35 yr old new to VTSAX and Vanguard itself

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glashutte
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Joined: Wed Aug 10, 2022 1:40 pm

35 yr old new to VTSAX and Vanguard itself

Post by glashutte »

Hello All,

New here but long time reader. However my mind doesn't quite understand finance like many others here and need guidance on how to invest.
May I kindly ask some recommendations for what to do? Details are below, any input would be appreciate as a starting point of how to think about doing this.

Married - dual income is $500,000/year
Net worth: $500,000 liquid in savings (all new money as our businesses just started)
Plan: Invest $500,000 this month in 1 lump sum into 100% VTSAX
+invest $15,000 into VTSAX every month for the next 30 years
Goal: Passive fund of $25M in Vanguard to leave for grandchildren by the time I am 65 (assuming 8% annual returns averaged over 30 years)


Emergency fund: 3 month emergency fund in savings
Debt: Mortgage that I pay $6000/month including all tax and fees. Interest rate 2.25%, 30 yr conventional and just started it August 2021.
Tax filing status: Married filing jointly
Tax rate: 35%
Age: 35
Desired asset allocation: 100% domestic stock


Current Portfolio: $660,000
75% Savings Account (no interest just sits there)
5% SEP IRA 100% bonds
20% TSP 100% C Fund

Desired allocation:
80% Vanguard account at 100% stocks
20% TSP at 100% C Fund
I will not be needing these accounts when I pass, and think of it as grandchildren's funds.


Thanks a lot for everyone's time and consideration to help,
Glashutte
Last edited by glashutte on Wed Aug 10, 2022 3:54 pm, edited 1 time in total.
Doctor Rhythm
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by Doctor Rhythm »

Start here.

Welcome to the forum.

You’re in a good spot in that you have a high income, and a fairly large amount saved up. Thus, you should be able to meet your own financial needs easily.

If you’ll permit me to say, the specific goal of $25M in 30 years by age 65 for non-existent grandchildren seems rather arbitrary and speculative. What if there aren’t grandchildren or there is just a single grandchild? And why $25M — isn’t $10 or 20M more than adequate? This matters in that the goal you set will drive how much risk you need or are able to take. Achieving 8% growth comes with a lot of risk, which you might not need to take.
KneeReplacementTutor
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by KneeReplacementTutor »

Glashutte welcome to Bogleheads.

You haven't given enough details about your entire financial picture to really get any serious feedback.

Try reading this guide and following its outline to solve that problem:

viewtopic.php?f=1&t=6212

:happy
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vineviz
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by vineviz »

glashutte wrote: Wed Aug 10, 2022 1:51 pm Hello All,

New here but long time reader. However my mind doesn't quite understand finance like many others here and need guidance on how to invest.
May I kindly ask some recommendations for what to do? Details are below, any input would be appreciate as a starting point of how to think about doing this.
Married - dual income is $500,000/year
Net worth: $500,000 liquid in savings (all new money as our businesses just started)
Plan: Invest $500,000 this month in 1 lump sum into 100% VTSAX
+invest $15,000 into VTSAX every month for the next 30 years
Goal: Passive fund of $25M in Vanguard to leave for grandchildren by the time I am 65 (assuming 8% annual returns averaged over 30 years)
Current Situation: Besides my mortgage, I have no other liabilities and can comfortably invest $15,000/month

Thanks!
Glashutte
I'm doing the math: $500k in income and $15k/month in savings = annual expenses of $320k.

If that's right, then it strikes me as possibly imprudent to put ALL of your liquid savings into a stock fund (much less one that only invests in stocks from one country).

For the lumpsum investment I'd consider $250k each in:

Vanguard Short-Term Inflation-Protected Securities Index Fund Admiral Shares (VTAPX)
Vanguard Total World Stock Index Fund Admiral Shares (VTWAX)

Subsequent investments could possibly go into VTWAX, but as others point out we don't know nearly enough to be sure.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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GMCZ71
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by GMCZ71 »

You might think about a tax loss partner(s) and doing the buys quarterly to avoid wash sales.

Example $500k now into Vtsax and monthlys wait till April-June-Sept- Dec. When market drops move to SP500 or other then back on the next drop.
John | * Friends and family and money | * What you recommend will have periods of underperformance. You will be blamed. | * You avoid the suspicion of "self-serving." by Taylor Larimore
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glashutte
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by glashutte »

Thanks all.
I will take advice and read this link to further detail my scenario
viewtopic.php?f=1&t=6212
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Billy C
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by Billy C »

Hello and welcome to the forum!

I like your plan. It’s pretty much what I did myself and I am pleased with the results after 25 years.

Starting relatively young gives you the great advantage of time, which moderates risk and increases reward. Dollar cost averaging a fixed amount every month is a strong way to capture the market return. You may even find yourself enjoying downturns in such a scenario as they are the great way to build wealth. This all assumes you have the conviction to stay the course, which is paramount.

Above all your plan has the power and elegance of simplicity and low cost. Don’t underestimate how important this is.

John Bogle was never a fan of investing outside the USA, and I agree with him. Even if you only invest in the Total Stock Market Index Fund, approximately half of the earnings will be from operations outside the US, so you are still diversified. There is no need to accept the added currency risk of investing in foreign funds. That was Bogle’s point.

Your plan is sound. Stick to it and I have no doubt you will be successful!
“When there are multiple solutions to a problem, choose the simplest one.” ― John C. Bogle
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Wiggums
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by Wiggums »

You won’t go wrong with scheduling the monthly purchases. We have scheduled money transfers and purchases from the brokers website for over 25 years. Never had an issue.

I’d do the same with the grandchildren’s fund. You can stop the scheduled transfer after you transfer 25k or when the balance hits 25k. Whichever was your intention.
"I started with nothing and I still have most of it left."
tibbitts
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by tibbitts »

glashutte wrote: Wed Aug 10, 2022 1:51 pm +invest $15,000 into VTSAX every month for the next 30 years
Goal: Passive fund of $25M in Vanguard to leave for grandchildren by the time I am 65 (assuming 8% annual returns averaged over 30 years)
I'm trying to do the math here: you're 35yrs old now and have grandchildren?
Topic Author
glashutte
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Joined: Wed Aug 10, 2022 1:40 pm

Re: 35 yr old new to VTSAX and Vanguard itself

Post by glashutte »

GMCZ71 wrote: Wed Aug 10, 2022 2:29 pm You might think about a tax loss partner(s) and doing the buys quarterly to avoid wash sales.

Example $500k now into Vtsax and monthlys wait till April-June-Sept- Dec. When market drops move to SP500 or other then back on the next drop.
Pardon my ignorance, do you mind expanding on this or giving guidance on what this topic is called so I can do research?
Topic Author
glashutte
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Joined: Wed Aug 10, 2022 1:40 pm

Re: 35 yr old new to VTSAX and Vanguard itself

Post by glashutte »

tibbitts wrote: Wed Aug 10, 2022 3:44 pm
glashutte wrote: Wed Aug 10, 2022 1:51 pm +invest $15,000 into VTSAX every month for the next 30 years
Goal: Passive fund of $25M in Vanguard to leave for grandchildren by the time I am 65 (assuming 8% annual returns averaged over 30 years)
I'm trying to do the math here: you're 35yrs old now and have grandchildren?
Great question! I have children, but no grandkids. Of course, that part of the dream to have grandkids. Also I do not want to pass money onto my current children due to personal beliefs.
Topic Author
glashutte
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Joined: Wed Aug 10, 2022 1:40 pm

Re: 35 yr old new to VTSAX and Vanguard itself

Post by glashutte »

vineviz wrote: Wed Aug 10, 2022 2:23 pm
glashutte wrote: Wed Aug 10, 2022 1:51 pm Hello All,

New here but long time reader. However my mind doesn't quite understand finance like many others here and need guidance on how to invest.
May I kindly ask some recommendations for what to do? Details are below, any input would be appreciate as a starting point of how to think about doing this.
Married - dual income is $500,000/year
Net worth: $500,000 liquid in savings (all new money as our businesses just started)
Plan: Invest $500,000 this month in 1 lump sum into 100% VTSAX
+invest $15,000 into VTSAX every month for the next 30 years
Goal: Passive fund of $25M in Vanguard to leave for grandchildren by the time I am 65 (assuming 8% annual returns averaged over 30 years)
Current Situation: Besides my mortgage, I have no other liabilities and can comfortably invest $15,000/month

Thanks!
Glashutte
I'm doing the math: $500k in income and $15k/month in savings = annual expenses of $320k.

If that's right, then it strikes me as possibly imprudent to put ALL of your liquid savings into a stock fund (much less one that only invests in stocks from one country).

For the lumpsum investment I'd consider $250k each in:

Vanguard Short-Term Inflation-Protected Securities Index Fund Admiral Shares (VTAPX)
Vanguard Total World Stock Index Fund Admiral Shares (VTWAX)

Subsequent investments could possibly go into VTWAX, but as others point out we don't know nearly enough to be sure.
Thank you for the input.
Do you mind expanding what the benefits of VTAPX will be? Is it similar to bonds where it holds protection for my fund?
What are your thoughts on VTWAX vs VTSAX?
mikejuss
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by mikejuss »

Cool idea, OP.

Starting with a lump-sum $500,000 investment in VTSAX now (which I highly recommend), and then buying $15,000 of VTSAX for the next 30 years, you'll need a rate of return of nearly 8% to reach your goal of $25 million. That may not happen.

Also, with an income of $500,000, you're netting about $25,000 a month. Can you live on just $10,000 a month (with a monthly mortgage payment of $6,000)?
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
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vineviz
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by vineviz »

glashutte wrote: Wed Aug 10, 2022 3:59 pm Thank you for the input.
Do you mind expanding what the benefits of VTAPX will be? Is it similar to bonds where it holds protection for my fund?
What are your thoughts on VTWAX vs VTSAX?
The main benefit of not being 100% in stocks right away is that you're protecting your household from an adverse financial shock. Right now your income is $500k and expenses are $320k. What do you do if your income drops to $200k for six months? For 12 months? Or your expenses unexpectedly rise to $600k for year.

Furthermore it sounds to me like you don't have a lot of investing experience. A radical jump from 100% cash to 100% stocks seems .... extreme and rapid. In my experience, that can be dangerous from a behavioral or psychological perspective. I'd slow down.

As for VTWAX vs VTSAX, the broad expert consensus is that single country concentration is represents an unnecessary and uncompensated risk. VTWAX is an easy and inexpensive way to get global diversification in a single fund.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
Pinotage
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by Pinotage »

glashutte wrote: Wed Aug 10, 2022 3:57 pm
tibbitts wrote: Wed Aug 10, 2022 3:44 pm
glashutte wrote: Wed Aug 10, 2022 1:51 pm +invest $15,000 into VTSAX every month for the next 30 years
Goal: Passive fund of $25M in Vanguard to leave for grandchildren by the time I am 65 (assuming 8% annual returns averaged over 30 years)
I'm trying to do the math here: you're 35yrs old now and have grandchildren?
Great question! I have children, but no grandkids. Of course, that part of the dream to have grandkids. Also I do not want to pass money onto my current children due to personal beliefs.
So, did your children flush some turtle shells down the toilet or something? :P

But in all seriousness, I am curious about this.

OP - can you explain further?

I’ve seen sentiments like this posted a few times and it genuinely intrigues me.

It is surprising that someone would not want to pass money to their children due to personal beliefs, but at the same time is interested in amassing 2.5% of a billion dollars for grandchildren that do not exist yet.
mikejuss
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by mikejuss »

Pinotage wrote: Wed Aug 10, 2022 4:59 pm
glashutte wrote: Wed Aug 10, 2022 3:57 pm
tibbitts wrote: Wed Aug 10, 2022 3:44 pm
glashutte wrote: Wed Aug 10, 2022 1:51 pm +invest $15,000 into VTSAX every month for the next 30 years
Goal: Passive fund of $25M in Vanguard to leave for grandchildren by the time I am 65 (assuming 8% annual returns averaged over 30 years)
I'm trying to do the math here: you're 35yrs old now and have grandchildren?
Great question! I have children, but no grandkids. Of course, that part of the dream to have grandkids. Also I do not want to pass money onto my current children due to personal beliefs.
So, did your children flush some turtle shells down the toilet or something? :P

But in all seriousness, I am curious about this.

OP - can you explain further?

I’ve seen sentiments like this posted a few times and it genuinely intrigues me.

It is surprising that someone would not want to pass money to their children due to personal beliefs, but at the same time is interested in amassing 2.5% of a billion dollars for grandchildren that do not exist yet.
So many questions here...
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Topic Author
glashutte
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by glashutte »

vineviz wrote: Wed Aug 10, 2022 4:30 pm
glashutte wrote: Wed Aug 10, 2022 3:59 pm Thank you for the input.
Do you mind expanding what the benefits of VTAPX will be? Is it similar to bonds where it holds protection for my fund?
What are your thoughts on VTWAX vs VTSAX?
The main benefit of not being 100% in stocks right away is that you're protecting your household from an adverse financial shock. Right now your income is $500k and expenses are $320k. What do you do if your income drops to $200k for six months? For 12 months? Or your expenses unexpectedly rise to $600k for year.

Furthermore it sounds to me like you don't have a lot of investing experience. A radical jump from 100% cash to 100% stocks seems .... extreme and rapid. In my experience, that can be dangerous from a behavioral or psychological perspective. I'd slow down.

As for VTWAX vs VTSAX, the broad expert consensus is that single country concentration is represents an unnecessary and uncompensated risk. VTWAX is an easy and inexpensive way to get global diversification in a single fund.
Regarding 100% stocks - being new here, I don't know if our definition of expenses are the same.
My expenses from A to Z including mortgage is roughly $108k/year.
Currently our dual income is $500k but goal is to invest $15k/month into VTSAX/VTWAX.
$500k - $108k expenses - $180k invested($15k x 12months) = $212k left over.

If our income drops radically, we would:
-Work more days
-Invest less into our stock funds

I'm here to learn and would love to hear your thoughts as I don't want to miss something and severely miscalculate.

It is correct I have very little investing experience but am ready (at least I think) to invest 100% cash to 100% stocks. But then again, I need to be certain and confident and hopefully will gain more insight to this plan by being on this forum : :happy

About VTWAX - this is a fairly new fund from what I see. Does being new change its dependability long term? I looked into VTIAX but am not impressed with the gains, and that is why I am turned off by international stocks (because of VTIAX).
mikejuss
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by mikejuss »

glashutte wrote: Wed Aug 10, 2022 6:13 pm Regarding 100% stocks - being new here, I don't know if our definition of expenses are the same.
My expenses from A to Z including mortgage is roughly $108k/year.
Currently our dual income is $500k but goal is to invest $15k/month into VTSAX/VTWAX.
$500k - $108k expenses - $180k invested($15k x 12months) = $212k left over.
Do you pay taxes? If not, tell me your secret. :wink:
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
tibbitts
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by tibbitts »

glashutte wrote: Wed Aug 10, 2022 6:13 pm About VTWAX - this is a fairly new fund from what I see. Does being new change its dependability long term? I looked into VTIAX but am not impressed with the gains, and that is why I am turned off by international stocks (because of VTIAX).
The problem with this thinking ("not impressed with the gains") is that a year or so ago it would have led you to invest in a FAANG,Tesla,etc. concentrated growth fund vs. VTSAX.
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GMCZ71
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by GMCZ71 »

glashutte wrote: Wed Aug 10, 2022 3:56 pm
GMCZ71 wrote: Wed Aug 10, 2022 2:29 pm You might think about a tax loss partner(s) and doing the buys quarterly to avoid wash sales.

Example $500k now into Vtsax and monthlys wait till April-June-Sept- Dec. When market drops move to SP500 or other then back on the next drop.
Pardon my ignorance, do you mind expanding on this or giving guidance on what this topic is called so I can do research?
Bogleheads wiki https://www.bogleheads.org/wiki/Tax_loss_harvesting
You store up losses to offset gains later.
Lower cost basis by moving between tax loss partners on the market dips while maintaining the same AA.
To avoid a wash sale, IRS won't allow the tax deduction. You can't buy 30 days before the sale, or buy back the same fund 30 days after the loss. Your monthly buys will cause this, also turn off reinvesting for taxable account and use different funds in IRA's and 401's.
If you sell a fund and your spouse or a corporation you control buys substantially identical stock, you also have a wash sale.
John | * Friends and family and money | * What you recommend will have periods of underperformance. You will be blamed. | * You avoid the suspicion of "self-serving." by Taylor Larimore
lostdog
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by lostdog »

glashutte wrote: Wed Aug 10, 2022 6:13 pm
vineviz wrote: Wed Aug 10, 2022 4:30 pm
glashutte wrote: Wed Aug 10, 2022 3:59 pm Thank you for the input.
Do you mind expanding what the benefits of VTAPX will be? Is it similar to bonds where it holds protection for my fund?
What are your thoughts on VTWAX vs VTSAX?
The main benefit of not being 100% in stocks right away is that you're protecting your household from an adverse financial shock. Right now your income is $500k and expenses are $320k. What do you do if your income drops to $200k for six months? For 12 months? Or your expenses unexpectedly rise to $600k for year.

Furthermore it sounds to me like you don't have a lot of investing experience. A radical jump from 100% cash to 100% stocks seems .... extreme and rapid. In my experience, that can be dangerous from a behavioral or psychological perspective. I'd slow down.

As for VTWAX vs VTSAX, the broad expert consensus is that single country concentration is represents an unnecessary and uncompensated risk. VTWAX is an easy and inexpensive way to get global diversification in a single fund.
Regarding 100% stocks - being new here, I don't know if our definition of expenses are the same.
My expenses from A to Z including mortgage is roughly $108k/year.
Currently our dual income is $500k but goal is to invest $15k/month into VTSAX/VTWAX.
$500k - $108k expenses - $180k invested($15k x 12months) = $212k left over.

If our income drops radically, we would:
-Work more days
-Invest less into our stock funds

I'm here to learn and would love to hear your thoughts as I don't want to miss something and severely miscalculate.

It is correct I have very little investing experience but am ready (at least I think) to invest 100% cash to 100% stocks. But then again, I need to be certain and confident and hopefully will gain more insight to this plan by being on this forum : :happy

About VTWAX - this is a fairly new fund from what I see. Does being new change its dependability long term? I looked into VTIAX but am not impressed with the gains, and that is why I am turned off by international stocks (because of VTIAX).
I suggest you contact Vanguard Personal Advisory Service or a fee only advisor to get you started.

Based on your bolded comment, you need additional education when it comes to diversified index investing. What you're falling for is called "performance chasing" and "recency bias". Many on this forum follow this bad behavior and try to rationalize it. Be careful when dealing with some of these forum members.

Once you get your arms around this whole thing and understand, you can cut ties with your advisor and do it yourself. :beer
Last edited by lostdog on Fri Aug 12, 2022 1:15 pm, edited 1 time in total.
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mikejuss
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by mikejuss »

The math in the OP makes no sense.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Topic Author
glashutte
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by glashutte »

lostdog wrote: Fri Aug 12, 2022 1:01 pm
glashutte wrote: Wed Aug 10, 2022 6:13 pm
vineviz wrote: Wed Aug 10, 2022 4:30 pm
glashutte wrote: Wed Aug 10, 2022 3:59 pm Thank you for the input.
Do you mind expanding what the benefits of VTAPX will be? Is it similar to bonds where it holds protection for my fund?
What are your thoughts on VTWAX vs VTSAX?
The main benefit of not being 100% in stocks right away is that you're protecting your household from an adverse financial shock. Right now your income is $500k and expenses are $320k. What do you do if your income drops to $200k for six months? For 12 months? Or your expenses unexpectedly rise to $600k for year.

Furthermore it sounds to me like you don't have a lot of investing experience. A radical jump from 100% cash to 100% stocks seems .... extreme and rapid. In my experience, that can be dangerous from a behavioral or psychological perspective. I'd slow down.

As for VTWAX vs VTSAX, the broad expert consensus is that single country concentration is represents an unnecessary and uncompensated risk. VTWAX is an easy and inexpensive way to get global diversification in a single fund.
Regarding 100% stocks - being new here, I don't know if our definition of expenses are the same.
My expenses from A to Z including mortgage is roughly $108k/year.
Currently our dual income is $500k but goal is to invest $15k/month into VTSAX/VTWAX.
$500k - $108k expenses - $180k invested($15k x 12months) = $212k left over.

If our income drops radically, we would:
-Work more days
-Invest less into our stock funds

I'm here to learn and would love to hear your thoughts as I don't want to miss something and severely miscalculate.

It is correct I have very little investing experience but am ready (at least I think) to invest 100% cash to 100% stocks. But then again, I need to be certain and confident and hopefully will gain more insight to this plan by being on this forum : :happy

About VTWAX - this is a fairly new fund from what I see. Does being new change its dependability long term? I looked into VTIAX but am not impressed with the gains, and that is why I am turned off by international stocks (because of VTIAX).
I suggest you do contact Vanguard Personal Advisory Service or a fee only advisor to get you started.

Based on your bolded comment, you need additional education when it comes to diversified index investing. What you're falling for is called "performance chasing" and "recency bias". Many on this forum follow this bad behavior and try to rationalize it. Be careful when dealing with some of these forum members.

Once you get your arms around this whole thing and understand, you can cut ties with your advisor and do it yourself. :beer

Thank you. Upon further research I think I am noticing these trends too. Do you have any recommendations on long time Bogleheads who have accumulated high net worth through Bogle philosophies and have good solid advice? If so, can you pls PM me so I can search their posts/threads?
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glashutte
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by glashutte »

mikejuss wrote: Fri Aug 12, 2022 1:05 pm The math in the OP makes no sense.
What part of it doesn't make sense?
I'm sincerely asking as this is my first post trying to organize all of this, and am here to make things make sense.
mikejuss
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by mikejuss »

glashutte wrote: Fri Aug 12, 2022 1:10 pm
mikejuss wrote: Fri Aug 12, 2022 1:05 pm The math in the OP makes no sense.
What part of it doesn't make sense?
I'm sincerely asking as this is my first post trying to organize all of this, and am here to make things make sense.
Is $500,000 a year your gross or net income? If it's your gross income, you're netting about half to 60% of $500,000 (roughly $20,000-$25,000 a month). Investing $15,000 a month is going to be a stretch, with a mortgage of $6,000 a month.
Last edited by mikejuss on Fri Aug 12, 2022 1:17 pm, edited 5 times in total.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
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Taylor Larimore
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by Taylor Larimore »

Glashutte:

Take a look at the many benefits of The Three-Fund Portfolio.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "The Three-Fund Portfolio will help you to develop a sound asset allocation strategy, make smart investment selections, and guide the implementation of your plan."
"Simplicity is the master key to financial success." -- Jack Bogle
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glashutte
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by glashutte »

mikejuss wrote: Fri Aug 12, 2022 1:12 pm
glashutte wrote: Fri Aug 12, 2022 1:10 pm
mikejuss wrote: Fri Aug 12, 2022 1:05 pm The math in the OP makes no sense.
What part of it doesn't make sense?
I'm sincerely asking as this is my first post trying to organize all of this, and am here to make things make sense.
Is $500,000 a year your gross or net income? If it's your gross income, you're netting about half to 60% of $500,000 (roughly $20,000-$25,000 a month). Investing $15,000 a month is going to be a stretch, with a mortgage of $6,000 a month.
$500k take home post tax. I live in Texas and file married jointly. Our net take home is somewhere around 70% something like that (never taken a hard think about taxes, I just pay it).
mikejuss
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by mikejuss »

glashutte wrote: Fri Aug 12, 2022 1:26 pm
mikejuss wrote: Fri Aug 12, 2022 1:12 pm
glashutte wrote: Fri Aug 12, 2022 1:10 pm
mikejuss wrote: Fri Aug 12, 2022 1:05 pm The math in the OP makes no sense.
What part of it doesn't make sense?
I'm sincerely asking as this is my first post trying to organize all of this, and am here to make things make sense.
Is $500,000 a year your gross or net income? If it's your gross income, you're netting about half to 60% of $500,000 (roughly $20,000-$25,000 a month). Investing $15,000 a month is going to be a stretch, with a mortgage of $6,000 a month.
$500k take home post tax. I live in Texas and file married jointly. Our net take home is somewhere around 70% something like that (never taken a hard think about taxes, I just pay it).
What is your gross income?
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
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glashutte
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by glashutte »

mikejuss wrote: Fri Aug 12, 2022 1:28 pm
glashutte wrote: Fri Aug 12, 2022 1:26 pm
mikejuss wrote: Fri Aug 12, 2022 1:12 pm
glashutte wrote: Fri Aug 12, 2022 1:10 pm
mikejuss wrote: Fri Aug 12, 2022 1:05 pm The math in the OP makes no sense.
What part of it doesn't make sense?
I'm sincerely asking as this is my first post trying to organize all of this, and am here to make things make sense.
Is $500,000 a year your gross or net income? If it's your gross income, you're netting about half to 60% of $500,000 (roughly $20,000-$25,000 a month). Investing $15,000 a month is going to be a stretch, with a mortgage of $6,000 a month.
$500k take home post tax. I live in Texas and file married jointly. Our net take home is somewhere around 70% something like that (never taken a hard think about taxes, I just pay it).
What is your gross income?
Somewhere around $650-700k, small part of it from disability. However it is changing - just 2 years ago income was half the amount. We started a business 2 years ago during COVID and that is where we can finally grow wealth.
ClassII
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by ClassII »

If you're new to investing don't get wrapped around the axle with some of the talk here about tax loss harvesting and such. That's pretty advanced and requires a bit of planning if you are doing this all yourself. Your plan is solid and I'd leave it at that for a good long while. Being as young as you are you can go 100% VTSAX and ride out any market fluctuations and reach retirement with a fabulous portfolio. Yes in a few years you may want to start adding bonds and whatnot to reach a balanced (lets say, 60/40 split) portfolio to safely retire no matter the market conditions. Same time, if you're going to have $25M in the bank by then, what does it really matter?

TL;DR: Your plan is great for now as is. Don't listen to the more complicated strategies people are proposing.
mikejuss
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by mikejuss »

glashutte wrote: Fri Aug 12, 2022 1:40 pm
mikejuss wrote: Fri Aug 12, 2022 1:28 pm
glashutte wrote: Fri Aug 12, 2022 1:26 pm
mikejuss wrote: Fri Aug 12, 2022 1:12 pm
glashutte wrote: Fri Aug 12, 2022 1:10 pm

What part of it doesn't make sense?
I'm sincerely asking as this is my first post trying to organize all of this, and am here to make things make sense.
Is $500,000 a year your gross or net income? If it's your gross income, you're netting about half to 60% of $500,000 (roughly $20,000-$25,000 a month). Investing $15,000 a month is going to be a stretch, with a mortgage of $6,000 a month.
$500k take home post tax. I live in Texas and file married jointly. Our net take home is somewhere around 70% something like that (never taken a hard think about taxes, I just pay it).
What is your gross income?
Somewhere around $650-700k, small part of it from disability. However it is changing - just 2 years ago income was half the amount. We started a business 2 years ago during COVID and that is where we can finally grow wealth.
Hmm--so you collect disability and also earn $700,000 a year?
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
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glashutte
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by glashutte »

mikejuss wrote: Fri Aug 12, 2022 2:20 pm
glashutte wrote: Fri Aug 12, 2022 1:40 pm
mikejuss wrote: Fri Aug 12, 2022 1:28 pm
glashutte wrote: Fri Aug 12, 2022 1:26 pm
mikejuss wrote: Fri Aug 12, 2022 1:12 pm

Is $500,000 a year your gross or net income? If it's your gross income, you're netting about half to 60% of $500,000 (roughly $20,000-$25,000 a month). Investing $15,000 a month is going to be a stretch, with a mortgage of $6,000 a month.
$500k take home post tax. I live in Texas and file married jointly. Our net take home is somewhere around 70% something like that (never taken a hard think about taxes, I just pay it).
What is your gross income?
Somewhere around $650-700k, small part of it from disability. However it is changing - just 2 years ago income was half the amount. We started a business 2 years ago during COVID and that is where we can finally grow wealth.
Hmm--so you collect disability and also earn $700,000 a year?
For broken body parts and injuries during war, yes a small income is given. Very small. Is there an issue?
gtrplayer
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by gtrplayer »

mikejuss wrote: Wed Aug 10, 2022 5:12 pm
Pinotage wrote: Wed Aug 10, 2022 4:59 pm
glashutte wrote: Wed Aug 10, 2022 3:57 pm
tibbitts wrote: Wed Aug 10, 2022 3:44 pm
glashutte wrote: Wed Aug 10, 2022 1:51 pm +invest $15,000 into VTSAX every month for the next 30 years
Goal: Passive fund of $25M in Vanguard to leave for grandchildren by the time I am 65 (assuming 8% annual returns averaged over 30 years)
I'm trying to do the math here: you're 35yrs old now and have grandchildren?
Great question! I have children, but no grandkids. Of course, that part of the dream to have grandkids. Also I do not want to pass money onto my current children due to personal beliefs.
So, did your children flush some turtle shells down the toilet or something? :P

But in all seriousness, I am curious about this.

OP - can you explain further?

I’ve seen sentiments like this posted a few times and it genuinely intrigues me.

It is surprising that someone would not want to pass money to their children due to personal beliefs, but at the same time is interested in amassing 2.5% of a billion dollars for grandchildren that do not exist yet.
So many questions here...
Bootstraps for the kids. Silver spoon for the grandkids. Hopefully the now extremely affluent grandkids give their parents a few bucks.

The biggest issue with this plan, to me, is this. Not for whatever personal reasons are involved, but that $25 million is an enormous sum and even a high income person could have to live poor if they try to maintain that amount of savings.
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by tibbitts »

ClassII wrote: Fri Aug 12, 2022 1:47 pm TL;DR: Your plan is great for now as is. Don't listen to the more complicated strategies people are proposing.
Agree about it being easy to get preoccupied with complicated strategies frequently discussed here. A $700k/yr income will accomplish a lot more for you than all the complicated strategies we can devise will accomplish for most of us.
mikejuss
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by mikejuss »

glashutte wrote: Fri Aug 12, 2022 2:45 pm
mikejuss wrote: Fri Aug 12, 2022 2:20 pm
glashutte wrote: Fri Aug 12, 2022 1:40 pm
mikejuss wrote: Fri Aug 12, 2022 1:28 pm
glashutte wrote: Fri Aug 12, 2022 1:26 pm

$500k take home post tax. I live in Texas and file married jointly. Our net take home is somewhere around 70% something like that (never taken a hard think about taxes, I just pay it).
What is your gross income?
Somewhere around $650-700k, small part of it from disability. However it is changing - just 2 years ago income was half the amount. We started a business 2 years ago during COVID and that is where we can finally grow wealth.
Hmm--so you collect disability and also earn $700,000 a year?
For broken body parts and injuries during war, yes a small income is given. Very small. Is there an issue?
VA benefits are a different matter.
Last edited by mikejuss on Fri Aug 12, 2022 3:49 pm, edited 1 time in total.
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Billy C
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by Billy C »

mikejuss wrote: Fri Aug 12, 2022 2:51 pm
And to be clear, if you earn $700,000 and live in Texas, and you are married and filing jointly, your federal tax rate is 37%, meaning your take-home is $441,000, not $500,000.

That would be true only if the entire $700,000 income was taxed at the top rate of 37%, which of course isn’t the case.
“When there are multiple solutions to a problem, choose the simplest one.” ― John C. Bogle
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by mikejuss »

Billy C wrote: Fri Aug 12, 2022 3:47 pm
mikejuss wrote: Fri Aug 12, 2022 2:51 pm
And to be clear, if you earn $700,000 and live in Texas, and you are married and filing jointly, your federal tax rate is 37%, meaning your take-home is $441,000, not $500,000.

That would be true only if the entire $700,000 income was taxed at the top rate of 37%, which of course isn’t the case.
I stand corrected. The number is $490,711.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
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glashutte
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by glashutte »

mikejuss wrote: Fri Aug 12, 2022 3:48 pm
Billy C wrote: Fri Aug 12, 2022 3:47 pm
mikejuss wrote: Fri Aug 12, 2022 2:51 pm
And to be clear, if you earn $700,000 and live in Texas, and you are married and filing jointly, your federal tax rate is 37%, meaning your take-home is $441,000, not $500,000.

That would be true only if the entire $700,000 income was taxed at the top rate of 37%, which of course isn’t the case.
I stand corrected. The number is $490,711.
Boom, you got it. And VA benefits are non taxable and not considered income
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glashutte
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by glashutte »

I took a step back to research which brokerage to use, and am debating Vanguard vs Fidelity.
From research, I can purchase VTI (which is almost identical to VTSAX?) through Fidelity, which has subjectively better website usage and customer service. (vanguard was dated back when I used it years ago and always had to call in due to website issues and complications).
Also Fidelity has same fees or lower fees?
Do small fees even matter if I am investing $500k at once?
mikejuss
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by mikejuss »

glashutte wrote: Fri Aug 12, 2022 10:18 pm
mikejuss wrote: Fri Aug 12, 2022 3:48 pm
Billy C wrote: Fri Aug 12, 2022 3:47 pm
mikejuss wrote: Fri Aug 12, 2022 2:51 pm
And to be clear, if you earn $700,000 and live in Texas, and you are married and filing jointly, your federal tax rate is 37%, meaning your take-home is $441,000, not $500,000.

That would be true only if the entire $700,000 income was taxed at the top rate of 37%, which of course isn’t the case.
I stand corrected. The number is $490,711.
Boom, you got it. And VA benefits are non taxable and not considered income
Thank you. I'll just note that it is highly peculiar for a person to provide as their income the net rather than the gross amount. Thus my skepticism of you.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
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glashutte
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by glashutte »

Pinotage wrote: Wed Aug 10, 2022 4:59 pm
glashutte wrote: Wed Aug 10, 2022 3:57 pm
tibbitts wrote: Wed Aug 10, 2022 3:44 pm
glashutte wrote: Wed Aug 10, 2022 1:51 pm +invest $15,000 into VTSAX every month for the next 30 years
Goal: Passive fund of $25M in Vanguard to leave for grandchildren by the time I am 65 (assuming 8% annual returns averaged over 30 years)
I'm trying to do the math here: you're 35yrs old now and have grandchildren?
Great question! I have children, but no grandkids. Of course, that part of the dream to have grandkids. Also I do not want to pass money onto my current children due to personal beliefs.
So, did your children flush some turtle shells down the toilet or something? :P

But in all seriousness, I am curious about this.

OP - can you explain further?

I’ve seen sentiments like this posted a few times and it genuinely intrigues me.

It is surprising that someone would not want to pass money to their children due to personal beliefs, but at the same time is interested in amassing 2.5% of a billion dollars for grandchildren that do not exist yet.
By giving my children an inheritance, I'll be starving them of ambition and hunger. So I won't be giving them financial support besides college (not paying for wedding, home, downpayment, etc). School paid off for is in itself huge and gives them freedom to be more creative to make money, besides having to be handcuffed to something just to pay off school loans.

I plan to give it to grandkids, maybe. But some protocols something like "in order to inherit each $100k, you must first save your own $100k" , something like that. This is because I want the family to exponentially increase generational wealth versus just spending it or being 'managers' and maintaining the wealth no better than an ordinary person can
Times-three
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Re: 35 yr old new to VTSAX and Vanguard itself

Post by Times-three »

Regarding your kids, you know your kids best so only you will know if giving them an inheritance will be harmful.

With that said, my first thought when I read this response was that your plan seems like a potential way to cause a lot of family drama, hurt feelings, resentment, etc.
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