Am I on the right track? Criticism is welcomed!

Have a question about your personal investments? No matter how simple or complex, you can ask it here.

Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 12:23 am

Hello and thanks to everyone that will take the time to help me reach a better financial understanding and goal.

50k a yr
33 no children
NO employer match at this time.. was first 3%. I'm still contributing as 3% iirc
150k in the bank as ef and everything else
401k has 30k
Mortgage @3.25 with 158k left.. Just refi'd. Payment $1135 or so
Car Payment of $500/month.. gettin rid of it soon.

I have the following Asset Allocations: 80% stocks, 20% balanced. From reading, i know i should have something else.. Here goes...
80% stocks:
Large company 10% R. Rowe Price blue chip
Small/Mid co. 52% = 30% morgan stanley inst mid cap & 22% Wellfs fargo Advantage Emerging
Intl/Global 18% thornburg intl value
20% balanced = 20% blackrock Global all instl.

I know i should fund some type of Ira, just dont have an idea of how and where to do it. I'm a sponge and willing to listen. Given my age and position.. What do y'all suggest i do? Once again, thanks for all the advice!

Ok if i have this correct.... I have the following...

RRBGX 11%
MPEGX 30%
TGVIX 19%
MALOX 19%
WFGDX 21%
Last edited by h8 2 lose on Thu Jan 10, 2013 10:54 pm, edited 1 time in total.
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Re: Am I on the right track? Criticism is welcomed!

Postby DaveS » Thu Jan 10, 2013 9:35 am

You open an IRA account and deposit money into it. You did not post expenses for the funds you own. They are really expensive ones. If you poke around Vanguards web page, you may find a cost analyzer. Run the extra 1% in costs through it for 30 years or do the math in your head and you will be surprised at how much appreciation you lose to those costs. In the wiki this site take a look at the 3 or 4 fund portfolio's. Dave
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Re: Am I on the right track? Criticism is welcomed!

Postby Grt2bOutdoors » Thu Jan 10, 2013 9:48 am

Can you list all the available funds in the 403b? If you take a look at Blue Chip Growth holdings you will see it's not what we call diversified - it's more like a closet tech fund. I would hardly call a tech fund - blue chip, even if some of them are established with good track records.
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Re: Am I on the right track? Criticism is welcomed!

Postby Beantown85 » Thu Jan 10, 2013 9:49 am

150k in the bank as an EF seems insanely high. Do you really need three times your annual gross salary as an EF? You should be maxing all tax advantaged accounts and burning down that EF as necessary.
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 9:58 am

DaveS wrote:You open an IRA account and deposit money into it. You did not post expenses for the funds you own. They are really expensive ones. If you poke around Vanguards web page, you may find a cost analyzer. Run the extra 1% in costs through it for 30 years or do the math in your head and you will be surprised at how much appreciation you lose to those costs. In the wiki this site take a look at the 3 or 4 fund portfolio's. Dave

Dave, that's the thing, all I did was get help in coming those stocks, if you tell me where to look for the cost, I'll provide that. I'm trying to get a better understanding of how this works. Tia
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 10:00 am

Beantown85 wrote:150k in the bank as an EF seems insanely high. Do you really need three times your annual gross salary as an EF? You should be maxing all tax advantaged accounts and burning down that EF as necessary.

Just my savings, nothing more. As mentioned, I'm a novice. Tell me where and what you think things should go, thanks.
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 10:02 am

Grt2bOutdoors wrote:Can you list all the available funds in the 403b? If you take a look at Blue Chip Growth holdings you will see it's not what we call diversified - it's more like a closet tech fund. I would hardly call a tech fund - blue chip, even if some of them are established with good track records.

Available as in what I can take out? Meaning vested? If so, 17k I. If. I'm misunderstanding, then all in the account is 30k
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Re: Am I on the right track? Criticism is welcomed!

Postby dickenjb » Thu Jan 10, 2013 10:15 am

You need to list all the funds available in your 401k and their expense ratios.

Then we can help.

We will probably advise you to max out your 401k at $17,500 and live off your insanely large emergency fund in the bank. Unless your 401k choices really really suck.
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Re: Am I on the right track? Criticism is welcomed!

Postby Wizze » Thu Jan 10, 2013 10:21 am

and as a clarification hopefully to help, by "funds available" mentioned above, they mean all the different selections you can choose from in your plan to place your money into. Not specifically the amount of money you have available in that plan.
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Re: Am I on the right track? Criticism is welcomed!

Postby 325e » Thu Jan 10, 2013 10:24 am

You make $50k and have $150k saved. Assuming that is not inheritance or something, that means you live below your means and can save even with a $500 car payment. That is excellent.

Saving money is the first part, then allocating is next.

If you live below means, perhaps you spend $30k a year or less. So that gives you 5 years of EF. That seems high.

No brainer is to open a Vanguard Roth and take that $500 a month car payment that is almost done, and throw it monthly into a roth. Pick a two or three fund (google boglehead 2 or 3 fund) and just keep putting money in there. After 5 years, you can take out principle from a roth penalty free, so it can double as an extra cushion to an EF if you really need it one day. But then you won't be paying taxes on the growth and it will work for you.

Put together a plan for what you want to achieve.

Based on that plan, you'll be able to better pick options to invest your money. The 401k is an amazing thing. If the market returns 7% a year, your money will double every 10 years. At 7%, $150k becomes $300k in 10, $600k in 20, 1.2mm in 30. Of course, this is not guaranteed. But to have your money grow tax free is a good deal. As said before, you could live on some of that $150k and start maxing your 401k along with the roth.

Overall, you are saving well. I would just start getting a chunk of that money to work for you in investments instead of sitting in the bank slowly losing money. If you are very conservative, you could pay extra on the mortgage as a trade-off to the EF, but your real gains will likely come from investing over the long term.
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Re: Am I on the right track? Criticism is welcomed!

Postby Grt2bOutdoors » Thu Jan 10, 2013 10:25 am

Let's take a step back before we even provide investment suggestions.

The OP is 33, OP how long did it take you to amass that $150K - was it by scrimp and saving, an inheritance or you got lucky in the lottery? The reason I ask, is one who saved since the first job is likely not willing or wanting to place their money in investments that may cause principal to decline. This should be your first step - how much principal are you willing to place at risk, how much risk are you willing to assume and what is the ultimate purpose of these investments.

Emotionally, having that $150K in the bank probably provides you some piece of mind. How comfortable are you with reducing that balance? Will you be able to sleep at night, if you have $100K or $50K in the bank?

Second, how secure is your current employment? Are you in a sector/industry that experiences frequent layoffs?


When I asked about what investments were available in the 403(b) what I meant was of those funds you listed, is that all that is available to invest in or are there others that you could invest in but have chosen not to? Ex. You use 5 different funds, but there are 10 funds from which to choose. If there are others, can you please list them?
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Re: Am I on the right track? Criticism is welcomed!

Postby Grt2bOutdoors » Thu Jan 10, 2013 10:30 am

[quote="325e"]You make $50k and have $150k saved. Assuming that is not inheritance or something, that means you live below your means and can save even with a $500 car payment. That is excellent.

Saving money is the first part, then allocating is next.

If you live below means, perhaps you spend $30k a year or less. So that gives you 5 years of EF. That seems high.

No brainer is to open a Vanguard Roth and take that $500 a month car payment that is almost done, and throw it monthly into a roth. quote]

Disagree - No brainer would be to use the Traditional IRA; reason being OP will receive immediate tax deductibility due to current income limitation, OP likely will receive a Savers Credit when filing. Unless OP is on a career path which will lead to significant tax bracket creep that is sustained through retirement, OP will likely pay little or no taxes in retirement.
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 10:31 am

dickenjb wrote:You need to list all the funds available in your 401k and their expense ratios.

Then we can help.

We will probably advise you to max out your 401k at $17,500 and live off your insanely large emergency fund in the bank. Unless your 401k choices really really suck.

I thought I posted them, see I don't know how to read them, if can take a pic and upload then I would. Max out meaning take my after tax money and put 17.5 in it? Or If they allow me to put up to 25% of gross in there I should?
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 10:34 am

325e wrote:You make $50k and have $150k saved. Assuming that is not inheritance or something, that means you live below your means and can save even with a $500 car payment. That is excellent.

Saving money is the first part, then allocating is next.

If you live below means, perhaps you spend $30k a year or less. So that gives you 5 years of EF. That seems high.

No brainer is to open a Vanguard Roth and take that $500 a month car payment that is almost done, and throw it monthly into a roth. Pick a two or three fund (google boglehead 2 or 3 fund) and just keep putting money in there. After 5 years, you can take out principle from a roth penalty free, so it can double as an extra cushion to an EF if you really need it one day. But then you won't be paying taxes on the growth and it will work for you.

Put together a plan for what you want to achieve.

Based on that plan, you'll be able to better pick options to invest your money. The 401k is an amazing thing. If the market returns 7% a year, your money will double every 10 years. At 7%, $150k becomes $300k in 10, $600k in 20, 1.2mm in 30. Of course, this is not guaranteed. But to have your money grow tax free is a good deal. As said before, you could live on some of that $150k and start maxing your 401k along with the roth.

Overall, you are saving well. I would just start getting a chunk of that money to work for you in investments instead of sitting in the bank slowly losing money. If you are very conservative, you could pay extra on the mortgage as a trade-off to the EF, but your real gains will likely come from investing over the long term.


No inheritance or lottery, I wish on the lottery though. Yes I live well below my means. That's why I'm here, I don't know where and how to allocate them. My plan is just to have more than I have now and understand how I got there. Thanks for the comments thus far:)
Last edited by h8 2 lose on Thu Jan 10, 2013 10:36 am, edited 1 time in total.
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Re: Am I on the right track? Criticism is welcomed!

Postby Grt2bOutdoors » Thu Jan 10, 2013 10:35 am

h8 2 lose wrote:
dickenjb wrote:You need to list all the funds available in your 401k and their expense ratios.

Then we can help.

We will probably advise you to max out your 401k at $17,500 and live off your insanely large emergency fund in the bank. Unless your 401k choices really really suck.

I thought I posted them, see I don't know how to read them, if can take a pic and upload then I would. Max out meaning take my after tax money and put 17.5 in it? Or If they allow me to put up to 25% of gross in there I should?


OP - how much are you coming home with monthly right now?
Take home - less mortgage, car payment, utilities, food, spending money = how much is left over at the end of the month?
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 10:47 am

Grt2bOutdoors wrote:Let's take a step back before we even provide investment suggestions.

The OP is 33, OP how long did it take you to amass that $150K - was it by scrimp and saving, an inheritance or you got lucky in the lottery? The reason I ask, is one who saved since the first job is likely not willing or wanting to place their money in investments that may cause principal to decline. This should be your first step - how much principal are you willing to place at risk, how much risk are you willing to assume and what is the ultimate purpose of these investments.

Emotionally, having that $150K in the bank probably provides you some piece of mind. How comfortable are you with reducing that balance? Will you be able to sleep at night, if you have $100K or $50K in the bank?

Second, how secure is your current employment? Are you in a sector/industry that experiences frequent layoffs?


When I asked about what investments were available in the 403(b) what I meant was of those funds you listed, is that all that is available to invest in or are there others that you could invest in but have chosen not to? Ex. You use 5 different funds, but there are 10 funds from which to choose. If there are others, can you please list them?


Yes scrimp and save, am not waiting for anything. It took I'd say, 8-10 yrs. I'm ok with risking a little of it. Job security, it's ok. 50/50. Its a schwab account, so I think I can pick and choose. In regards to the car payment, I want to get rid of it and get a better efficient car
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 10:51 am

Grt2bOutdoors wrote:
325e wrote:You make $50k and have $150k saved. Assuming that is not inheritance or something, that means you live below your means and can save even with a $500 car payment. That is excellent.

Saving money is the first part, then allocating is next.

If you live below means, perhaps you spend $30k a year or less. So that gives you 5 years of EF. That seems high.

No brainer is to open a Vanguard Roth and take that $500 a month car payment that is almost done, and throw it monthly into a roth. quote]

Disagree - No brainer would be to use the Traditional IRA; reason being OP will receive immediate tax deductibility due to current income limitation, OP likely will receive a Savers Credit when filing. Unless OP is on a career path which will lead to significant tax bracket creep that is sustained through retirement, OP will likely pay little or no taxes in retirement.

Thx grt, so just go to any bank and say I'd like to open a t ira, and deposit how much of my after tax money? In one shot or monthly ad you've suggested? In regards to the car, looking to sell to get a better fuel efficient car. The payment will be lower and I don't mind having one. I like the new subaru legacy.
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 10:54 am

Grt2bOutdoors wrote:
h8 2 lose wrote:
dickenjb wrote:You need to list all the funds available in your 401k and their expense ratios.

Then we can help.

We will probably advise you to max out your 401k at $17,500 and live off your insanely large emergency fund in the bank. Unless your 401k choices really really suck.

I thought I posted them, see I don't know how to read them, if can take a pic and upload then I would. Max out meaning take my after tax money and put 17.5 in it? Or If they allow me to put up to 25% of gross in there I should?


OP - how much are you coming home with monthly right now?
Take home - less mortgage, car payment, utilities, food, spending money = how much is left over at the end of the month?

$1200 I'd say or thereabouts. I work in a tipping position
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Re: Am I on the right track? Criticism is welcomed!

Postby Johm221122 » Thu Jan 10, 2013 11:03 am

I did not want to comment but share this if have not seen it
Bogleheads philosophy
http://www.bogleheads.org/wiki/Boglehea ... philosophy
John
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 11:06 am

Johm221122 wrote:I did not want to comment but share this if have not seen it
Bogleheads philosophy
http://www.bogleheads.org/wiki/Boglehea ... philosophy
John

why didn't you want to comment John, thanks for commenting. I shall read that and try to understand. It all seems like a lot to take in. While I'm smart in some areas, I have mani idea in others. Thanks again everyone :)
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Re: Am I on the right track? Criticism is welcomed!

Postby Johm221122 » Thu Jan 10, 2013 11:12 am

h8 2 lose wrote:
Johm221122 wrote:I did not want to comment but share this if have not seen it
Bogleheads philosophy
http://www.bogleheads.org/wiki/Boglehea ... philosophy
John

why didn't you want to comment John, thanks for commenting. I shall read that and try to understand. It all seems like a lot to take in. While I'm smart in some areas, I have mani idea in others. Thanks again everyone :)

You are getting advise from others,I did not have time to follow all the replies right now.Your in right place, take your time.I will look latter if I see anything I let you know
Good luck
John
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Re: Am I on the right track? Criticism is welcomed!

Postby JW Nearly Retired » Thu Jan 10, 2013 11:13 am

h8 2 lose wrote:
dickenjb wrote:You need to list all the funds available in your 401k and their expense ratios.

Then we can help.

We will probably advise you to max out your 401k at $17,500 and live off your insanely large emergency fund in the bank. Unless your 401k choices really really suck.

......Max out meaning take my after tax money and put 17.5 in it? Or If they allow me to put up to 25% of gross in there I should?

Max out meaning take my after tax money and put 17.5 in it?.......... Not directly because it isn't allowed. But you can do it indirectly.

Or If they allow me to put up to 25% of gross in there I should?........... Yes, boost your regular paycheck contributions up to 17500/12 = $1450/month, or whatever is the 25% max you would be allowed to do. Then take use ef withdrawels to make up for your reduced take home pay. You were already putting in some money and you will get a bigger tax break, so I doubt you will need to use more than $1000/month from the ef to "max" the 401k at $17,500. In effect this shifts money from your ef to your 401k.
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 11:39 am

JW Nearly Retired wrote:
h8 2 lose wrote:
dickenjb wrote:You need to list all the funds available in your 401k and their expense ratios.

Then we can help.

We will probably advise you to max out your 401k at $17,500 and live off your insanely large emergency fund in the bank. Unless your 401k choices really really suck.

......Max out meaning take my after tax money and put 17.5 in it? Or If they allow me to put up to 25% of gross in there I should?

Max out meaning take my after tax money and put 17.5 in it?.......... Not directly because it isn't allowed. But you can do it indirectly.

Or If they allow me to put up to 25% of gross in there I should?........... Yes, boost your regular paycheck contributions up to 17500/12 = $1450/month, or whatever is the 25% max you would be allowed to do. Then take use ef withdrawels to make up for your reduced take home pay. You were already putting in some money and you will get a bigger tax break, so I doubt you will need to use more than $1000/month from the ef to "max" the 401k at $17,500. In effect this shifts money from your ef to your 401k.
JW
ok thx jw, however don't I need to re arrange my portfolio first?
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 11:42 am

Johm221122 wrote:
h8 2 lose wrote:
Johm221122 wrote:I did not want to comment but share this if have not seen it
Bogleheads philosophy
http://www.bogleheads.org/wiki/Boglehea ... philosophy
John

why didn't you want to comment John, thanks for commenting. I shall read that and try to understand. It all seems like a lot to take in. While I'm smart in some areas, I have mani idea in others. Thanks again everyone :)

You are getting advise from others,I did not have time to follow all the replies right now.Your in right place, take your time.I will look latter if I see anything I let you know
Good luck
John

that's fine I can wait on your response and many others. I know that's not going to happen overnight, thanks again
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Re: Am I on the right track? Criticism is welcomed!

Postby pkcrafter » Thu Jan 10, 2013 11:51 am

H8 2 lose wrote:
Thx grt, so just go to any bank and say I'd like to open a t ira, and deposit how much of my after tax money? In one shot or monthly ad you've suggested? In regards to the car, looking to sell to get a better fuel efficient car. The payment will be lower and I don't mind having one. I like the new subaru legacy.

No, don't go to a bank, that's a very expensive way to get an IRA. We recommend Vanguard, Fidelity or Schwab. You can put $5500 into an IRA for 2013, and until you file taxes you can contribute to a Roth for 2012 ($5000). But but don't do anything yet, jst note it as part of your plan. Wait until you understand how to build your new portfolio before actually changing anything. You are getting a lot of information and it's all new, so it will be confusing at first.
edited: blue

What we are asking now is for you to ask someone at work for a list of the funds that are available to you in your plan along with ticker symbols (identifiers) if there are any, and expense ratios (how much the funds cost). Once we know what you can get, we can recommend.

Paul
Last edited by pkcrafter on Thu Jan 10, 2013 6:02 pm, edited 1 time in total.
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Re: Am I on the right track? Criticism is welcomed!

Postby JW Nearly Retired » Thu Jan 10, 2013 12:37 pm

h8 2 lose wrote:
JW Nearly Retired wrote:
h8 2 lose wrote:
dickenjb wrote:You need to list all the funds available in your 401k and their expense ratios.

Then we can help.

We will probably advise you to max out your 401k at $17,500 and live off your insanely large emergency fund in the bank. Unless your 401k choices really really suck.

......Max out meaning take my after tax money and put 17.5 in it? Or If they allow me to put up to 25% of gross in there I should?

Max out meaning take my after tax money and put 17.5 in it?.......... Not directly because it isn't allowed. But you can do it indirectly.

Or If they allow me to put up to 25% of gross in there I should?........... Yes, boost your regular paycheck contributions up to 17500/12 = $1450/month, or whatever is the 25% max you would be allowed to do. Then take use ef withdrawels to make up for your reduced take home pay. You were already putting in some money and you will get a bigger tax break, so I doubt you will need to use more than $1000/month from the ef to "max" the 401k at $17,500. In effect this shifts money from your ef to your 401k.
JW
ok thx jw, however don't I need to re arrange my portfolio first?

I don't think it makes much difference as long as you will follow through on rearranging your portfolio. Once you decide (with our help) on what funds you want to hold in the 401k, that can usually be made to happen on-line in a few mouse clicks. You just exchange from your current bunch of funds to a new bunch.

Can you access your 401k account on line now? I thought that was pretty standard.
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Re: Am I on the right track? Criticism is welcomed!

Postby bogleblitz » Thu Jan 10, 2013 1:11 pm

Why is there a car payment in the first place? I would think you would have paid in full with cash unless it is 0% finance. I know you are trying to get rid of the car payment.
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 2:40 pm

bogleblitz wrote:Why is there a car payment in the first place? I would think you would have paid in full with cash unless it is 0% finance. I know you are trying to get rid of the car payment.

I've had the car for 4 yrs with payment. I could've paid cash, but things wouldve been different. Hence why I'm now trying to pay cash for a good car and keep it for sometime to reach my financial goal. I'm not perfect, buy willing to learn.
Last edited by h8 2 lose on Thu Jan 10, 2013 5:15 pm, edited 1 time in total.
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 2:42 pm

JW Nearly Retired wrote:
h8 2 lose wrote:
JW Nearly Retired wrote:
h8 2 lose wrote:
dickenjb wrote:You need to list all the funds available in your 401k and their expense ratios.

Then we can help.

We will probably advise you to max out your 401k at $17,500 and live off your insanely large emergency fund in the bank. Unless your 401k choices really really suck.

......Max out meaning take my after tax money and put 17.5 in it? Or If they allow me to put up to 25% of gross in there I should?

Max out meaning take my after tax money and put 17.5 in it?.......... Not directly because it isn't allowed. But you can do it indirectly.

Or If they allow me to put up to 25% of gross in there I should?........... Yes, boost your regular paycheck contributions up to 17500/12 = $1450/month, or whatever is the 25% max you would be allowed to do. Then take use ef withdrawels to make up for your reduced take home pay. You were already putting in some money and you will get a bigger tax break, so I doubt you will need to use more than $1000/month from the ef to "max" the 401k at $17,500. In effect this shifts money from your ef to your 401k.
JW
ok thx jw, however don't I need to re arrange my portfolio first?

I don't think it makes much difference as long as you will follow through on rearranging your portfolio. Once you decide (with our help) on what funds you want to hold in the 401k, that can usually be made to happen on-line in a few mouse clicks. You just exchange from your current bunch of funds to a new bunch.

Can you access your 401k account on line now? I thought that was pretty standard.
JW

When I'm able to access it, I'll update. I will take the advice, once I've compiled it and apply it accordingly. Yes it was standard, just double checking. Guessing my t, sitting my i.
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 2:47 pm

Firstly I'd like to first into the right funds and then adjust accordingly immediately to the max of 25%. I don't particularly need to take anything from the ef to compensate, because I live smart for the most part. Car with payment is 06 mercedes & I have also a 01 honda accord (stick). Looking to consolidate into one vehicle and get the subaru legacy, as I like the features and gas mileage for an awd vehicle. Gf cannot drive stick, so I think it's wise to get a car she can drive as well in case we need to swap. She has a cuv.
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Re: Am I on the right track? Criticism is welcomed!

Postby Default User BR » Thu Jan 10, 2013 3:14 pm

You're a lot like I was, only getting going earlier. I would advise reading some of the books from the reading list in the Wiki. That will help ease you into the process of letting go of some of those savings and turning them into investments. At 33, time is on your side.


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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 5:12 pm

Default User BR wrote:You're a lot like I was, only getting going earlier. I would advise reading some of the books from the reading list in the Wiki. That will help ease you into the process of letting go of some of those savings and turning them into investments. At 33, time is on your side.


Brian

I'd actually like to get into rentals as the ptices are low. While having the 401 work for me, I can try at being a landlord as well. I'm a patient person, so it'll work out over time. I'm not afraid to pour the money out, just would like to put it out as correct as possible the first time.
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Re: Am I on the right track? Criticism is welcomed!

Postby Random Musings » Thu Jan 10, 2013 5:36 pm

Unless the EF is really needed, I think the no-brainer is to take $10,500 of the $150K in EF and place in Roth.

$5,000 for 2012 contribution
$5,500 for 2013 contribution

How it will be invested will depend upon details of portfolio choices in 401K and other factors not yet provided by OP.

RM
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Re: Am I on the right track? Criticism is welcomed!

Postby crowd79 » Thu Jan 10, 2013 5:42 pm

Beantown85 wrote:150k in the bank as an EF seems insanely high. Do you really need three times your annual gross salary as an EF? You should be maxing all tax advantaged accounts and burning down that EF as necessary.


I assume that much, if not all, of this EF is in a low-yielding savings account earning 1% or less interest. Since this is an abnormally high EF with respect to income, all of that money is earning next to nothing. I'd take $10k of it right now and stash it away in inflation-protected I-Bonds (for short, mid or long-term savings) and another $10k as a "floor" for your retirement account with EE-Bonds as a safe portion of your portfolio. They will double your money in 20 years at 3.53% interest, but you absolutely cannot touch that money until then. Both series of government I and EE Bonds are federal tax-deferred and are not subject to state income taxes at all.
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 7:46 pm

Beantown85 wrote:150k in the bank as an EF seems insanely high. Do you really need three times your annual gross salary as an EF? You should be maxing all tax advantaged accounts and burning down that EF as necessary.

Whats your take on things thus far beantown? Where would you suggest I put it? Thanks
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 7:47 pm

Random Musings wrote:Unless the EF is really needed, I think the no-brainer is to take $10,500 of the $150K in EF and place in Roth.

$5,000 for 2012 contribution
$5,500 for 2013 contribution

How it will be invested will depend upon details of portfolio choices in 401K and other factors not yet provided by OP.

RM

I can do that and not worry, where should I put it?
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 10, 2013 11:06 pm

here are my options to reallocate: If i need more info, just tell me what to input. Thanks..

SWPPX
SENCX
NSVAX
FSEMX
NAMAX
NSVAX
DIISX
Schwab Managed Retirement Trust Income Fund
Schwab Managed Retirement Trust Fund 2010 UNIT CLASS 2
Schwab Managed Retirement Trust Fund 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050
DBIRX
SWUXX
Morley Stable Value Fund CLASS 50-1

also, updated first post to show the symbols?
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Re: Am I on the right track? Criticism is welcomed!

Postby Random Musings » Fri Jan 11, 2013 9:37 am

h8 2 lose wrote:
Random Musings wrote:Unless the EF is really needed, I think the no-brainer is to take $10,500 of the $150K in EF and place in Roth.

$5,000 for 2012 contribution
$5,500 for 2013 contribution

How it will be invested will depend upon details of portfolio choices in 401K and other factors not yet provided by OP.

RM

I can do that and not worry, where should I put it?


Initially, just place in a money market fund until you get everything sorted out with respect to implementing your written investment plan.

RM
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Re: Am I on the right track? Criticism is welcomed!

Postby JW Nearly Retired » Fri Jan 11, 2013 10:11 am

h8 2 lose wrote:here are my options to reallocate: If i need more info, just tell me what to input. Thanks..
SWPPX
SENCX
NSVAX
FSEMX
NAMAX
NSVAX
DIISX
Schwab Managed Retirement Trust Income Fund
Schwab Managed Retirement Trust Fund 2010 UNIT CLASS 2
Schwab Managed Retirement Trust Fund 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050
DBIRX
SWUXX
Morley Stable Value Fund CLASS 50-1

also, updated first post to show the symbols?

I think you have some pretty good low expense choices here. Just to clarify, you now show in the OP that you are presently invested in the following:
RRBGX 11%
MPEGX 30%
TGVIX 19%
MALOX 19%
WFGDX 21%
This plus the other group above is all the choices in your 401k... correct?

Can you add the expense ratios to this? and fund names? Some folks here complain about needing to look them up. Also we need the ERs within the 401k including whatever admin fee the 401k custodian is tacking on. And sometimes the 401k ERs are different from the retail versions of the funds. This info should be in the 401k Summary Plan Description (SPD) document.
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Fri Jan 11, 2013 11:36 am

JW Nearly Retired wrote:
h8 2 lose wrote:here are my options to reallocate: If i need more info, just tell me what to input. Thanks..
SWPPX
SENCX
NSVAX
FSEMX
NAMAX
NSVAX
DIISX
Schwab Managed Retirement Trust Income Fund
Schwab Managed Retirement Trust Fund 2010 UNIT CLASS 2
Schwab Managed Retirement Trust Fund 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050
DBIRX
SWUXX
Morley Stable Value Fund CLASS 50-1

also, updated first post to show the symbols?

I think you have some pretty good low expense choices here. Just to clarify, you now show in the OP that you are presently invested in the following:
RRBGX 11%
MPEGX 30%
TGVIX 19%
MALOX 19%
WFGDX 21%
This plus the other group above is all the choices in your 401k... correct?

Can you add the expense ratios to this? and fund names? Some folks here complain about needing to look them up. Also we need the ERs within the 401k including whatever admin fee the 401k custodian is tacking on. And sometimes the 401k ERs are different from the retail versions of the funds. This info should be in the 401k Summary Plan Description (SPD) document.
JW

Yes correct and I'll find those answers I hope lol
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Fri Jan 11, 2013 1:39 pm

Random Musings wrote:
h8 2 lose wrote:
Random Musings wrote:Unless the EF is really needed, I think the no-brainer is to take $10,500 of the $150K in EF and place in Roth.

$5,000 for 2012 contribution
$5,500 for 2013 contribution

How it will be invested will depend upon details of portfolio choices in 401K and other factors not yet provided by OP.

RM

I can do that and not worry, where should I put it?


Initially, just place in a money market fund until you get everything sorted out with respect to implementing your written investment plan.

RM
which do you suggest? I'd like to do as mentioned above and add that 5000 and 5500, respectively, Right now.
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Re: Am I on the right track? Criticism is welcomed!

Postby Random Musings » Fri Jan 11, 2013 3:16 pm

h8 2 lose wrote:
Random Musings wrote:
h8 2 lose wrote:
Random Musings wrote:Unless the EF is really needed, I think the no-brainer is to take $10,500 of the $150K in EF and place in Roth.

$5,000 for 2012 contribution
$5,500 for 2013 contribution

How it will be invested will depend upon details of portfolio choices in 401K and other factors not yet provided by OP.

RM

I can do that and not worry, where should I put it?


Initially, just place in a money market fund until you get everything sorted out with respect to implementing your written investment plan.

RM
which do you suggest? I'd like to do as mentioned above and add that 5000 and 5500, respectively, Right now.


There are various companies you can use to do this - Vanguard, Fidelity, Schwab, TRowe, Wells Fargo and so on. Most of these companies will offer low-cost ETF's or indexed mutual funds to provide you with the asset classes you need. Some investors here prefer all their assets in one shop as best they can (excluding company plans and 529's) while others will use more than one so that all their assets are not in one basket - I prefer the former approach.

I think the key, with interest rates being so low, is to move the money to a Roth, set up you plan and then disburse those $ in MM fund to appropriate asset classes once everything is fleshed out. The money market fund chosen should not be a "high-yield" one that incurs market risk. Even "safe" funds (including those from T-Rowe and Schwab) injected some $ into their MM funds in the tweak their funds back to par - they ultimately had to disclose (I think in 2008).

RM
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Mon Jan 14, 2013 1:13 pm

Random Musings wrote:
h8 2 lose wrote:
Random Musings wrote:
h8 2 lose wrote:
Random Musings wrote:Unless the EF is really needed, I think the no-brainer is to take $10,500 of the $150K in EF and place in Roth.

$5,000 for 2012 contribution
$5,500 for 2013 contribution

How it will be invested will depend upon details of portfolio choices in 401K and other factors not yet provided by OP.

RM

I can do that and not worry, where should I put it?


Initially, just place in a money market fund until you get everything sorted out with respect to implementing your written investment plan.

RM
which do you suggest? I'd like to do as mentioned above and add that 5000 and 5500, respectively, Right now.


There are various companies you can use to do this - Vanguard, Fidelity, Schwab, TRowe, Wells Fargo and so on. Most of these companies will offer low-cost ETF's or indexed mutual funds to provide you with the asset classes you need. Some investors here prefer all their assets in one shop as best they can (excluding company plans and 529's) while others will use more than one so that all their assets are not in one basket - I prefer the former approach.

I think the key, with interest rates being so low, is to move the money to a Roth, set up you plan and then disburse those $ in MM fund to appropriate asset classes once everything is fleshed out. The money market fund chosen should not be a "high-yield" one that incurs market risk. Even "safe" funds (including those from T-Rowe and Schwab) injected some $ into their MM funds in the tweak their funds back to par - they ultimately had to disclose (I think in 2008).

RM
so I just go in the bank and tell them I want to open up a ira and that's it? What type of benefits does it give to my tax obligations?
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Re: Am I on the right track? Criticism is welcomed!

Postby Johm221122 » Mon Jan 14, 2013 1:33 pm

I would not go to bank try somewhere like vanguard
https://personal.vanguard.com/us/openaccount
John
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Tue Jan 15, 2013 3:50 pm

Johm221122 wrote:I would not go to bank try somewhere like vanguard
https://personal.vanguard.com/us/openaccount
John

Thnks john I'll look into it tonight.
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Tue Jan 15, 2013 11:40 pm

h8 2 lose wrote:
Johm221122 wrote:I would not go to bank try somewhere like vanguard
https://personal.vanguard.com/us/openaccount
John

Thnks john I'll look into it tonight.

Should I open a roth or t ira? Thanks again everyone
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Re: Am I on the right track? Criticism is welcomed!

Postby JW Nearly Retired » Wed Jan 16, 2013 9:22 am

h8 2 lose wrote:
h8 2 lose wrote:
Johm221122 wrote:I would not go to bank try somewhere like vanguard
https://personal.vanguard.com/us/openaccount
John

Thnks john I'll look into it tonight.

Should I open a roth or t ira? Thanks again everyone

We at least need to know your marginal tax bracket to say. Compare your taxable income (line 43 of form 1040) with this table and tell us. http://www.forbes.com/sites/moneybuilde ... nal-rates/

Taxable income is going to be less than your 50k gross income by at least the std deduction and exemptions. We don't know your marital status so we can't estimate your bracket.
Do you file a single or married filing jointly tax return?

If you are in the 25% bracket I would open a TIRA. In 15% or lower a Roth.
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Re: Am I on the right track? Criticism is welcomed!

Postby Johm221122 » Wed Jan 16, 2013 10:15 am

You got great advice above ,here is WIKI link traditional vs Roth
http://www.bogleheads.org/wiki/Traditional_versus_Roth
John
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 17, 2013 12:46 am

JW Nearly Retired wrote:
h8 2 lose wrote:
h8 2 lose wrote:
Johm221122 wrote:I would not go to bank try somewhere like vanguard
https://personal.vanguard.com/us/openaccount
John

Thnks john I'll look into it tonight.

Should I open a roth or t ira? Thanks again everyone

We at least need to know your marginal tax bracket to say. Compare your taxable income (line 43 of form 1040) with this table and tell us. http://www.forbes.com/sites/moneybuilde ... nal-rates/

Taxable income is going to be less than your 50k gross income by at least the std deduction and exemptions. We don't know your marital status so we can't estimate your bracket.
Do you file a single or married filing jointly tax return?

If you are in the 25% bracket I would open a TIRA. In 15% or lower a Roth.
JW

single
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Re: Am I on the right track? Criticism is welcomed!

Postby h8 2 lose » Thu Jan 17, 2013 12:51 am

also, my employer matches again the first 3%. I just signed on with it again and I WILL be doing the 25% effective immediately. Thanks again so far. Now to this roth/tira thing smh haha
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