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  • Portfolio Input

    Hi guys,

    I’d love your input in our financial asset situation. My main question is about our asset allocation. We got good advice from a CFP last year and diversified into low cost under funds/EFTs. (We were a hot mess before with high cost actively managed mutual funds and single stocks). But the problem is we are realizing it’s too complicated for us. We didn’t know enough last year to tell our CFP this was too complicated, but now are realizing this not sustainable for us.

    Our asset allocation is:

    17.5% SPYG (large cap growth)
    17.5% SPYV (large cap value)
    17.5% VBK (small cap growth)
    17.5% VBR (small cap value)
    10% SPDW (intl)
    10% SPEM (emerging markets)
    10% USRT (REIT)

    It’s supposed to be spread like that through each of our accounts.

    The problem is vanguard doesn’t let us automatically put new money into the above allocation. We aren’t the type to put in money monthly ourselves, and have just been automating money into our taxable account in VTSAX every month because it’s easy. We need something easy. I don’t want to sell the VTSAX we have in our taxable account and incur capital gains tax.

    In my husband’s 401k, he can’t automatically put his contribution into the above asset allocation either so has put it in FSKAX ‘for now’. Originally we were planning to sell whatever was in FSKAX and buy into our asset allocation once a year, I’m thinking we could just keep it simple and keep it in FSKAX. For some reason, my 401k can automatically follow the above allocation (I wish all the accounts could do this. What a pain that they can’t).

    Any thoughts welcome.

    Should we just do our best to rebalance every 1-3 years and take advantage of when the market is down to decrease capital gains?

    Should we abandon our current asset allocation for something like ‘VTSAX and chill’.

    Should we try a hybrid model and keep up our asset allocation where it’s easy (Eg: Roth’s and my 401k) but to ‘VTSAX/FSKAX and chill’ with our taxable acct and his 401k?

    Am I over thinking this because it doesn’t matter in the long run with our savings rate and wealth accumulation timeline? (Probably)

    We would appreciate any input from you financial mutants!
    Last edited by ObgynMD; 11-03-2021, 07:35 AM.

  • #2
    Originally posted by ObgynMD View Post
    Should we try a hybrid model and keep up our asset allocation where it’s easy (Eg: Roth’s and my 401k) but to ‘VTSAX/FSKAX and chill’ with our taxable acct and his 401k?
    That strategy would get my vote. Easy usually wins out in the end, and "VTSAX and chill" is a very sound long-term strategy.

    Originally posted by ObgynMD View Post
    Am I over thinking this because it doesn’t matter in the long run with our savings rate and wealth accumulation timeline? (Probably)
    Definitely. No strategy works if you don't save enough, and many do if you are saving plenty (which it sounds like you are doing).

    Originally posted by ObgynMD View Post
    We would appreciate any input from you financial mutants!
    I didn't know we were eligible to join the X-Men! Hurrah!

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    • #3
      VTSAX and chill. Add VXUS if you want international

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      • #4
        If this stressing you out then you could simplify. VTIAX has international and some emerging in it. It is the only foreign exposure that I have. Nothing wrong with VTSAX with VTIAX and call it a day. Slicing and dicing is for people who enjoy running asset allocation models.

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        • #5
          Nearly $2m in retirement, not counting cash, at age 36/37? Congrats. You've done step 1 extremely well.

          you shouldn't balance that total AA in each of your accounts the same. REIT + International (including emerging markets) + Small Cap is best in Roth space. Second best space for small cap and REIT is in tax-deferred/pre-tax 401k. Your taxable should be primarily large cap with some international (to get the foreign tax credit).

          As long as you keep saving as you have been your AA really will be secondary. Though as you get closer and closer to whatever your goal is you should sell equities and buy bonds (ideally in the tax-deferred/401k space)

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          • #6
            VTSAX and chill.
            amazing work to get to ~2 mil by age 36/37

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            • #7
              No reason to try to have the same breakdown in every account. I would do what’s easiest and can be automated. You can leave it as is and do what you’re doing with new funds or buy/sell/exchange anything in the retirement accounts to make it simpler if desired. I would leave the taxable alone and put all new contributions in vtsax.

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              • #8
                Well done!

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                • #9
                  Originally posted by JBME View Post
                  Nearly $2m in retirement, not counting cash, at age 36/37? Congrats. You've done step 1 extremely well.

                  you shouldn't balance that total AA in each of your accounts the same. REIT + International (including emerging markets) + Small Cap is best in Roth space. Second best space for small cap and REIT is in tax-deferred/pre-tax 401k. Your taxable should be primarily large cap with some international (to get the foreign tax credit).

                  As long as you keep saving as you have been your AA really will be secondary. Though as you get closer and closer to whatever your goal is you should sell equities and buy bonds (ideally in the tax-deferred/401k space)
                  Originally posted by JBME View Post
                  Nearly $2m in retirement, not counting cash, at age 36/37? Congrats. You've done step 1 extremely well.

                  you shouldn't balance that total AA in each of your accounts the same. REIT + International (including emerging markets) + Small Cap is best in Roth space. Second best space for small cap and REIT is in tax-deferred/pre-tax 401k. Your taxable should be primarily large cap with some international (to get the foreign tax credit).

                  As long as you keep saving as you have been your AA really will be secondary. Though as you get closer and closer to whatever your goal is you should sell equities and buy bonds (ideally in the tax-deferred/401k space)
                  Right. Putting same allocation across every account is not ideal and overly complicated.
                  I would say switch to VTSAX / VTIAX in tax-protected accounts in whatever proportion you prefer. +/- a REIT fund
                  In taxable you're not going to want to sell and pay capital gains taxes, I'm assuming everything is a gain. But simplify with new contributions.

                  Comment


                  • #10
                    Another vote for vtsax and chill. Just keep buying it until you retire. It’s as easy as it gets.

                    Keep current investments where they are. If there’s a market down turn then you can sell the complicated funds to buy even more vtsax.

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                    • #11
                      I suggest putting reits and value funds in tax protected space to avoid paying tax on dividends

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                      • #12
                        VTSAX and FSKAZ are total market funds. Everything else is an attempt to overweight value, growth, reits, intl, or em. You can do that is you really want. It might work but is not necessary.

                        You can't move your 401k's but you can move your roths and taxable. Keeping everything in Fidelity would simplify things. If you want to tilt, do it in the largest accounts.
                        No need to keep each account with the same allocation. Hatton's REIT and Value funds for tax purposes is following tax efficiency by account type.

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                        • #13
                          Thanks guys!!

                          What I’ve digested from the above:
                          - Drop the SPYG and SPYV from my 401k and increase % of small cap, reit, EM, and int’l (all automatic). Look at His 401k and see if there is an automatic option to model this, but if not, ok to keep buying FSKAX and ‘rebalance’ to this once every year or two.
                          - ok to keep automatically buying VTSAX in taxable account. Do not sell what is currently there. In general don’t buy value shares in taxable due to dividends
                          - for our Roth, once a year, buy something like USRT and VTIAX.
                          - can tweak our Roth and 401k as needed to meet our asset allocation
                          - eventually sell stuff in 401k and buy some bonds.

                          Fiddling with things once a year is more sustainable for us.
                          Last edited by ObgynMD; 09-09-2021, 09:36 PM.

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