Trying to simplify life
Trying to simplify life
Folks I am tired of managing our 3 fund portfolio yes I know I really don’t have that much to do on a yearly basis. Please tell me if you really think this is a bad idea.
Some details I am turning 65 soon wife is 63 both retired for 5 years already. Portfolio of $1,700,000 with $28000 yearly pension not inflation adjusted. Waiting to collect SS till 70 wife will collect at 65 or 66. Pension and (2) SS will cover most of required living expenses.
So the question is would switching everything to VASGX (Life Strategy moderate Growth) be a reasonable idea. I know it would not be as tax efficient for taxable funds but I am really just trying to keep it simply for everything and everyone in the future. My wife has no interest in any of this and it will be easy for my son to monitor in the future if needed. Other option is pay the .30 fee and let Vanguard manage everything. Thoughts!
Some details I am turning 65 soon wife is 63 both retired for 5 years already. Portfolio of $1,700,000 with $28000 yearly pension not inflation adjusted. Waiting to collect SS till 70 wife will collect at 65 or 66. Pension and (2) SS will cover most of required living expenses.
So the question is would switching everything to VASGX (Life Strategy moderate Growth) be a reasonable idea. I know it would not be as tax efficient for taxable funds but I am really just trying to keep it simply for everything and everyone in the future. My wife has no interest in any of this and it will be easy for my son to monitor in the future if needed. Other option is pay the .30 fee and let Vanguard manage everything. Thoughts!
Re: Trying to simplify life
What % is Tax Deferred, Taxable or Roth?
Re: Trying to simplify life
That fund would be more than tax-efficient enough if it was held in a tax-deferred or Roth account. Is that possible?
If you have a taxable account, then what do you have in it right now tonight?
Full disclosure: I own shares of LifeStrategy Moderate Growth fund to make my life simpler, but not in my taxable account. VSMGX is LifeStrategy Moderate Growth. I don't know what that ticker symbol you listed actually is.
If you have a taxable account, then what do you have in it right now tonight?
Full disclosure: I own shares of LifeStrategy Moderate Growth fund to make my life simpler, but not in my taxable account. VSMGX is LifeStrategy Moderate Growth. I don't know what that ticker symbol you listed actually is.
- anon_investor
- Posts: 15122
- Joined: Mon Jun 03, 2019 1:43 pm
Re: Trying to simplify life
I would not realize a taxable gain in a taxable account to make that switch. But in a roth or pretax account that is reasonable.
-
- Posts: 5682
- Joined: Sat Aug 11, 2012 8:44 am
Re: Trying to simplify life
I think that holding a single identical low-cost all-in-one globally-diversified balanced index fund, like Vanguard's LifeStrategy Moderate Growth Fund (VSMGX), in all accounts (Traditional, Roth, ..., and even taxable) is good enough. Here's a thread about the One-Fund Portfolio.
Variable Percentage Withdrawal (bogleheads.org/wiki/VPW) | One-Fund Portfolio (bogleheads.org/forum/viewtopic.php?t=287967)
Re: Trying to simplify life
About 10% is in taxable, 60% tax deferred, 30% is tax free
-
- Posts: 1613
- Joined: Wed May 20, 2020 6:36 am
Re: Trying to simplify life
+1anon_investor wrote: ↑Fri Feb 05, 2021 6:51 pm I would not realize a taxable gain in a taxable account to make that switch. But in a roth or pretax account that is reasonable.
“Now shall I walk or shall I ride? |
'Ride,' Pleasure said; |
'Walk,' Joy replied.” |
|
― W.H. Davies
-
- Posts: 2390
- Joined: Mon Dec 17, 2018 5:49 pm
Re: Trying to simplify life
Yes, I think that is an excellent idea. It would also make it easier for spouse to manage in the setting of cognitive decline or other calamity requiring one spouse to take over.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
Re: Trying to simplify life
I agree. This is what I will probably do. Currently, 2/3s of my portfolio is in VSMGX.longinvest wrote: ↑Fri Feb 05, 2021 6:58 pm I think that holding a single identical low-cost all-in-one globally-diversified balanced index fund, like Vanguard's LifeStrategy Moderate Growth Fund (VSMGX), in all accounts (Traditional, Roth, ..., and even taxable) is good enough. Here's a thread about the One-Fund Portfolio.
- retired@50
- Posts: 12821
- Joined: Tue Oct 01, 2019 2:36 pm
- Location: Living in the U.S.A.
Re: Trying to simplify life
Be careful with your ticker symbols...ski wrote: ↑Fri Feb 05, 2021 6:44 pm Folks I am tired of managing our 3 fund portfolio yes I know I really don’t have that much to do on a yearly basis. Please tell me if you really think this is a bad idea.
Some details I am turning 65 soon wife is 63 both retired for 5 years already. Portfolio of $1,700,000 with $28000 yearly pension not inflation adjusted. Waiting to collect SS till 70 wife will collect at 65 or 66. Pension and (2) SS will cover most of required living expenses.
So the question is would switching everything to VASGX (Life Strategy moderate Growth) be a reasonable idea. I know it would not be as tax efficient for taxable funds but I am really just trying to keep it simply for everything and everyone in the future. My wife has no interest in any of this and it will be easy for my son to monitor in the future if needed. Other option is pay the .30 fee and let Vanguard manage everything. Thoughts!
VASGX = LS Growth = 80% stock / 20% bond
VSMGX = LS Moderate Growth = 60% stock / 40% bond
Seems like a good idea for simplification, assuming you wind up in the fund you intend.
Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Re: Trying to simplify life
ski, the ticker you listed for the LS fund is growth (80% stock).
LS moderate is 60% stock. Which one are you interested in?
A good alternate would be tax-managed balanced, VTMFX
It is about 50% stock, but much better for taxable. If you want a higher stock allocation, add total stock market.
Paul
LS moderate is 60% stock. Which one are you interested in?
A good alternate would be tax-managed balanced, VTMFX
It is about 50% stock, but much better for taxable. If you want a higher stock allocation, add total stock market.
Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
Re: Trying to simplify life
Finish converting tax-deferred to Roth before RMDs start at age 72.
That will simplify your life, since then you would not have to think about RMDs, if you already satisfied them, what to withdraw, convert, or how they are increasing (along with your taxes) each year. After the “financial” guru in the family dies, the surviving spouse would not have to worry about them and their higher tax bracket (from being single). S/he would not have to worry about IRMAA surcharges either (caused by RMDs).
And your heirs wouldn’t have to think about required withdrawals and how they impact their own taxes either and if they are in different tax brackets, their inheritances will all have equal spending power too.
Hey, you asked, so I answered how we are simplifying.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
Re: Trying to simplify life
Agreed. Its a great idea to switch to a single balanced fund across all accounts. Pls do your due diligence in estimating taxes when unloading taxable account.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
- abuss368
- Posts: 27850
- Joined: Mon Aug 03, 2009 2:33 pm
- Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
- Contact:
Re: Trying to simplify life
I have family who engaged Vanguard PAS and have been extremely satisfied and happy. Vanguard PAS will essentially construct a portfolio of four total market index funds. Total Stock and Total International Stock as well as Total Bond and Total International Bond. My family went through an interview process initially. Vanguard returned with a risk assessment and plan. Then they moved forward with implementation.ski wrote: ↑Fri Feb 05, 2021 6:44 pm Folks I am tired of managing our 3 fund portfolio yes I know I really don’t have that much to do on a yearly basis. Please tell me if you really think this is a bad idea.
Some details I am turning 65 soon wife is 63 both retired for 5 years already. Portfolio of $1,700,000 with $28000 yearly pension not inflation adjusted. Waiting to collect SS till 70 wife will collect at 65 or 66. Pension and (2) SS will cover most of required living expenses.
So the question is would switching everything to VASGX (Life Strategy moderate Growth) be a reasonable idea. I know it would not be as tax efficient for taxable funds but I am really just trying to keep it simply for everything and everyone in the future. My wife has no interest in any of this and it will be easy for my son to monitor in the future if needed. Other option is pay the .30 fee and let Vanguard manage everything. Thoughts!
I think there is value in the 0.30% management fee. Hopefully that declines over time.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
- abuss368
- Posts: 27850
- Joined: Mon Aug 03, 2009 2:33 pm
- Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
- Contact:
Re: Trying to simplify life
I totally agree. The tax impact alone will result in that much less in compounding moving forward.anon_investor wrote: ↑Fri Feb 05, 2021 6:51 pm I would not realize a taxable gain in a taxable account to make that switch. But in a roth or pretax account that is reasonable.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
-
- Posts: 4382
- Joined: Sun Mar 08, 2009 8:01 am
Re: Trying to simplify life
Putting aside taxable gains from switching cost, Lifestrategy moderate growth in tax deferred, and tax-managed balanced fund in taxable would be fine. https://investor.vanguard.com/mutual-fu ... olio/vtmfx
- abuss368
- Posts: 27850
- Joined: Mon Aug 03, 2009 2:33 pm
- Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
- Contact:
Re: Trying to simplify life
The further in our investment journey we get, the more I try to loaded up on the Roth 401k and Roth IRA!
Tony
John C. Bogle: “Simplicity is the master key to financial success."
Re: Trying to simplify life
Thanks everyone for your thoughts. I had not considered the tax implications of converting the taxable portion so I will do nothing with that at until my wife is 65 because of ACA income restrictions. Yes Roth IRA conversions will be maximized when wife turns 65. But I do believe the rest will be converted very soon to the Life strategy moderate growth fund (60/40) Always great to get second options from this great community.
- abuss368
- Posts: 27850
- Joined: Mon Aug 03, 2009 2:33 pm
- Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
- Contact:
Re: Trying to simplify life
A few other considerations with a balanced fund in an account:ski wrote: ↑Fri Feb 05, 2021 9:20 pm Thanks everyone for your thoughts. I had not considered the tax implications of converting the taxable portion so I will do nothing with that at until my wife is 65 because of ACA income restrictions. Yes Roth IRA conversions will be maximized when wife turns 65. But I do believe the rest will be converted very soon to the Life strategy moderate growth fund (60/40) Always great to get second options from this great community.
* Either stocks or bonds may be in the wrong type of account.
* No ability to rebalance.
* Can not change asset allocation if desired (such as a life change).
* Higher tax cost.
Best.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
Re: Trying to simplify life
No need to re-balance. Your taxable account is only 10% of your portfolio. Whatever happens in taxable won't skew your asset allocation much.
1. Use an appropriate LifeStrategy fund in your tax-deferred and tax-free accounts. (The "G" in VASGX may stand for "Growth," but the "A" stands for "aggressive".)
2. Convert tax-deferred to Roth while you can, that is, if you can manage.
3. Do not re-balance funds in taxable.
4. Do not reinvest dividends or new cash into taxable funds.
5. Watch the tax consequences when liquidating taxable assets.
4. Vanguard Tax-Managed Balanced Fund (VTMFX) is a great choice for taxable when moving assets out of the old taxable funds.
1. Use an appropriate LifeStrategy fund in your tax-deferred and tax-free accounts. (The "G" in VASGX may stand for "Growth," but the "A" stands for "aggressive".)
2. Convert tax-deferred to Roth while you can, that is, if you can manage.
3. Do not re-balance funds in taxable.
4. Do not reinvest dividends or new cash into taxable funds.
5. Watch the tax consequences when liquidating taxable assets.
4. Vanguard Tax-Managed Balanced Fund (VTMFX) is a great choice for taxable when moving assets out of the old taxable funds.
Last edited by pingo on Sat Feb 06, 2021 12:50 pm, edited 1 time in total.
Re: Trying to simplify life
Just a minor point but if you have not done it already in the taxable account you should make sure that the mutual funds are set to not automatically reinvest the dividends and capital gains distributions.
This will prevent you from buying more of a fund you may not want to keep for the long term and after a year it will ensure that any capital gains are long term.
This will prevent you from buying more of a fund you may not want to keep for the long term and after a year it will ensure that any capital gains are long term.
- abuss368
- Posts: 27850
- Joined: Mon Aug 03, 2009 2:33 pm
- Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
- Contact:
Re: Trying to simplify life
That is an excellent point. Take the dividends in cash and buy more of the fund you now want.Watty wrote: ↑Fri Feb 05, 2021 10:58 pm Just a minor point but if you have not done it already in the taxable account you should make sure that the mutual funds are set to not automatically reinvest the dividends and capital gains distributions.
This will prevent you from buying more of a fund you may not want to keep for the long term and after a year it will ensure that any capital gains are long term.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
-
- Posts: 5682
- Joined: Sat Aug 11, 2012 8:44 am
Re: Trying to simplify life
I'll add that Vanguard's LifeStrategy Moderate Growth Fund (VSMGX) is globally diversified with a 60/40 stocks/bonds allocation. It contains 3,634 U.S. stocks, 7,386 international stocks, 9,995 U.S. bonds, and 6,338 international bonds for a total of 27,353 global securities. This post explains that it's a good enough approximation of the global (free float) stock-and-bond market with a moderate U.S. home bias.longinvest wrote: ↑Fri Feb 05, 2021 6:58 pm I think that holding a single identical low-cost all-in-one globally-diversified balanced index fund, like Vanguard's LifeStrategy Moderate Growth Fund (VSMGX), in all accounts (Traditional, Roth, ..., and even taxable) is good enough. Here's a thread about the One-Fund Portfolio.
In contrast, Vanguard's Tax-Managed Balanced Fund Admiral Shares (VTMFX) is concentrated into a single country with a 50/50 stocks/bonds allocation. It only contains 847 U.S. Stocks (that pay lower dividends) and 2,083 U.S. bonds (municipal securities) for a total of 2,930 U.S. securities. As a result, it doesn't qualify as a single fund to use within a One-Fund Portfolio which requires a low-cost globally-diversified all-in-one index fund or ETF.
Variable Percentage Withdrawal (bogleheads.org/wiki/VPW) | One-Fund Portfolio (bogleheads.org/forum/viewtopic.php?t=287967)
-
- Posts: 4382
- Joined: Sun Mar 08, 2009 8:01 am
Re: Trying to simplify life
Of course it does. First, OP's taxable holdings are only 10% of his portfolio, so using the more tax effecient fund in taxable has a negligible impact on overall diversificaiton if the remainder is in lifestrategy. Second, many, including Jack Bogle and Warren Buffet consider international unnecessary, and that it may actually depress returns. Third, the S&P 500 contains, of course, only 500 stocks, yet it tracks within a hair's breath of Total Stock Market with all U.S. equities. I would have no hesitation for using Tax Managed Balanced fund as part of a well-diversified one-fund solution for taxable investing.longinvest wrote: ↑Sat Feb 06, 2021 8:18 am Vanguard's LifeStrategy Moderate Growth Fund (VSMGX) is globally diversified with a 60/40 stocks/bonds allocation. It contains 3,634 U.S. stocks, 7,386 international stocks, 9,995 U.S. bonds, and 6,338 international bonds for a total of 27,353 global securities.
In contrast, Vanguard's Tax-Managed Balanced Fund Admiral Shares (VTMFX) is concentrated into a single country with a 50/50 stocks/bonds allocation. It only contains 847 U.S. Stocks (that pay lower dividends) and 2,083 U.S. bonds (municipal securities) for a total of 2,930 U.S. securities. As a result, it doesn't qualify as a single fund to use within a One-Fund Portfolio which requires a low-cost globally-diversified all-in-one index fund or ETF.
-
- Posts: 5682
- Joined: Sat Aug 11, 2012 8:44 am
Re: Trying to simplify life
Dear Outer Marker,Outer Marker wrote: ↑Sat Feb 06, 2021 8:31 am First, OP's taxable holdings are only 10% of his portfolio, so using the more tax effecient fund in taxable has a negligible impact on overall diversificaiton
If it has a negligible impact on overall diversification, it must also have a negligible impact on overall lifelong after-tax portfolio withdrawals. So, there's no reason to make the portfolio anymore complex and concentrated by using a different fund in the taxable account.
I think that using Vanguard's LifeStrategy Moderate Growth Fund (VSMGX) in all accounts, including taxable, is good enough. In the One-Fund Portfolio thread, I've provided a proof that a mirror asset allocation mathematically-guaranteed not to turn out to have been the worst asset location strategy over one's lifetime.
Some people might consider this mathematical guarantee, of not being the worst asset location strategy, "not very attractive", yet I have not seen a mathematical proof of a "more attractive" asset location strategy that is guaranteed to always beat a simple mirrored allocation strategy.
It's quite similar to indexing, when you think about it. William Sharpe's theorem guarantees that a simple total-market cap-weighted index investment strategy will never be worse than average (before fees). Some people might consider this mathematical guarantee "not very attractive", yet I have not seen a mathematical proof of a "more attractive" investment strategy that is guaranteed to always beat it.
Best regards,
longinvest
Variable Percentage Withdrawal (bogleheads.org/wiki/VPW) | One-Fund Portfolio (bogleheads.org/forum/viewtopic.php?t=287967)
-
- Posts: 4382
- Joined: Sun Mar 08, 2009 8:01 am
Re: Trying to simplify life
Longinvest, as Ben Franklin said, "in this world, nothing is certain except death and taxes.” As savvy investors, tax strategy is one of the few things we can control. We don't know OP's tax bracket, but assuming it's significant on that level of assets, minimizing taxes is an important consideration. I don't see having a single different all-in-one fund in taxable as complicating the portfolio in any way. You're not going to rebalance it or do anything different from the others. The AA is nearly the same. Just disregard the fact that its called by a different name.longinvest wrote: ↑Sat Feb 06, 2021 8:41 am If it has a negligible impact on overall diversification, it must also have a negligible impact on overall lifelong after-tax portfolio withdrawals. So, there's no reason to make the portfolio anymore complex and concentrated by using a different fund in the taxable account.
I think that using Vanguard's LifeStrategy Moderate Growth Fund (VSMGX) in all accounts, including taxable, is good enough. In the One-Fund Portfolio thread, I've provided a proof that a mirror asset allocation mathematically-guaranteed not to turn out to have been the worst asset location strategy over one's lifetime.
Some people might consider this mathematical guarantee, of not being the worst asset location strategy, "not very attractive", yet I have not seen a mathematical proof of a "more attractive" asset location strategy that is guaranteed to always beat a simple mirrored allocation strategy.
-
- Posts: 5682
- Joined: Sat Aug 11, 2012 8:44 am
Re: Trying to simplify life
Dear Outer Market,Outer Marker wrote: ↑Sat Feb 06, 2021 8:57 amLonginvest, as Ben Franklin said, "in this world, nothing is certain except death and taxes.” As savvy investors, tax strategy is one of the few things we can control. We don't know OP's tax bracket, but assuming it's significant on that level of assets, minimizing taxes is an important consideration. I don't see having a single different all-in-one fund in taxable as complicating the portfolio in any way. You're not going to rebalance it or do anything different from the others. The AA is nearly the same. Just disregard the fact that its called by a different name.longinvest wrote: ↑Sat Feb 06, 2021 8:41 am If it has a negligible impact on overall diversification, it must also have a negligible impact on overall lifelong after-tax portfolio withdrawals. So, there's no reason to make the portfolio anymore complex and concentrated by using a different fund in the taxable account.
I think that using Vanguard's LifeStrategy Moderate Growth Fund (VSMGX) in all accounts, including taxable, is good enough. In the One-Fund Portfolio thread, I've provided a proof that a mirror asset allocation mathematically-guaranteed not to turn out to have been the worst asset location strategy over one's lifetime.
Some people might consider this mathematical guarantee, of not being the worst asset location strategy, "not very attractive", yet I have not seen a mathematical proof of a "more attractive" asset location strategy that is guaranteed to always beat a simple mirrored allocation strategy.
I suggest to read this post on the One-Fund Portfolio thread. Aiming for paying fewer taxes is an illogical objective. The logical objective is to aim to end up with more money to spend after paying taxes. Simplistic one-year calculations are insufficient to achieve this objective. A lifelong analysis of portfolio contributions and after-tax withdrawals is required. Unfortunately, there are more unknown parameters (such as future unanticipated asset returns, future unanticipated tax law changes, and future unanticipated investor circumstance changes) to this analysis than known parameters.
Fortunately, we have a mathematical proof that applies regardless of these unknown parameters; mirroring the asset allocation in all accounts is a good enough asset location strategy.
I'll note that it's inappropriate to compare the so-called "tax efficiency" of a concentrated U.S.-only fund with that of a broad globally-diversified fund without discussing the various risks related to this concentration. Otherwise, we might as well suggest to keep taxable money into physical cash under the pillow, as it will be perfectly "tax efficient", delivering no interest at all, and thus attracting no taxes whatsoever. Risk, in all its forms, is important. Physical cash under the pillow, for example, has many risks (burglary, fire, etc.). Ignoring them is a mistake.
When taking risk into consideration, one quickly discovers the necessity to consider the effective tax-adjusted asset allocation (justified by mathematics) within analyses. Most analyses unfortunately fail this requirement.
Best regards,
longinvest
Last edited by longinvest on Sat Feb 06, 2021 9:37 am, edited 3 times in total.
Variable Percentage Withdrawal (bogleheads.org/wiki/VPW) | One-Fund Portfolio (bogleheads.org/forum/viewtopic.php?t=287967)
-
- Posts: 159
- Joined: Thu Mar 22, 2018 1:18 pm
Re: Trying to simplify life
Given this distribution, I would suggest an emphasis in bonds in the tax deferred and an emphasis in stocks in the tax free at least until RMD's start. This has the advantage of potentially decreasing growth in the tax deferred while allowing conversions. It also could minimize RMD's in the future. Unfortunately, it is not the solution to simplify everything.
-
- Posts: 4382
- Joined: Sun Mar 08, 2009 8:01 am
Re: Trying to simplify life
longinvest, I think you're over-complicating this on the misguided premise that someone must hold the exact same one-fund across all accounts. The tax managed balanced fund is very well diversified, and just because it doesn't hold companies headquartered in other countries, does not mean that it doesn't have international exposure. Apple, Ford, and Boeing do business all around the globe.longinvest wrote: ↑Sat Feb 06, 2021 9:24 am Aiming for paying fewer taxes is an illogical objective. The logical objective is to aim to end up with more money to spend after paying taxes. Simplistic one-year calculations are insufficient to achieve this objective. A lifelong analysis of portfolio contributions and after-tax withdrawals is required. Unfortunately, there are more unknown parameters (such as future unanticipated asset returns, future unanticipated tax law changes, and future unanticipated investor circumstance changes) to this analysis than known parameters.
Fortunately, we have a mathematical proof that applies regardless of these unknown parameters; mirroring the asset allocation in all accounts is a good enough asset location strategy.
I'll note that it's inappropriate to compare the so-called "tax efficiency" of a concentrated U.S.-only fund with that of a broad globally-diversified fund without discussing the various risks related to this concentration. Otherwise, we might as well suggest to keep taxable money into physical cash under the pillow, as it will be perfectly "tax efficient", delivering no interest at all, and thus attracting no taxes whatsoever. Risk, in all its forms, is important. Physical cash under the pillow, for example, has many risks (burglary, fire, etc.). Ignoring them is a mistake.
Over the last 10 years, Tax Managed Balanced outperformed Lifestrategy Mod. Growth, with an initial $10,000 investement growing to $23,500 vs. 21,500 for Lfstr. Mod. -- while at the same time generating less of a tax bill. That's more money to spend by any measure. Holding the more tax effecient fund is "good enough" as you say, without trying to "mirror" the same holding across all accounts.
-
- Posts: 5682
- Joined: Sat Aug 11, 2012 8:44 am
Re: Trying to simplify life
Dear Outer Marker,Outer Marker wrote: ↑Sat Feb 06, 2021 9:38 amlonginvest, I think you're over-complicating this on the misguided premise that someone must hold the exact same one-fund across all accounts. The tax managed balanced fund is very well diversified, and just because it doesn't hold companies headquartered in other countries, does not mean that it doesn't have international exposure. Apple, Ford, and Boeing do business all around the globe.longinvest wrote: ↑Sat Feb 06, 2021 9:24 am Aiming for paying fewer taxes is an illogical objective. The logical objective is to aim to end up with more money to spend after paying taxes. Simplistic one-year calculations are insufficient to achieve this objective. A lifelong analysis of portfolio contributions and after-tax withdrawals is required. Unfortunately, there are more unknown parameters (such as future unanticipated asset returns, future unanticipated tax law changes, and future unanticipated investor circumstance changes) to this analysis than known parameters.
Fortunately, we have a mathematical proof that applies regardless of these unknown parameters; mirroring the asset allocation in all accounts is a good enough asset location strategy.
I'll note that it's inappropriate to compare the so-called "tax efficiency" of a concentrated U.S.-only fund with that of a broad globally-diversified fund without discussing the various risks related to this concentration. Otherwise, we might as well suggest to keep taxable money into physical cash under the pillow, as it will be perfectly "tax efficient", delivering no interest at all, and thus attracting no taxes whatsoever. Risk, in all its forms, is important. Physical cash under the pillow, for example, has many risks (burglary, fire, etc.). Ignoring them is a mistake.
Over the last 10 years, Tax Managed Balanced outperformed Lifestrategy Mod. Growth, with an initial $10,000 investement growing to $23,500 vs. 21,500 for Lfstr. Mod. -- while at the same time generating less of a tax bill. That's more money to spend by any measure. Holding the more tax effecient fund is "good enough" as you say, without trying to "mirror" the same holding across all accounts.
Single-country risk and concentration risk are risks. They can translate into higher than average returns, when lucky, and lower than average returns, when unlucky.
This personal investment thread isn't the place for yet another U.S.-vs-international thread.
We've provided the original poster (OP) with sufficient material to make an informed decision. I think it's best to let the OP ask for clarifications, if necessary.
Best regards,
longinvest
Variable Percentage Withdrawal (bogleheads.org/wiki/VPW) | One-Fund Portfolio (bogleheads.org/forum/viewtopic.php?t=287967)
-
- Posts: 9479
- Joined: Sun Oct 08, 2017 7:16 pm
Re: Trying to simplify life
This might be a good idea for some, but it certainly doesn't simplify life as much as auto-reinvest.abuss368 wrote: ↑Sat Feb 06, 2021 6:59 amThat is an excellent point. Take the dividends in cash and buy more of the fund you now want.Watty wrote: ↑Fri Feb 05, 2021 10:58 pm Just a minor point but if you have not done it already in the taxable account you should make sure that the mutual funds are set to not automatically reinvest the dividends and capital gains distributions.
This will prevent you from buying more of a fund you may not want to keep for the long term and after a year it will ensure that any capital gains are long term.
Tony
- abuss368
- Posts: 27850
- Joined: Mon Aug 03, 2009 2:33 pm
- Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
- Contact:
Re: Trying to simplify life
I agree. I have all of our investments set to reinvest. Vanguard tracks and provides all cost basis reporting. Easier than ever.UpperNwGuy wrote: ↑Sat Feb 06, 2021 10:04 amThis might be a good idea for some, but it certainly doesn't simplify life as much as auto-reinvest.abuss368 wrote: ↑Sat Feb 06, 2021 6:59 amThat is an excellent point. Take the dividends in cash and buy more of the fund you now want.Watty wrote: ↑Fri Feb 05, 2021 10:58 pm Just a minor point but if you have not done it already in the taxable account you should make sure that the mutual funds are set to not automatically reinvest the dividends and capital gains distributions.
This will prevent you from buying more of a fund you may not want to keep for the long term and after a year it will ensure that any capital gains are long term.
Tony
Tony
John C. Bogle: “Simplicity is the master key to financial success."
- abuss368
- Posts: 27850
- Joined: Mon Aug 03, 2009 2:33 pm
- Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
- Contact:
Re: Trying to simplify life
I have printed out and field with important documents the Vanguard PAS information. My wife will engage Vanguard PAS should anything happen.Ferdinand2014 wrote: ↑Fri Feb 05, 2021 7:31 pm Yes, I think that is an excellent idea. It would also make it easier for spouse to manage in the setting of cognitive decline or other calamity requiring one spouse to take over.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
- abuss368
- Posts: 27850
- Joined: Mon Aug 03, 2009 2:33 pm
- Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
- Contact:
Re: Trying to simplify life
Both are EXCELLENT options. I have family who engaged Vanguard PAS service and could not be happier. They meet and discuss your portfolio, put together an plan, implement, and then touch base a couple of times a year.ski wrote: ↑Fri Feb 05, 2021 6:44 pm Folks I am tired of managing our 3 fund portfolio yes I know I really don’t have that much to do on a yearly basis. Please tell me if you really think this is a bad idea.
Some details I am turning 65 soon wife is 63 both retired for 5 years already. Portfolio of $1,700,000 with $28000 yearly pension not inflation adjusted. Waiting to collect SS till 70 wife will collect at 65 or 66. Pension and (2) SS will cover most of required living expenses.
So the question is would switching everything to VASGX (Life Strategy moderate Growth) be a reasonable idea. I know it would not be as tax efficient for taxable funds but I am really just trying to keep it simply for everything and everyone in the future. My wife has no interest in any of this and it will be easy for my son to monitor in the future if needed. Other option is pay the .30 fee and let Vanguard manage everything. Thoughts!
Hard to beat.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
- abuss368
- Posts: 27850
- Joined: Mon Aug 03, 2009 2:33 pm
- Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
- Contact:
Re: Trying to simplify life
I am of the opinion that simplicity and the impact to heirs and loved ones is unfortunately not talked about enough! I have seen it too many times with clients in a prior life.
My spouse? I have Vanguard PAS information printed out and we have reviewed and discussed. She know to simply “call Vanguard”.
Everyone can discuss spreadsheet, and “not that bad” and a mired of other points. The true and only question is “Can a spouse “handle” it?
Tony
My spouse? I have Vanguard PAS information printed out and we have reviewed and discussed. She know to simply “call Vanguard”.
Everyone can discuss spreadsheet, and “not that bad” and a mired of other points. The true and only question is “Can a spouse “handle” it?
Tony
John C. Bogle: “Simplicity is the master key to financial success."