Hi folks,
First apologies for not continuing to plow through old and current threads about bonds and bond funds. I've read plenty and will continue my education in the various flavors of bondage (sorry for that one), but some recent moves have left me a bit more pressed in deciding where to do what, so I'm indulging the forum for its quick and to-the-point advice on the following:
Turning 60 this year, with dear wife 1 year behind that and looking to retire in 3 years. My academic department shut down over 10 years ago so I've been part-timing while she continues to earn a decent salary as an engineer. We have roughly $3 million mostly 401k/403b/Trad IRA, but a decent chunk in Roth (10%), as well as about 100k in equity Mutual Funds, and a little too much cash around 75k (finally moved to some decent MMs). We can expect some inheritance from both sides with 2 fathers nearing 90 who spend almost nothing and who were 100% equities their whole lives so have decent eggs to pass on. When I took over for my dad as his dementia set in about 4-5 years ago, I thought, wow, this could use at least some rebalancing and did the same for my own accounts which were as aggressive as the day I started them decades before. Of course this was in the 0% Money market days and I have seen the bond funds in both his account and mine fall and remain worth less than cost basis. So be it, I get that I have to digest bond duration, etc, but I certainly would not have been in the same boat if I had actually bought bonds proper and not funds. Not a terribly expensive lesson and one I'm glad to have, but as mentioned in another thread, I'm trying to consolidate our assets as well as get them out of higher ER accounts that I retain in TIAA, which led to moving Roths to Vanguard and Fidelity, as well as establishing a Traditional IRA at TIAA rolled over from my last institution. Together these 3 are about 240k or 8% of net worth (150k in Roth, 93 Trad IRA), and I still have to allocate 2/3 of them from the sweep funds. Seems like a perfect time to evaluate a plan and rebalance some allocations since I have cash on hand, right?
Although I feel a little burned by the red numbers in our portfolios (only went into BND at about 20%), I also feel like it must still be a bargain if I can buy my current holdings for a lower cost, and darned if it isn't time to start laying the income stream down (she also has a 250k+ pension that can be annuitized or rolled out, as do I, although only 60k, in TIAA traditional.), Now seems like a good time to get my head around the various bond offerings (been trying for years to get the theory), and especially the nuances between them, and yes, at the risk of market timing, deciding if I should just go straight total domestic and international bond funds/etf or maybe start building some ladders out of these relatively modest accounts (the sweep cash from Rollovers) to see if it is worth the hassle (vs liquidity, returns, tax advantages, and all that stuff I'm still learning).
Having read and understood the "one fund approach" thread (that advocated a single balanced fund at about 60:40 as a good compromise/"will do no worse than" approach), as well as the general Bogleheads 3 fund portfolio,I'm much more open to increasing bond exposure now, at least with this need-to-place now bundle, especially since the 2 Roths that left TIAA had some of my bond allocations in the liquid version of the TIAA traditional, whose "guaranteed" rate was indeed that--it may have only been 2% but it was positive at least. So I need to replace that and start to figure out where TIPS might fit in, and, moving forward, figuring out how to allocate some money towards I-Bonds, maybe? I know there are some camps of thought on this, and not seeking a "which is better" answer, rather ,more like percentages of the buckets. And for now this is mostly the tax-advantaged side, although certainly comments on tax implications are more than welcome. I didn't mention our bracket but it's never really cracked 200k/year.
Anyway, I obviously still have much reading to do, but how about a few "this is what you should do/look into" responses, as well as the well-deserved scolding about what I've left out of the picture, what I still need to decide upon, etc. I hope to put together a genuine portfolio question with all the numbers and funds, but that exercise seems less important for the moment than the consolidation/rationalization of current AA and funds, which number in the dozens from a couple of jobs/institutions/custodians. I will throw this general recasting of the question if you have made it this far with me: I am reasonably happy (within the margin of error, let's say) with the following approximate AA. What would be suggestions for the bond portion of the remaining cash/sweep/rollover money? I still have access to TIAA traditional, but the current proceeds can only purchase the lower income (but more liquid) version.
74% Equity both US/INT
16% Bond US/INT
2.40% Real Estate TIAA and some smaller, within other mutuals
2% TIAA TIAA Traditional annuity/pension
7.5% cash> Sweep funds still to allocate; 1/3 has already been placed around 60:40 but not calculated in above #'s
I realize this is more than 100%; a few got counted twice in trying to collate all the funds that moved in/out last week
Thanks in advance.
Signed by a mostly reformed 90-100% equities sit and hold investor ready to start cashing some chips.![:beer]( "beer")
First apologies for not continuing to plow through old and current threads about bonds and bond funds. I've read plenty and will continue my education in the various flavors of bondage (sorry for that one), but some recent moves have left me a bit more pressed in deciding where to do what, so I'm indulging the forum for its quick and to-the-point advice on the following:
Turning 60 this year, with dear wife 1 year behind that and looking to retire in 3 years. My academic department shut down over 10 years ago so I've been part-timing while she continues to earn a decent salary as an engineer. We have roughly $3 million mostly 401k/403b/Trad IRA, but a decent chunk in Roth (10%), as well as about 100k in equity Mutual Funds, and a little too much cash around 75k (finally moved to some decent MMs). We can expect some inheritance from both sides with 2 fathers nearing 90 who spend almost nothing and who were 100% equities their whole lives so have decent eggs to pass on. When I took over for my dad as his dementia set in about 4-5 years ago, I thought, wow, this could use at least some rebalancing and did the same for my own accounts which were as aggressive as the day I started them decades before. Of course this was in the 0% Money market days and I have seen the bond funds in both his account and mine fall and remain worth less than cost basis. So be it, I get that I have to digest bond duration, etc, but I certainly would not have been in the same boat if I had actually bought bonds proper and not funds. Not a terribly expensive lesson and one I'm glad to have, but as mentioned in another thread, I'm trying to consolidate our assets as well as get them out of higher ER accounts that I retain in TIAA, which led to moving Roths to Vanguard and Fidelity, as well as establishing a Traditional IRA at TIAA rolled over from my last institution. Together these 3 are about 240k or 8% of net worth (150k in Roth, 93 Trad IRA), and I still have to allocate 2/3 of them from the sweep funds. Seems like a perfect time to evaluate a plan and rebalance some allocations since I have cash on hand, right?
Although I feel a little burned by the red numbers in our portfolios (only went into BND at about 20%), I also feel like it must still be a bargain if I can buy my current holdings for a lower cost, and darned if it isn't time to start laying the income stream down (she also has a 250k+ pension that can be annuitized or rolled out, as do I, although only 60k, in TIAA traditional.), Now seems like a good time to get my head around the various bond offerings (been trying for years to get the theory), and especially the nuances between them, and yes, at the risk of market timing, deciding if I should just go straight total domestic and international bond funds/etf or maybe start building some ladders out of these relatively modest accounts (the sweep cash from Rollovers) to see if it is worth the hassle (vs liquidity, returns, tax advantages, and all that stuff I'm still learning).
Having read and understood the "one fund approach" thread (that advocated a single balanced fund at about 60:40 as a good compromise/"will do no worse than" approach), as well as the general Bogleheads 3 fund portfolio,I'm much more open to increasing bond exposure now, at least with this need-to-place now bundle, especially since the 2 Roths that left TIAA had some of my bond allocations in the liquid version of the TIAA traditional, whose "guaranteed" rate was indeed that--it may have only been 2% but it was positive at least. So I need to replace that and start to figure out where TIPS might fit in, and, moving forward, figuring out how to allocate some money towards I-Bonds, maybe? I know there are some camps of thought on this, and not seeking a "which is better" answer, rather ,more like percentages of the buckets. And for now this is mostly the tax-advantaged side, although certainly comments on tax implications are more than welcome. I didn't mention our bracket but it's never really cracked 200k/year.
Anyway, I obviously still have much reading to do, but how about a few "this is what you should do/look into" responses, as well as the well-deserved scolding about what I've left out of the picture, what I still need to decide upon, etc. I hope to put together a genuine portfolio question with all the numbers and funds, but that exercise seems less important for the moment than the consolidation/rationalization of current AA and funds, which number in the dozens from a couple of jobs/institutions/custodians. I will throw this general recasting of the question if you have made it this far with me: I am reasonably happy (within the margin of error, let's say) with the following approximate AA. What would be suggestions for the bond portion of the remaining cash/sweep/rollover money? I still have access to TIAA traditional, but the current proceeds can only purchase the lower income (but more liquid) version.
74% Equity both US/INT
16% Bond US/INT
2.40% Real Estate TIAA and some smaller, within other mutuals
2% TIAA TIAA Traditional annuity/pension
7.5% cash> Sweep funds still to allocate; 1/3 has already been placed around 60:40 but not calculated in above #'s
I realize this is more than 100%; a few got counted twice in trying to collate all the funds that moved in/out last week
Thanks in advance.
Signed by a mostly reformed 90-100% equities sit and hold investor ready to start cashing some chips.
Statistics: Posted by mnr3 — Thu Jun 20, 2024 12:56 am