Great stuff guys! I'll try to address these as I have time.
Kramer:
What you should do depends a lot on your tax situation, so here
goes a little advice not knowing the specifics of that:
One of our weirdisms is an unnaturally low tax rate due to FEIE. We are relatively nonchalant re: taxes as we generally pay no more than 15% total (and that just on investment income - worst would be in suburban DC real estate but interest/points and depreciation make sure that number is not too high (basically we strive to fill out the 15% dance card but not over as that would be taxed at 33% or so (MD plus US tax).
I like the choice of VEIEX over EEM due to the lower expense ratio
I just hate adding after it's already up 80% over the last 12 mos. Still, GMO tells me I'm light.
I have chosen to forgo the international small cap due to the high
expense ratios, and also lack of tax efficiency. I overweight
US small cap value even more than I would otherwise as a result.
It's a conundrum. Don't think there's a solution short of (ugh) DFA or OAKEX or someone re-opening. Does Bridgeway have such a fund.
PCRIX for commodities would be good choice, as others have
expounded. You can get institutional fund from Vanguard.
I would be careful about overweighting them now when they
are so hot. Lots of money has rushed in there. PCRIX is
significantly more diversified than any small basket of
individual commodity companies.
Good news! I would like to see what they are holding. PCRIX seems to be very popular here. Have to check them out - thought they would have none of the small fry like me. Don't like the extra $35 bs zendrix referred to...
Basic materials wise, ishares wants .6%+ to hold DOW, DD, AA, IP, WY, etc. 70%+ in 10 issues. I say I can do better, get decent coverage and get a value tilt on my own. I considered VAW but it was essentially the same as ishares offering (almost 60% in the top 10), but MUCH lower er. Not a bad choice. Just sub-optimal, imo.
Cheapest way to own international is tax managed international
(VTMGX) with expense ratio now down to something like .28% but
there are penalties for early selling.
Again, taxes much less of an issue for us than most. VGTSX/VPACX/VEIEX/VEURX have done us right. Also hate the back end fees - totally justified from the existing/carry on shareholders' perspective, but we'd like to be more nimble. Like in case I let us get out of whack again. Never happen, I know.
I never hold cash and rarely do I advise that. Short term
corporate fund is the equivalent, really, at well over twice
the yield.
I hate it, too. I really do. But I have lived to regret not having some cash when the inevitable happens (buying oppty, cash crunch re the real estate [we were without a renter at one place for 6 mos.). I would much prefer to be at about 5%. But Warren tells me he is doing the 20% cash thing so, maybe we'll go down together. Hate the lack of choices out there these days...
Personally, I would not hold a sector fund like health care, you
get exposure in broader indexes. Unclear if medical expenses
and health care equity return will be related.
Understood. But er of .28 and there are some value issues (at least in terms of comparative historical prices) and I wanted that and the diversification, the large cap element (raddr has seduced me much of the way to the dark side - have less than 15% large cap US)
Need US small cap value. Use the Vanguard fund in a non-taxable
account, IJS in a taxable account (latter does not own REITs).
I've lived to regret not rebalancing more, but I guess we did OK. Wish I had more veiex and visvx early in the run. Guess I'll ease in like that single successful Thailand guy recommends.
Your bond holdings are risky in nature (VHEWX and emerging), not
much of an anchor there. I have nothing against slice and dice of
bond holdings, but I am assuming you will move all your
cash into nice, safe bond holdings.
Indeed. But VWEHX has barely budged in the interest rate hubbub - shallow end of the HY pool, decent duration, follow the recovering economy, cash for redeployment, nil tax bite. I will keep some for that reason, but will trim sails to maybe 5%.
The other stuff is closed ends with relatively high ers (ok, ridiculously high ers) but vanguard is too paternalistic and doesn't read ok think as highly of Jeremy Grantham as I do. Wasn't killed in the recent job report flurry.
On the real estate, consider the possibility of a 1031 exchange, if
that is possible, to defer taxation, but then I am thinking you might
be in Canadian tax jurisdiction. Whether 1031 is the right thing
to do depends on a lot of factors.
Great minds think alike!
Still US bound. I think.
Great comments Kramer. I thank you for making me think.
But I researched the shite out of it. They were a good decision. I needed some flow. Paper assets but backed with real property. Granted it is inflated 20%. But the S&P is at 50% per Q. Have plenty for shopping when the bubble bursts.
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