Vanguard adviser recommends 4 fund portfolio

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JD101
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Vanguard adviser recommends 4 fund portfolio

Post by JD101 » Mon Oct 30, 2017 7:03 pm

I talked with Vanguard adviser and asked her about if I were to higher their service, how would they construct my portfolio. My question is:

What does Vanguard paid service offer that we can't do it ourselves? This is of course you are not averse to re-balancing etc etc, this service may add value to those who don't want any headache and I understand that.

Next, it seems they recommend

1. US Total Stock Market Index Fund
2. US Total Bond Market Index Fund
3. International Stock Market Index Fund
4. International Bond Market Fund

I'm pretty sure everyone agrees on 1& 2 but hear varying points of view on 3 & 4. Can the folks here clear the haze? Thanks

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Alexa9
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Re: Vanguard adviser recommends 4 fund portfolio

Post by Alexa9 » Mon Oct 30, 2017 7:18 pm

International stocks and bonds are debated on here. The general consensus is that it adds diversity even though US large companies are international. The US is special in some ways (in the past) but it's not in some ways (the future?). Buffet and Bogle are international averse but they're billionaires. Your average investor wants protection from currency and one nation risk. Global market weight is a reasonable starting point which is about 50/50. You can check ETF: VT to get an idea but that fund is not recommended. International bonds are even more debated (what is more reliable than US bonds? Answer is you can't predict the future so international bonds are recommended). I won't get into politics but I would definitely want international exposure. How much is up to you to decide. The Lifestrategy Funds are a good starting point for a portfolio and if you have significant assets, own the individual funds to save on the expense ratio and rebalance once a year.
30% International bonds, 70% US
40% International Stocks, 60% US
For less than 40k assets, the Lifestrategy or Target Date Funds are great.
Vanguard advisers are not very useful unless you have a complicated situation. You'll get good advice on here or if you have a complicated tax situation you might consult a CPA. Some CFP's give good advice but never let them manage your assets. Vanguard has an Ask A CFP Program for free if you have a certain level of assets. You might also consult an estate attorney for a will/trust.
Last edited by Alexa9 on Mon Oct 30, 2017 7:23 pm, edited 1 time in total.

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GerryL
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Re: Vanguard adviser recommends 4 fund portfolio

Post by GerryL » Mon Oct 30, 2017 7:23 pm

During a webinar a Vanguard advisor discussing PAS said that one of the key services they offer many of their clients is "hand holding," that is, keeping them calm and on track with their plan when the markets are scary. If that is not something you need and you plan to maintain a basic 3- or 4-fund portfolio, such as the one they recommended, you probably don't need their advisory service.

Ragnoth
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Re: Vanguard adviser recommends 4 fund portfolio

Post by Ragnoth » Mon Oct 30, 2017 7:38 pm

It is usually preferable to have a diversified portfolio, and having a mix of different types of (uncorrelated) assets gives you the most "bank for your buck" in terms of expected returns vs. volatility. Of course, diversified portfolios have their own downsides (e.g., it can be a pain to re-balance, there are transaction costs, it can mean lower long-term returns, etc.).

Historically, international stocks and bonds could help to diversify a portfolio. There may be more recent versions available, but there were some old Vanguard white papers that dug into the details of exactly "how much" you need in order to get the benefits of diversification:
https://vanguard.com/pdf/ISGGEB.pdf
https://vanguard.com/pdf/icrifi_032012_high.pdf

If you follow the vanguard white paper, you will see that having something like 30% of your stock allocation in international markets would have reduced your volatility in the past, without severely reducing returns. A lot of the "pro" international people will focus on these diversification effects. A lot of the "anti" international people will point out (1) in recent years international and domestic stock/bonds have been increasingly correlated, reducing the benefits of diversification; (2) Many US companies do a huge portion of their business abroad, and you are getting indirect exposure to international markets anyway; (3) you are over-complicating your portfolio with little to show for it; and (4) some international funds are heavily skewed to certain countries/sectors, and are not as diversified as they might seem.

These arguments are not intended to be exhaustive, but it gives you a flavor for what is out there.

My personal opinion is that international exposure (in equities and bonds) can help to diversify a portfolio, but you aren't going to miss out on much if you want to stick with a 3-fund (or even 2-fund) portfolio instead. Having an allocation you can stick with in the long run is often more important than getting an "ideal" allocation.

JD101
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Re: Vanguard adviser recommends 4 fund portfolio

Post by JD101 » Mon Oct 30, 2017 8:18 pm

Ragnoth wrote:
Mon Oct 30, 2017 7:38 pm
It is usually preferable to have a diversified portfolio, and having a mix of different types of (uncorrelated) assets gives you the most "bank for your buck" in terms of expected returns vs. volatility. Of course, diversified portfolios have their own downsides (e.g., it can be a pain to re-balance, there are transaction costs, it can mean lower long-term returns, etc.).

Historically, international stocks and bonds could help to diversify a portfolio. There may be more recent versions available, but there were some old Vanguard white papers that dug into the details of exactly "how much" you need in order to get the benefits of diversification:
https://vanguard.com/pdf/ISGGEB.pdf
https://vanguard.com/pdf/icrifi_032012_high.pdf

If you follow the vanguard white paper, you will see that having something like 30% of your stock allocation in international markets would have reduced your volatility in the past, without severely reducing returns. A lot of the "pro" international people will focus on these diversification effects. A lot of the "anti" international people will point out (1) in recent years international and domestic stock/bonds have been increasingly correlated, reducing the benefits of diversification; (2) Many US companies do a huge portion of their business abroad, and you are getting indirect exposure to international markets anyway; (3) you are over-complicating your portfolio with little to show for it; and (4) some international funds are heavily skewed to certain countries/sectors, and are not as diversified as they might seem.

These arguments are not intended to be exhaustive, but it gives you a flavor for what is out there.

My personal opinion is that international exposure (in equities and bonds) can help to diversify a portfolio, but you aren't going to miss out on much if you want to stick with a 3-fund (or even 2-fund) portfolio instead. Having an allocation you can stick with in the long run is often more important than getting an "ideal" allocation.
wow! What a succinct skinny. You have summarized 50 page book into less than one page summary.

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dwickenh
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Re: Vanguard adviser recommends 4 fund portfolio

Post by dwickenh » Mon Oct 30, 2017 8:22 pm

JD101 wrote:
Mon Oct 30, 2017 8:18 pm
Ragnoth wrote:
Mon Oct 30, 2017 7:38 pm
It is usually preferable to have a diversified portfolio, and having a mix of different types of (uncorrelated) assets gives you the most "bank for your buck" in terms of expected returns vs. volatility. Of course, diversified portfolios have their own downsides (e.g., it can be a pain to re-balance, there are transaction costs, it can mean lower long-term returns, etc.).

Historically, international stocks and bonds could help to diversify a portfolio. There may be more recent versions available, but there were some old Vanguard white papers that dug into the details of exactly "how much" you need in order to get the benefits of diversification:
https://vanguard.com/pdf/ISGGEB.pdf
https://vanguard.com/pdf/icrifi_032012_high.pdf

If you follow the vanguard white paper, you will see that having something like 30% of your stock allocation in international markets would have reduced your volatility in the past, without severely reducing returns. A lot of the "pro" international people will focus on these diversification effects. A lot of the "anti" international people will point out (1) in recent years international and domestic stock/bonds have been increasingly correlated, reducing the benefits of diversification; (2) Many US companies do a huge portion of their business abroad, and you are getting indirect exposure to international markets anyway; (3) you are over-complicating your portfolio with little to show for it; and (4) some international funds are heavily skewed to certain countries/sectors, and are not as diversified as they might seem.

These arguments are not intended to be exhaustive, but it gives you a flavor for what is out there.

My personal opinion is that international exposure (in equities and bonds) can help to diversify a portfolio, but you aren't going to miss out on much if you want to stick with a 3-fund (or even 2-fund) portfolio instead. Having an allocation you can stick with in the long run is often more important than getting an "ideal" allocation.
wow! What a succinct skinny. You have summarized 50 page book into less than one page summary.
+1
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

David Scubadiver
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Re: Vanguard adviser recommends 4 fund portfolio

Post by David Scubadiver » Mon Oct 30, 2017 8:35 pm

You get the same advice from the vanguard etf page, suggesting a 4 fund portfolio. I am now using M1 Fiannce to keep my portfolio balanced. It is easy enough to do without it. I just haven’t done it. There is something useful to me about having the portfolio defined and then having my deposits automatically invested into it and not having to think about allocation when buying or selling.

This eliminates the hassle factor of “adding one more” Fund. Or x more funds.
Last edited by David Scubadiver on Tue Oct 31, 2017 3:58 am, edited 1 time in total.

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arcticpineapplecorp.
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Re: Vanguard adviser recommends 4 fund portfolio

Post by arcticpineapplecorp. » Mon Oct 30, 2017 8:49 pm

JD101 wrote:
Mon Oct 30, 2017 7:03 pm
I talked with Vanguard adviser and asked her about if I were to higher their service, how would they construct my portfolio. My question is:

What does Vanguard paid service offer that we can't do it ourselves? This is of course you are not averse to re-balancing etc etc, this service may add value to those who don't want any headache and I understand that.

Next, it seems they recommend

1. US Total Stock Market Index Fund
2. US Total Bond Market Index Fund
3. International Stock Market Index Fund
4. International Bond Market Fund

I'm pretty sure everyone agrees on 1& 2 but hear varying points of view on 3 & 4. Can the folks here clear the haze? Thanks
since the funds they recommend exactly mirror the target date retirement funds (except those IN retirement which are only slightly different), then why don't you just invest in a target date retirement fund instead and save the 0.3% PAS fee instead?

Regarding rebalancing as you say, the beauty of the target date retirement fund is that not only do you get those 4 funds, but they are automatically rebalanced so you don't have to do so. No headache at all with the target date funds. What could be simpler?

The only thing is you have to understand the asset allocation (stock/bond ratio) of the TD fund you choose (which will lessen risk over time) so you are aware of the risk you are taking on. A 2020 fund is less risky than a 2060 fund. Understand the difference and choose accordingly and then get on with your life!

For those who will not research the risk level or worse yet, will freak out anyway during a market decline would be better with an advisor if that advisor can convince them to stay the course. Then an advisor will have been worth his/her salt.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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Taylor Larimore
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Re: Vanguard adviser recommends 4 fund portfolio

Post by Taylor Larimore » Mon Oct 30, 2017 9:19 pm

JD101 wrote:
Mon Oct 30, 2017 7:03 pm
I talked with Vanguard adviser and asked her about if I were to higher their service, how would they construct my portfolio. My question is:

What does Vanguard paid service offer that we can't do it ourselves? This is of course you are not averse to re-balancing etc etc, this service may add value to those who don't want any headache and I understand that.

Next, it seems they recommend

1. US Total Stock Market Index Fund
2. US Total Bond Market Index Fund
3. International Stock Market Index Fund
4. International Bond Market Fund

I'm pretty sure everyone agrees on 1& 2 but hear varying points of view on 3 & 4. Can the folks here clear the haze? Thanks
JD101:

A recommendation for a few properly allocated, low-cost, total market index funds is very likely to be an excellent portfolio recommendation.

There is more than one road to Dublin.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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TD2626
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Re: Vanguard adviser recommends 4 fund portfolio

Post by TD2626 » Tue Oct 31, 2017 12:20 am

dwickenh wrote:
Mon Oct 30, 2017 8:22 pm
JD101 wrote:
Mon Oct 30, 2017 8:18 pm
Ragnoth wrote:
Mon Oct 30, 2017 7:38 pm
It is usually preferable to have a diversified portfolio, and having a mix of different types of (uncorrelated) assets gives you the most "bank for your buck" in terms of expected returns vs. volatility. Of course, diversified portfolios have their own downsides (e.g., it can be a pain to re-balance, there are transaction costs, it can mean lower long-term returns, etc.).

Historically, international stocks and bonds could help to diversify a portfolio. There may be more recent versions available, but there were some old Vanguard white papers that dug into the details of exactly "how much" you need in order to get the benefits of diversification:
https://vanguard.com/pdf/ISGGEB.pdf
https://vanguard.com/pdf/icrifi_032012_high.pdf

If you follow the vanguard white paper, you will see that having something like 30% of your stock allocation in international markets would have reduced your volatility in the past, without severely reducing returns. A lot of the "pro" international people will focus on these diversification effects. A lot of the "anti" international people will point out (1) in recent years international and domestic stock/bonds have been increasingly correlated, reducing the benefits of diversification; (2) Many US companies do a huge portion of their business abroad, and you are getting indirect exposure to international markets anyway; (3) you are over-complicating your portfolio with little to show for it; and (4) some international funds are heavily skewed to certain countries/sectors, and are not as diversified as they might seem.

These arguments are not intended to be exhaustive, but it gives you a flavor for what is out there.

My personal opinion is that international exposure (in equities and bonds) can help to diversify a portfolio, but you aren't going to miss out on much if you want to stick with a 3-fund (or even 2-fund) portfolio instead. Having an allocation you can stick with in the long run is often more important than getting an "ideal" allocation.
wow! What a succinct skinny. You have summarized 50 page book into less than one page summary.
+1
Very succinct. Except it's not a 50 page book. It's more like 500 pages. The debate goes on and on and on. It's something that's very hard to get a clear answer on.

I personally feel that having no international stock is for most a serious mistake. (I am more in the 40% to cap weight in international camp). Others substantially disagree with this.

For bonds, though - it gets even more hazy. You get into issues of currency risk (and/or currency hedging costs), portfolio diversity vs simplification (if international bonds would otherwise be a small allocation), and so on.

A young investor who is 90% stock and wants to put 30% of their bonds in international would have 3% of their total portfolio in the international bond fund. Is the hassle of adding an extra fund worth it in that situation? Likely not in my opinion, especially if that investor has substantial international exposure via global cap weighting international stock. However, someone who has a bond-dominated portfolio and relatively lower amounts of international stock may find international bonds somewhat more helpful, in my opinion.

Essentially, the Taylor Larimore Three Fund Portfolio and the Vanguard Four Fund Portfolio are both reasonable, and it is very difficult to foresee ahead of time which one will perform better. The Vanguard Four Fund Portfolio is used in Vanguard's Target Date and Life Strategy funds. Having a one-fund option like that would serve to reduce the "complexity of adding another fund" objection in exchange for higher ERs and possible lower tax efficency. Note that I believe Vanguard used to use something similar to the Three Fund Portfolio.

jason1500
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Re: Vanguard adviser recommends 4 fund portfolio

Post by jason1500 » Tue Oct 31, 2017 7:11 am

JD101 wrote:
Mon Oct 30, 2017 7:03 pm
I talked with Vanguard adviser and asked her about if I were to higher their service, how would they construct my portfolio. My question is:

What does Vanguard paid service offer that we can't do it ourselves? This is of course you are not averse to re-balancing etc etc, this service may add value to those who don't want any headache and I understand that.

Next, it seems they recommend

1. US Total Stock Market Index Fund
2. US Total Bond Market Index Fund
3. International Stock Market Index Fund
4. International Bond Market Fund

I'm pretty sure everyone agrees on 1& 2 but hear varying points of view on 3 & 4. Can the folks here clear the haze? Thanks
That's essentially the holdings of Vanguard LifeStrategy Growth Fund https://personal.vanguard.com/us/funds/ ... 0122#tab=2

tibbitts
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Re: Vanguard adviser recommends 4 fund portfolio

Post by tibbitts » Tue Oct 31, 2017 7:47 am

JD101 wrote:
Mon Oct 30, 2017 7:03 pm
I talked with Vanguard adviser and asked her about if I were to higher their service, how would they construct my portfolio. My question is:

What does Vanguard paid service offer that we can't do it ourselves? This is of course you are not averse to re-balancing etc etc, this service may add value to those who don't want any headache and I understand that.

Next, it seems they recommend

1. US Total Stock Market Index Fund
2. US Total Bond Market Index Fund
3. International Stock Market Index Fund
4. International Bond Market Fund

I'm pretty sure everyone agrees on 1& 2 but hear varying points of view on 3 & 4. Can the folks here clear the haze? Thanks
You don't belong in PAS and they don't want you as a customer for that service. Do yourself and them a favor and manage your own investments.

stan1
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Re: Vanguard adviser recommends 4 fund portfolio

Post by stan1 » Tue Oct 31, 2017 8:38 am

JD101 wrote:
Mon Oct 30, 2017 7:03 pm
Next, it seems they recommend

1. US Total Stock Market Index Fund
2. US Total Bond Market Index Fund
3. International Stock Market Index Fund
4. International Bond Market Fund

I'm pretty sure everyone agrees on 1& 2 but hear varying points of view on 3 & 4. Can the folks here clear the haze? Thanks
This is a low cost portfolio that would be suitable for anyone with appropriate allocations to each of the funds. Any haze that appears on this board is very, very minimal although sometimes people like to debate the finer points.

I think the varying points of view on #3 come from a small number of vocal individuals (most of whom were born before WW II). They have determined that international stocks are not for them but if asked whether a 30 year old grandchild should invest in international stocks I think most would say "yes" after a few seconds of thought.

For #4 I'd say the consensus here seems to be "optional, doesn't matter, don't know, or negligible" more so than yes or no. Having a small allocation to international bonds is unlikely to have much impact on your overall outcome.

dbr
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Re: Vanguard adviser recommends 4 fund portfolio

Post by dbr » Tue Oct 31, 2017 9:16 am

It's simple. If you ask Vanguard, that is what you get. I don't think there is good reason to dispute their recommendation though avoiding international bonds goes back to the BH revered three fund portfolio, which is also just fine.

Why you would pay Vanguard .3% if you are ready and willing to do this yourself is beyond me. Are there some good reasons you would want to pay them for investment management? I don't think you are going to get investment advice worth anything.

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Re: Vanguard adviser recommends 4 fund portfolio

Post by Jack FFR1846 » Tue Oct 31, 2017 9:35 am

Arcticpineapple hit it on the head. PAS listens, takes your age and spits out one of the target date funds. They won't change it, they won't remove international bonds, it's take it or leave it.

I would submit that if you're astute enough to argue for/against international bonds or international altogether, you're beyond the knowledge assumed for PAS and should either buy the appropriate target date fund and live with the international or just build your own 2 or 3 fund and spend 15 minutes in a rebalance exercise on your birthday.
Bogle: Smart Beta is stupid

Ron Scott
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Re: Vanguard adviser recommends 4 fund portfolio

Post by Ron Scott » Tue Oct 31, 2017 10:44 am

tibbitts wrote:
Tue Oct 31, 2017 7:47 am
You don't belong in PAS and they don't want you as a customer for that service. Do yourself and them a favor and manage your own investments.
Jack FFR1846 wrote:
Tue Oct 31, 2017 9:35 am
I would submit that if you're astute enough to argue for/against international bonds or international altogether, you're beyond the knowledge assumed for PAS and should either buy the appropriate target date fund and live with the international or just build your own 2 or 3 fund and spend 15 minutes in a rebalance exercise on your birthday.
Exactly.

I'm Select Flagship or whatever and only use the advisors for technical stuff I don't feel like doing online, or doing account transfers, etc. They are really good administrators if you give them the chance and allow for time to get things set up.

Investing? DIY...

afan
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Re: Vanguard adviser recommends 4 fund portfolio

Post by afan » Tue Oct 31, 2017 12:21 pm

You don't need an advisor to implement a good portfolio.
2-fund, 3-fund and 4-fund portfolios are perfectly reasonable.

I do international stocks, but not international bonds.
For the stocks, since the correlation with US has increased over time, I don't expect it to make much difference. But stocks have a lot of risk and it is at least possible for the component of the variation in US stocks that is not correlated with international stocks to make the greater diversification worth it.

For bonds, I stick to high quality and intermediate or shorter term duration. No junk and no long bonds. This means my bond holdings have MUCH lower volatility than my stocks, which is why I hold them. Even if I believed that diversifying the bond holdings would lower the overall volatility, at the risk level I hold them it cannot make much difference. Plus, I have to accept a lot of tax hassle that I can avoid by staying in the US.

At the extreme, I don't hold cash in any foreign currency either. If there were some hypothetical advantage to having international cash, I don't believe it would be important enough to be worth it.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

rick0
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Re: Vanguard adviser recommends 4 fund portfolio

Post by rick0 » Tue Oct 31, 2017 1:04 pm

JD101 wrote:
Mon Oct 30, 2017 7:03 pm

Next, it seems they recommend

1. US Total Stock Market Index Fund
2. US Total Bond Market Index Fund
3. International Stock Market Index Fund
4. International Bond Market Fund

I'm pretty sure everyone agrees on 1& 2 but hear varying points of view on 3 & 4. Can the folks here clear the haze? Thanks
In answer to your SECOND question, I've started adding International bonds to my bond allocation.
I currently have 20% of my bonds as international. My reasoning is that it adds some diversification
and will likely smooth out the bond gains.

Yes, I know past performance is no predictor of the future, but if you compare at the recent gains of
- "Vanguard Total Bond Market Index Fund Investor Shares" (TBM) and
- "Vanguard Total International Bond Index Fund Investor Shares" (TIB)
you will see:

Code: Select all

Year TIB TBM
--------- ------- -------
2014 8.83% 5.76%
2015 1.04% 0.30%
2016 4.67% 2.50%
2017 as of 10/30 1.88% 3.17%
(Total Returns pulled off the Vanguard funds "Price and Performance" tab)

Based on that (very short!) history, I don't believe the international are hurting me.
Time will tell whether they move independently, or are correlated.

Rick

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nedsaid
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Re: Vanguard adviser recommends 4 fund portfolio

Post by nedsaid » Tue Oct 31, 2017 2:25 pm

JD101 wrote:
Mon Oct 30, 2017 7:03 pm
I talked with Vanguard adviser and asked her about if I were to higher their service, how would they construct my portfolio. My question is:

What does Vanguard paid service offer that we can't do it ourselves? This is of course you are not averse to re-balancing etc etc, this service may add value to those who don't want any headache and I understand that.

Next, it seems they recommend

1. US Total Stock Market Index Fund
2. US Total Bond Market Index Fund
3. International Stock Market Index Fund
4. International Bond Market Fund

I'm pretty sure everyone agrees on 1& 2 but hear varying points of view on 3 & 4. Can the folks here clear the haze? Thanks
My recommendation is for 1, 2 and 3. 4 is entirely optional.

A Target Date Fund or a LifeStrategy Fund will put you into a strategy pretty close to what Vanguard Advisory Service would do and at a lower cost. If you want to manage your portfolio by risk level: Aggressive, Moderate, Conservative; the LifeStrategy Funds would be for you. If you want an age appropriate fund, the Target Date Retirement Funds would fit the bill.
A fool and his money are good for business.

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Re: Vanguard adviser recommends 4 fund portfolio

Post by abuss368 » Tue Oct 31, 2017 5:38 pm

GerryL wrote:
Mon Oct 30, 2017 7:23 pm
During a webinar a Vanguard advisor discussing PAS said that one of the key services they offer many of their clients is "hand holding," that is, keeping them calm and on track with their plan when the markets are scary. If that is not something you need and you plan to maintain a basic 3- or 4-fund portfolio, such as the one they recommended, you probably don't need their advisory service.
In my opinion this is key and often overlooked.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Re: Vanguard adviser recommends 4 fund portfolio

Post by abuss368 » Tue Oct 31, 2017 5:56 pm

I have both an employer retirement plan and the college 529 plans in Vanguard Target Funds. There are many more days than not where I would love to place all accounts in these funds. They are good. I would like to see a couple of things changed but overall they are hard to beat.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Re: Vanguard adviser recommends 4 fund portfolio

Post by Watty » Tue Oct 31, 2017 6:27 pm

dwickenh wrote:
Mon Oct 30, 2017 8:22 pm
JD101 wrote:
Mon Oct 30, 2017 8:18 pm
Ragnoth wrote:
Mon Oct 30, 2017 7:38 pm
It is usually preferable to have a diversified portfolio, and having a mix of different types of (uncorrelated) assets gives you the most "bank for your buck" in terms of expected returns vs. volatility. Of course, diversified portfolios have their own downsides (e.g., it can be a pain to re-balance, there are transaction costs, it can mean lower long-term returns, etc.).

Historically, international stocks and bonds could help to diversify a portfolio. There may be more recent versions available, but there were some old Vanguard white papers that dug into the details of exactly "how much" you need in order to get the benefits of diversification:
https://vanguard.com/pdf/ISGGEB.pdf
https://vanguard.com/pdf/icrifi_032012_high.pdf

If you follow the vanguard white paper, you will see that having something like 30% of your stock allocation in international markets would have reduced your volatility in the past, without severely reducing returns. A lot of the "pro" international people will focus on these diversification effects. A lot of the "anti" international people will point out (1) in recent years international and domestic stock/bonds have been increasingly correlated, reducing the benefits of diversification; (2) Many US companies do a huge portion of their business abroad, and you are getting indirect exposure to international markets anyway; (3) you are over-complicating your portfolio with little to show for it; and (4) some international funds are heavily skewed to certain countries/sectors, and are not as diversified as they might seem.

These arguments are not intended to be exhaustive, but it gives you a flavor for what is out there.

My personal opinion is that international exposure (in equities and bonds) can help to diversify a portfolio, but you aren't going to miss out on much if you want to stick with a 3-fund (or even 2-fund) portfolio instead. Having an allocation you can stick with in the long run is often more important than getting an "ideal" allocation.
wow! What a succinct skinny. You have summarized 50 page book into less than one page summary.
+1
Another +1. That post should be in the wiki somewhere.

The only thing that I would add is that having some international investments would help if there is a problem or black swan specific to the US. There are lots of countries that looked promising and ran into major problems where the residents would have greatly benefited but having international diversification. Even if the country does not have to become a basket case that collapses, things can happen like the like the decline of the British Empire.

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