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i do most of it in my retirement accounts . we have our portfolio split pretty much between taxable and deferred so there is lots of room in the 1/2 in the ira's to adjust.
i never would let the tax tail wag the portfolio and effect my investment decisions to move money even if it did incur taxes . i will gladly pay taxes on any extra alpha i get but usually it is not an issue since we have the flexibility in accounts ..
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Last edited by mathjak107; 03-29-2017 at 02:39 AM..
So 66% equities, 17% TLT and 17% short term treasury bill fund or ETF - how about that?
ray dalio has an interesting model called the all season portfolio. personally i like the butterfly better because when rates are rising the short term /long term bonds seem to make more sense to me than intermediate and long term bonds .
i do like the fact it has some commodity exposure since gold is not a great inflation hedge unless the inflation weakens the dollar . the bad news is in 2008 commodity's plunged while gold was up so they are not the same action .
Asset Allocation
30%*Large Cap Blend
40%*Long Term Treasuries
15%*Int. Term Treasuries
7.5%*Commodities
7.5%*Gold
the all weather portfolio averaged 5.30% a year in real return (after inflation ) through all the economic scenario's we had since 1970.
it lost money 26% of the time and swung an average of 8% .
overall it was beaten by the butterfly in all category's right up to yesterdays close ..
Last edited by mathjak107; 03-29-2017 at 03:05 AM..
there is a reason they do not avoid long term bonds
Haha, yeah there is a reason - they are yield chasing. The reality is, they have to sell those funds and investors look mostly at yield rather than at risk. So fund manager juice the returns by throwing in some long term bonds. And possibly low quality corporates.
Avoiding LT is really about risk management. If you don't mind the risk, go for it. For me, bonds are about safety not income. I keep the risk in equities and leave bonds relatively risk free and liquid.
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i never would let the tax tail wag the portfolio and effect my investment decisions to move money even if it did incur taxes . i will gladly pay taxes on any extra alpha i get but usually it is not an issue since we have the flexibility in accounts ..
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I guess I should get over my dislike of taxes. I have paid high taxes all my working life. Now that I am retired it just does not seem fair that I continue to pay income taxes in addition to high property taxes.
Several years ago I turned my largest qualified account to TIAA portfolio management. I pay a large 1.1% fee but that also includes the mutual fund fees. I made that decision because I was going to be traveling fulltime and did not want to pay an attention. I expected to terminate the management agreement when I stopped traveling but the fund has done well. In addition it is more diversified than I could achieve alone. In any case I have limited ability to change my allocations. I can do so with my unqualified accounts and pay the taxes. I have made some adjustments but tend to leave those accounts alone. I can change my portfolio management allocations put only in a general sense. I need to fill out another risk tolerance questionnaire to do so.
Haha, yeah there is a reason - they are yield chasing. The reality is, they have to sell those funds and investors look mostly at yield rather than at risk. So fund manager juice the returns by throwing in some long term bonds. And possibly low quality corporates.
Avoiding LT is really about risk management. If you don't mind the risk, go for it. For me, bonds are about safety not income. I keep the risk in equities and leave bonds relatively risk free and liquid.
yield ? nope not at all . they do it because of the lifting power longer term bonds have when there is flow away from stocks . they become very very insensitive to short term rate changes once greed ,fear and perception enter the mix.
it is the same reason i use them , they still tend to be the best protection when money flows away from risk .
Several years ago I turned my largest qualified account to TIAA portfolio management. I pay a large 1.1% fee but that also includes the mutual fund fees. I made that decision because I was going to be traveling fulltime and did not want to pay an attention.
You don't like paying taxes yet you will tolerate a 1.1% management fee? Most retirees withdraw 3-4% of their portfolio every year. If you are paying 1.1%, that means of your annual withdraw, about 30% of it is going to just paying the manager. That is a huge fraction of your income!
You should consider the boglehead 3-fund portfolio. It requires no work. Once a year sell 3-4% of it to make a withdrawal and while you're at it, rebalance it. Takes about 1-2 hours. That's it. You will save a heck of a lot of money.
The three funds:
VTI (total US stock market index fund) - 45%
BND (total US bond market index fund) - 40%
VXUS (International stock market index fund0 - 15%
Total cost = 0.08%
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