to op:Hello BH's,
I have questions on the 3 fund portfolio and if I’m applying it correctly to my portfolio (2 fund in my case since I’m not holding bonds). I have a goal of early retirement around age 56 (45 now). I want to make sure my portfolio is in line with my goal and do a check in.
For an outside check up I recently went to a fiduciary CFP and paid a fee for a review. I feel it was worth my time and cost as it helped see my retirement picture including taxes, social security, and withdrawal plans.
The CFP also provided recommendations for being more diversified and suggested I change allocation. Their recommendation contained around 7 funds for each account, a combination of small, medium, large cap, Int, & emerging. That seems like a lot of funds that VTI & VXUS mostly covers. I’d like to compare thoughts from Bogleheads against what the advisor recommended.
My questions are:
1. Are there any changes with my fund choices you recommend now and into the next 5 years?
2. What about when I’m not okay with a giant drop being in all equities, maybe 5 years from now, how would you shift this closer to the early retirement goal. The taxable will be the account that I draw from first and would need risk reduced before the tax qualified accounts as it will be my bridge account? What does this allocation look like at that time?
I’m not sure if I’m asking the correct questions either and really appreciate any other input and suggestions anyone has and for your time. I truly have learned so much from everyone.
Emergency fund- Yes $50,000
Debt-Zero/House is paid off. Value 1.2M
Tax Filing Status: Married Filing Jointly
Tax Rate: 35% Federal, 0% State
State of Residence: NV
Age: 45 him, 45 her
Annual Income: $700,000
Desired Asset allocation: 100% stocks /0% bonds
International 20% of stocks
Current Retirement Portfolio: $2,281,000
Vanguard non tax qualified brokerage account:
43% $1M VTI VANGUARD TOTAL STOCK MARKET ETF
17% $388K VXUS VANGUARD TOTAL INTL STOCK INDEX FUND ETF
His Roth IRA at Vanguard:
2.6% $61,000 VTSAX Vanguard Total Stock Market Index Fund
Her Roth IRA at Vanguard:
2.3% $54,000 VTSAX Vanguard Total Stock Market Index Fund
His: 401K:
19% $435,000 VTSAX Vanguard Total Stock Market Index Fund
Her: 401K:
11% $262,000 VTSAX Vanguard Total Stock Market Index Fund
HSA at Fidelity:
3.5% $81,000 100% FSKAX Fidelity Total Market Index Fund
Key points:
Current allocation not counting emergency fund is 83% US and 17% Int
401K has access to most all Vanguard funds
401K was using Roth option but switched to pre tax option with plan to convert after retirement and lower taxes now.
Two teenage children. Have 529 plans funded at a level I’m comfortable with and won’t contribute anything additional. Any excess college expense can be paid out of current income.
Underlying insurance is taken care of and not worried about aging parents support.
Contributions:
$47,000 in (his and her) 401K
$14,000 Roth (his and her) backdoor
$8,300 HSA
$225,000 annually into the non tax qualified Vanguard account
Around 300K into total contributions annually.
Self employed so the numbers vary year to year, this is an estimate. I’m tracking and budgeting this year and going forward so I know expenses and can calculate actual retirement amount needed.
You have done an outstanding job putting together a sound long term financial strategy and structure.
That you are "self employed" and done so well is a testament to that sound logical well researched thinking that's obvious in your portfolio review.
1
stay the course, at some point you might consider something between 30/70 or 40/60 to 70/39 to 60/40 allocations, either set at some point in your stage of life and career or on a "glide path" from 100/0 now to that when you retire, etc. You already have that figured out it seems.
2
Ignore the CFP, FA, salesman's suggestions. You are doing fine. Often, they are selling services and that you need more of their time and services, etc. That said, giving suggestions that are different from what you might have does not mean that they are "better". Often, the assumption is that advice from a professional is "better" than what we are already doing. While that is often true, it is not always true. So, continue your caution and discretion.
3
There's nothing wrong with your fund choices if you are set on 100/0
4
Though not in your query, at your income level, have you considered R/E Residential multi unit income property, solely owned physically in your area, for the tax advantages and diversification of asset base and income stream, etc?
(common amongst high earning professionals and business owners).
Though arguable and often opinionized, this can be in some ways like a "fixed" base (bonds, bond like, etc) that anchors the volatility of your 100/0 equities AA. If done right and well, it works. If done poorly or not expertly, then those should not do it.
5
I'm sure you have a substantial "working capital" account for your business.
But, at a personal financial level, addressing your "5 year" question, consider an "intermediate "bucket per se" of cash like reserves that covers a 3-5 year period, more than your monthly expenses, in CD ladders, Treasury Ladders (not funds), or similar?? Must be non volatile so not funds.
Since you want to remain at 100/0 AA, What do you think of this?
j
(dis laimer) just some things and options of a zillion to ponder on.
Statistics: Posted by Sandtrap — Fri Jun 28, 2024 8:17 am — Replies 1 — Views 74