Vanguard Windsor II is really good fund. It has outperformed the Vanguard Value ETF, VTV, which is low cost, but it still underperforms. I’d just make sure I have enough cash, bonds, and some International, like VEU. For an 80 yo? 30% stock? 40% stock? Please don’t be the 80 yo guy who is 100% stock. You can do this if you’re very wealthy, though, and you can afford a -50% drawdown between now and the end of your life.
Why do you want to move exchange your mutual funds to ETFs? Are your holdings in taxable, tax deferred or tax-free accounts?
Ultraconservative- do you mean cash equivalent or bonds?
VWINX and PRPFX could be good ultra conservative investments. VWELX is a good holding
You could look at having 2-3 years of an emergency fund. You could also be 35% in stocks on the conservative side to 70% if you are aggressive or have a larger time horizon for the money as an 80 year old, such as if the goal is inheritance. It all depends on your needs, risk tolerance, and goals
Ochotona has some great advice and I’ll look at rearranging my TSP. I have not invested in the L Funds because I felt they were significantly underweight small caps and significantly overweight internationally
One can do better than PRPFX by just investing in the original Permanent Portfolio… 25% to gold, US stocks, cash, and US long dated Treasury bonds. So… 25% to IAUM, SPY, TLT, SGOV (and bank deposits). Rebalance every year. That’s it. Excellent risk adjusted return. The Permanent Portfolio inspired PRPFX.
Since 1970, 8.7% return, worst drawdown was -15.6% in 2022 due to the bond rout, it recovered in 26 months. If I wasn’t inclined to trade, this would be it for me. This could be something I use when I’m really old… I could ask my daughter to rebalance it once a year for me.
Sharpe Ratio (measure of risk adjusted return) 0.56, for the 60/40 portfolio 0.50, for US large cap stocks S&P 500 0.41, which also can easily take -50% drawdowns which can take like 6 years to heal.
Those kinds of drawdowns and underwater periods kill retirements and push people into poverty. That’s why I am so freaked out by the large Baby Boomer allocation to stocks now… 70%. Boomers should have about half that. The Tech Bust and Financial Crisis killed my Dad’s retirement, and we kids had to support him. It was really tragic.
Sorry for what happened to your dad. Something similar happened to my mom. She always kept replenishing her E-Fund and never really could start saving for retirement.
I’m doing poorly as I have $170k in retirement at 41 or 2x my salary (1.5x our joint salary) which is lower than what they initially had. But when dad stopped working at my age (he also made more in the 1980s), her money quickly went and she worked 2 jobs as a single mom. We were bailed out a lot by family. I make about the same as my mom on an inflation adjusted basis.
Yes to have a 70% allocation, you need 3 year fully funded emergency fund where you can cut back. And that 70% does not count the E-Fund. Thanks for the advice.
Your advice is definitely spot on for people living till about 90. To live to 105, you do need more in stocks but it also means you must cut your withdrawal rate possibly to 2% during a crisis like in 2009 and that’s why you need lots of cash
If half your portfolio is cash and half is 70% invested, you’ll be at 35% stocks
In my STAR and VWENX funds I get some short-term cap gains, I’d rather have similar performance without that extra tax. When ETFs first came on the scene I understood that they didn’t have as much exposure to ST cap gains as mutual funds did.
Maybe one step more aggressive than the Vanguard cash account options.
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VWELX (VWENX) has worked well for us for over 25 years. A 75/25 VWENX/STAR account we’ve had that long dropped 40% in the 2007 -2008 financial crisis and in 12 months had fully recovered.
I didn’t get serious about saving for retirement until I was 55 or so, getting debt-free ASAP helped us reach our retirement goals sooner than we expected.
If you are good at people skills I’d look for low-risk, no-investment high-paying opportunities in sales and/or consulting work.
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@Smartpolitics 41 is really young, I’m 64.5, you have tons of time to increase your portfolio size. You have a good quarter century. Just try to be a Clark Howard supersaver and general cheapskate.
I’m finding a lot of savings by riding my bike to work, and I don’t live in Europe, I live in Texas. I drive my paid-for 2012 Kia with 130,000 miles on it about 20 miles per week, so it could hit 200,000 miles when I’m 132 years old… that’s not going to happen, of course, but the point is, I don’t think I have to buy another car in my lifetime. If it dies, I won’t replace it. My wife and I will share a car. She doesn’t like the idea of sharing but I have a way to deal with it…
I’ll bring her the checkbook, and tell her, “OK, I want you to write a $50,000 check payable to “XXXXX Toyota or Honda” and you sign it”. She won’t.
For the benefit of readers, here are Fidelity’s recommendations for “how much to have at what age”
Age 30: 1x your salary
Age 35: 2x your salary
Age 40: 3x your salary
Age 45: 4x your salary
Age 50: 6X your salary
Age 55: 7x your salary
Age 60: 8x your salary
Age 67: 10x your salary
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You and I are blessed with financially like-thinking supportive spouses, it makes things relatively easy compared to many married couples who aren’t on the same page.
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One spouse, one house. Eventually one car.
Both STAR and VWENX are balanced funds and are tax-ineficient when held in a taxable account. There can be quarterly tax on the income from the bond component of the fund and also short term and long term capital gains from the internal fund sale of appreciated stock shares.
If you sell these funds to purchase ETF funds that you would have additonal taxation on your appreciated stock shares.
For additonal input perhaps you can list your current asset allocation percentages, your desired asset allocation and your asset location percentages in taxable, tax deferred and tax-free accounts.
Fidelity FTEC = 10%
Fidelity FXAIX = 5%
Vanguard VWENX & STAR =45%
Vanguard Cash Plus = 30%
Misc CDs, COH, ETC. = 15%
My back of the envelope calculation shows that your portfolio is about 37% stocks, 23% bonds and 45% cash assuming that COH refers to a cash holding. You have a conservative portfolio for your age that includes a significant cash component. For a reference point, Vanguard Target Date funds for your age have an allocation of about 30% stocks, 65% bonds (which includes Treasury Inflation Protected Securities) and 5% cash. Not included in your information is which of your funds are in taxable, tax-deferred or tax-free accounts.
You indicated that you are looking for “ultra-conservative” investments. Investments with low risk include cash equivalents and for bond funds Treasury and TIPS. The Single Premium Insurance Annuity is also a low risk investment. As @Smartpolitics stated your portfolio “It all depends on your needs, risk tolerance, and goals”.
Thank you for taking the time to help me sort it out…
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Thanks for all your help
Clark published a fantastic article a few days ago:
It almost sounds like I could have written it, to be quite honest. There was a lot of head nodding. In fact, you see that when you look at the stock portion of my portfolio. I really don’t deal with individual stocks, I only use ETFs. Here are the ETFs:
FNDX - Schwab Fundamental US Large Company ETF - This is an interesting one… it still has the IT sector in it, but instead of 40% weight, it’s 15%. It’s downweighted become some of those companies are trading beyond their fundamental values, and this ETF uses a fundamental weighting (sales, cash flows, profits, etc), not a simple market cap weighting
SCHA - Schwab US Small-Cap ETF
IEFA - iShares Core MSCI EAFE ETF (developed countries ETF)
IEMG - iShares Core MSCI Emerging Markets ETF
Stocks are about 47% for me right now rest is cash, bonds, and gold. Very diversified. It keeps grinding higher because something is always advancing, even if other things take a breather.
It also sends gold prices up, as that is another possible central bank asset that is free from the liabilities of the USD.