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5 minutes ago, EdLaFave said:

 If I owned it, I'd think of it more as a risky stock fund.

Hmmm.. The colleague I wrote about is 29 years old.  Maybe that's why his financial adviser put him in that "risky stock fund".  I didn't think about our age difference (I'm 36) nor had the whole asset allocation picture when transferring funds.  My sole goal of the initial transfer was to get out of my 50% allocation in bonds and rebalance.  I'm reviewing this whole thread again which means more questions will be coming 🙂  Thank you for your replies Ed.

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If I didn't already give you this link, I'd recommend you read the Investing 101 page I wrote. It gives you 90% of what you need to know in a few short pages.

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GA Teacher

Not trying to gang up on you but:

I'm no expert on bonds (disclaimer) BUT What I don't like about your high yield bond is that it's not a diversified bond fund. It owns the riskiest of bonds.  You don't own any others short term and intermediate term bonds.. I think you would be better served going with a more diversified offering. Keep in mind the basic index fund portfolio we recommended to you early on included a total bond market index fund. I would utilize your brokerage account to get that type of bond  fund. I would also dump all those managed funds.

Like Ed said, Bonds should be there to counterbalance your stock funds to smooth out your portfolio volatility. By including the riskiest bonds  category that act like stocks more often than not, you are not tempering your portfolio or diversifying it with its inclusion .  I believe they are often called junk bonds because of their higher possibility of default.  You would be better served getting a diversified bond fund.

I don't know if you have to wait a certain amount of time now to make changes but i would imagine you can get rid of that portfolio and go the brokerage route and get index funds.

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As is often the case, sometimes the deeper we get into specific details the more complex things can get for the OP. That's why I love target date funds for most folks and he could do that with his brokerage account and everything will be done for him and he can concentrate on saving!!

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3 hours ago, EdLaFave said:

Third, you're moving forward without investigating the Charles Schwab option. I think that's a significant mistake. Unless of course, you plan to get things in order within this plan and then look into Schwab and possibly go through a second round of restructuring. That's fine I suppose even though it wouldn't be my approach.

Below is the copy/paste info on Charles Schwab option.  It sounds very daunting for me as it sounds it needs lots of actions on my part?  I like the  Vanguard IRA options you guys talked about before much better, but just wanted to check with you guys.

 

Self-Directed Brokerage Account Schwab Personal Choice Retirement Account® (PCRA) is a self-directed brokerage account that allows participants to invest all or a portion of their Plan account balance in investment options available through a brokerage service. Participants enroll in the brokerage window by allocating contributions or exchanging other investment vehicles into PCRA. For a participant with no PCRA account, this activity triggers the automated PCRA account opening procedure. A written communication containing an informational brochure and a Limited Power of Attorney (LPOA) form is then sent by VALIC. The LPOA form should be completed by the participant and returned to Schwab. A “Welcome Kit” is also sent to the participant by Schwab. This kit contains instructional information regarding the new PCRA account along with the new PCRA account number. Participants can request activities on their self-directed brokerage accounts by speaking directly with a Schwab representative by calling 1-888-393-7272 or by using any of the following: Schwab.com, Telebroker® (touch-tone telephone) or Schwab by Phone™ (voice recognition telephone) services. Participants will receive confirmation of each transaction made to their account either by mail, or if elected, electronically via email. A monthly statement will also be generated. In addition to the detailed Schwab statement, the participant's aggregate balance in the self-directed brokerage account and confirmation information will be provided on AIG Retirement Services Information - Annual Participant Fee Disclosure 04/30/2020 30 of 34 01307 - 001 VALIC's quarterly account statement. The following fees are representative of the fees associated with PCRA: Account maintenance fee: PCRA investors are assessed an annual account maintenance fee of $50.00 by VALIC. Transaction fees: Schwab charges transaction fees on some of its mutual fund offerings. Some funds may also charge sales and/or redemption fees. Standard fees apply on both transactions when placing simultaneous orders to sell one or more transaction-fee fund(s) and purchase additional transaction-fee fund(s) with the proceeds. No-Transaction Fee Funds (includes funds available through the Mutual Fund OneSource® service): Electronic Trade -- $0, Broker-Assisted Trade -- $25 service charge per trade may apply. Schwab's short-term redemption fee will be charged on redemption of funds purchased through Schwab's Mutual Fund OneSource service (and certain other funds with no transaction fees) and held 90 days or less. Transaction-Fee Funds: Electronic Trade -- $50 per buy, $0 per sell; Broker-Assisted Trade -- Electronic fee, plus $25 service charge per trade. You can obtain more information about PCRA commissions and transaction fees by calling Schwab's PCRA Call Center at 1- 888-393-PCRA (7272), Monday through Friday, 9:00 am through 7:30 pm ET. Or, you can view the current Charles Schwab Pricing Guide for Retirement Plan Accounts on Schwab.com for a more complete description of all other commissions and transaction fees.

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Can you please list the following information:

  1. What is your desired asset allocation?
  2. How much money do you have to invest per year?
  3. What accounts do you currently have?
  4. How much is in each account?
  5. What funds are available in each account?
  6. What about a spouse and their answers to these questions? Do you mix finances?

That'll really help.

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31 minutes ago, tony said:

GA Teacher

Not trying to gang up on you but:

I'm no expert on bonds (disclaimer) BUT What I don't like about your high yield bond is that it's not a diversified bond fund. It owns the riskiest of bonds.  You don't own any others short term and intermediate term bonds.. I think you would be better served going with a more diversified offering. Keep in mind the basic index fund portfolio we recommended to you early on included a total bond market index fund. I would utilize your brokerage account to get that type of bond  fund. I would also dump all those managed funds.

Like Ed said, Bonds should be there to counterbalance your stock funds to smooth out your portfolio volatility. By including the riskiest bonds  category that act like stocks more often than not, you are not tempering your portfolio or diversifying it with its inclusion .  I believe they are often called junk bonds because of their higher possibility of default.  You would be better served getting a diversified bond fund.

I don't know if you have to wait a certain amount of time now to make changes but i would imagine you can get rid of that portfolio and go the brokerage route and get index funds.

I love this, Tony!  I don't feel like being ganged up on at all.  I'm learning so much 🙂  I like how you explained that Blackrock bond is not a diversified bond.  Should I buy back Pimco or the Valic annuity within the same account or just start completely over with a new total Vanguard total bond fund you guys mentioned?  I guess I did something foolish.

 

2 minutes ago, EdLaFave said:

Can you please list the following information:

  1. What is your desired asset allocation?
  2. How much money do you have to invest per year?
  3. What accounts do you currently have?
  4. How much is in each account?
  5. What funds are available in each account?
  6. What about a spouse and their answers to these questions? Do you mix finances?

That'll really help.

Is it safe to list all those here?  I want to share with you all but with general public I feel hesitant.  This is my first forum setting... If you guys say that it's safe, I don't mind sharing.

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1 hour ago, GA teacher said:

Should I buy back Pimco or the Valic annuity

Well Pimco would have been a better choice but it costs more and is a managed fund although it has done quite well for years. Regardless I would open a brokerage account with Charles Schwab and go with the funds we mentioned.  You should be able to do that.Vanguard Index funds or Fidelity Index funds or even Schwab index funds.  Total Bond index is the only bond fund you need.

No to the annuity. Stay as far away as you can. Do the portfolio we recommended  way above on this trend or just pick one fund, a target fund closest to you anticipated year of retirement. A target fund will be managed for you and have the same index funds we talk about here. I recommend a Vanguard target fund.

Did you get that? you pick that one fund and the complexity is over for you and you can focus on saving saving saving!!! And you will come out smelling like a rose in 25 years if you keep investing it and not mess with it.

 

 

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25 minutes ago, GA teacher said:

I guess I did something foolish.

Don't be so hard on yourself. You want to learn and you are learning.  That makes you a winner!! I've made more mistakes than I have fingers LOL!!  But I fixed my mistakes and I know better now. Your mistake can be fixed.    Please trust our recommendations. The folks here are smart. You will be in a better place following our advice.

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12 minutes ago, tony said:

Well Pimco would have been a better choice but it costs more and is a managed fund although it has done quite well for years.

Whoa.. I just had a light bulb moment here Tony.  So all of the funds I have are still "actively managed funds" except VINIX?  I thought actively managed fund meant my portfolio was guided and managed by the Valic people..  

 

18 minutes ago, tony said:

Do the portfolio we recommended  way above on this trend or just pick one fund, a target fund closest to you anticipated year of retirement. A target fund will be managed for you and have the same index funds we talk about here. I recommend a Vanguard target fund.

Did you get that? you pick that one fund and the complexity is over for you and you can focus on saving saving saving!!!

I'm gearing toward opening IRA accounts: total bond and total international stock market and maybe exclude total stock market because I'll have so much of VINIX from my 457 and 403 accounts rather than opening the Target funds.  I'll copy the Target fund allocations like ScottO does for his portfolio https://investor.vanguard.com/mutual-funds/profile/portfolio/vtivx in hopes that I can save more on the fees.  Hopefully I'll be able to manage.

20 minutes ago, tony said:

Don't be so hard on yourself. You want to learn and you are learning.  That makes you a winner!! I've made more mistakes than I have fingers LOL!!  But I fixed my mistakes and I know better now. Your mistake can be fixed.    Please trust our recommendations. The folks here are smart. You will be in a better place following our advice.

Thank you for your encouraging words!  I am in a better place already following your expertise 🙂  I truly appreciate all your help.  

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1 hour ago, GA teacher said:

Is it safe to list all those here?  I want to share with you all but with general public I feel hesitant

You have to do what is comfortable for you. I'll show you how safe I think it is. With this information folks could give me pretty specific answers to financial questions:

Basics

Status: Single

Emergency funds: 2 months in cash.

Tax Bracket: 22% federal, 0% state

State of Residence: Florida

Age: 36

Current Retirement Assets

Portfolio Size: $1,025,000

Asset Allocation: 70% Total Domestic, 30% Total International, 0% Bonds

Taxable: 75% of portfolio

Traditional Accounts: 20% of portfolio

Roth/HSA Accounts: 5% of portfolio

Funds Available

Taxable/IRA/HSA: Anything

Employer 401k: Vanguard index funds for small, mid, and large cap domestic stocks. Everything else is expensive.

Contributions = $105,000/year

Taxable: $71,450

Traditional 401k: $24,000

Roth IRA: $6,000

HSA: $3,550

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59 minutes ago, GA teacher said:

Whoa.. I just had a light bulb moment here Tony.  So all of the funds I have are still "actively managed funds" except VINIX?  I thought actively managed fund meant my portfolio was guided and managed by the Valic people..  

 

No, The funds that are actively managed have managers associated with the specific fund and not with Valic.  Active managers pick and chose , buy and sell stocks or bonds  they want in their fund based on research. An index fund is all the funds in a category so you own all funds in that category. An index fund has a manager too but he/she seeks to track the performance of a benchmark index like the 500 index so he doesn't pick individual stocks he might like.. Instead an index fund  invests all of its assets in the stocks that make up the Index so you own all the stocks in that category. The thing to know is most index funds cost much less (expense ratio)and outperform most managed funds. Not necessarily on a day to day basis but over time. It's hard to explain all this. You should try going to investopedia.com and read all you can.

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17 minutes ago, EdLaFave said:

Is it safe to list all those here?  I want to share with you all but with general public I feel hesitant

nobody knows who you are . of course you don't want to put  your full name with address or social security info on here. just basic information. we can then map things out for you.

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6 hours ago, GA teacher said:

Hey ScottO,

I'm trying to review this whole thread right now.  Would you be able to tell me why it looks like a garbage bond fund?  

It looked expensive for what it was, like it was built to slowly lose money over time and not even maintain its value.

It's ok to make moves slowly. Mathematics may dictate what's optimal, but if you aren't comfortable with the decisions you won't stick with them. Gaining an understanding of why we're recommending certain things also takes time. Finance is a strange language at first.

I'm an advocate for SWAN portfolios, which are the ones that allow you to "sleep well at night." You're doing well so far making steps toward improvements - putting in more effort than the average.

Ed's asking questions that'll give a clearer picture to make customized suggestions... or he just wanted to let us all know he's a single millionaire 😋

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Thank you Ed for this example.  I'm copying and pasting and replacing the answers 🙂

Basics

Status: Single

Emergency funds: 6+ months in money market/savings.

Tax Bracket: 22% federal

State of Residence: Georgia

Age: 36

Current Retirement Assets

Portfolio Size: $136,000

Asset Allocation: please see attached pics for more details***

Taxable: 

Traditional Accounts: 

Roth/HSA Accounts: 

Funds Available

Taxable/IRA/HSA: NONE

Employer 401k: NONE

Contributions from last year = $23,832 (It was a bit hard to make this contribution last year so I decreased my contribution past couple months)

Pre-tax 457: $11028

Roth 403: $11028

Pre-tax 403: $888 (created by mistake and stopped contributions)

457 ROTH: $888 (created by mistake and stopped contributions)

Thank you for your help guys!!

457 Pretax.jpg

403 ROTH.jpg

403 Pre-tax.jpg

 

457 ROTH.jpg

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