topic).  Based on the Vanguard questionairre I should be 80% stocks and 20% bonds (not sure how to fit in REITs and “other” investments since I don’t totally understand them).

          As my portfolio currently stands I have:

          45% Stocks (32% US, 13% Int’l)

          26% Bonds

          24% cash (Yes, you read that correctly…I know, I’m aghast too)

          5% REITs

           

          In 5 accounts including taxable, HSA, 2 Roths, and my 401K (not counting my defined benefits because I still have NO IDEA how that money is invested…and it’s 13% of my portfolio…emailed my partnership’s financial guy to get info because it is nonexistent on Schwab’s site) I have over 36 THIRTY SIX! Different allocations!  This is nuts, absolutely nuts, for a novice with limited understanding to have something so complex.

           

          Specific questions:

          1.  Who should I turn to for advice on how to simply and move things around?  If I call the various companies holding my money I feel like I need to know what I want to do or they will lead me astray. I don’t particularly want a financial planner for the same reasons. Advice from you experts is much appreciated.  Reading Andrew Tobias for extra help.

          2. How much cash should one have on hand who needs ~30K a quarter for taxes? (In my defense, I’m also hoarding cash for a backyard remodel, but once that is done I need to get rid of some of it)

          3.  I’ve got an old Roth with USAA and of all my investments it have the highest ERs (up to 1.13%).  Can I move that money into Vanguard without penalties?  I’m planning to call USAA to discuss but want to ask non biased sources.

           

          PS.  For what it’s worth, bulk of my money is in 401K with Schwab.  New taxable and HSA are invested in Vanguard funds.  2 Roths…one with USAA and one with Schwab (overly complicated, might I add)

           

          Help!
          Click to expand...


          1) I keep a list of advisors I trust here: https://www.whitecoatinvestor.com/financial-advisors/

          None of them work for free but a few of them do do financial planning for a flat fee. Or you can read, read, read and ask questions until this stuff seems really easy to you (which it will eventually.)

          2) The only cash I keep on hand has a designated purpose- emergency fund, upcoming tax bills, upcoming expenses in the next year etc. That can be hundreds of thousands of dollars and that doesn't bother me. But I don't carry cash as part of my asset allocation. Once I know the money is to be invested for retirement or college or whatever, it goes into stocks, bonds, or real estate. So if I owed $120K a year in taxes, I'd put $10K a month into a cash account and pay $30K out of it every quarter to the IRS.

          3) Yes, but don't call USAA. Call Vanguard. They'll pull it over there and you can invest in cheaper mutual funds. I use USAA for lots of stuff, but not investing due to problems like what you describe.

          And if you think managing 5-6 accounts is complex....you have no idea. I've got 35+ just in 529s. 3 401(k)s and a DBP for me, a 401(k) for my wife, Roth IRAs, traditional IRAs, HSA, taxable mutual funds, taxable real estate etc.
          Helping those who wear the white coat get a fair shake on Wall Street since 2011

          Comment


          • #6
            Keeping cash on hand to pay my quarterlies and have been saving for a backyard remodel.  Once the remodel is done I plan to scale back on the cash amt and put more into taxable...I like what WCI says about cash.  Makes sense.

            Now I just need to figure out how to rebalance my portfolio.  I'm finally starting to learn what it should look like but figuring out how to make it look that way seems tricky.  Maybe I visit a financial planner once to get things dialed in.  Thanks for the tips.

            Comment


            • #7
              Schwab has an excellent portfolio performance tool that allows you to enter outside holdings.  You may want to check it out since that is where the bulk of your money is in the 401k.  FWIW all our accounts are now at Schwab except the 529's.  I access the Vanguard ETF's cheaply through Schwab.  I really like having everything in one location.  Their customer service is awesome if ever needed.  Good luck!

              Comment

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