07/29/2010 (4:36 am)
building financial portfolio with vanguard mutual funds. Best answer on the web
mutual funds and finacial planning.I need very specific information
regarding retirment portfolio I am building for myself.
Basic information:I make 10000 a month,and with bonus I make 200,000 a
year.I have 300,000 in bank and I am in my late thirtees.one child and
no more planned
I have opened a account with vanguard for investment in different
mutual funds mainly vanguard family.My target retirment age is about
25 years away.And these are the holdings I have till now.
1)vanguard small cap growth index fund(visgx)--$18000.
2)vanguard growth index fund investor (vigrx)--$10000.
3)vanguard target retirment fund 2035 (vtthx)--$30000.
4)vanguard emerging markets stock index fund (veiex)--$3000.
5)vanguard midcap index fund investor share (vimsx)--$10000.
As I mentioned earlier I am planning to retire 25 years later and
planning to contribute monthly $100 to different funds in my
portfolio.I have other investments in realestate but excluding
them,here are my questions
1)Is above fund mix a decent plan for long term investment(please let
me know if you feel any one of the funds in my account is not a great
choice for my target as I mentioned above)
2)I only want to deal with different vanguard funds now and how can I
improve my portfolio with someother vanguard funds.I mean,I can remove
some funds from my account if needed and add new funds if needed. or
else I can buy new funds keeping the ones which I already have.
3)My target is capital preservation and reasonable consistent
growth.that is the reason I am sticking to vanguard for time being.I
am hoping due to time factor and compounding I will be able to do
well.(let me know if I am wrong)
4)what are your ideas about adding vanguard US value fund (vuvlx)and
vanguard strategic small cap equity fund (vstcx)to my current
portfolio.
5)If you feel that my idea and my portfolio is completly wrong can you
creat a completly different portflio with different vanguard mutual
funds , again to meet my criteria as mentioned above.
6)Once I make the portfolio how often do I need to adjust the
contributions or adjust the portfolio.
Thank you.And if I feel the answer is good I will give a bonus of $25.
Then again, Im sure Vanguard can do the same for you through their website.
it wont tell you if it is good, it is just a nice breakdown.
58% is in growth funds (the only overly risky fund is Emerging Markets which you only have $3000 in)
Overall, that is about 10% bonds, 90% stocks. And your stocks are a nice blend of various categories. This is a great portfolio for your retirement goal of 25 years. If you're on the conservative side then every 5 years you should increase your bond percentage by 10% (ie in 5 years have 20% bonds and 80% stocks). If you're not so conservative or if your retirement age is somewhat flexible (retiring earlier if the market does well, later if the market does poor) then change to bonds much more slowly.
You'll probably get 10% return over the long run with your current portfolio. At 10%, your portfolio will be worth about $750,000 in 25 years. If you invest $5000 per year (that is my estimate from your statement "contribute monthly $100 to different funds in my portfolio") then you will have $1,250,000. That will leave you way below your current standard of living during retirement. If you're about 38 (retiring at 63) and plan to live until you're 90 then that only leaves you about $100,000 per year to live on and that $100,000 will be worth much less than today due to inflation.
I see that you have real estate investments also. To maintain your standard of living, you should have around $4,000,000 net worth when you retire. Depending on your current real estate positions, this may be hard to obtain in 25 years. I do recommend increasing your investments in Vanguard. At your current income, you should have no problem investing 15% of your income ($30,000 annually) between real estate and mutual funds. That should put you well on your way to a healthy retirement. Also, you have $300,000 in the bank... this money is probably earning less than 4% interest which is completely unacceptable. Invest that money. At worst, find a safe bond fund and earn 7%, but that money would be much better suited in your other Vanguard funds. If you're concerned about losing it but are fairly sure it will remain invested atleast 10 years then put alot of it in TR2035, that is 20% bonds.
That is a great choice with Vanguard by the way, that is where my investments are... they do have the lowest fees and a great track record for performance.
Perhaps a researcher will now dive deeper into your portfolio allocation.
frde, what scam do you see here?
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