Cristina has a $1.2 million portfolio and hopes to make work optional within the next decade. Is she invested in the right way? Or should she change up her asset allocation?
Anonymous and her husband plan to retire in 5 years. They have 10 rental properties and a $2.75 million portfolio. They dream of slow travel, generosity, and family time. How should they structure their assets to support the lifestyle they want?
Paula and her husband are planning for three kids, private school, and possibly college down the road. Should they front-load a 529 plan with a large lump sum, or take a different approach?
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Cristina: I’ve been reworking my portfolio. The Efficient Frontier talk got me thinking and overthinking. I built an asset allocation that looked solid on paper, but it didn’t feel right.
Here’s my snapshot: I’m 43 and hope to make work optional between ages 50 and 55. I have $750,000 in retirement accounts, $65,000 in emergency savings, and a paid-off rental worth $300,000 that nets about $950 a month.
I max out my 401(k) with the match – about $30,000 a year — and also contribute $30,000 annually to my brokerage. Altogether, I’ve got about $1.2 million in assets and no debt.
I modeled a three-bucket drawdown strategy and came up with a mostly serious, slightly spicy allocation. And this is what I want to run by you:
25 percent U.S. total market
20 percent U.S. value tilt
15 percent international high dividend
5 percent emerging markets
5 percent REITs
6 percent ARK funds (my “spice”)
24 percent bonds
I asked ChatGPT to role-play as you and give me feedback. Now I want the real deal. What do you think?
Anonymous: I’m 57 and semi-retired; my husband is 53 and hopes to leave full-time work in about five years.
We believe we’re invested along the efficient frontier. Our $2.75 million portfolio is about 58 percent large-cap growth, 16 percent small-cap value, 20 percent international ex-U.S., and 6 percent divided among individual stocks, REITs, and bonds. Roughly 98 percent of this sits in retirement accounts. We also have $80,000 in cash.
Beyond that, we own 10 rental properties worth about $2.1 million, with $1 million in mortgages. Seven of those have 5/1 ARMs at 7 percent, and three are on 30-year mortgages at 3.5 percent. Gross rents total $18,800 a month, with $12,400 going toward PITI and another 10 percent toward management.
Our primary home is paid off, and our only other debt is a $35,000 car loan at 3.9 percent. At full retirement age, we’ll each receive a pension of $1,000 a month.
Looking ahead, we want to slow travel, spend a few months at a time in different places, give generously, and eventually stay near our daughter once she starts a family. We estimate our lifestyle will cost about $12,000 a month, and we expect to earn at least $4,000 from part-time work in retirement.
My husband is still contributing to his 401(k) up to the match, and we’re both funding a backdoor Roth and an HSA. On top of that, we can save about $3,000 a month. I’m torn on whether that money should go toward cash, bonds, or our current allocation.
Here’s what I’d love your perspective on: how we should view our assets as a whole and how strategies like the Golden Ratio or All-Weather Portfolio might apply. And finally, I wonder if we should rebalance now to mimic the All-Weather Portfolio or wait until we’re closer to retirement.
Paula: How much should I put into 529 plans for my kids’ education — and should I front-load contributions now or pace them over time?
My husband and I are expecting our first child, and we plan to have three kids. We want to send them to private school and then possibly public or private universities, so we know it’ll be a big financial commitment.
I’m trying to figure out how much to contribute to 529 plans. My Fidelity advisor mentioned I could front-load five years’ worth of gifts at once, which seems smart since the money would have more time to grow.
Right now, we have about $200,000 sitting in a high-yield savings account. It was originally set aside for property, but we’re rethinking that plan. I’m debating whether to move that money into 529s – or at least start with $90,000 when the baby’s born.
The challenge is there are so many types of 529 plans, all with different rules. I need one that allows $10,000 a year in withdrawals for private school, in addition to covering college expenses. We’re in California now, but may not stay here long term.
Can you share your thoughts on using 529s for both private school and college costs? And do you have any recommendations for the best 529 plans?
Resources Mentioned:
Interview with Frank Vasquez
Risk Parity Cheat Sheet
The All Weather Portfolio by Frank Vasquez
The Golden Ratio
Caller Christina’s original call
Afford Anything Episode 618
Risk Parity Portfolio Blueprint
Joe’s episode Stacking Benjamins 1698
Run The Line half marathon with Joe
SavingForCollege.com
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