25yo daughter's portfolio review

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carminered2019
Posts: 1939
Joined: Fri Jun 21, 2019 7:06 pm

25yo daughter's portfolio review

Post by carminered2019 »

Age: 25
Roth: VTI: 32K, VXUS:13K
Taxable account: VOO: 31K, VTI:42K, VXUS:18K
Future contribution: VTI and VXUS

I am not too familiar with all the fund names from Vanguard but like to keep her overall portfolio the next 25 years and make it as easy as possible until she turns 50 then I will have here add some bonds.

1. Is this good enough for the next 25 years ?
2. Are there better Vanguard funds to switch over now or later ?
Last edited by carminered2019 on Thu Jan 20, 2022 12:21 pm, edited 1 time in total.
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arcticpineapplecorp.
Posts: 15081
Joined: Tue Mar 06, 2012 8:22 pm

Re: 25yo daughter's portfolio review

Post by arcticpineapplecorp. »

carminered2019 wrote: Thu Jan 20, 2022 11:44 am Age: 25
Roth: VTI: 32K, VXUS:13K
Taxable account: VOO: 31K, VTI:42K, VXUX:18K

I am not too familiar with all the fund names from Vanguard but like to keep her overall portfolio the next 25 years and make it as easy as possible until she turns 50 then I will have here add some bonds.

1. Is this good enough for the next 25 years ?
2. Are there better Vanguard funds to switch over now or later ?
under taxable, do you mean vxus rather than vxux?

also you don't need VOO and VTI in taxable (VTI contains VOO and returns will likely be similar). Also, if you want to do tax loss harvesting you'll want to use whatever you don't have in IRA to avoid wash sale, so you could VOO in taxable and other tax loss harvesting partners besides VTI).

otherwise it looks fine. Any reason you have 29% international in Roth but only 20% international in taxable?

Also, does she have access to a 401k? Or is she self employed and can use Solo 401k/SEP IRA?

If you post more of her details according to "asking portfolio questions" (see link in my signature below) you'll get better answers.
Last edited by arcticpineapplecorp. on Thu Jan 20, 2022 12:00 pm, edited 2 times in total.
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wetgear
Posts: 859
Joined: Thu Apr 06, 2017 10:14 am

Re: 25yo daughter's portfolio review

Post by wetgear »

It’s best to post all the details in this format for the best and most complete advice: viewtopic.php?t=6212
livesoft
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Joined: Thu Mar 01, 2007 7:00 pm

Re: 25yo daughter's portfolio review

Post by livesoft »

Since your daughter is about to buy a house and a new vehicle in the next couple of months, maybe only VOO, VTI, and VXUX (sic) are not the only investments that should be in the taxable account?
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Northern Flicker
Posts: 15367
Joined: Fri Apr 10, 2015 12:29 am

Re: 25yo daughter's portfolio review

Post by Northern Flicker »

I assume the last taxable holding listed is a typo and you mean VXUS. I have the following comments.

1. Holding no bonds to age 50 is very aggressive. It is ok at age 25 but aggressive even at age 25.

2. She may want to consider making some traditional IRA contributions if making IRA contributions, and allocating that to bonds, maybe starting that at age 30. What is her tax bracket?

3. Holding VXUS in the Roth account gives up the foreign tax credit for that part of the holding. Hold VXUS in a taxable account unless tax bracket is very high and the tax on dividends is more of an issue. Even then holding it in a taxable account is ok.

4. You don't need both VTI and VOO. Just VTI is fine. If holding VOO because it has performed better recently, that is called performance chasing, and it does not on average improve future returns. It is not uncommon for it to degrade returns.

5. What is the intended asset allocation? Write it down. For example, currently you are allocated at 100% stock with 29% of stock in ex-US. This is a good mix but it should be intentional. Bonds would be included in the asset allocation when ready to start holding bonds.

6. If the Roth account is an inheritance IRA with a distribution schedule, assets would just flow from Roth to taxable in the same investment.

I recommend holding only VTI in the Roth account, and VTI and VXUS in the taxable account with the combination of both accounts at the asset allocation weights. If there is a significant embedded capital gain in VOO you may not be able to make the adjustment. If there are not significant embedded gains currently, it would be a good time to fix it.

I also suggest your daughter getting involved in managing the accounts.

edit: I agree with the above about buying a house. The down payment should be in a safe asset.
Last edited by Northern Flicker on Thu Jan 20, 2022 4:55 pm, edited 3 times in total.
tibbitts
Posts: 23729
Joined: Tue Feb 27, 2007 5:50 pm

Re: 25yo daughter's portfolio review

Post by tibbitts »

carminered2019 wrote: Thu Jan 20, 2022 11:44 am I am not too familiar with all the fund names from Vanguard but like to keep her overall portfolio the next 25 years and make it as easy as possible until she turns 50 then I will have here add some bonds.
Probably you'll be dead in 25 years so you might want to encourage your daughter to take responsibility for her own asset allocation decisions.
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