About two years ago I took everything from accounts managed by my "CFP" at northwestern because of dissatisfaction with the service I was getting and moved it all (that wasn't' in employer managed accounts) to vanguard. At the time, I had in interview with an FA and we decided to put everything in two equity index funds. I have a little exposure to bond funds through a 401k, but as my income makes me ineligible for deductible or ROTH IRA, the bulk of my savings over the past two years have gone into my brokerage account at Vanguard and I feel like I might be too heavily exposed to equities for my age.
My wife and I are still fairly young (37 & 3 and both have good careers with pretty stable longterm income prospects (surgeon and business owner in IT).
The brokerage account is split about 70-30 between VTI (70%) and VXUS (30%).
So my question is two part.
1. Do you all think I should be adding more diversification in these investments beyond equities? Add a bond index fund up to 10%? 20%? Ive been hesitant to consider bonds because of the interest rate scenario and my limited understanding of bond funds is that their value runs counter to interest rates and rates don't have anywhere to go but up.
2. Does anyone have any experience with using Vanuard's managed account services. With a minimum level of investment with them that I satisfy, they offer account management with a seemingly very reasonable fee of 0.3% of funds under management.
Thanks in advance.
Sun Apr 24, 2016 3:12 am
oldguy Senior Member
Cash: $ 718.00
Joined: 21 May 2006
1. No, I wouldn't add diversification yet, maybe in 10 or 12 years when you're thinking of starting the transition from wealth-building to wealth-preservation. As for equities you are about as diversified as you can get - 70% averaged across the US 7000 corporations, and 30% averaged across 6000 companies in the other 190 nations.
Eventually, when you start using your VXUS money, you'll need to worry about currency (it trades/reports in dollars but it is affected by several world currencies).
2. I don't know, I haven't followed their managed account service. In general, for all company's managed mutual funds the added returns are not enough to pay the managers fees - about 85% of managed funds lag the unmanaged index funds. That's not quite the same as their management service - but maybe an indicator?