Taking Control of our Investments and Portfolio Assessment.

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Topic Author
Annikins
Posts: 4
Joined: Mon May 16, 2022 1:30 pm

Taking Control of our Investments and Portfolio Assessment.

Post by Annikins »

We have been investing with WellsFargo for taxable accounts and in 401k/IRA for the last 10 years. Now that our kids are older and we have more time to look at our investments closer. We realized that we can do this on our own without having to pay the large fees and excessive trading that occurs with financial advisors. So we are transferring the Wells Fargo accounts (taxable investment and IRA) to Vanguard. My company also just switched our 401k from Vanguard to Charles Schwab. We have 529s for the kids and some rental property as well. Our goal is to retire in 11-15 years.

Emergency fund: we have this, 6 months
Debt: student loan $70K at 1.875% - paying extra to principle every month ($1300). No Mortgage or other debt

Tax Filing Status: Married Filing Jointly
Tax rate: 24% federal, 4.55% state Income tax
State of Residence: Colorado
Age: husband 46, wife 45
Desired Asset allocation: 70% stocks/30% bonds
Desired International allocation: 15% stocks

Approximate size of total portfolio: $1.6M

Current retirement assets:

Taxable Wells Fargo Advisor – transferring to Vanguard
6.6% Vanguard Growth Index Fund ETF (VUG) (0.04%)
2.53% SPDR Bloomberg High Yield Bond ETF (JNK) (0.40%)
1.05% ALPS Alerian MLP ETF (AMPL) (0.87%)
1.06% First Trust Global Tactical Commodity Strategy (FTGC) (0.95%)
0.51% SPDR Gold Trust (GLD) (0.04%)
7% Vanguard Mid-Cap Index Fund Admiral Shares (VIMAX) (0.05%)
6.49% Vanguard 500 Index Fund Admiral Shares (VFIAX) (0.04%)
5.7% Vanguard Small-Cap Index Fund Admiral Shares (VSMAX) (0.05%)
3.73% PIMCO Income Fund Institutional Class (PIMIX) (0.74%)
1.52% Thornburg Limited Term Income Fund Class I (THIIX) (1.52%)
1.2% Virtus KAR Mid-Cap Growth Fund Class I (PICMX) (1.20%)
1.17% PIMCO CommodityRealReturn Strategy Fund Institutional Class (PCRIX) (1.24%)
1% Abbey Capital Futures Strategy Fund Class I (ABYIX) (1%) – to be liquidated
0.71% AQR Managed Futures Strategy Fund Class I (ABMIX) (0.71%)
0.66% Eaton Vance Global Macro Absolute Return Advantage Fund Class I (EGRIX) (1.11%)
0.20% PGIM Floating Rate Income Fund- Class Z (FRFZX) (0.7%)
0.95% Goldman Sachs FS Government Fund;Institutional (FGTX) (0.07%) – to be liquidated
8.22% Invesco QQQ Trust Series 1 (QQQ) (0.2%)

Our individual stock at Ameritrade/Individual stocks
1.4% Tesla (TLSA)
0.03% Rivian (RIVN)
0.12% American Battery Manufacturing (ABML)
0.06% Corsair (CRSR)
1.62% Manulife (MFC)

Her 401k at Charles Schwab
6.19% Vanguard PRIMECAP Fund Admiral Shares (VPMAX) (0.31%)
1.15%1 Vanguard Mid-Cap Growth Index Fund Admiral Shares (VMGMX) (0.07%)
2.91% Vanguard Small-Cap Growth Index Fund Institutional Shares (VSGIX) (0.06%)
3.01% Vanguard International Growth Fund Admiral Shares (VWILX) (9.24%)
5.35% Vanguard Short-Term Investment-Grade Fund Institutional Shares (VFSIX) (0.07%)
1.67% Vanguard Total Bond Market Index Fund Institutional Shares (VBTIX) (0.035%)
11.47% Vanguard Target Retirement 2035 (VTHXX) (0.08%)


His IRA – from wells fargo, transferring to Vanguard
0.45% ALPS Alerian MLP ETF (AMLP) (0.87%)
0.52% First Trust Global Tactical Commodity Strategy (FTGC) (0.95%)
0.41% iShares S&P Small-Cap 600 Value ETF (IJS) (0.18%)
1.58% iShares Core S&P Mid-Cap ETF (IJH) (0.50%)
1.37% iShares Core S&P Small-Cap ETF (IJR) (0.06%)
0.59% iShares S&P Mid-Cap 400 Value ETF (IJJ) (0.18%)
0.53% Vanguard Real Estate Index Fund ETF (VNQ) (0.12%)
1.52% Vanguard 500 Index Fund ETF (VOO) (0.03%)
0.16% Vanguard Intermediate-Term Corp Bond Idx Fund ETF (VCIT) (0.04%)
0.23% Vanguard S&P 500 Growth Index Fund ETF (VOOG) (0.10%)
0.25% AQR Managed Futures Strategy Fund Class I (AQMIX) (1.22%)
0.25% DoubleLine Low Duration Bond Fund Class I (DBLSX) (0.43%)
0.49% Neuberger Berman Large Cap Value Fund Institutional Class (NBPIX) (0.71%)
0.47% PIMCO Income Fund Institutional Class (PIMIX) (0.74%)
0.43% PIMCO CommodityRealReturn Strategy Fund Institutional Class (PCRIX) (1.24%)
0.22% PGIM High Yield Fund- Class Z (PHYZX) (0.55%)
0.43% PGIM Floating Rate Income Fund- Class Z (FRFZX) (0.70%)
0.16% Abbey Capital Futures Strategy Fund Class I (ABYIX) (1.79%) to be liquidated
0.08% Thornburg Limited Term Income Fund Class I (THIIX) (0.53%)
0.55% Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX) (0.09%)
3.57% Meta Financial Group Inc. (CASH)
0.25% SPDR Gold Trust (GLD) (0.04%)
0.27% Goldman Sachs FS Government Fund;Institutional (FGTXX) (0.54%) to be liquidated

Kids 529 - college
Child 1 age 10 Vanguard 529 $87K
Child 2 age 8 Vanguard 529 $68K

Contributions
$19500 her 401k (employer matching up to $12500)
$5000/mo to taxable
Holding on contributions for now to 529

Other Assets
5 rental properties - $3000/mo net

Questions:
1. Obviously, we have a huge number of funds and need to optimize our allocations. We would like to simplify to index funds. Suggestions?

We would like direction/advice on how to move forward. Thank you for all your future input. We have enjoyed learning from this forum!!
User avatar
retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: Taking Control of our Investments and Portfolio Assessment.

Post by retiredjg »

Welcome to the forum. :happy

The taxable account is the only one one that will require some work. The IRAs and 401k can be adjusted pretty simply any time you want with no tax implications.

  • Taxable Wells Fargo Advisor – transferring to Vanguard
    6.6% Vanguard Growth Index Fund ETF (VUG) (0.04%)
    2.53% SPDR Bloomberg High Yield Bond ETF (JNK) (0.40%)
    1.05% ALPS Alerian MLP ETF (AMPL) (0.87%)
    1.06% First Trust Global Tactical Commodity Strategy (FTGC) (0.95%)
    0.51% SPDR Gold Trust (GLD) (0.04%)

    7% Vanguard Mid-Cap Index Fund Admiral Shares (VIMAX) (0.05%)
    6.49% Vanguard 500 Index Fund Admiral Shares (VFIAX) (0.04%)
    5.7% Vanguard Small-Cap Index Fund Admiral Shares (VSMAX) (0.05%)
    3.73% PIMCO Income Fund Institutional Class (PIMIX) (0.74%)
    1.52% Thornburg Limited Term Income Fund Class I (THIIX) (1.52%)
    1.2% Virtus KAR Mid-Cap Growth Fund Class I (PICMX) (1.20%)
    1.17% PIMCO CommodityRealReturn Strategy Fund Institutional Class (PCRIX) (1.24%)
    1% Abbey Capital Futures Strategy Fund Class I (ABYIX) (1%) – to be liquidated
    0.71% AQR Managed Futures Strategy Fund Class I (ABMIX) (0.71%)
    0.66% Eaton Vance Global Macro Absolute Return Advantage Fund Class I (EGRIX) (1.11%)
    0.20% PGIM Floating Rate Income Fund- Class Z (FRFZX) (0.7%)
    0.95% Goldman Sachs FS Government Fund;Institutional (FGTX) (0.07%) – to be liquidated

    8.22% Invesco QQQ Trust Series 1 (QQQ) (0.2%)
For each of the items in blue above, look up the "unrealized gains or losses". Sell any at or near a loss and replace it with total stock market index and/or total international stock index. Use the losses accumulated to offset gains in the other funds you want to get rid of.

Whatever can't be sold at a loss or with gains that are not offset by losses should be sold as you are willing to pay tax. I would not take very long to do this but I don't know what kind of gains you have. What you do have are a bunch of high cost (high expense ratio) and tax-inefficient funds that are raising your taxes.

My goal would be to hold only two things in taxable - total stock index and total international index. However, until you can sell them at a loss, the ones that are not in blue are acceptable to keep.

Our individual stock at Ameritrade/Individual stocks
1.4% Tesla (TLSA)
0.03% Rivian (RIVN)
0.12% American Battery Manufacturing (ABML)
0.06% Corsair (CRSR)
1.62% Manulife (MFC)
Do you plan to keep these?

Her 401k at Charles Schwab
6.19% Vanguard PRIMECAP Fund Admiral Shares (VPMAX) (0.31%)
1.15%1 Vanguard Mid-Cap Growth Index Fund Admiral Shares (VMGMX) (0.07%)
2.91% Vanguard Small-Cap Growth Index Fund Institutional Shares (VSGIX) (0.06%)
3.01% Vanguard International Growth Fund Admiral Shares (VWILX) (9.24%)
5.35% Vanguard Short-Term Investment-Grade Fund Institutional Shares (VFSIX) (0.07%)
1.67% Vanguard Total Bond Market Index Fund Institutional Shares (VBTIX) (0.035%)
11.47% Vanguard Target Retirement 2035 (VTHXX) (0.08%)
This entire account can be put into a 500 index and the total bond market index.

His IRA – from wells fargo, transferring to Vanguard
0.45% ALPS Alerian MLP ETF (AMLP) (0.87%)
0.52% First Trust Global Tactical Commodity Strategy (FTGC) (0.95%)
0.41% iShares S&P Small-Cap 600 Value ETF (IJS) (0.18%)
1.58% iShares Core S&P Mid-Cap ETF (IJH) (0.50%)
1.37% iShares Core S&P Small-Cap ETF (IJR) (0.06%)
0.59% iShares S&P Mid-Cap 400 Value ETF (IJJ) (0.18%)
0.53% Vanguard Real Estate Index Fund ETF (VNQ) (0.12%)
1.52% Vanguard 500 Index Fund ETF (VOO) (0.03%)
0.16% Vanguard Intermediate-Term Corp Bond Idx Fund ETF (VCIT) (0.04%)
0.23% Vanguard S&P 500 Growth Index Fund ETF (VOOG) (0.10%)
0.25% AQR Managed Futures Strategy Fund Class I (AQMIX) (1.22%)
0.25% DoubleLine Low Duration Bond Fund Class I (DBLSX) (0.43%)
0.49% Neuberger Berman Large Cap Value Fund Institutional Class (NBPIX) (0.71%)
0.47% PIMCO Income Fund Institutional Class (PIMIX) (0.74%)
0.43% PIMCO CommodityRealReturn Strategy Fund Institutional Class (PCRIX) (1.24%)
0.22% PGIM High Yield Fund- Class Z (PHYZX) (0.55%)
0.43% PGIM Floating Rate Income Fund- Class Z (FRFZX) (0.70%)
0.16% Abbey Capital Futures Strategy Fund Class I (ABYIX) (1.79%) to be liquidated
0.08% Thornburg Limited Term Income Fund Class I (THIIX) (0.53%)
0.55% Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX) (0.09%)
3.57% Meta Financial Group Inc. (CASH)
0.25% SPDR Gold Trust (GLD) (0.04%)
0.27% Goldman Sachs FS Government Fund;Institutional (FGTXX) (0.54%) to be liquidated
This entire account can be put into 500 index and total bond index.

Other things you can do with appreciated shares in the taxable account - instead of donating cash to charity/church/whatever, donate appreciated shares of stock. You get rid of them without paying any tax.

WellsFargo has done an outstanding job of creating an incomprehensible, high cost, tax-inefficient portfolio for you. Shame on them. You can do much better than this. :?


I notice that you have not included some other accounts that might not be managed by WellsFargo. They really need to be considered in this "makeover" as well.
LeeMKE
Posts: 2233
Joined: Mon Oct 14, 2013 9:40 pm

Re: Taking Control of our Investments and Portfolio Assessment.

Post by LeeMKE »

+1 retiredjg
The mightiest Oak is just a nut who stayed the course.
Topic Author
Annikins
Posts: 4
Joined: Mon May 16, 2022 1:30 pm

Re: Taking Control of our Investments and Portfolio Assessment.

Post by Annikins »

retiredjg wrote: Mon May 16, 2022 2:46 pm Welcome to the forum. :happy

The taxable account is the only one one that will require some work. The IRAs and 401k can be adjusted pretty simply any time you want with no tax implications.

For each of the items in blue above, look up the "unrealized gains or losses". Sell any at or near a loss and replace it with total stock market index and/or total international stock index. Use the losses accumulated to offset gains in the other funds you want to get rid of.

Whatever can't be sold at a loss or with gains that are not offset by losses should be sold as you are willing to pay tax. I would not take very long to do this but I don't know what kind of gains you have. What you do have are a bunch of high cost (high expense ratio) and tax-inefficient funds that are raising your taxes.

My goal would be to hold only two things in taxable - total stock index and total international index. However, until you can sell them at a loss, the ones that are not in blue are acceptable to keep.


WellsFargo has done an outstanding job of creating an incomprehensible, high cost, tax-inefficient portfolio for you. Shame on them. You can do much better than this. :?


I notice that you have not included some other accounts that might not be managed by WellsFargo. They really need to be considered in this "makeover" as well.
Thank you so much for your thoughtfulness and really looking at all of our portfolio! I ended up reading "Intelligent Investor" as well the "Boglehead's Guide to Investing" and after finishing those and really looked at our allocations...I was shocked! I wish we had started this journey a few years ago when my husband started noticing the high fees. Yes, I do appreciate you going through the list and the blue ones were funds that I was thinking needed to go and nice to get confirmation.

In regards to the individual stocks, we haven't decided what to do quite yet. Manulife was inherited and has just stuck around as the years go by. We plan to keep the TSLA stock with 30 shares for the long term, ABML is a similar longer term bet with only 2k invested, CRSR could be sold for a 1.6k loss to balance things as we don't see that coming back in the near term. RIVN is 1.5k loss at the moment, so that will likely be a long term hold.

In regards to the 529. Not sure how we ended up with two slightly different portfolios?? but here they are:
Child 1 (age 10) - moderate growth portfolio
Vanguard® Institutional Total Stock Market Index Fund 30%
Vanguard® Total International Stock Index Fund 20%
Vanguard® Total Bond Market II Index Fund 35%
Vanguard® Total International Bond Index Fund 15%

Child 2 (age 8) - moderate portfolio 65% stock and 35% bonds
Vanguard Institutional Total Stock Market Index Fund 37.50%
Vanguard Total International Stock Index Fund 25%
Vanguard Total Bond Market II Index Fund 26.25%
Vanguard Total International Bond Index Fund 11.25%

We were investing 5k per month (automatically withdrawal) with Wells Fargo for taxable account and plan to continue this sum going forward.

We are weighing the idea of a vacation property that we would rent (and use) so funds could be focused on that to recoup down payment if property values happen to decrease enough to make that a reality (will only consider if things drop from this current peak).
Wannaretireearly
Posts: 4880
Joined: Wed Mar 31, 2010 4:39 pm

Re: Taking Control of our Investments and Portfolio Assessment.

Post by Wannaretireearly »

You’re in great hands with retiredjg.
My only comment: I’m no longer hearing from friends/family on either crypto or tech stock recommendations!

There is so much benefit to a stay the course/fund/etf route. You really only appreciate it when there is a downturn, you lose a couple of hundred k on paper, and don’t care. Cos 1. Your trying your best to buy the dip ;) and 2. Confidence that your buying the market (a market, any market) and the risk of it staying at this level for 5-10 years is low.
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
User avatar
retired@50
Posts: 12821
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Taking Control of our Investments and Portfolio Assessment.

Post by retired@50 »

Annikins wrote: Mon May 16, 2022 5:53 pm
In regards to the individual stocks, we haven't decided what to do quite yet.
...
CRSR could be sold for a 1.6k loss to balance things as we don't see that coming back in the near term. RIVN is 1.5k loss at the moment, so that will likely be a long term hold.
I'd suggest harvesting the losses in the individual stocks as well, which would allow you to dump more of the undesirable blue funds above.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
LeeMKE
Posts: 2233
Joined: Mon Oct 14, 2013 9:40 pm

Re: Taking Control of our Investments and Portfolio Assessment.

Post by LeeMKE »

In regards to the 529. Not sure how we ended up with two slightly different portfolios?? but here they are:
Child 1 (age 10) - moderate growth portfolio
Vanguard® Institutional Total Stock Market Index Fund 30%
Vanguard® Total International Stock Index Fund 20%
Vanguard® Total Bond Market II Index Fund 35%
Vanguard® Total International Bond Index Fund 15%

Child 2 (age 8) - moderate portfolio 65% stock and 35% bonds
Vanguard Institutional Total Stock Market Index Fund 37.50%
Vanguard Total International Stock Index Fund 25%
Vanguard Total Bond Market II Index Fund 26.25%
Vanguard Total International Bond Index Fund 11.25%
My guess is that these accounts are set up to gradually move toward cash as the date for college approaches. So, you may see bonds increase and stocks decrease a bit every year or so. This would be based on their ages. This is conservative, but prevents you having a big drop just before you need to start tapping the account(s). Prudent. Eight years will fly by, as you already know.
The mightiest Oak is just a nut who stayed the course.
HomeStretch
Posts: 11415
Joined: Thu Dec 27, 2018 2:06 pm

Re: Taking Control of our Investments and Portfolio Assessment.

Post by HomeStretch »

Welcome to the forum!

You have received great feedback on simplifying and reducing investment costs for your portfolio.

Wells Fargo will likely shutoff your online account access as soon as the account transfer is received from Vanguard. Print or download the unrealized gain/loss information and account statements before you lose access.

Once the WFA accounts are transferred to Vanguard:
(1) you can immediately simplify the holdings in His IRA without tax consequences to the holdings suggested by retiredjg.
(2) set up the new Taxable account -
(A) set the cost basis method to “Specific ID”
(B) set dividends to NOT reinvest (so you don’t buy more of funds you don’t want)
(C) make sure the cost basis by holding/tax lot transfers properly from WFA to Vanguard
(3) work on simplifying the Taxable account holdings tax-effectively as suggested, above.

For your TDA Taxable account:
(1) turn off dividend reinvestment so you don’t buy more of the individual stocks you no longer want to hold
(2) Normally I would suggest transferring your TDA individual stocks into your new Vanguard Taxable account. However as TDA will be merged soon into Schwab where you already have a 401k, consider trying out a Schwab Taxable account to see if you like Schwab better than Vanguard before potentially consolidating to 1 Taxable account. galawdawg’s mega thread about Schwab may be informative:
viewtopic.php?p=6157661#p6157661

Do you have any other tax deferred space or Roth space available to you/spouse? If yes, contribute to tax deferred/Roth (it grows tax free) before contributing $5k/month to Taxable. Some places to consider for extra “space”:
(1) does spouse have any retirement plan options available besides the traditional IRA?

(2) does your employer 401k offer a Mega Backdoor Roth (MBR)? BH MBR wiki page: https://www.bogleheads.org/wiki/Mega-backdoor_Roth

(3) consider opening and funding Roth IRAs at Schwab or Vanguard for Roth space and to start the 5-year clock on initial Roth IRAs. With a marginal tax rate of 24%, your adjusted gross income may be too high to make a direct Roth contribution. If so, you can do a backdoor Roth (see BH wiki link, below - closely read the section on Form 8606 tax reporting). Your spouse cannot do a backdoor Roth without being subject to pro-rated taxes due to His traditional IRA.
https://www.bogleheads.org/wiki/Backdoor_Roth

(4) consider purchasing I-Bonds which are Federal tax-deferred, state-tax exempt and have some inflation protection. I-Bonds can be held as part of your emergency fund after the one-year holding period is met. BH I-Bond wiki page: https://www.bogleheads.org/wiki/I_savings_bonds
Topic Author
Annikins
Posts: 4
Joined: Mon May 16, 2022 1:30 pm

Re: Taking Control of our Investments and Portfolio Assessment.

Post by Annikins »

HomeStretch wrote: Tue May 17, 2022 7:26 am
Welcome to the forum!
Thank you!!

Wells Fargo will likely shutoff your online account access as soon as the account transfer is received from Vanguard. Print or download the unrealized gain/loss information and account statements before you lose access.
I thought that we would keep access...silly me. I went online and downloaded all that info today! Thanks for this tidbit!
Once the WFA accounts are transferred to Vanguard:
(1) you can immediately simplify the holdings in His IRA without tax consequences to the holdings suggested by retiredjg.
(2) set up the new Taxable account -
(A) set the cost basis method to “Specific ID”
(B) set dividends to NOT reinvest (so you don’t buy more of funds you don’t want)
(C) make sure the cost basis by holding/tax lot transfers properly from WFA to Vanguard
(3) work on simplifying the Taxable account holdings tax-effectively as suggested, above.
thanks for this advice as well!!
For your TDA Taxable account:
(1) turn off dividend reinvestment so you don’t buy more of the individual stocks you no longer want to hold
(2) Normally I would suggest transferring your TDA individual stocks into your new Vanguard Taxable account. However as TDA will be merged soon into Schwab where you already have a 401k, consider trying out a Schwab Taxable account to see if you like Schwab better than Vanguard before potentially consolidating to 1 Taxable account. galawdawg’s mega thread about Schwab may be informative:
viewtopic.php?p=6157661#p6157661
I didn't realized Schwab and TDA were merging.
Do you have any other tax deferred space or Roth space available to you/spouse? If yes, contribute to tax deferred/Roth (it grows tax free) before contributing $5k/month to Taxable. Some places to consider for extra “space”:
(1) does spouse have any retirement plan options available besides the traditional IRA?
no additional retirement options for him
(2) does your employer 401k offer a Mega Backdoor Roth (MBR)? BH MBR wiki page: https://www.bogleheads.org/wiki/Mega-backdoor_Roth
I'm going to look into this.
(3) consider opening and funding Roth IRAs at Schwab or Vanguard for Roth space and to start the 5-year clock on initial Roth IRAs. With a marginal tax rate of 24%, your adjusted gross income may be too high to make a direct Roth contribution. If so, you can do a backdoor Roth (see BH wiki link, below - closely read the section on Form 8606 tax reporting). Your spouse cannot do a backdoor Roth without being subject to pro-rated taxes due to His traditional IRA.
https://www.bogleheads.org/wiki/Backdoor_Roth
Yes, I'm very interested in this Backdoor Roth option.
(4) consider purchasing I-Bonds which are Federal tax-deferred, state-tax exempt and have some inflation protection. I-Bonds can be held as part of your emergency fund after the one-year holding period is met. BH I-Bond wiki page: https://www.bogleheads.org/wiki/I_savings_bonds
We purchased one at the end of April, but trying to figure out what strategy we are going to with the i-bonds. I think we are going to take that advice and turn the ibond into part of the emergency fund.
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