Pre-Retirement Investments.

[mrpaseo]

Currently we have only one Mutual Fund for our pre retirement years. I would like to build a portfolio of three to six funds, any suggestions or discussion would be appreciated.

Current MF: VGSTX (Vanguard Star)

Breakdown of this MF
Cash: 6.45%
US Stock: 38.52%
Non US Stock: 21.24%
Bond: 33.04%
Other: .75%

Probably a little high in the Bond area. I think I would like to add a US Stock fund first. I have enough on hand to open probably two new funds.

Questions, comments welcomed.
Thanks.

[Tabs]

Again, before you strike out on your own, please take a look at the Target Retirement funds first.

As for manually creating your own asset allocation, I've always liked the The Boglehead's Lazy Portfolios as a starting point.

[mrpaseo]

Again, before you strike out on your own, please take a look at the Target Retirement funds first.

As for manually creating your own asset allocation, I've always liked the The Boglehead's Lazy Portfolios as a starting point.

This portfolio is for non-retirement accounts. We already have our Retirement portfolio established and will fully fund the 401k and both ROTHs by the end of the year.

[Tabs]

Ah, I see, so what is the goal for this taxable investment money? What your goals are for this account will have a large impact on what funds would work best for you.

Generally speaking though, I lean towards tax-efficient investments with my taxable money. Any interest, dividend, and short-term sells are subject to income tax, and I prefer to avoid them whenever possible.

Also, I still don't know what your risk tolerance is, but for example, if it is conservative, you could look into muni bonds, and for higher risk tolerance, you can look into small cap stock funds with low dividend payouts (and aim for paper gains instead).

[JulieAlbright]

Other than our 401k accounts where I have no choice, I moved out of Mutual Funds several years ago and into ETFs (Exchange Traded Funds). They are very similar to Mutual Funds but there is an advantage of being able to buy and sell instantly like a regular stock purchase. Many of these have equivalent Mutual Funds. As you can see there is some overlap of purpose here, mostly because I moved from primarily investing at Schwab previously to a Robinhood Account this year.

As you can see, I mostly prefer very low expense ratios types of funds.

This is what I currently own:

At Robinhood Brokerage (Buy and Sell Commission Free):

VOOG (Vanguard S&P 500 Growth)
VXUS (Vanguard Total International)
VYM (Vanguard High Income)
VNQ (Vanguard Real Estate)
VNQI (Vanguard International Real Estate)

At Schwab Brokerage:
SCHB (Schwab US Broad Market)
SCHH (Schwab Real Estate)
SCHF (Schwab International Equity)

[scfr]

At Robinhood Brokerage (Buy and Sell Commission Free):

VOOG (Vanguard S&P 500 Growth)
VXUS (Vanguard Total International)
VYM (Vanguard High Income)
VNQ (Vanguard Real Estate)
VNQI (Vanguard International Real Estate)

Why did you choose to not to just have an account at Vanguard and own these funds directly from them?

[mrpaseo]

Ah, I see, so what is the goal for this taxable investment money? What your goals are for this account will have a large impact on what funds would work best for you.

Generally speaking though, I lean towards tax-efficient investments with my taxable money. Any interest, dividend, and short-term sells are subject to income tax, and I prefer to avoid them whenever possible.

Also, I still don't know what your risk tolerance is, but for example, if it is conservative, you could look into muni bonds, and for higher risk tolerance, you can look into small cap stock funds with low dividend payouts (and aim for paper gains instead).

Risk tolerance is pretty high but I'm not an all in type of guy. If all investments were on a scale from 1 to 100 with 1 being ultra conservative and 100 being lottery tickets, I am comfortable between 20 and 80, leaning towards 80.

I don't know anything about Muni Bonds and I don't invest in anything that I do not understand so I would have to do research and understand the process before I do. That said, I want to establish a base portfolio first, then venture out into other types. I envision my base portfolio 3 to 6 investment types. I'm new to all this so I will have to make some decisions after research.

[mrpaseo]

Other than our 401k accounts where I have no choice, I moved out of Mutual Funds several years ago and into ETFs (Exchange Traded Funds). They are very similar to Mutual Funds but there is an advantage of being able to buy and sell instantly like a regular stock purchase. Many of these have equivalent Mutual Funds. As you can see there is some overlap of purpose here, mostly because I moved from primarily investing at Schwab previously to a Robinhood Account this year.

As you can see, I mostly prefer very low expense ratios types of funds.

This is what I currently own:

At Robinhood Brokerage (Buy and Sell Commission Free):

VOOG (Vanguard S&P 500 Growth)
VXUS (Vanguard Total International)
VYM (Vanguard High Income)
VNQ (Vanguard Real Estate)
VNQI (Vanguard International Real Estate)

At Schwab Brokerage:
SCHB (Schwab US Broad Market)
SCHH (Schwab Real Estate)
SCHF (Schwab International Equity)

I'm a fan of Vanguard funds, what is the "High Income" fund? Schwab is a goof fund as well, I see you have US, International and Real Estate... Maybe it's time for me to look into RE.

[mrpaseo]

I don't really have a reason or timeline for this money, just want to save more.

[Tabs]

High income funds are generally funds that contain investments product that pay out high interest or dividend. They can be appropriate for you as a secondary source of (passive) income for example, or they can be inappropriate for you if you are seeking tax efficiency. Again, it just depends on what your goals are.

However, if you don't have a particular goal in mind, I would recommend to look into tax efficient funds instead. Something leaning towards small cap funds for example.

Whatever you decide, I would double check to make sure that your selected funds won't throw your entire portfolio's asset allocation out of balance. Figure out your portfolio target, select the best funds for each of your accounts and its goals. Adjust accordingly.

[mrpaseo]

High income funds are generally funds that contain investments product that pay out high interest or dividend. They can be appropriate for you as a secondary source of (passive) income for example, or they can be inappropriate for you if you are seeking tax efficiency. Again, it just depends on what your goals are.

However, if you don't have a particular goal in mind, I would recommend to look into tax efficient funds instead. Something leaning towards small cap funds for example.

Whatever you decide, I would double check to make sure that your selected funds won't throw your entire portfolio's asset allocation out of balance. Figure out your portfolio target, select the best funds for each of your accounts and its goals. Adjust accordingly.

Thank you. I am looking for tax efficiency since I do not need the income at this time.

So...

Step 1: Figure out asset allocation goal.
Step 2: Find funds to fill this asset allocation. Ensure funds are tax efficient (No or low dividends).

What should I be looking for?

[feh]

Thank you. I am looking for tax efficiency since I do not need the income at this time.

So...

Step 1: Figure out asset allocation goal.
Step 2: Find funds to fill this asset allocation. Ensure funds are tax efficient (No or low dividends).

What should I be looking for?

Start here: http://www.bogleheads.org/wiki/Bogle...g_start-up_kit

First question you need to answer - is this money for retirement? Just because it's not in an IRA/401K doesn't mean it's not for retirement.

[Petunia 100]

STAR would not be my choice for a taxable account as it is tax inefficient. I would go with tax efficient stock funds, especially foreign as you can take a tax credit for the foreign income tax it pays (you can't if you own foreign inside a tax advantaged account). Total market index funds are very tax efficient.

[snafu]

I'm a bit confused. You want to save more of your income so you want a new goal? I presume you've fully funded allowables for retirement for the year. Profit, dividends, interest from this new portfolio will be fully taxable and risk level as high as 80 so you want something familiar but tax efficient.

I suggest looking for ETFs to reduce the risk of individual stocks. Are you willing to research areas going to future like Assisted Living since seniors will be a high percentage of population? I'd watch for an ETF in pharmaceuticals - big risk but giant opportunities for a small percentage [under 5%] of this specific non retirement, portfolio.

What is your plan for the profit of this new portfolio?

[mrpaseo]

I'm a bit confused. You want to save more of your income so you want a new goal? I presume you've fully funded allowables for retirement for the year. Profit, dividends, interest from this new portfolio will be fully taxable and risk level as high as 80 so you want something familiar but tax efficient.

I suggest looking for ETFs to reduce the risk of individual stocks. Are you willing to research areas going to future like Assisted Living since seniors will be a high percentage of population? I'd watch for an ETF in pharmaceuticals - big risk but giant opportunities for a small percentage [under 5%] of this specific non retirement, portfolio.

What is your plan for the profit of this new portfolio?

Not trying to confuse anyone, sorry about that. We want to save more for our future. Here is what we have done so far.

House is paid in full.

Two of three vehicles paid in full. Vehicle three was purchased at 0% interest, when I purchased my company gave me a $5k raise which pays the payments so I am not in a rush to pay off. Balance is exactly $18,500 I pay $500 per month, next payment is due in Sept because I have been overpaying.

Motorcycle, Paid in full (The toy).

No loans (Other than the car noted above).

No CC debt (Paid off weekly)

Monthly bills are about $3,100 (Including the car payment) About $37,000 a year.

We have $1,300,000 in insurance coverage (Home, cars, motorcycle). (Premiums included in monthly bills above)

$100k Life ins on each of us.

401k will be fully funded by years end

ROTH IRA for his and hers are already funded ($3,600 already invest, the rest is sitting in the E-Fund and will be invested weekly)

E-Fund is sitting at about $14,195 Cash, each month we will add to it but some of it is for the ROTHS as noted above so it fluctuates between $10,000 and $20,000 throughout the year.

We want to save more money for retirement but have maxed our options.

Combined income is $100,000 plus I have a pension of about $40,000. (Pension is for life)

We currently have about $2,000 per month to find a home for.