Critique my IPS
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Critique my IPS
Hello everyone
Its been a great few months in this forum and i have been learning a lot and based on reading a bit, I have created the following IPS. Can you take a look and let me know anything else I should add. Of course I am looking for something that is good enough, instead of it being perfect.
Also we are in early 30's in VHCOL area...
Save at least 25% of income every year
Emergency funds in HYSA - 4 months of expenses
Max Out His 401k, His Roth, Her 401k, Her Roth
Desired Stock & Bond Allocation - Vanguard 2055 retirement fund till it reaches 60% Stocks. Then continue with 60/40
Desired International Allocation - 30%
Place all bonds in 401k till practically possible
Rebalance under following conditions
1. Withdrew greater than 10% of Assets in Taxable
2. Market moving events >15% loss in a month
3. June of every calendar year
Invest excess funds every 3 months - Jan, April, July, October as per investment priorities order
Investment Priorities - Emergency --> 401k --> Roth --> 529 --> Taxable
Its been a great few months in this forum and i have been learning a lot and based on reading a bit, I have created the following IPS. Can you take a look and let me know anything else I should add. Of course I am looking for something that is good enough, instead of it being perfect.
Also we are in early 30's in VHCOL area...
Save at least 25% of income every year
Emergency funds in HYSA - 4 months of expenses
Max Out His 401k, His Roth, Her 401k, Her Roth
Desired Stock & Bond Allocation - Vanguard 2055 retirement fund till it reaches 60% Stocks. Then continue with 60/40
Desired International Allocation - 30%
Place all bonds in 401k till practically possible
Rebalance under following conditions
1. Withdrew greater than 10% of Assets in Taxable
2. Market moving events >15% loss in a month
3. June of every calendar year
Invest excess funds every 3 months - Jan, April, July, October as per investment priorities order
Investment Priorities - Emergency --> 401k --> Roth --> 529 --> Taxable
- retired@50
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Re: Critique my IPS
It might matter that the Vanguard 2055 fund probably holds 40% of the equity in international.
So, if you're determined to hold 30%, you might need to adjust.
Regards,
So, if you're determined to hold 30%, you might need to adjust.
Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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Re: Critique my IPS
Yes, the Vanguard 2055 is only for the Equity / Bond allocation calculation. Planning to hold 30% international.retired@50 wrote: ↑Mon Jun 21, 2021 8:30 pm It might matter that the Vanguard 2055 fund probably holds 40% of the equity in international.
So, if you're determined to hold 30%, you might need to adjust.
Regards,
Re: Critique my IPS
A good start! Your IPS doesn't mention what your ultimate savings goal for the 529 is. For example. I saved in my kids' 529s until we reached 60% of the cost of state university. Then it has grown from there without more contributions. You may want to set a floor and ceiling for contributions.
67/12/21 US stock/international stock/bonds. Bonds capped at 10x annual spending. Semi-retired as of 2022.
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Re: Critique my IPS
I am not actually sure what it should be. My plan for the next few years (say 5) is to contribute for the state tax deduction limit and leave it at that for a few yearsluminous wrote: ↑Mon Jun 21, 2021 8:47 pm A good start! Your IPS doesn't mention what your ultimate savings goal for the 529 is. For example. I saved in my kids' 529s until we reached 60% of the cost of state university. Then it has grown from there without more contributions. You may want to set a floor and ceiling for contributions.
Re: Critique my IPS
Do you mean you are going to mimic this funds AA? Holding it in all accounts might not be the most tax efficient way to hold the AA.lazyinvestor30 wrote: ↑Mon Jun 21, 2021 8:25 pm Desired Stock & Bond Allocation - Vanguard 2055 retirement fund till it reaches 60% Stocks. Then continue with 60/40
lazyinvestor30 wrote: ↑Mon Jun 21, 2021 8:25 pm Rebalance under following conditions
1. Withdrew greater than 10% of Assets in Taxable
2. Market moving events >15% loss in a month
1) Why this criteria? If withdrawing causes your portfolio AA to be out of wack then re-balance per the other criteria, if it doesn't then it's too minor to worry about. Also 10% of taxable will be a varying percentage of your total portfolio which is what matters.
2) The month criteria seems too complicated. Is it a rolling 30 days or are you going to check on regular days each month? You also only account for losses, what about gains? Why not just set a threshold like +/- 15% from target allocation to trigger a re-balance so you don't have to keep track if it has been >32 days to see if it would trigger.
Everything else looks good though
Re: Critique my IPS
Ah, that's a good plan. I don't live in a state with a tax deduction so I didn't have that helpful guidepost.lazyinvestor30 wrote: ↑Mon Jun 21, 2021 8:54 pmI am not actually sure what it should be. My plan for the next few years (say 5) is to contribute for the state tax deduction limit and leave it at that for a few yearsluminous wrote: ↑Mon Jun 21, 2021 8:47 pm A good start! Your IPS doesn't mention what your ultimate savings goal for the 529 is. For example. I saved in my kids' 529s until we reached 60% of the cost of state university. Then it has grown from there without more contributions. You may want to set a floor and ceiling for contributions.
67/12/21 US stock/international stock/bonds. Bonds capped at 10x annual spending. Semi-retired as of 2022.
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Re: Critique my IPS
The overall asset allocation will be based on target fund. But will hold bonds in 401k and stocks in Roth and taxablewetgear wrote: ↑Mon Jun 21, 2021 9:24 pmDo you mean you are going to mimic this funds AA? Holding it in all accounts might not be the most tax efficient way to hold the AA.lazyinvestor30 wrote: ↑Mon Jun 21, 2021 8:25 pm Desired Stock & Bond Allocation - Vanguard 2055 retirement fund till it reaches 60% Stocks. Then continue with 60/40
lazyinvestor30 wrote: ↑Mon Jun 21, 2021 8:25 pm Rebalance under following conditions
1. Withdrew greater than 10% of Assets in Taxable
2. Market moving events >15% loss in a month
1) Why this criteria? If withdrawing causes your portfolio AA to be out of wack then re-balance per the other criteria, if it doesn't then it's too minor to worry about. Also 10% of taxable will be a varying percentage of your total portfolio which is what matters.
2) The month criteria seems too complicated. Is it a rolling 30 days or are you going to check on regular days each month? You also only account for losses, what about gains? Why not just set a threshold like +/- 15% from target allocation to trigger a re-balance so you don't have to keep track if it has been >32 days to see if it would trigger.
Everything else looks good though
Rebalance condition- I see it now that’s too complicated. Just having a criteria with a threshold will be much more simpler I agree. Thanks for the suggestions
Re: Critique my IPS
This doesn't sound right. Are you sometimes withdrawing assets marked for retirement? If you have money in a taxable account for retirement, it should not be withdrawn, it needs to be marked for retirement. If it's for other purposes or discretionary, it should not be counted as retirement money.Rebalance under following conditions
1. Withdrew greater than 10% of Assets in Taxable
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.
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Re: Critique my IPS
I am considering all money outside of the emergency funds and regular cash flow as one big pile. Once I have a better idea and time frame for using that money (say a car or home improvement needs) I can earmark it for that purpose at that timepkcrafter wrote: ↑Tue Jun 22, 2021 8:55 amThis doesn't sound right. Are you sometimes withdrawing assets marked for retirement? If you have money in a taxable account for retirement, it should not be withdrawn, it needs to be marked for retirement. If it's for other purposes or discretionary, it should not be counted as retirement money.Rebalance under following conditions
1. Withdrew greater than 10% of Assets in Taxable
Paul
Re: Critique my IPS
Plans change. I viewed everything as one portfolio until I decided to buy a home in 2013. At that point, I knew I would sell stock to make the home down payment, and adjust my allocation accordingly. (I didn't actually sell any stock until I signed the contract to buy the specific home, as I didn't want to take a larger capital gain than necessary; I adjusted my overall allocation by switching between bonds and stock in my employer plan.)pkcrafter wrote: ↑Tue Jun 22, 2021 8:55 amThis doesn't sound right. Are you sometimes withdrawing assets marked for retirement? If you have money in a taxable account for retirement, it should not be withdrawn, it needs to be marked for retirement. If it's for other purposes or discretionary, it should not be counted as retirement money.Rebalance under following conditions
1. Withdrew greater than 10% of Assets in Taxable