Vanguard Personal Advisor Service Results

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Topic Author
herrbshaw
Posts: 14
Joined: Mon Jan 24, 2022 8:09 pm

Vanguard Personal Advisor Service Results

Post by herrbshaw »

Hi all,

I just received my results for my PAS consultation and I'd like some feedback and direction. I'm behind the 8 ball in investing. I have 130K currently in VASGX. I'm 60 and need an agressive allocation to make up for lost time. I put in 30k per year, tax-deferred, into VASGX right now. I plan to do this for another 10 years. I'd like to have near 1M before I hang it up when I'm 70. I'd like I'm considering letting PAS invest it for me. Here's what they recommended:

Years until Distribution

Years 11-9 9-6 6-3 3-0
Stocks 75% 70% 65% 60%
Bonds 25% 30% 35% 40%

Years of remaining distribution

Years 20 20-15 15-0
Stocks 60% 55% 50%
Bonds 40% 45% 50%

Suggested Funds: VTI (45%), VXUS (30%), BND (17%), BNDX (8%)

Questions:
1. Is it smart to do a 50-50 split like they are suggesting deep into retirement? Does the above plan sound like a solid recommendation?
2. I'm considering doing a 3 or 4 fund Bogle Portfolio instead of PAS. If so, what should my allocations be in each fund?
4. What should my glide path be?

I feel very confident I could manage it myself but I'm unsure of the allocations and the glide path I should take.
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: Vanguard Personal Advisor Service Results

Post by dbr »

Did they show you a model for what range of outcome you should expect? That information is necessary to be able to judge if you can support your hoped for spending with this plan. Otherwise you should go to a couple of several retirement planners and see what comes out. It is hard to find tools that allow the asset allocation to change though. Things like Social Security and pensions are supposed to be in the model. They have to have modeled this or there is no way they can arrive at the recommendation. Hopefully you are being sure to have SS or an equivalent pension by age 70.

50/50 is fine for the duration of a retirement. The serious mistake is to have too little in stocks, such as less than 30%. It is also possible that starting now with a 60/40 portfolio and staying there for the duration would work just as well. You only have ten years to make up assets so any plan is chancy. The fallback is that you live with what you have when you reach 70.

The funds they suggest are a Bogle "4 fund" portfolio. Some people would avoid the international bonds and put all the fixed income in BND giving you the classic 3 fund portfolio.
Jack FFR1846
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Re: Vanguard Personal Advisor Service Results

Post by Jack FFR1846 »

PAS tends to simply provide target date fund allocations which are fine, but conservative. I would say that the 3 or 4 fund portfolios are not Bogle type portfolios. Jack talked about the lack of need to invest specifically in international funds because if you think about it......go ahead and name any company that does nothing abroad. You might think, for example, Texas Instruments. Headquarters just southwest of the Hi 5 in Dallas. Fabs spread around Dallas. But their business is mostly outside the US. They own the largest test and packaging facility in the world at Clarke in the Philippines. So buying Texas Instruments stock means you're buying about a half and half US and International stock.

Anyways, I also want to point out that allocations are not going to make up for lack of past savings. If you want to end up with more, spend less and save more. It's that simple. If there were some magic allocation that could make up for a lack of past savings, everyone would use it. There isn't.

One way to save is to use the information PAS gave you and simply cancel their services so you don't pay their fee. That keeps drag out of your account.

I'll say that a 50/50 allocation isn't all that uncommon. It's what I do. I'll be 65 in 5 days.
Bogle: Smart Beta is stupid
Escapevelocity
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Re: Vanguard Personal Advisor Service Results

Post by Escapevelocity »

Their recommendation looks reasonable. Will you also maintain an emergency fund separate from this?
quietseas
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Re: Vanguard Personal Advisor Service Results

Post by quietseas »

Escapevelocity wrote: Tue Jan 25, 2022 9:25 am Their recommendation looks reasonable.
I agree, their recommendation is reasonable.

I'd just add that if you are able to save more than $30K/year you'll have a better chance of being closer to $1M in 10 years. This will have a much greater impact on the chance of achieving your goal of having close to $1M.
Last edited by quietseas on Tue Jan 25, 2022 9:33 am, edited 1 time in total.
dbr
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Re: Vanguard Personal Advisor Service Results

Post by dbr »

Yes, the Bogle portfolio is a 2 fund portfolio that eschews international investing of any kind and probably also prefers an S&P 500 fund to a total stock fund. Mr. Bogle was also heard to say that total bond index does not have enough corporate bonds so another bond fund should be added for that.* Bogleheads probably advocate a 3 fund portfolio with international stocks, US total stock market, and total bond index (or any other US bonds):

https://www.bogleheads.org/wiki/Three-fund_portfolio

*That is not a comment to be taken seriously, nor is the one about S&P 500.

And, yes, the portfolio is fine but may not guarantee the desired results.
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WoodSpinner
Posts: 3504
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Re: Vanguard Personal Advisor Service Results

Post by WoodSpinner »

herrbshaw wrote: Mon Jan 24, 2022 9:10 pm Hi all,

I just received my results for my PAS consultation and I'd like some feedback and direction. I'm behind the 8 ball in investing. I have 130K currently in VASGX. I'm 60 and need an agressive allocation to make up for lost time. I put in 30k per year, tax-deferred, into VASGX right now. I plan to do this for another 10 years. I'd like to have near 1M before I hang it up when I'm 70. I'd like I'm considering letting PAS invest it for me. Here's what they recommended:

Years until Distribution

Years 11-9 9-6 6-3 3-0
Stocks 75% 70% 65% 60%
Bonds 25% 30% 35% 40%

Years of remaining distribution

Years 20 20-15 15-0
Stocks 60% 55% 50%
Bonds 40% 45% 50%

Suggested Funds: VTI (45%), VXUS (30%), BND (17%), BNDX (8%)

Questions:
1. Is it smart to do a 50-50 split like they are suggesting deep into retirement? Does the above plan sound like a solid recommendation?
2. I'm considering doing a 3 or 4 fund Bogle Portfolio instead of PAS. If so, what should my allocations be in each fund?
4. What should my glide path be?

I feel very confident I could manage it myself but I'm unsure of the allocations and the glide path I should take.
Herbshaw,

The recommendation seems reasonable to me and the assets suggested are very similar to my portfolio.

The allocations also seem reasonable on the surface but I have no knowledge of your overall goals, financial picture etc.

The Red Flag for me is your desire to ramp up RISK to help make up for lost time. Personally, I would not do that, too much chance of something to go wrong, especially in today’s market. The risks are very Real at all times but feel elevated at this point as we seem to be heading for a correction and rising rates.

Just my $.02 since you asked….

WoodSpinner
WoodSpinner
GmanJeff
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Re: Vanguard Personal Advisor Service Results

Post by GmanJeff »

Keep in mind that PAS is more than an initial asset allocation model based on your articulated risk tolerance, objectives, and timelines. The PAS fee is also for personalized ongoing planning and portfolio management intended to adapt to future changes in your individual circumstances and external conditions which may impact your plan. If you only want ongoing access to an informed asset allocation model and to automated corresponding rebalancing, consider using Vanguard's Digital Advisor Service instead, which charges a lower fee. https://investor.vanguard.com/advice/digital-advisor/
Topic Author
herrbshaw
Posts: 14
Joined: Mon Jan 24, 2022 8:09 pm

Re: Vanguard Personal Advisor Service Results

Post by herrbshaw »

quietseas wrote: Tue Jan 25, 2022 9:26 am
Escapevelocity wrote: Tue Jan 25, 2022 9:25 am Their recommendation looks reasonable.
I agree, their recommendation is reasonable.

I'd just add that if you are able to save more than $30K/year you'll have a better chance of being closer to $1M in 10 years. This will have a much greater impact on the chance of achieving your goal of having close to $1M.
Well noted. Thank you.
Elysium
Posts: 4120
Joined: Mon Apr 02, 2007 6:22 pm

Re: Vanguard Personal Advisor Service Results

Post by Elysium »

herrbshaw wrote: Mon Jan 24, 2022 9:10 pm Hi all,

I just received my results for my PAS consultation and I'd like some feedback and direction. I'm behind the 8 ball in investing. I have 130K currently in VASGX. I'm 60 and need an agressive allocation to make up for lost time. I put in 30k per year, tax-deferred, into VASGX right now. I plan to do this for another 10 years. I'd like to have near 1M before I hang it up when I'm 70. I'd like I'm considering letting PAS invest it for me. Here's what they recommended:

Years until Distribution

Years 11-9 9-6 6-3 3-0
Stocks 75% 70% 65% 60%
Bonds 25% 30% 35% 40%

Years of remaining distribution

Years 20 20-15 15-0
Stocks 60% 55% 50%
Bonds 40% 45% 50%

Suggested Funds: VTI (45%), VXUS (30%), BND (17%), BNDX (8%)

Questions:
1. Is it smart to do a 50-50 split like they are suggesting deep into retirement? Does the above plan sound like a solid recommendation?
2. I'm considering doing a 3 or 4 fund Bogle Portfolio instead of PAS. If so, what should my allocations be in each fund?
4. What should my glide path be?

I feel very confident I could manage it myself but I'm unsure of the allocations and the glide path I should take.
This is a good plan. Execution is more important, meaning contributing the maximum you can, then staying invested according to the plan, and re-balancing only when needed. The glidepath they recommended is perfectly fine, and yes 50/50 allocation in retirement is fine too, but you get to tweak this later years, so no need to worry about it too much now. PAS can take away the execution part for you, while you can do the contribution part. As for DIY, yes it is possible to build the 3-fund portfolio yourself and follow a similar glidepath, but it gets harder with the noises coming from daily news and even on this forum people say too many different things that can distract. You really need to focus on the contributions part leaving aside any other worries on managing a portfolio while stressing if you're doing a good job of it.
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Nate79
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Re: Vanguard Personal Advisor Service Results

Post by Nate79 »

I think you need to check your assumptions, savings rate and targets as your expectations need a spectacular stock return with 100% stock allocation to even come close.
dbr
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Re: Vanguard Personal Advisor Service Results

Post by dbr »

Nate79 wrote: Tue Jan 25, 2022 5:16 pm I think you need to check your assumptions, savings rate and targets as your expectations need a spectacular stock return with 100% stock allocation to even come close.
This is correct. If you even just ballpark it with a simple future value calculation you would need 15% return each year to get there. The chances of that are very small, certainly not with what they propose. You are also missing confirmation of what that $1M is expected to do for you. Was there a discussion of what you wanted to spend when you retire at age 70?

That's why I asked what model they showed you to indicate you would get there. Did they even acknowledge what you said you were trying to do?

The first thing you are supposed to get from VPAS is a plan. It doesn't look like you have one from them. Asset allocations are a piece of a plan, but the probable outcomes also have to be developed.
backpacker61
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Re: Vanguard Personal Advisor Service Results

Post by backpacker61 »

When you have less saved than you would like, it becomes very pivotal to wring the best Social Security benefit possible. I assume you realize that, since you're proposing to work until 70.

You can also delay receiving distributions from tax advantaged accounts until age 72, which would allow them an extra couple years to continue growing before you begin drawing out RMD's.
“Now shall I walk or shall I ride? | 'Ride,' Pleasure said; | 'Walk,' Joy replied.” | | ― W.H. Davies
Wrench
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Re: Vanguard Personal Advisor Service Results

Post by Wrench »

Nate79 wrote: Tue Jan 25, 2022 5:16 pm I think you need to check your assumptions, savings rate and targets as your expectations need a spectacular stock return with 100% stock allocation to even come close.
+1
With $130K today, investing $2500 per month for 10 years and compounding annually requires a ~12.6% annual return to reach one million dollars. Although that is possible I personally would not count on it. Many on BH are suggesting returns over the next ten years below historical averages, more like 3-5%, with some even suggesting real returns of zero.
If you really need to make it to $1M in ten years, save more. Alternatively, you could plan to work longer than 10 years. You win three ways if you work longer: the amount of time your retirement funds have to last is shorter, you save more, and your funds have longer to grow before you start withdrawal.

Wrench
Topic Author
herrbshaw
Posts: 14
Joined: Mon Jan 24, 2022 8:09 pm

Re: Vanguard Personal Advisor Service Results

Post by herrbshaw »

Thank you all for your thoughtful replies. I appreciate every one of them, truely. My wife and I will have 6k coming in per month through a teacher's pension and SS. We also will not take distributions until required at age 72 and plan to take the minimum as we will be fairly comfortable with that 6k a month and even more comfortable with the RMD. It looks like we can realistically put 30k in per year to our Vanguard 401k. Vanguard did send us a plan. I appreciate greatly those who are telling me I need to save as much as possible and not rely on so much on allocation percentages. The 30k a year is about what we can muster at this point. If I adjust my expectation to a 750k nest egg by age 72, What allocation stocks to bonds should I start out with? It seems like most on this thread are comfortable with 50-50 throughout the entirety of retirement, Am I being too agressive starting out now at 70-30 stocks/bonds and ramping down to 50-50 by age 72? I'm really struggling with the allocation and the glide path. Any help is appreciated.
Topic Author
herrbshaw
Posts: 14
Joined: Mon Jan 24, 2022 8:09 pm

Re: Vanguard Personal Advisor Service Results

Post by herrbshaw »

Nate79 wrote: Tue Jan 25, 2022 5:16 pm I think you need to check your assumptions, savings rate and targets as your expectations need a spectacular stock return with 100% stock allocation to even come close.
Agreed.
Topic Author
herrbshaw
Posts: 14
Joined: Mon Jan 24, 2022 8:09 pm

Re: Vanguard Personal Advisor Service Results

Post by herrbshaw »

Elysium wrote: Tue Jan 25, 2022 5:00 pm
herrbshaw wrote: Mon Jan 24, 2022 9:10 pm Hi all,

I just received my results for my PAS consultation and I'd like some feedback and direction. I'm behind the 8 ball in investing. I have 130K currently in VASGX. I'm 60 and need an agressive allocation to make up for lost time. I put in 30k per year, tax-deferred, into VASGX right now. I plan to do this for another 10 years. I'd like to have near 1M before I hang it up when I'm 70. I'd like I'm considering letting PAS invest it for me. Here's what they recommended:

Years until Distribution

Years 11-9 9-6 6-3 3-0
Stocks 75% 70% 65% 60%
Bonds 25% 30% 35% 40%

Years of remaining distribution

Years 20 20-15 15-0
Stocks 60% 55% 50%
Bonds 40% 45% 50%

Suggested Funds: VTI (45%), VXUS (30%), BND (17%), BNDX (8%)

Questions:
1. Is it smart to do a 50-50 split like they are suggesting deep into retirement? Does the above plan sound like a solid recommendation?
2. I'm considering doing a 3 or 4 fund Bogle Portfolio instead of PAS. If so, what should my allocations be in each fund?
4. What should my glide path be?

I feel very confident I could manage it myself but I'm unsure of the allocations and the glide path I should take.
This is a good plan. Execution is more important, meaning contributing the maximum you can, then staying invested according to the plan, and re-balancing only when needed. The glidepath they recommended is perfectly fine, and yes 50/50 allocation in retirement is fine too, but you get to tweak this later years, so no need to worry about it too much now. PAS can take away the execution part for you, while you can do the contribution part. As for DIY, yes it is possible to build the 3-fund portfolio yourself and follow a similar glidepath, but it gets harder with the noises coming from daily news and even on this forum people say too many different things that can distract. You really need to focus on the contributions part leaving aside any other worries on managing a portfolio while stressing if you're doing a good job of it.
Thank you for your comments. Very helpful. Am I hearing you say PAS would be a good move for me?
Topic Author
herrbshaw
Posts: 14
Joined: Mon Jan 24, 2022 8:09 pm

Re: Vanguard Personal Advisor Service Results

Post by herrbshaw »

WoodSpinner wrote: Tue Jan 25, 2022 9:33 am
herrbshaw wrote: Mon Jan 24, 2022 9:10 pm Hi all,

I just received my results for my PAS consultation and I'd like some feedback and direction. I'm behind the 8 ball in investing. I have 130K currently in VASGX. I'm 60 and need an agressive allocation to make up for lost time. I put in 30k per year, tax-deferred, into VASGX right now. I plan to do this for another 10 years. I'd like to have near 1M before I hang it up when I'm 70. I'd like I'm considering letting PAS invest it for me. Here's what they recommended:

Years until Distribution

Years 11-9 9-6 6-3 3-0
Stocks 75% 70% 65% 60%
Bonds 25% 30% 35% 40%

Years of remaining distribution

Years 20 20-15 15-0
Stocks 60% 55% 50%
Bonds 40% 45% 50%

Suggested Funds: VTI (45%), VXUS (30%), BND (17%), BNDX (8%)

Questions:
1. Is it smart to do a 50-50 split like they are suggesting deep into retirement? Does the above plan sound like a solid recommendation?
2. I'm considering doing a 3 or 4 fund Bogle Portfolio instead of PAS. If so, what should my allocations be in each fund?
4. What should my glide path be?

I feel very confident I could manage it myself but I'm unsure of the allocations and the glide path I should take.
Herbshaw,

The recommendation seems reasonable to me and the assets suggested are very similar to my portfolio.

The allocations also seem reasonable on the surface but I have no knowledge of your overall goals, financial picture etc.

The Red Flag for me is your desire to ramp up RISK to help make up for lost time. Personally, I would not do that, too much chance of something to go wrong, especially in today’s market. The risks are very Real at all times but feel elevated at this point as we seem to be heading for a correction and rising rates.

Just my $.02 since you asked….

WoodSpinner
I'm inclined to agree with you. Assuming I reset my expectation to a nest egg of 750k by age 72, What allocation would you start off with and how would you ramp it down to age 72? I'm 61 now.
Topic Author
herrbshaw
Posts: 14
Joined: Mon Jan 24, 2022 8:09 pm

Re: Vanguard Personal Advisor Service Results

Post by herrbshaw »

Escapevelocity wrote: Tue Jan 25, 2022 9:25 am Their recommendation looks reasonable. Will you also maintain an emergency fund separate from this?
We do have an emergency HSA fund that covers our medical deductable for two years in case of calamity. I am already receiving my teacher's pension to the tune of $3,500 a month so I don't have to worry about being unemployed. We have other income coming and a savings in cash as well.
Escapevelocity
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Re: Vanguard Personal Advisor Service Results

Post by Escapevelocity »

herrbshaw wrote: Tue Jan 25, 2022 7:55 pm
Escapevelocity wrote: Tue Jan 25, 2022 9:25 am Their recommendation looks reasonable. Will you also maintain an emergency fund separate from this?
We do have an emergency HSA fund that covers our medical deductable for two years in case of calamity. I am already receiving my teacher's pension to the tune of $3,500 a month so I don't have to worry about being unemployed. We have other income coming and a savings in cash as well.
Ok those are hugely important especially the pension. You should include stuff like that in the setup of your question since it affects the type of risk you need to take with your portfolio.
dbr
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Joined: Sun Mar 04, 2007 8:50 am

Re: Vanguard Personal Advisor Service Results

Post by dbr »

Escapevelocity wrote: Tue Jan 25, 2022 8:22 pm
herrbshaw wrote: Tue Jan 25, 2022 7:55 pm
Escapevelocity wrote: Tue Jan 25, 2022 9:25 am Their recommendation looks reasonable. Will you also maintain an emergency fund separate from this?
We do have an emergency HSA fund that covers our medical deductable for two years in case of calamity. I am already receiving my teacher's pension to the tune of $3,500 a month so I don't have to worry about being unemployed. We have other income coming and a savings in cash as well.
Ok those are hugely important especially the pension. You should include stuff like that in the setup of your question since it affects the type of risk you need to take with your portfolio.
VPAS is supposed to have worked all that out. That is what a financial plan is and why, among other things, one goes to VPAS. There is a major disconnect here that we can't see what was presented. Specifically this addresses why the $1M goal and what would be the consequences of not reaching that target.
Topic Author
herrbshaw
Posts: 14
Joined: Mon Jan 24, 2022 8:09 pm

Re: Vanguard Personal Advisor Service Results

Post by herrbshaw »

Nate79 wrote: Tue Jan 25, 2022 5:16 pm I think you need to check your assumptions, savings rate and targets as your expectations need a spectacular stock return with 100% stock allocation to even come close.
Agreed.
Topic Author
herrbshaw
Posts: 14
Joined: Mon Jan 24, 2022 8:09 pm

Re: Vanguard Personal Advisor Service Results

Post by herrbshaw »

dbr wrote: Tue Jan 25, 2022 8:28 pm
Escapevelocity wrote: Tue Jan 25, 2022 8:22 pm
herrbshaw wrote: Tue Jan 25, 2022 7:55 pm
Escapevelocity wrote: Tue Jan 25, 2022 9:25 am Their recommendation looks reasonable. Will you also maintain an emergency fund separate from this?
We do have an emergency HSA fund that covers our medical deductable for two years in case of calamity. I am already receiving my teacher's pension to the tune of $3,500 a month so I don't have to worry about being unemployed. We have other income coming and a savings in cash as well.
Ok those are hugely important especially the pension. You should include stuff like that in the setup of your question since it affects the type of risk you need to take with your portfolio.
VPAS is supposed to have worked all that out. That is what a financial plan is and why, among other things, one goes to VPAS. There is a major disconnect here that we can't see what was presented. Specifically this addresses why the $1M goal and what would be the consequences of not reaching that target.
Sorry about that. This is my first time posting on this board. So, we will have 6k at least coming in per month before we ever take a penny in RMD. Our expenses are under control and we live well within our means. This fund will be gravy on top of our teacher's pension and SS. We expect only to take RMD when we hit 72 so we can allow the fund to grow with whatever years we have remaining after that.
tibbitts
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Re: Vanguard Personal Advisor Service Results

Post by tibbitts »

Escapevelocity wrote: Tue Jan 25, 2022 8:22 pm
herrbshaw wrote: Tue Jan 25, 2022 7:55 pm
Escapevelocity wrote: Tue Jan 25, 2022 9:25 am Their recommendation looks reasonable. Will you also maintain an emergency fund separate from this?
We do have an emergency HSA fund that covers our medical deductable for two years in case of calamity. I am already receiving my teacher's pension to the tune of $3,500 a month so I don't have to worry about being unemployed. We have other income coming and a savings in cash as well.
Ok those are hugely important especially the pension. You should include stuff like that in the setup of your question since it affects the type of risk you need to take with your portfolio.
We get that a lot in questions like this: after a couple of pages we get "incidentally we also have six-figures in other annual income...", like that's something everybody has.
Topic Author
herrbshaw
Posts: 14
Joined: Mon Jan 24, 2022 8:09 pm

Re: Vanguard Personal Advisor Service Results

Post by herrbshaw »

WoodSpinner wrote: Tue Jan 25, 2022 9:33 am
herrbshaw wrote: Mon Jan 24, 2022 9:10 pm Hi all,

I just received my results for my PAS consultation and I'd like some feedback and direction. I'm behind the 8 ball in investing. I have 130K currently in VASGX. I'm 60 and need an agressive allocation to make up for lost time. I put in 30k per year, tax-deferred, into VASGX right now. I plan to do this for another 10 years. I'd like to have near 1M before I hang it up when I'm 70. I'd like I'm considering letting PAS invest it for me. Here's what they recommended:

Years until Distribution

Years 11-9 9-6 6-3 3-0
Stocks 75% 70% 65% 60%
Bonds 25% 30% 35% 40%

Years of remaining distribution

Years 20 20-15 15-0
Stocks 60% 55% 50%
Bonds 40% 45% 50%

Suggested Funds: VTI (45%), VXUS (30%), BND (17%), BNDX (8%)

Questions:
1. Is it smart to do a 50-50 split like they are suggesting deep into retirement? Does the above plan sound like a solid recommendation?
2. I'm considering doing a 3 or 4 fund Bogle Portfolio instead of PAS. If so, what should my allocations be in each fund?
4. What should my glide path be?

I feel very confident I could manage it myself but I'm unsure of the allocations and the glide path I should take.
Herbshaw,

The recommendation seems reasonable to me and the assets suggested are very similar to my portfolio.

The allocations also seem reasonable on the surface but I have no knowledge of your overall goals, financial picture etc.

The Red Flag for me is your desire to ramp up RISK to help make up for lost time. Personally, I would not do that, too much chance of something to go wrong, especially in today’s market. The risks are very Real at all times but feel elevated at this point as we seem to be heading for a correction and rising rates.

Just my $.02 since you asked….

WoodSpinner
I agree with your advice to be careful with risk. Assuming I wanted to have a nest egg of between 500-750K at 72, putting away 30k per year in a solo 401k and assuming what you know from above, What allocation would you start at and where would you ramp down to at age 72 in my position? I have a moderate to agressive tolerance for risk. We will have a 6k income WITHOUT this money at age 72 through my pension $3,500 (which I'm already taking) and my wife's SS of $2,500 per month. We will only need to take the minimum RMD at age 72 and we will wait till that age to do it.
Topic Author
herrbshaw
Posts: 14
Joined: Mon Jan 24, 2022 8:09 pm

Re: Vanguard Personal Advisor Service Results

Post by herrbshaw »

Jack FFR1846 wrote: Tue Jan 25, 2022 9:18 am PAS tends to simply provide target date fund allocations which are fine, but conservative. I would say that the 3 or 4 fund portfolios are not Bogle type portfolios. Jack talked about the lack of need to invest specifically in international funds because if you think about it......go ahead and name any company that does nothing abroad. You might think, for example, Texas Instruments. Headquarters just southwest of the Hi 5 in Dallas. Fabs spread around Dallas. But their business is mostly outside the US. They own the largest test and packaging facility in the world at Clarke in the Philippines. So buying Texas Instruments stock means you're buying about a half and half US and International stock.

Anyways, I also want to point out that allocations are not going to make up for lack of past savings. If you want to end up with more, spend less and save more. It's that simple. If there were some magic allocation that could make up for a lack of past savings, everyone would use it. There isn't.

One way to save is to use the information PAS gave you and simply cancel their services so you don't pay their fee. That keeps drag out of your account.

I'll say that a 50/50 allocation isn't all that uncommon. It's what I do. I'll be 65 in 5 days.
So I'm sorry I didn't mention I have a teacher's pension of $3500 per month which I'm taking now and my wife will have $2,500 per month in SS at age 70. We will not take anything out of vanguard until age 72 and then only RMD. Our goal is to take as little out as we need and let the money grow years into retirement. With the RMD we should be quite comfortable.
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: Vanguard Personal Advisor Service Results

Post by dbr »

herrbshaw wrote: Tue Jan 25, 2022 8:39 pm
dbr wrote: Tue Jan 25, 2022 8:28 pm
Escapevelocity wrote: Tue Jan 25, 2022 8:22 pm
herrbshaw wrote: Tue Jan 25, 2022 7:55 pm
Escapevelocity wrote: Tue Jan 25, 2022 9:25 am Their recommendation looks reasonable. Will you also maintain an emergency fund separate from this?
We do have an emergency HSA fund that covers our medical deductable for two years in case of calamity. I am already receiving my teacher's pension to the tune of $3,500 a month so I don't have to worry about being unemployed. We have other income coming and a savings in cash as well.
Ok those are hugely important especially the pension. You should include stuff like that in the setup of your question since it affects the type of risk you need to take with your portfolio.
VPAS is supposed to have worked all that out. That is what a financial plan is and why, among other things, one goes to VPAS. There is a major disconnect here that we can't see what was presented. Specifically this addresses why the $1M goal and what would be the consequences of not reaching that target.
Sorry about that. This is my first time posting on this board. So, we will have 6k at least coming in per month before we ever take a penny in RMD. Our expenses are under control and we live well within our means. This fund will be gravy on top of our teacher's pension and SS. We expect only to take RMD when we hit 72 so we can allow the fund to grow with whatever years we have remaining after that.
So the plan is to support your retirement from pensions and Social Security and then to also spend the RMDs. But the key is that how much you actually get in RMDs isn't important but you do expect the balance remaining in the fund to grow.

Some key questions I would ask might be:

1. How sure are you that pensions and Social Security will be sufficient? Contigencies include allowing for elder care, evaluating the scenario for the survivor when the first of you passes away, increased costs if one or both of you suffer disabilities or severe disease, and so on. Other contingencies might include whether or not you own your home and when you might sell it. Whether or not the pension is inflation indexed is critical.

2. It is not guaranteed that a tax deferred account will grow after RMDs are removed. VPAS would have given you a plan showing the probable distribution of plan balance over time. It might be important whether or not this is your reserve for contingencies or just estate to be passed to heirs or given away. Actually that plan should start with showing the range of possible plan balances from today on for your rate of contribution and at different asset allocations.

3. The investment plan affects what the range of asset balances might be between now and retirement and then after retirement. The portfolio should be planned to meet what you want. In general a higher stock allocation will accumulate more wealth and also will be more uncertain what that wealth will be. It does not appear that the goal of $1M is either here nor there if your lifestyle in retirement does not depend on it.
Topic Author
herrbshaw
Posts: 14
Joined: Mon Jan 24, 2022 8:09 pm

Re: Vanguard Personal Advisor Service Results

Post by herrbshaw »

tibbitts wrote: Tue Jan 25, 2022 8:42 pm
Escapevelocity wrote: Tue Jan 25, 2022 8:22 pm
herrbshaw wrote: Tue Jan 25, 2022 7:55 pm
Escapevelocity wrote: Tue Jan 25, 2022 9:25 am Their recommendation looks reasonable. Will you also maintain an emergency fund separate from this?
We do have an emergency HSA fund that covers our medical deductable for two years in case of calamity. I am already receiving my teacher's pension to the tune of $3,500 a month so I don't have to worry about being unemployed. We have other income coming and a savings in cash as well.
Ok those are hugely important especially the pension. You should include stuff like that in the setup of your question since it affects the type of risk you need to take with your portfolio.
We get that a lot in questions like this: after a couple of pages we get "incidentally we also have six-figures in other annual income...", like that's something everybody has.
I'm sorry. I didn't mean it to be like that.
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: Vanguard Personal Advisor Service Results

Post by dbr »

herrbshaw wrote: Tue Jan 25, 2022 9:11 pm
tibbitts wrote: Tue Jan 25, 2022 8:42 pm
Escapevelocity wrote: Tue Jan 25, 2022 8:22 pm
herrbshaw wrote: Tue Jan 25, 2022 7:55 pm
Escapevelocity wrote: Tue Jan 25, 2022 9:25 am Their recommendation looks reasonable. Will you also maintain an emergency fund separate from this?
We do have an emergency HSA fund that covers our medical deductable for two years in case of calamity. I am already receiving my teacher's pension to the tune of $3,500 a month so I don't have to worry about being unemployed. We have other income coming and a savings in cash as well.
Ok those are hugely important especially the pension. You should include stuff like that in the setup of your question since it affects the type of risk you need to take with your portfolio.
We get that a lot in questions like this: after a couple of pages we get "incidentally we also have six-figures in other annual income...", like that's something everybody has.
I'm sorry. I didn't mean it to be like that.
Don't worry. These things have to be worked through. I myself am a little more concerned that VPAS does not appear to have communicated a plan. One of the most important things they should do for a person is explain how they are arriving at what they recommend and how it supports what you want to do. This would not be the first thread where it they don't seem to have made clear why they have recommended something. And, again, the investment plan they outlined does not seem crazy at all.
tibbitts
Posts: 23716
Joined: Tue Feb 27, 2007 5:50 pm

Re: Vanguard Personal Advisor Service Results

Post by tibbitts »

herrbshaw wrote: Tue Jan 25, 2022 9:11 pm
tibbitts wrote: Tue Jan 25, 2022 8:42 pm
Escapevelocity wrote: Tue Jan 25, 2022 8:22 pm
herrbshaw wrote: Tue Jan 25, 2022 7:55 pm
Escapevelocity wrote: Tue Jan 25, 2022 9:25 am Their recommendation looks reasonable. Will you also maintain an emergency fund separate from this?
We do have an emergency HSA fund that covers our medical deductable for two years in case of calamity. I am already receiving my teacher's pension to the tune of $3,500 a month so I don't have to worry about being unemployed. We have other income coming and a savings in cash as well.
Ok those are hugely important especially the pension. You should include stuff like that in the setup of your question since it affects the type of risk you need to take with your portfolio.
We get that a lot in questions like this: after a couple of pages we get "incidentally we also have six-figures in other annual income...", like that's something everybody has.
I'm sorry. I didn't mean it to be like that.
Did the PAS adviser know this additional information?
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: Vanguard Personal Advisor Service Results

Post by dbr »

tibbitts wrote: Tue Jan 25, 2022 9:34 pm
herrbshaw wrote: Tue Jan 25, 2022 9:11 pm
tibbitts wrote: Tue Jan 25, 2022 8:42 pm
Escapevelocity wrote: Tue Jan 25, 2022 8:22 pm
herrbshaw wrote: Tue Jan 25, 2022 7:55 pm

We do have an emergency HSA fund that covers our medical deductable for two years in case of calamity. I am already receiving my teacher's pension to the tune of $3,500 a month so I don't have to worry about being unemployed. We have other income coming and a savings in cash as well.
Ok those are hugely important especially the pension. You should include stuff like that in the setup of your question since it affects the type of risk you need to take with your portfolio.
We get that a lot in questions like this: after a couple of pages we get "incidentally we also have six-figures in other annual income...", like that's something everybody has.
I'm sorry. I didn't mean it to be like that.
Did the PAS adviser know this additional information?
If they didn't make sure to find it out, then they are incompetent. That would be the question I have about that service.
Elysium
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Joined: Mon Apr 02, 2007 6:22 pm

Re: Vanguard Personal Advisor Service Results

Post by Elysium »

herrbshaw wrote: Tue Jan 25, 2022 7:47 pm Thank you for your comments. Very helpful. Am I hearing you say PAS would be a good move for me?
Yes, if you like to have someone else take care of the day to day operation and have questions answered when you have them, then it's a good idea to hand it over to them.
User avatar
WoodSpinner
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Re: Vanguard Personal Advisor Service Results

Post by WoodSpinner »

herrbshaw wrote: Tue Jan 25, 2022 7:51 pm
WoodSpinner wrote: Tue Jan 25, 2022 9:33 am
herrbshaw wrote: Mon Jan 24, 2022 9:10 pm Hi all,

I just received my results for my PAS consultation and I'd like some feedback and direction. I'm behind the 8 ball in investing. I have 130K currently in VASGX. I'm 60 and need an agressive allocation to make up for lost time. I put in 30k per year, tax-deferred, into VASGX right now. I plan to do this for another 10 years. I'd like to have near 1M before I hang it up when I'm 70. I'd like I'm considering letting PAS invest it for me. Here's what they recommended:

Years until Distribution

Years 11-9 9-6 6-3 3-0
Stocks 75% 70% 65% 60%
Bonds 25% 30% 35% 40%

Years of remaining distribution

Years 20 20-15 15-0
Stocks 60% 55% 50%
Bonds 40% 45% 50%

Suggested Funds: VTI (45%), VXUS (30%), BND (17%), BNDX (8%)

Questions:
1. Is it smart to do a 50-50 split like they are suggesting deep into retirement? Does the above plan sound like a solid recommendation?
2. I'm considering doing a 3 or 4 fund Bogle Portfolio instead of PAS. If so, what should my allocations be in each fund?
4. What should my glide path be?

I feel very confident I could manage it myself but I'm unsure of the allocations and the glide path I should take.
Herbshaw,

The recommendation seems reasonable to me and the assets suggested are very similar to my portfolio.

The allocations also seem reasonable on the surface but I have no knowledge of your overall goals, financial picture etc.

The Red Flag for me is your desire to ramp up RISK to help make up for lost time. Personally, I would not do that, too much chance of something to go wrong, especially in today’s market. The risks are very Real at all times but feel elevated at this point as we seem to be heading for a correction and rising rates.

Just my $.02 since you asked….

WoodSpinner
I'm inclined to agree with you. Assuming I reset my expectation to a nest egg of 750k by age 72, What allocation would you start off with and how would you ramp it down to age 72? I'm 61 now.
There is no definitive answer….

Did the PAS advisor provide you a graph of probable outcomes. Why are you so hesitant in accepting their advice?

What happens if you don’t hit the $700k? What if it’s $100k? $500k?

Can you work longer? Spend less?

Suggest you develop some plans based on various possible outcomes.

I think you will find this type of realistic planning is vital for an informed decision.

WoodSpinner
WoodSpinner
tj
Posts: 9366
Joined: Wed Dec 23, 2009 11:10 pm

Re: Vanguard Personal Advisor Service Results

Post by tj »

Elysium wrote: Tue Jan 25, 2022 10:16 pm
herrbshaw wrote: Tue Jan 25, 2022 7:47 pm Thank you for your comments. Very helpful. Am I hearing you say PAS would be a good move for me?
Yes, if you like to have someone else take care of the day to day operation and have questions answered when you have them, then it's a good idea to hand it over to them.
What "day to day" is involved with your portfolio? I cant' say I look at mine on a daily basis.
Topic Author
herrbshaw
Posts: 14
Joined: Mon Jan 24, 2022 8:09 pm

Re: Vanguard Personal Advisor Service Results

Post by herrbshaw »

dbr wrote: Tue Jan 25, 2022 9:20 pm
herrbshaw wrote: Tue Jan 25, 2022 9:11 pm
tibbitts wrote: Tue Jan 25, 2022 8:42 pm
Escapevelocity wrote: Tue Jan 25, 2022 8:22 pm
herrbshaw wrote: Tue Jan 25, 2022 7:55 pm

We do have an emergency HSA fund that covers our medical deductable for two years in case of calamity. I am already receiving my teacher's pension to the tune of $3,500 a month so I don't have to worry about being unemployed. We have other income coming and a savings in cash as well.
Ok those are hugely important especially the pension. You should include stuff like that in the setup of your question since it affects the type of risk you need to take with your portfolio.
We get that a lot in questions like this: after a couple of pages we get "incidentally we also have six-figures in other annual income...", like that's something everybody has.
I'm sorry. I didn't mean it to be like that.
Don't worry. These things have to be worked through. I myself am a little more concerned that VPAS does not appear to have communicated a plan. One of the most important things they should do for a person is explain how they are arriving at what they recommend and how it supports what you want to do. This would not be the first thread where it they don't seem to have made clear why they have recommended something. And, again, the investment plan they outlined does not seem crazy at all.
I did get a plan from VPAS and it showed possible growth outcomes and ranges. They also know everything I've shared here. I told them that I wanted an "agressive" portfolio so I guess that's what I got. I'm just not so sure based on what I'm reading in this thread that I should be so agressive due to the fact of my age and risk factors. I am heeding the advice some are giving telling me that I can't make up lack of saving with an agressive portfolio. Duly noted. It is a very agressive portfolio VPAS put together based on my responses but maybe i should dial it down some. What I do have in my favor is that we wouldn't be eating cat food in 10 years even if I didn't have one cent to my name in Vanguard. But we do! 130K right now and increasing with our contributions. So fundamentally I guess what I'm asking is: How agressive should I be based on what you know about my situation so far?
Last edited by herrbshaw on Wed Jan 26, 2022 10:23 am, edited 1 time in total.
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: Vanguard Personal Advisor Service Results

Post by dbr »

herrbshaw wrote: Wed Jan 26, 2022 9:41 am
dbr wrote: Tue Jan 25, 2022 9:20 pm
herrbshaw wrote: Tue Jan 25, 2022 9:11 pm
tibbitts wrote: Tue Jan 25, 2022 8:42 pm
Escapevelocity wrote: Tue Jan 25, 2022 8:22 pm

Ok those are hugely important especially the pension. You should include stuff like that in the setup of your question since it affects the type of risk you need to take with your portfolio.
We get that a lot in questions like this: after a couple of pages we get "incidentally we also have six-figures in other annual income...", like that's something everybody has.
I'm sorry. I didn't mean it to be like that.
Don't worry. These things have to be worked through. I myself am a little more concerned that VPAS does not appear to have communicated a plan. One of the most important things they should do for a person is explain how they are arriving at what they recommend and how it supports what you want to do. This would not be the first thread where it they don't seem to have made clear why they have recommended something. And, again, the investment plan they outlined does not seem crazy at all.
I did get a plan from VPAS and it showed possible growth outcomes and ranges. They also know everything I've shared here. I told them that I wanted an "agressive" portfolio so I guess that's what I got. I'm just not so sure I should be so agressive anymore based primarily based on my age. It is a very agressive portfolio they have put together.
In planning I would consider first expressing objectives and then looking at how well different alternatives fit those objectives. Asking for a portfolio at any particular level of "aggressive" would not enter the discussion. The criterion of achieving a portfolio value of $1M would also seem a little artificial unless it is part of a path to something important.

A good thought process for how much risk to take is presented by Swedroe in some of his books. It is the framework if need, ability, and willingness to take risk. Need means necessary to meet objectives. Ability means resources to manage if bad outcomes materialize. Willingness is the psychological ability to tolerate ups and downs in investments. Generally the need part is analyzed by modeling the outcome. VPAS has probably shown you that kind of result. What they may not have shown you is the outcome for alternatives that are not as risky so that you can decide what to do.

An action item is to go back and express discomfort with the high stock allocations and see if they can consider less risky portfolios and still meet your needs. Your needs would probably be expressed as being able to support a certain level of spending in retirement with little chance of failure. But needs can involve other things as well, such as desires to leave a legacy, and so on. VPAS is supposed to be explicit at aligning the plan with the objectives. That is kind of a definition of planning.
Topic Author
herrbshaw
Posts: 14
Joined: Mon Jan 24, 2022 8:09 pm

Re: Vanguard Personal Advisor Service Results

Post by herrbshaw »

dbr wrote: Wed Jan 26, 2022 9:52 am
herrbshaw wrote: Wed Jan 26, 2022 9:41 am
dbr wrote: Tue Jan 25, 2022 9:20 pm
herrbshaw wrote: Tue Jan 25, 2022 9:11 pm
tibbitts wrote: Tue Jan 25, 2022 8:42 pm
We get that a lot in questions like this: after a couple of pages we get "incidentally we also have six-figures in other annual income...", like that's something everybody has.
I'm sorry. I didn't mean it to be like that.
Don't worry. These things have to be worked through. I myself am a little more concerned that VPAS does not appear to have communicated a plan. One of the most important things they should do for a person is explain how they are arriving at what they recommend and how it supports what you want to do. This would not be the first thread where it they don't seem to have made clear why they have recommended something. And, again, the investment plan they outlined does not seem crazy at all.
I did get a plan from VPAS and it showed possible growth outcomes and ranges. They also know everything I've shared here. I told them that I wanted an "agressive" portfolio so I guess that's what I got. I'm just not so sure I should be so agressive anymore based primarily based on my age. It is a very agressive portfolio they have put together.
In planning I would consider first expressing objectives and then looking at how well different alternatives fit those objectives. Asking for a portfolio at any particular level of "aggressive" would not enter the discussion. The criterion of achieving a portfolio value of $1M would also seem a little artificial unless it is part of a path to something important.

A good thought process for how much risk to take is presented by Swedroe in some of his books. It is the framework if need, ability, and willingness to take risk. Need means necessary to meet objectives. Ability means resources to manage if bad outcomes materialize. Willingness is the psychological ability to tolerate ups and downs in investments. Generally the need part is analyzed by modeling the outcome. VPAS has probably shown you that kind of result. What they may not have shown you is the outcome for alternatives that are not as risky so that you can decide what to do.

An action item is to go back and express discomfort with the high stock allocations and see if they can consider less risky portfolios and still meet your needs. Your needs would probably be expressed as being able to support a certain level of spending in retirement with little chance of failure. But needs can involve other things as well, such as desires to leave a legacy, and so on. VPAS is supposed to be explicit at aligning the plan with the objectives. That is kind of a definition of planning.
Thank you for your response. I agree the 1M is artificial. I hate to say it but my objective to simply get as big of a nest egg as I can to protect us in case of time of need. That objective will be limited to what we now have (130k) and what we can put in yearly for the next 10 years (30k per year). I want that to grow as big as I can without taking extreme risk. Your idea of need, ability and willingness are helpful. When I looked at the Vanguard pland and the allocations they suggested above, it seemed REALLY agressive and it shocked me a bit. Based on what people are saying about the reality of risk, I might be playing this too agressively. I think I will go back to VPAS to revisit this. I told Vanguard I wanted an agressive portfolio and that's what they gave me.
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