Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

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FIREGuy88
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Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by FIREGuy88 »

Hi all,

35/M/Self-Employed, came into a large windfall recently and decided to go with Vanguard PAS. I'm currently making ~$200-$250k per year, target retirement is 20 years from now (55).

Allocation Before Vanguard PAS:

Roth IRA: $11k, 100% VFIFX
SEP IRA: $225k, 100% VFIFX
Brokerage: $2.3M, 100% Money Market (windfall was recent)


Allocation After Vanguard PAS:

Roth IRA: $11k, 100% VXUS
SEP IRA: $225k, 16% BNDX, 40% BND, 43% VXUS
Brokerage: $2.3M, 37% VXUS, 63% VTI

What do you think? How did my advisor do?
tj
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by tj »

It seems like Vanguard Digital Advisor would have put you in the same thing for half the fee.
reln
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by reln »

FIREGuy88 wrote: Mon Mar 22, 2021 6:15 pm Hi all,

35/M/Self-Employed, came into a large windfall recently and decided to go with Vanguard PAS. I'm currently making ~$200-$250k per year, target retirement is 20 years from now (55).

Allocation Before Vanguard PAS:

Roth IRA: $11k, 100% VFIFX
SEP IRA: $225k, 100% VFIFX
Brokerage: $2.3M, 100% Money Market (windfall was recent)


Allocation After Vanguard PAS:

Roth IRA: $11k, 100% VXUS
SEP IRA: $225k, 16% BNDX, 40% BND, 43% VXUS
Brokerage: $2.3M, 37% VXUS, 63% VTI

What do you think? How did my advisor do?
Looks good
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by anon_investor »

tj wrote: Mon Mar 22, 2021 6:28 pm It seems like Vanguard Digital Advisor would have put you in the same thing for half the fee.
+1. You could have also set this up yourself at no cost, but what they put you in is perfectly fine.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by RubyTuesday »

It’s probably fine for your age, but if my head math is working is that about 95/5 equity/fixed income? And about 60/40 domestic to intl? I would probably do more in fixed income and also maybe a little heavier domestic. But without knowing your other details (mortgage, etc), it’s a fine enough allocation.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by mikejuss »

That's not awful--but you should probably be holding more bonds. We're living through frothy times. When the you-know-what hits the fan--and it will, one day--you're going to want what Jack Bogle called an "anchor to wind" (ie, some fixed-income investments).
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by FIREGuy88 »

tj wrote: Mon Mar 22, 2021 6:28 pm It seems like Vanguard Digital Advisor would have put you in the same thing for half the fee.
Correct. PAS is for my behavior in the years to come, not the allocation now.
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FIREGuy88
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by FIREGuy88 »

reln wrote: Mon Mar 22, 2021 6:34 pm Looks good
Thanks!
Last edited by FIREGuy88 on Mon Mar 22, 2021 7:54 pm, edited 1 time in total.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by FIREGuy88 »

anon_investor wrote: Mon Mar 22, 2021 6:35 pm +1. You could have also set this up yourself at no cost, but what they put you in is perfectly fine.
Yes. You could say that about literally any financial advisor, but yes you are correct.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by tj »

FIREGuy88 wrote: Mon Mar 22, 2021 7:01 pm
tj wrote: Mon Mar 22, 2021 6:28 pm It seems like Vanguard Digital Advisor would have put you in the same thing for half the fee.
Correct. PAS is for my behavior in the years to come, not the allocation now.
I thought you had $7M ? What did you do with the rest of it? If you've chosen to hire Vanguard, you should probably trust them.

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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by FIREGuy88 »

tj wrote: Mon Mar 22, 2021 7:03 pm
I thought you had $7M ? What did you do with the rest of it?
It's not liquid yet.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by FIREGuy88 »

RubyTuesday wrote: Mon Mar 22, 2021 6:37 pm It’s probably fine for your age, but if my head math is working is that about 95/5 equity/fixed income? And about 60/40 domestic to intl? I would probably do more in fixed income and also maybe a little heavier domestic. But without knowing your other details (mortgage, etc), it’s a fine enough allocation.
Thanks.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by sergeant »

FIREGuy88 wrote: Mon Mar 22, 2021 7:07 pm
tj wrote: Mon Mar 22, 2021 7:03 pm
I thought you had $7M ? What did you do with the rest of it?
It's not liquid yet.
You posted that it was in a MM account. Why isn't a MM account liquid?
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by anon_investor »

FIREGuy88 wrote: Mon Mar 22, 2021 7:01 pm
anon_investor wrote: Mon Mar 22, 2021 6:35 pm +1. You could have also set this up yourself at no cost, but what they put you in is perfectly fine.
Yes. You could say that about literally any financial advisor, but yes you are correct.
As you mentioned in above, you are using PAS for behavioral reasons going forward. To clarify, how PAS has set up your asset allocation and location are perfectly fine (also my comment was more to the fact that their set up was simple enough that you could easily do it yourself, which is a good thing). I do like how they have you set up tax efficently with all the fixed income in your SEP IRA.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by FIREGuy88 »

sergeant wrote: Mon Mar 22, 2021 8:14 pm
tj wrote: Mon Mar 22, 2021 7:03 pm
I thought you had $7M ? What did you do with the rest of it?
You posted that it was in a MM account. Why isn't a MM account liquid?
This guy went into my post history for some reason and saw that I recently came into a $7M windfall. Of that $7M, about $2M has recently gone into the money market, which is liquid. The rest is illiquid.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by FIREGuy88 »

anon_investor wrote: Mon Mar 22, 2021 8:20 pm As you mentioned in above, you are using PAS for behavioral reasons going forward. To clarify, how PAS has set up your asset allocation and location are perfectly fine (also my comment was more to the fact that their set up was simple enough that you could easily do it yourself, which is a good thing). I do like how they have you set up tax efficently with all the fixed income in your SEP IRA.
This was really helpful, thank you. Yes, they re-did my tax allocation in a way that I wasn't understanding, even with all this research. I'm happy with them so far.

I've also found that I've just been too insecure to pull the trigger. I like that Vanguard PAS will just hit the buy button for me because I'm too nervous and too much of a disaster to do it myself.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by Sandtrap »

Have you considered a more conservative allocation of from 70:30 to 60:40??

Why?
Why not?

Curious 🤨

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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by Escapevelocity »

I would put a minimum 25% in bonds.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by drk »

FIREGuy88 wrote: Mon Mar 22, 2021 8:28 pm This guy went into my post history for some reason and saw that I recently came into a $7M windfall.
FWIW, I doubt that it was malicious. You've made a few different posts on similar topics, and OG Bogleheads like to make sure that they have a complete picture before providing advice or feedback on a portfolio. That's why people recommend using the Asking Portfolio Questions format.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by FIREGuy88 »

Sandtrap wrote: Mon Mar 22, 2021 8:35 pm Have you considered a more conservative allocation of from 70:30 to 60:40??

Why?
Why not?

Curious 🤨

j🌺
I haven't, no. I haven't considered anything actually. Just posting what the Vanguard PAS guy said and looking for feedback.

Is that your recommendation? To tell him to reduce international exposure?
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by FIREGuy88 »

Escapevelocity wrote: Mon Mar 22, 2021 8:43 pm I would put a minimum 25% in bonds.
At age 35?
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by anon_investor »

FIREGuy88 wrote: Mon Mar 22, 2021 8:30 pm
anon_investor wrote: Mon Mar 22, 2021 8:20 pm As you mentioned in above, you are using PAS for behavioral reasons going forward. To clarify, how PAS has set up your asset allocation and location are perfectly fine (also my comment was more to the fact that their set up was simple enough that you could easily do it yourself, which is a good thing). I do like how they have you set up tax efficently with all the fixed income in your SEP IRA.
This was really helpful, thank you. Yes, they re-did my tax allocation in a way that I wasn't understanding, even with all this research. I'm happy with them so far.

I've also found that I've just been too insecure to pull the trigger. I like that Vanguard PAS will just hit the buy button for me because I'm too nervous and too much of a disaster to do it myself.
Those are good reasons to use PAS. Not everyone wants to nerd out on some of these finer points, and that is okay. Do you think at some point you might try to DIY? The good thing is they have you in a simple portfolio that you could take the reins over if you wanted to one day. Don't let someone convince in you in the future you need to get more complicated. The one question is, does PAS help you to do any tax loss harvesting?
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by FIREGuy88 »

anon_investor wrote: Mon Mar 22, 2021 8:52 pm
Those are good reasons to use PAS. Not everyone wants to nerd out on some of these finer points, and that is okay. Do you think at some point you might try to DIY? The good thing is they have you in a simple portfolio that you could take the reins over if you wanted to one day. Don't let someone convince in you in the future you need to get more complicated. The one question is, does PAS help you to do any tax loss harvesting?
I have been doing DIY since 2012, and I have managed to mess up and make the wrong decision every single chance I could 😂

Luckily, the stakes were low, with only ~$30k-$100k invested. Now that I've received a windfall, it's not about doing it DIY to save $10,000, it's about not crashing the car.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by Escapevelocity »

FIREGuy88 wrote: Mon Mar 22, 2021 8:52 pm
Escapevelocity wrote: Mon Mar 22, 2021 8:43 pm I would put a minimum 25% in bonds.
At age 35?
Yes considering i had already won the game and also that having secured that 25% I would be sleeping well at night. What is the counter argument to that? Just to pile up more unneeded assets for the hell of it?
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by RAchip »

Whats with all the international stock fund allocation? I would do 90% stock (45% VG s&p 500 and 45% VG Equity Income) and 10% short term treasuries or cash. Bonds are not a smart investment at this point.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by Triple digit golfer »

RAchip wrote: Mon Mar 22, 2021 9:06 pm Whats with all the international stock fund allocation? I would do 90% stock (45% VG s&p 500 and 45% VG Equity Income) and 10% short term treasuries or cash. Bonds are not a smart investment at this point.
It's about 40% of stocks. Very reasonable and what Vanguard, Fidelity, and BlackRock all use in their target and life cycle funds.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by drk »

Escapevelocity wrote: Mon Mar 22, 2021 9:04 pm Yes considering i had already won the game and also that having secured that 25% I would be sleeping well at night. What is the counter argument to that? Just to pile up more unneeded assets for the hell of it?
OP is young and still has a high income. There's no reason to take that much off the table with a 20-year horizon.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by anon_investor »

FIREGuy88 wrote: Mon Mar 22, 2021 9:02 pm
anon_investor wrote: Mon Mar 22, 2021 8:52 pm
Those are good reasons to use PAS. Not everyone wants to nerd out on some of these finer points, and that is okay. Do you think at some point you might try to DIY? The good thing is they have you in a simple portfolio that you could take the reins over if you wanted to one day. Don't let someone convince in you in the future you need to get more complicated. The one question is, does PAS help you to do any tax loss harvesting?
I have been doing DIY since 2012, and I have managed to mess up and make the wrong decision every single chance I could 😂

Luckily, the stakes were low, with only ~$30k-$100k invested. Now that I've received a windfall, it's not about doing it DIY to save $10,000, it's about not crashing the car.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by random_walker_77 »

FIREGuy88 wrote: Mon Mar 22, 2021 8:52 pm
Sandtrap wrote: Mon Mar 22, 2021 8:35 pm Have you considered a more conservative allocation of from 70:30 to 60:40??

Why?
Why not?

Curious 🤨

j🌺
I haven't, no. I haven't considered anything actually. Just posting what the Vanguard PAS guy said and looking for feedback.

Is that your recommendation? To tell him to reduce international exposure?
To add more context, that's to increase the allocation to bonds and have less in stocks. This adds more "ballast" to stabilize your portfolio during downturns. While the expected overall return is less (less risk means less reward), most people find they have less risk tolerance than they thought they had. You don't want to be in a position where you have to (panic-)sell during a downturn b/c you simply can't afford to lose more.

One rule of thumb is age-in-bonds. A more aggressive rule is (age-10) in bonds. And these are for a typical age 65 retirement. Most target date funds go much higher and might be 90-95% in stocks at your age, figuring that maximizes returns and that people in a target date fund really won't withdraw before that date.

Since you've already got a huge nest egg, and are looking at an earlier retirement, and have a past history of making behavioral mistakes, there's a strong case to cut back on stocks. The risk-reward curve isn't necessarily *that* different between 40% stocks to 70% in stocks. Going higher is arguably a lot more risky -- your expected returns go up a little bit, but the amount your portfolio might droop is a lot more scary.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by Escapevelocity »

drk wrote: Mon Mar 22, 2021 9:09 pm
Escapevelocity wrote: Mon Mar 22, 2021 9:04 pm Yes considering i had already won the game and also that having secured that 25% I would be sleeping well at night. What is the counter argument to that? Just to pile up more unneeded assets for the hell of it?
OP is young and still has a high income. There's no reason to take that much off the table with a 20-year horizon.
To what end?
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by lostdog »

If you're comfortable with what Vanguard PAS put you in then I would leave it alone.

You're going to get all sorts of recommendations from this thread. Don't start letting some odd ball recommendations make you second guess what PAS set you up with. It will drive you crazy.

Stick to the PAS plan. It looks good and you'll be fine. :beer
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by Triple digit golfer »

lostdog wrote: Mon Mar 22, 2021 9:26 pm If you're comfortable with what Vanguard PAS put you in then I would leave it alone.

You're going to get all sorts of recommendations from this thread. Don't start letting some odd ball recommendations make you second guess what PAS set you up with. It will drive you crazy.

Stick to the PAS plan. It looks good and you'll be fine. :beer
Absolutely.

You're paying them for a reason. Let them do what you're paying them to do.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by drk »

Escapevelocity wrote: Mon Mar 22, 2021 9:24 pm To what end?
That depends on the OP's goals (e.g., extravagant spending, pet projects, philanthropy). The question could fairly be posed to your suggestion of 25% bonds, too.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by Wanderingwheelz »

FIREGuy88 wrote: Mon Mar 22, 2021 8:52 pm
Escapevelocity wrote: Mon Mar 22, 2021 8:43 pm I would put a minimum 25% in bonds.
At age 35?
Bonds don’t care how old you are.
Being wrong compounds forever.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by tibbitts »

Triple digit golfer wrote: Mon Mar 22, 2021 9:27 pm
lostdog wrote: Mon Mar 22, 2021 9:26 pm If you're comfortable with what Vanguard PAS put you in then I would leave it alone.

You're going to get all sorts of recommendations from this thread. Don't start letting some odd ball recommendations make you second guess what PAS set you up with. It will drive you crazy.

Stick to the PAS plan. It looks good and you'll be fine. :beer
Absolutely.

You're paying them for a reason. Let them do what you're paying them to do.
Completely agree. Too many Bogleheads in this thread are second-guessing the PAS plan but not explaining that their recommendations aren't better or worse, they're just different, and maybe more suitable to them - but maybe not to you. If you're going to tweak the PAS recommendation, there's no point in paying for it.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by Escapevelocity »

I wouldn’t pay it. They probably spent 5 minutes working it up.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by random_walker_77 »

tibbitts wrote: Mon Mar 22, 2021 9:53 pm
Triple digit golfer wrote: Mon Mar 22, 2021 9:27 pm
lostdog wrote: Mon Mar 22, 2021 9:26 pm If you're comfortable with what Vanguard PAS put you in then I would leave it alone.

You're going to get all sorts of recommendations from this thread. Don't start letting some odd ball recommendations make you second guess what PAS set you up with. It will drive you crazy.

Stick to the PAS plan. It looks good and you'll be fine. :beer
Absolutely.

You're paying them for a reason. Let them do what you're paying them to do.
Completely agree. Too many Bogleheads in this thread are second-guessing the PAS plan but not explaining that their recommendations aren't better or worse, they're just different, and maybe more suitable to them - but maybe not to you. If you're going to tweak the PAS recommendation, there's no point in paying for it.
Yes, presumably OP has had a long conversation discussing their tolerance for losses, and upcoming financial milestones. Risk tolerance will depend on whether there are major expenditures coming up: house downpayment, college tuition, other needed spending. Also OP's spending budget and required expenditures relative to emergency fund size and job stability. The PAS portfolio certainly looks reasonable, and could be perfect for an investor. There's not enough info to say whether it's a good fit for FIREGuy88. Quite frankly, I don't know enough about PAS to have confidence that they have talked to him enough to determine that it's a good personalized fit.

I do see that this is a pretty aggressive equity-heavy portfolio with very little in bonds. And I've seen that people tend to be overly confident about their risk tolerance when markets are at all-time highs. If these funds absolutely won't be withdrawn for 20 years, even if the stock market goes down 60%, and if his business dries up. I'm not getting the sense that FireGuy88 has nerves of steel...
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by tibbitts »

random_walker_77 wrote: Mon Mar 22, 2021 10:04 pm
tibbitts wrote: Mon Mar 22, 2021 9:53 pm
Triple digit golfer wrote: Mon Mar 22, 2021 9:27 pm
lostdog wrote: Mon Mar 22, 2021 9:26 pm If you're comfortable with what Vanguard PAS put you in then I would leave it alone.

You're going to get all sorts of recommendations from this thread. Don't start letting some odd ball recommendations make you second guess what PAS set you up with. It will drive you crazy.

Stick to the PAS plan. It looks good and you'll be fine. :beer
Absolutely.

You're paying them for a reason. Let them do what you're paying them to do.
Completely agree. Too many Bogleheads in this thread are second-guessing the PAS plan but not explaining that their recommendations aren't better or worse, they're just different, and maybe more suitable to them - but maybe not to you. If you're going to tweak the PAS recommendation, there's no point in paying for it.
Yes, presumably OP has had a long conversation discussing their tolerance for losses, and upcoming financial milestones. Risk tolerance will depend on whether there are major expenditures coming up: house downpayment, college tuition, other needed spending. Also OP's spending budget and required expenditures relative to emergency fund size and job stability. The PAS portfolio certainly looks reasonable, and could be perfect for an investor. There's not enough info to say whether it's a good fit for FIREGuy88. Quite frankly, I don't know enough about PAS to have confidence that they have talked to him enough to determine that it's a good personalized fit.

I do see that this is a pretty aggressive equity-heavy portfolio with very little in bonds. And I've seen that people tend to be overly confident about their risk tolerance when markets are at all-time highs. If these funds absolutely won't be withdrawn for 20 years, even if the stock market goes down 60%, and if his business dries up. I'm not getting the sense that FireGuy88 has nerves of steel...
I'm guessing half of everyone is commenting based on $2.x million and I'm not even sure if the OP understands if he has or will have $2.x million, 7 million, or some other amount. We don't know what he told PAS about that. But really the point is that once the OP went with PAS, while it's okay to ask if the recommendation is reasonable, it doesn't help the OP for everybody to be saying "well yes but you should have less international", or "well yes but you should have more bonds", etc. We have a significant "why not 100% stock?" crowd around here, so maybe 95% isn't enough - and I don't think those people have nerves of steel either. Hopefully PAS will supply the OP with any necessary nerves, and I think it's harmful for the OP to get into the habit of questioning every decision PAS makes, because that would undermine PAS in helping the OP stick with its allocation.
Last edited by tibbitts on Tue Mar 23, 2021 9:41 am, edited 1 time in total.
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by FIREGuy88 »

Extremely helpful. Thank you!
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by shess »

FIREGuy88 wrote: Mon Mar 22, 2021 6:15 pm Allocation After Vanguard PAS:

Roth IRA: $11k, 100% VXUS
SEP IRA: $225k, 16% BNDX, 40% BND, 43% VXUS
Brokerage: $2.3M, 37% VXUS, 63% VTI

What do you think? How did my advisor do?
I think this is fine. I've tended to lean a bit more to international, but I'm not convinced enough about that to argue that someone else should. I think your bond allocation is reasonable for your age, I could see bumping it up a bit, but at that age I probably had less.

My only ??? is BNDX. I am not convinced that hedged international bond exposure is worth the effort for people in the US, mostly because the USD dominates the world. But I'm also over time becoming less and less convinced about corporate debt, too. Anyhow, I'd prefer to have some inflation-protected bonds before adding international bonds.

My layup would probably look like:
80/20 or 85/15 stock/bond
in stock, 55/45 or 60/40 US/intl (for US investors), using VTI and VXUS
in bond, 50/50 nominal/inflation-protected
in bond, mostly intermediate-term Treasury securities or broad indices, ~6 year duration
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by FIREGuy88 »

shess wrote: Tue Mar 23, 2021 3:45 am
My only ??? is BNDX. I am not convinced that hedged international bond exposure is worth the effort for people in the US, mostly because the USD dominates the world. But I'm also over time becoming less and less convinced about corporate debt, too. Anyhow, I'd prefer to have some inflation-protected bonds before adding international bonds.

My layup would probably look like:
80/20 or 85/15 stock/bond
in stock, 55/45 or 60/40 US/intl (for US investors), using VTI and VXUS
in bond, 50/50 nominal/inflation-protected
in bond, mostly intermediate-term Treasury securities or broad indices, ~6 year duration
Interesting perspective. Thank you.
EdNorton
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by EdNorton »

FIREGuy88 wrote: Mon Mar 22, 2021 7:07 pm
tj wrote: Mon Mar 22, 2021 7:03 pm
I thought you had $7M ? What did you do with the rest of it?
It's not liquid yet.
He needs some walking around money in case he sees something he likes.
:sharebeer
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lostdog
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by lostdog »

One last time, stick with the PAS plan.

If you're planning on undermining them based on recommendations here, they might ask you to leave out of annoyance and you might as well do it yourself.
Stocks-80% || Bonds-20% || Taxable-VTI/VXUS || IRA-VT/BNDW
MotoTrojan
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by MotoTrojan »

Fine. View your por
shess wrote: Tue Mar 23, 2021 3:45 am
FIREGuy88 wrote: Mon Mar 22, 2021 6:15 pm Allocation After Vanguard PAS:

Roth IRA: $11k, 100% VXUS
SEP IRA: $225k, 16% BNDX, 40% BND, 43% VXUS
Brokerage: $2.3M, 37% VXUS, 63% VTI

What do you think? How did my advisor do?
I think this is fine. I've tended to lean a bit more to international, but I'm not convinced enough about that to argue that someone else should. I think your bond allocation is reasonable for your age, I could see bumping it up a bit, but at that age I probably had less.

My only ??? is BNDX. I am not convinced that hedged international bond exposure is worth the effort for people in the US, mostly because the USD dominates the world. But I'm also over time becoming less and less convinced about corporate debt, too. Anyhow, I'd prefer to have some inflation-protected bonds before adding international bonds.

My layup would probably look like:
80/20 or 85/15 stock/bond
in stock, 55/45 or 60/40 US/intl (for US investors), using VTI and VXUS
in bond, 50/50 nominal/inflation-protected
in bond, mostly intermediate-term Treasury securities or broad indices, ~6 year duration
+1 I like this layup. Corporate debt is inefficient, just hold treasuries and tilt a bit more to equities. Barbell of short-term treasuries and long-term nominal treasuries is another option, or intermediate for each as noted. I wouldn't pay PAS to implement this myself. I personally tilt strongly to value/quality/size as well, but that is another story.

Also OP, stop viewing portfolio as a separate allocation in each account, but as one full portfolio.
Triple digit golfer
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by Triple digit golfer »

lostdog wrote: Tue Mar 23, 2021 8:18 am One last time, stick with the PAS plan.

If you're planning on undermining them based on recommendations here, they might ask you to leave out of annoyance and you might as well do it yourself.
I wouldn't pay $7,500 a year for a service unless I was confident in the work they're doing.

It's like hiring a roofing contractor and then going on a DIY forum and asking for suggestions on shingle types and drip edges after the roofer finished the job and just put on a really nice brand new roof.
WhyNotUs
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by WhyNotUs »

Since investment strategies start with goals (and risk tolerance) and we do not know yours, other than retirement in 20 years, it is hard to say much other than it seems to look fine.

You have quite a bit of money in taxable and it sounds like more to come. Once you get an asset allocation that you are comfortable with, I would shift my focus to a tax strategy for the long haul. There is the potential/likelihood of future tax increases on wealth and taxable accounts will be easier to tax than retirement plans IMO.

The plan might call for increasing your bond holdings as you find ways to shift your taxable $$ into retirement accounts. It might include muni bonds at some point based on your regular income. But that can all be sorted out as your develop a more refined tax strategy.
I own the next hot stock- VTSAX
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FIREGuy88
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by FIREGuy88 »

WhyNotUs wrote: Tue Mar 23, 2021 8:48 am Since investment strategies start with goals (and risk tolerance) and we do not know yours, other than retirement in 20 years, it is hard to say much other than it seems to look fine.

You have quite a bit of money in taxable and it sounds like more to come. Once you get an asset allocation that you are comfortable with, I would shift my focus to a tax strategy for the long haul. There is the potential/likelihood of future tax increases on wealth and taxable accounts will be easier to tax than retirement plans IMO.

The plan might call for increasing your bond holdings as you find ways to shift your taxable $$ into retirement accounts. It might include muni bonds at some point based on your regular income. But that can all be sorted out as your develop a more refined tax strategy.
This was great, thank you.
helloeveryone
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by helloeveryone »

FIREGuy88 wrote: Mon Mar 22, 2021 9:02 pm
anon_investor wrote: Mon Mar 22, 2021 8:52 pm
Those are good reasons to use PAS. Not everyone wants to nerd out on some of these finer points, and that is okay. Do you think at some point you might try to DIY? The good thing is they have you in a simple portfolio that you could take the reins over if you wanted to one day. Don't let someone convince in you in the future you need to get more complicated. The one question is, does PAS help you to do any tax loss harvesting?
I have been doing DIY since 2012, and I have managed to mess up and make the wrong decision every single chance I could 😂

Luckily, the stakes were low, with only ~$30k-$100k invested. Now that I've received a windfall, it's not about doing it DIY to save $10,000, it's about not crashing the car.
Sounds like a really good decision to use PAS and to stick with that plan.
Curious - will you do things like Backdoor Roth going forward every year in addition to maximizing your SEP savings through work?
Kind of "worth it" to do the backdoor roth but it's small potatoes compared to your networth.
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MJS
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by MJS »

Very good plan for a young, rich, adventurous person! Put your future millions in at the same ratios... well, maybe discuss the BNDX alternatives, but really it's a good plan for you-as-seen-Bogleheads.

Then, don't look at your portfolio for 15 years. Ignore the noise, especially Headlines of Doom. Buy a house if you want, even in Manhattan or SF. At age 50, get a check-up for a possible change in asset allocation.

Congratulations!
Ipsa scientia potestas est. Bacon F.
Dave55
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Re: Huge Windfall + Vanguard PAS, Here's What They Allocated For Me

Post by Dave55 »

lostdog wrote: Mon Mar 22, 2021 9:26 pm If you're comfortable with what Vanguard PAS put you in then I would leave it alone.

You're going to get all sorts of recommendations from this thread. Don't start letting some odd ball recommendations make you second guess what PAS set you up with. It will drive you crazy.

Stick to the PAS plan. It looks good and you'll be fine. :beer
+1. Right on the $money$ lostdog.


Dave
"Reality always wins, your only job is to get in touch with it." Wilfred Bion
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