Accounts
Inactive
- American Funds- GRIDSMART retirement account. Funds have already been transferred, but I had to keep the account open so they could complete tax reporting. Maybe be able to close it now.
- Fidelity- Tiffany just transferred her retirement funds from here to Vanguard. Accounts are still open but empty.
- PCS Retirement- Design Media retirement account. Rather than matching, they just contribute some amount to this account. Carries a relatively small balance. Transferred into Vanguard as of 07/2024.
Active
- Vanguard- We hold multiple accounts here comprising the bulk of our retirement savings.
- Devon’s traditional IRA
- Devon’s Roth IRA
- Devon’s brokerage account
- Tiffany’s rollover IRA
- Tiffany’s Roth IRA
General Strategy
Buy index funds and hold them. This allows me to track with the overall market and not have to try to time markets.
Rebalance to less aggressive investments as I approach retirement age.
Asset Allocation
2025-01-16
Allocate across all accounts. Next year, (age - 40) ⨉ 2 will be >0, so I will begin allocating 2% to bonds, with 80% of those being domestic and the remaining 20% being international.
| Symbol | Asset | Allocation |
|---|---|---|
| VFINX, Admiral: VFIAX | Vanguard 500 | 76.8% |
| VGTSX, Admiral: VTIAX | Vanguard Total International Stock | 19.2% |
| Admiral: VBTLX | Vanguard Total Bond Market | 3.2% |
| Admiral: VTABX | Vanguard Total International Bond | 0.8% |
| I think I goofed the math last year. I believe this is the correct balance based on the formula I want to follow. |
Total investment: $116,906.33
Target balances
| Symbol | Asset | Trade |
|---|---|---|
| VFINX, Admiral: VFIAX | Vanguard 500 | $89,784.06 |
| VGTSX, Admiral: VTIAX | Vanguard Total International Stock | $22,446.02 |
| Admiral: VBTLX | Vanguard Total Bond Market | $3,741.00 |
| Admiral: VTABX | Vanguard Total International Bond | $935.25 |
Transactions
| Symbol | Asset | Trade |
|---|---|---|
| VFINX, Admiral: VFIAX | Vanguard 500 | Buy $68,421.71 |
| VGTSX, Admiral: VTIAX | Vanguard Total International Stock | Buy $16,269.72 |
| Admiral: VBTLX | Vanguard Total Bond Market | Buy $3,741.00 |
| Admiral: VTABX | Vanguard Total International Bond | Buy $935.25 |
2024-01-03
Allocate across all accounts. Next year, (age - 40) ⨉ 2 will be >0, so I will begin allocating 2% to bonds, with 80% of those being domestic and the remaining 20% being international.
| Symbol | Asset | Allocation |
|---|---|---|
| VGTSX, Admiral: VTIAX | Vanguard Total International Stock | 29% |
| VFINX, Admiral: VFIAX | Vanguard 500 | 69% |
| Admiral: VBTLX | Vanguard Total Bond Market | 1.6% |
| Admiral: VTABX | Vanguard Total International Bond | 0.4% |
| Symbol | Asset | Trade |
|---|---|---|
| VFINX, Admiral: VFIAX | Vanguard 500 | Buy $1,607.61 |
| VGTSX, Admiral: VTIAX | Vanguard Total International Stock | Buy $2,978.19 |
| Admiral: VBTLX | Vanguard Total Bond Market | Sell $2,068.56 |
| Admiral: VTABX | Vanguard Total International Bond | Sell $2,517.14 |
2023-04-04
Allocate across all accounts. Next year, (age - 40) ⨉ 2 will be >0, so I will begin allocating 2% to bonds.
| Symbol | Asset | Allocation |
|---|---|---|
| VGTSX, Admiral: VTIAX | Vanguard Total International Stock | 30% |
| VFINX, Admiral: VFIAX | Vanguard 500 | 70% |
2021-07-24
After researching some options for how to set this allocation given our ages, I no longer think my current allocation is too aggressive. If anything, I think I’m holding too many bonds.
Going forward, I’m going to try the (age - 40) x 2 formula proposed by Optimized Portfolio to calculate my bond allocation versus stocks. Based on the Morningstar article about domestic versus international bond allocation, I will try an 80/20 allocation in favor of domestic bonds, shifting further in favor of domestic bonds as I approach retirement age. Based on some limited research, an allocation of 70% domestic stocks to 30% international stocks seems reasonable.
Devon
I have been allocating my investments per account.
| Symbol | Asset | Allocation |
|---|---|---|
| VGTSX, Admiral: VTIAX | Vanguard Total International Stock | 30% |
| VFINX, Admiral: VFIAX | Vanguard 500 | 70% |
Tiffany
To get Tiffany to the threshold for Admiral shares (lower expenses), I purchased her entire bond allocation in her rollover IRA account. The remainder of that account is allocated toward stocks after hitting her bond allocation. Her Roth IRA is allocated entirely to the Vanguard 500 fund. I will probably continue to maintain her allocation across all her accounts rather than per account and may move to that model with mine in the future.
| Symbol | Asset | Allocation |
|---|---|---|
| Admiral: VTABX | Vanguard Total International Bond | 3.2% |
| VBMFX, Admiral: VBTLX | Vanguard Total Bond Market | 12.8% |
| VGTSX, Admiral: VTIAX | Vanguard Total International Stock | 25.2% |
| VFINX, Admiral: VFIAX | Vanguard 500 | 58.8% |
Original
My current asset allocation is aggressive – probably too aggressive.
Devon
| Symbol | Asset | Allocation |
|---|---|---|
| VBMFX, Admiral: VBTLX | Vanguard Total Bond Market | 10% |
| VGTSX, Admiral: VTIAX | Vanguard Total International Stock | 25% |
| VFINX, Admiral: VFIAX | Vanguard 500 | 65% |
| I have also started experimenting with other types of assets and current own some shares of a REIT, although I haven’t incorporated this into my regular asset balancing yet. |
Tiffany
I do not manage Tiffany’s retirement at this time.
Research
Evaluating various strategies for updating my allocation.
2021-07-24
Stock Diversity
Bogleheads Wiki
Source: Three-fund portfolio - Bogleheads
The relative percentage of domestic and international stocks is a subject of intense discussion in the forum. One sensible option is to hold domestic and international stocks in the same proportions as they represent in the total world economy. As of October 2014, that would be about 50% U. S. and 50% international. This option is recommended by Burton Malkiel and Charles Ellis, both of whom have longstanding ties to Vanguard, in their book The Elements of Investing. Other authorities suggest holding less than that, and Vanguard currently allocates 40% of stock to international in its Target Retirement funds, and in their research, advise holding 20% - 40% international allocations.[3]. If your own preference is for a “total world” weighting, then the portfolio can obviously be simplified using Vanguard’s Total World Stock Index fund, which is exactly what Malkiel and Ellis suggest. Such a two-fund portfolio would use these funds:
- Vanguard Total World Stock Index Fund (VTWSX) for both domestic and international stocks
- Vanguard Total Bond Market Index Fund (VBTLX)
Wall Street Physician
Source: What Should Be Your International Stock Allocation? - The Wall Street Physician
I see the diversification benefit in international exposure, but am not comfortable with a fully market-weight international stock allocation. My stock allocation is 2/3 domestic, 1/3 international. This happens to be between the international allocation of Fidelity’s target-date funds, which are 70% domestic, 30% international, and Vanguard’s target date funds, which are roughly 60-40. Based on historical data, this allocation would lead to the lowest risk portfolio, but I am not expecting future stock returns to align with its past performance.
Bond Diversity
Morningstar
Source: How Much Foreign Stock and Bond Exposure Do You Need? | Morningstar
However, it’s safe to say that few asset-allocation experts are in favor of mirroring the global markets’ allocation to U.S. and foreign bonds. Even though more than 50% of the world’s fixed-income investments exist outside the United States, and foreign bonds represented a third of the globe’s market cap at the end of 2012, investing in foreign bonds has the potential to add cost and volatility to a U.S. investor’s portfolio.
The volatility issue can be addressed—at least in large part—by hedging out the currency risk of the foreign bonds; that helps ensure that investors partake of foreign bonds’ yields and any price changes, but not the currency-related impact when those returns are translated into dollars. However, hedging strategies entail costs, and in a low-returning asset class like bonds, those costs can take a big bite out of returns. That’s a key reason that Morningstar’s Lifetime Allocation Indexes, as well as target-date investment providers, have generally not mirrored the foreign/U.S. bond weightings of the global market capitalization.
Vanguard recently added foreign bonds to its target-date series, but in a weighting of 20% of fixed-income investments, as outlined here. That fixed-income exposure is entirely hedged; the goal is to deliver some diversification by providing exposure to varying interest-rate environments while also keeping the risk profile in line with high-quality U.S. bonds.
Meanwhile, T. Rowe Price’s Retirement funds maintain foreign-bond weightings in a similar ballpark, but their complexion is different. In particular, the target-date funds invest in T. Rowe Price International Bond (RPIBX)—an unhedged product that focuses on developed-markets debt—as well as T. Rowe Price Emerging Markets Bond (PREMX). The actively managed core bond fund, T. Rowe Price New Income (PRCIX) also has the latitude to invest a portion of the portfolio in non-U.S. bonds.
In keeping with research on intra-asset-class exposures getting more conservative as investors get closer to retirement, Morningstar’s Lifetime Allocation Indexes start out with 20% of their fixed-income exposures in foreign bonds for very young investors (aggressive investors retiring in the year 2060), but then gradually scale back the foreign allocation of the bond portfolio as retirement approaches. For a conservative investor in retirement, for example, the indexes include just a 5% stake in foreign bonds. (Note that I’m calculating the foreign-bond percentage by dividing foreign-bond exposure by the total bond exposure, including TIPS.)
2021-07-20
Optimized Portfolio
Source: Portfolio Asset Allocation by Age - Beginners to Retirees
- The first and simplest adage is “age in bonds.” A 40-year-old would have 40% in bonds. This may be fitting for an investor with a low tolerance for risk, but is far too conservative in my opinion. In fact, this conventional wisdom that has been repeated ad nauseam goes against the recommended allocations of all the top target date fund managers. This calculation would mean a beginner investor at 20 years old would already have 20% bonds right out of the gate. This would very likely stifle early growth when accumulation is more important at the beginning of the investing horizon.
- Another general rule of thumb is a more aggressive [age minus 20] for bond allocation. This calculation is much more in line with expert recommendations. This means the 40-year-old has 20% in bonds and the young investor has a portfolio of 100% stocks and no bonds at age 20. This also yields the stalwart 60/40 portfolio for a retiree at age 60.
- A more optimal, albeit slightly more complex formula may be something like [(age-40)x 2]. This means bonds don’t show up in the portfolio until age 40, allowing for maximum growth while early accumulation is more important, then accelerating the shift to prioritizing capital preservation nearing retirement age. This calculation seems to most closely follow the glide paths of the top target date funds.
Maintaining
I don’t bother rebalancing this unless I’m contributing to one of the accounts. This is my process for rebalancing alongside a contribution.
- Take the total amount across all allocated assets
- Add the contribution amount
- For each asset, multiply the overall total by the allocation percentage (e.g., for an asset allocated at 10%, multiple the overall total by 0.1)
- Subtract the current amount in that asset from the result
- Allocate this amount to the asset
- Repeat for the remaining assets
Contributions & Distributions
Fidelity ROTH IRA
| Year | Amount | Documentation |
|---|---|---|
| 2012 | $3,600 | 2012 Fidelity 5498 Devon.pdf |
| 2016 | $5,500 | 2016 Fidelity 5498 Devon.pdf |