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Talking stocks, trading, and investing in general - Page 672

post #10066 of 11195
Quote:
Originally Posted by stimulacra View Post

Hi, I'm trying to replicate as close as possible an “all weather portfolio” in my Vanguard rollover account (allocation graphic below).

One question I had, how do you emulate exposure to gold and commodities? The minimum amount for Vanguard Materials Index Fund (VMIAX) is $100k… it'll be a while before I get there.

Also second question. I'm trying to consolidate all accounts under one login to the extent possible. I'm considering shutting down my Ameritrade brokerage account and moving it over to Vanguard. Does anyone currently do this and how do they like the service?

Thank you in advance.

 

Vanguard ETF: VAW is a materials ETF which should act similar to the fund.

 

I don't know your age but if you have a long time before retirement, try something like an 80/20 (stock/bond) portfolio instead of a 45/55 (stock/bond).  I personally do not invest in commodities and gold and just stick to stocks, bonds, and REITs.

post #10067 of 11195
Quote:
Originally Posted by jbarwick View Post
 

 

Vanguard ETF: VAW is a materials ETF which should act similar to the fund.

 

I don't know your age but if you have a long time before retirement, try something like an 80/20 (stock/bond) portfolio instead of a 45/55 (stock/bond).  I personally do not invest in commodities and gold and just stick to stocks, bonds, and REITs.

80/20 Stock bonds is not close to "all weather", you'll have a lot of vol there. 

post #10068 of 11195
Quote:
Originally Posted by MSchapiro View Post
 

80/20 Stock bonds is not close to "all weather", you'll have a lot of vol there. 

 

Agreed though finding out his age is important.  I wouldn't be close to his asset allocation until I was pushing 60.

post #10069 of 11195

100% stocks FTW.

post #10070 of 11195
I'm 38 years old.

FYI in my Roth IRA my allocation are 90% S&P and 10% intermediate bonds (Since it's growing tax free I can just set it and forget it till 2040).

I will check out the Materials ETF.

I'm wary of gold and precious metals as a whole (transaction fees and risk of theft makes it a hassle) but I'm open minded.

Thanks everyone for the feedback and insights.
post #10071 of 11195

I have some money in a precious metals and materials fund.  It is always either wayyyyyyyyyyyyyyy up up wayyyyyyyyyyyy down.  I'm up 110% this year, but last year, but it is currently 40% of what it was 5 years ago.

post #10072 of 11195

My Roth 401k is actually 90% bonds at the moment. 

 

I want to put as much as I can in there without risk of loss. Will re-allocate when valuations become more attractive. 

post #10073 of 11195
This graphic below might give a better idea of what I'm going for.

The dotted line allocation in the upper right might be a less extreme and more palatable attempt at an “all-weather” portfolio.

Roth IRA (lower left) is geared for maximum returns growing tax free; 90% S&P 500 index, 10% Intermediate bond index.

Taxable account (lower right) is the smallest of the group. Mostly having fun with stocks (occasional bragging rights) and slowly building a dividend-based portfolio that I hope can replace a portion of my income over time.

post #10074 of 11195
Quote:
Originally Posted by MSchapiro View Post

My Roth 401k is actually 90% bonds at the moment. 

I want to put as much as I can in there without risk of loss. Will re-allocate when valuations become more attractive. 

If you own a mid-long term bond fund, do you not expose yourself to losses in a rising rate environment....assuming we every actually get to the point where the environment can be described as rising rate?
post #10075 of 11195
Quote:
Originally Posted by SkinnyGoomba View Post


If you own a mid-long term bond fund, do you not expose yourself to losses in a rising rate environment....assuming we every actually get to the point where the environment can be described as rising rate?

Yes you do. 

 

Can't put it in cash though, so not much I can do there. I believe the current government spending patterns will lead to a tax increase bar anything unforseen happening. I'd rather lock in the tax rate now. 

 

I still don't fully understand the mechanism by which mid term bond funds operate. I presume they are selling bonds as they get closure to maturity to maintain their average maturity so there is a risk of capital loss. Need to go through a fixed income book at some point to figure it out.

 

No easy way to protect against rate increases in my 401k either.

Stocks will go down. Bonds will go down. REITs will go down. Even gold should in theory go down. 

 

Edit: Should also mention this is a tax-inefficient use of a Roth. I'd only be saving the 15% dividend tax I'd be paying by keeping them in there versus a taxable account. I'm really using it as a forced savings account and will move the cash in REITs when valueations become more attractive. 


Edited by MSchapiro - 7/22/16 at 9:29am
post #10076 of 11195
Quote:
Originally Posted by MSchapiro View Post

No easy way to protect against rate increases in my 401k either.

Stocks will go down. Bonds will go down. REITs will go down.

I always thought averaging down was the best way to deal with it
post #10077 of 11195
Quote:
Originally Posted by idfnl View Post


I always thought averaging down was the best way to deal with it

You still take the loss. I'm thinking on a portfolio level. None of the tools available to me likely have a negative correlation with rising rates. 

 

mREITs do in a way because they are hedged and steeper rates bring a greater yield, but there is no way to know what the yield curve steepness will look like in the future. Also I can only buy a REIT fund that has eREITs and mREITs. 

post #10078 of 11195
Quote:
Originally Posted by MSchapiro View Post

You still take the loss. I'm thinking on a portfolio level. None of the tools available to me likely have a negative correlation with rising rates. 

Its a paper loss. The market should eventually price in rising rates so in the mean time you can take advantage of the lower level.
post #10079 of 11195
Quote:
Originally Posted by idfnl View Post


Its a paper loss. The market should eventually price in rising rates so in the mean time you can take advantage of the lower level.

No it is a very real loss. One can continue to invest to make up for it, but it is still a loss. 

 

The problem is if you are holding the securities when the market begins to price in higher rates. You will take a capital loss. 

post #10080 of 11195
It's probably just my simplistic view of things but "averaging down" has always struck me as some sort of fallacious thinking. No matter how much you "average down" that tranche that lost its shirt is still that tranche that lost its shirt and the only reason you're buying something on the decline is to convince yourself that you're mitigating loss. Again, just my opinion and I'm sure there's some math that demonstrates it's sound.
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