My Portfolio Strategy

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#1

Hey Jeremy, long time no talk :sweat_smile: I was hoping you could offer your thoughts on this portfolio strategy.

I’m currently enrolled in Vanguard’s Personal Advisor Service which charges .3% annually and essentially manages a 3-fund ETF portfolio for you. The service is great but I think I can do this myself. Vanguard currently has me at 60% US Stock/40% Int’l stock, but I’m thinking of doing myself a 80/20 split and not introducing bonds until I am much older.

With my 401K I’m currently invested in the Vanguard 2060 TDIF (.04% expense ratio), but there I am thinking of investing in the S&P 500 index fund option (.015%) to be a little more aggressive.

Thoughts? Not trying to constantly flip flop my strategy but I think I want to be aggressive given my age and limit fees as much as possible.

Bonus JL Collins recommends the following two portfolios.

  1. The Wealth Accumulation Portfolio which is 100% VTSAX
  2. The Wealth Preservation Portfolio which is 75% VTSAX, 20% VBTLX and 5% cash

Do you see any issue with these strategies?

Thanks!
TB

#2

Hi Tom,

I believe you mentioned about Vanguard Personal Advisor Services in one of the previous office hours and because of that I read up on the service and will have my first call with a Vanguard Advisor to start the onboarding process in 2 weeks.

Would you mind if I ask you the following:
*What makes the service great?
*Aside of providing you a “decent portfolio mix” , what else have you gotten that justifies the 0.3% ?

TIA!

#3

Hey Fernando, happy to give you a review of my experience thus far! Overall I really like the service. Vanguard is a reputable company and the advisors in the service are fiduciaries who are salaried and do not receive commission based on your investments.

Pros
-Free 1 hour consultation to explain your financial situation and goals where you can basically ask them anything you want, and there’s no obligation
-They provide an in-depth financial plan with recommendations, and a lot other interesting information about their investing methodology (28 pages!)
-The portfolios they recommend are all low cost ETF index funds, which have the lowest expense ratios of anything you can invest in
-The portal you have access to has a lot of planning tools you can use to make sure you’re on track
-There is a messaging feature in the portal where you can message questions at any time and an advisor will respond within ~24 hours
-Advise you on your entire portfolio, even assets outside of Vanguard, with no pressure to rollover or transfer to Vanguard management

Cons
-If you would like to speak to an advisor, often times you will need to wait 1-2+ weeks for an available time slot
-The portfolios are so simple that you can do it yourself (which is a good thing!)
-$50K account minimum to enroll

So I haven’t made a decision yet whether to opt out or not, but am considering doing so to save some costs over the long run. Overall this is as cheap as it gets for a financial advisor but you receive top notch service. The biggest benefit of staying for me is that I’m a tinkerer, so using the advisor service keeps me in check knowing that I’m on a good path and don’t need to make all of these decisions myself and continue to second guess, even if it means paying .3% to do so. The other benefit is that they do the rebalancing for you. From my understanding this isn’t difficult to do yourself, but still something that is nice to have handled by a professional.

Hope this helps! LMK if you have any other questions. Below are some articles I read when trying to make the decision

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#4

Wooahh, thank you so much for all the info! seems I have lots to read before my initial meeting with the Vanguard FA in 2 weeks.

I feel what you are going through is somewhat common, the fact that you start out with someone guiding you, which of course is making money from the money invested and as time progresses we start getting more comfortable with doing things ourselves and possibly what has happened to me, is that I end up taking a better decision than what the advisor mentioned.

This just happened to me with my SimpleIRA, it’s with American Funds, I just spoke to the FA, which in my opinion is more of a sales guy that knows about financial products, because when I used the acronym TDIF , he didn’t know what a Target Date Index Fund was, that was a red flag and he had 5 days to research the acronym at least, which he didn’t. I then asked him about what suggestions he had for my portfolio and he gave me some crappy suggestions which don’t make sense, such as move money from my current fund (ANEFX) , to something that has bonds and stocks in oil companies … I was like hhhmmm, not sure that will outperform what I currently have.

Anyhow, I feel I might be were you are in a year or less, after I get more comfortable with understanding the Vanguard mentality and then just rolling the dice on my own :slight_smile:

#5

I covered this in office hours (12/28/2020) with the recording available afterwards on the course site!

If you’re not signed up for office hours, you can sign up here.

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