Total Stock Mkt vs Indiv Mkt Cap Funds for Pre-retiree
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Total Stock Mkt vs Indiv Mkt Cap Funds for Pre-retiree
Hi all, I am a 61 year old military retiree and currently a Federal employee. I am looking to retire in the next two years and am interested in reallocating (simplifying) my investments, specifically my Roth and taxable accounts. My combined pensions will be ~ $120K & have $750K in the TSP 2030 fund; my wife has $230K in a 403b Target 2030 fund. My Schwab account (~ $650K) consists of Roth IRAs for my wife and I (63%) and 37% in a taxable account in the following ETFs:
IRAs (63%): Schwab US Dividend (SCHD) 35% / Schwab Intl Dividend Equity (SCHY) 10% / Schwab US REIT (SCHH) 10% / I Shares Core U.S. Aggregate Bond (AGG) 30% / Schwab US TIPS (SCHP) 15%
Taxable (37%): Schwab US Lg Cap (SCHX) 35% / Schwab US Small Cap (SCHA) 10% / Schwab Intl Equity (SCH)F 15% / Schwab Emerging Mkts Equity (SCHE) 10% / iShares National Muni Bond (MUB ) 30% / Money Mkt 10%
As you can see, my Roths are dividend-centric and trying to keep my taxable account tax-efficient. I had a couple question re: total stock market ETFs (current ETFs/balances are new, conversions and won't result in significant taxes); since I'm nearing retirement and want to simplify/consolidate funds, am I better off:
1) Combining my SCHX and SCHA ETFs and moving to a Total Stock Mkt ETF?
2) Moving my SCHF and SCHE ETFs to a Total Int'l Stock ETF (or just eliminate SCHE)?
I realize SCHA allows me to maintain a higher allocation to small caps than a total stock mkt ETF, but a single fund could simplify allocation as well as the withdrawal process when I decide or need to do so. A total mkt Int'l ETF could do the same, and would provide a simpler way to have some but not too much emerging mkt exposure (or at my age should I eliminate it all together?). As far as my Roths are concerned, I think I'm okay with fund selection and allocation; given my age and impending retirement I'm comfortable with it providing a balance of growth, income, and preservation (I may reallocate 5% SCHD to SCHY to modestly increase int'l exposure in Roth). Appreciate your thoughts re: my Schwab account ETF selections and allocation, thanks!
IRAs (63%): Schwab US Dividend (SCHD) 35% / Schwab Intl Dividend Equity (SCHY) 10% / Schwab US REIT (SCHH) 10% / I Shares Core U.S. Aggregate Bond (AGG) 30% / Schwab US TIPS (SCHP) 15%
Taxable (37%): Schwab US Lg Cap (SCHX) 35% / Schwab US Small Cap (SCHA) 10% / Schwab Intl Equity (SCH)F 15% / Schwab Emerging Mkts Equity (SCHE) 10% / iShares National Muni Bond (MUB ) 30% / Money Mkt 10%
As you can see, my Roths are dividend-centric and trying to keep my taxable account tax-efficient. I had a couple question re: total stock market ETFs (current ETFs/balances are new, conversions and won't result in significant taxes); since I'm nearing retirement and want to simplify/consolidate funds, am I better off:
1) Combining my SCHX and SCHA ETFs and moving to a Total Stock Mkt ETF?
2) Moving my SCHF and SCHE ETFs to a Total Int'l Stock ETF (or just eliminate SCHE)?
I realize SCHA allows me to maintain a higher allocation to small caps than a total stock mkt ETF, but a single fund could simplify allocation as well as the withdrawal process when I decide or need to do so. A total mkt Int'l ETF could do the same, and would provide a simpler way to have some but not too much emerging mkt exposure (or at my age should I eliminate it all together?). As far as my Roths are concerned, I think I'm okay with fund selection and allocation; given my age and impending retirement I'm comfortable with it providing a balance of growth, income, and preservation (I may reallocate 5% SCHD to SCHY to modestly increase int'l exposure in Roth). Appreciate your thoughts re: my Schwab account ETF selections and allocation, thanks!
Last edited by bartonfive on Sat Jul 31, 2021 12:33 pm, edited 2 times in total.
Re: Total Stock Mkt vs Indiv Mkt Cap Funds for Pre-retiree
I came to BH with a Coffehouse style slice-and-dice portfolio. I have been progressively simplifying over the last 7 years. I ended up with a 3-fund (Total International, Total Stock, Total Bond) at retirement.
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
Re: Total Stock Mkt vs Indiv Mkt Cap Funds for Pre-retiree
If you add the fund names to your post, you’ll get more responses.
Use the pencil key at the top right of the post.
Use the pencil key at the top right of the post.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Re: Total Stock Mkt vs Indiv Mkt Cap Funds for Pre-retiree
Once I retired, we decided that a simple portfolio made more sense for our family. We hold the three fund portfolio. Complexity is a big problem if your spouse cannot or does not want to manage the portfolio after you are gone.
"I started with nothing and I still have most of it left."
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Re: Total Stock Mkt vs Indiv Mkt Cap Funds for Pre-retiree
If you're a military retiree and a current Fed, then you know the rules of government writing: always spell out an acronym the first time it appears in your narrative. The same rule goes for ETF ticker symbols such as the following:bartonfive wrote: ↑Fri Jul 30, 2021 2:17 pm Hi all, I am a 61 year old military retiree and currently a Federal employee.
Can you edit your post?IRAs (63%): SCHD 35% / SCHY 10% / SCHH 10% / AGG 30% / SCHP 15%
Taxable (37%): SCHX 35% / SCHA 10% / SCHF 15% / SCHE 10% / MUB 30% / MM 10%
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Re: Total Stock Mkt vs Indiv Mkt Cap Funds for Pre-retiree
Are you married? Do you have kids? If someone else needed to step in and manage the portfolio for any reason, would they know what to do?
Honestly would go for the simplest solution. It's great if you know how to manage all of that, but at some point (and hopefully not for a very long while) someone else may need to manage the portfolio. Keeping the complexity down will make it easier for whoever picks that up.
Honestly would go for the simplest solution. It's great if you know how to manage all of that, but at some point (and hopefully not for a very long while) someone else may need to manage the portfolio. Keeping the complexity down will make it easier for whoever picks that up.
"Anyone who claims to understand quantum theory is either lying or crazy" -- Richard Feynman
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Re: Total Stock Mkt vs Indiv Mkt Cap Funds for Pre-retiree
Agree and done! I’m fairly new to the Bogleheads forum, and saw a general overuse of (first time) acronyms and ticker symbols, so I wrongly assumed they were commonly understood and used.UpperNwGuy wrote: ↑Fri Jul 30, 2021 5:27 pmIf you're a military retiree and a current Fed, then you know the rules of government writing: always spell out an acronym the first time it appears in your narrative. The same rule goes for ETF ticker symbols such as the following:bartonfive wrote: ↑Fri Jul 30, 2021 2:17 pm Hi all, I am a 61 year old military retiree and currently a Federal employee.
Can you edit your post?IRAs (63%): SCHD 35% / SCHY 10% / SCHH 10% / AGG 30% / SCHP 15%
Taxable (37%): SCHX 35% / SCHA 10% / SCHF 15% / SCHE 10% / MUB 30% / MM 10%
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Re: Total Stock Mkt vs Indiv Mkt Cap Funds for Pre-retiree
Thanks. I’m curious to know what the allocation was between those 3 funds (?).
Re: Total Stock Mkt vs Indiv Mkt Cap Funds for Pre-retiree
I held 75% of stocks in US Total US and 25% of stocks in Total International at retirement.bartonfive wrote: ↑Fri Jul 30, 2021 10:12 pmThanks. I’m curious to know what the allocation was between those 3 funds (?).
I would prefer not to say my Asset Allocation because AA is intensely personal. The ability to handle loss is firmly rooted in one’s emotional makeup. I do not believe that anyone should choose their AA based on what someone else is doing.
I would recommend this “Bogleheads On Investing” with Morgan Housel: https://www.bogleheads.org/blog/2020/10 ... ick-ferri/
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius