I am looking for advice on simplifying my portfolio and how to make tax efficient investments going forward.
Emergency funds: 6 months of expenses
Debt: Credit cards paid in full every month, mortgage balance 615K with 3.625%
Tax Filing Status: Married Filing Jointly
Tax Rate: 28% Federal, 9.3% State
State of Residence: California
Age: 39 (both)
Kids: 2, age 8 (both)
Desired Asset allocation: 65% stocks / 35% bonds (Bonds = approx Age - 5)
Desired International allocation: 30% (would like to know if that's too much)
Total Portfolio: Low 7 figures including cash available (see below) for investing
Current Retirement (and Kids' Education) assets
Kids' Education
2% I-Bonds (10K per child)
Taxable - 39%
17% Total Stock Mkt Idx Adm (VTSAX)
1% Emerging Mkts Stk Idx Adm (VEMAX)
2% Small-Cap Val Idx Admiral (VSIAX)
9% Tot Intl Stock Ix Admiral (VTIAX)
2% REIT Index Fund Adm (VGSLX)
4% Cash in Prime Money Market (VMMXX)
4% Cash in CA Int-Term Tax Exempt (VCADX)
His 401k at Fidelity - 14%
Company matches 100% for first 1K, 50% for rest, max unto 3K
12% PIMCO Total Return Inst (PTTRX, 0.46%)
2% SPRTN 500 Index Inst (FXSIX, 0.05%)
His Rollover IRA at Vanguard - 7%
1% Emerging Mkts Stk Idx Adm (VEMAX)
0.5% Mid-Cap Index Fund Inv (VIMSX)
2% Small-Cap Val Idx Admiral (VSIAX)
1% Total Bond Mkt Index Adm (VBTLX)
1% Inflation-Protect Sec Inv (VIPSX)
0.6% S-T Investment-Grade Inv (VFSTX)
Her 401k from pervious employer A at Fidelity - 2%
2% PIMCO Total Return Inst (PTTRX, 0.46%)
Her 401k from pervious employer B at Fidelity - 36%
13% SPRTN TOTAL MKT INDX FID ADVANTAGE CLASS (FSTVX, 0.07%)
0.4% FIDELITY SELECT GOLD (FSAGX, 0.90%)
6% Individual stocks in BrokarageLink
13% PIMCO Total Return Inst (PTTRX, 0.46%)
4% FIDELITY CASH RESEVE (FDRXX)[/color]
Her 401k from current employer at ADP - 0.5%
0.5% SSgA Cash Series U.S. Government Fund - Class L (ADP doesn't list ticket symbol and/or exp ratio)
Other accounts at Matthews Funds
2% Matthews India Fund (MINDX) (1.18%)
Future Contributions
Max allowed amount in his 401k (employer will match unto 3K)
Max allowed amount in her 401k (employer will match 100% unto 4%)
I would also like to add following starting 2014
$5.5K in his (backdoor) Roth IRA
$5.5 in her (backdoor) Roth IRA
10K in I-Bonds for him
10K in I-Bonds for her
TBD% in 529 accounts for 2 kids
Remaining funds go to taxable for retirement
Funds available in his 401(k) at Fidelity
American Funds Fundamental Investors Fund Class R-6 / RFNGX / 0.31%
Spartan® 500 Index Fund - Institutional Class / FXSIX / 0.04%
T. Rowe Price Institutional Large Cap Core Growth Fund / TPLGX / 0.65%
Vanguard Windsor II Fund Admiral Shares / VWNAX / 0.27%
Baron Growth Fund Institutional Shares / BGRIX / 1.06%
Perkins Mid Cap Value Fund Class I / JMVAX / 0.73%
T. Rowe Price Mid-Cap Growth Fund / RPMGX / 0.8%
Royce Low-Priced Stock Fund Institutional Class / RLPIX / 1.19%
Fidelity® Diversified International Fund - Class K / FDIKX / 0.84%
Vanguard International Value Fund Investor Shares / VTRIX / 0.41%
Fidelity® Balanced Fund - Class K / FBAKX / 0.48%
Fidelity Freedom K® 2000 Fund / FFKBX / 0.39%
Fidelity Freedom K® 2005 Fund / FFKVX / 0.46%
Fidelity Freedom K® 2010 Fund / FFKCX / 0.50%
Fidelity Freedom K® 2015 Fund / FKVFX / 0.51%
Fidelity Freedom K® 2020 Fund / FFKDX / 0.54%
Fidelity Freedom K® 2025 Fund / FKTWX / 0.58%
Fidelity Freedom K® 2030 Fund / FFKEX / 0.59%
Fidelity Freedom K® 2035 Fund / FKTHX / 0.62%
Fidelity Freedom K® 2040 Fund / FFKFX / 0.62%
Fidelity Freedom K® 2045 Fund / FFKGX / 0.63%
Fidelity Freedom K® 2050 Fund / FFKHX / 0.64%
Fidelity Freedom K® Income Fund / FFKAX / 0.39%
PIMCO Total Return Fund Institutional Class / PTTRX / 0.46%
Fidelity® Institutional Money Market - Money Market Portfolio - Class I / FMPXX / 0.21%
Funds available in her current employer 401(k) at ADP
SSgA Cash Series U.S. Government Fund - Class L / Unknown / 0.75%
PIMCO Total Return Fund - Class A / PTTAX / 0.85%
T. Rowe Price Retirement Income R / RRTIX / 1.07%
T. Rowe Price Retirement 2010 R / RRTAX / 1.10%
T. Rowe Price Retirement 2020 R / RRTBX / 1.19%
T. Rowe Price Retirement 2030 R / RRTCX / 1.25%
T. Rowe Price Retirement 2040 R / RRTDX / 1.28%
T. Rowe Price Retirement 2050 R / RRTFX / 1.28%
BlackRock Equity Dividend Inv A LW / MDDVX / 1.00%
RS Large Cap Alpha A Load Waived / GPAFX / 0.98%
SSgA S&P 500 Index Securities Lending Series Fund - Class IX / Unknown / 0.71%
Alger Capital Appreciation Instl / ALARX / 1.19%
Victory Established Value A Load Waived / VETAX / 1.06%
SSgA S&P MidCap Index Non-Lending Series Fund - Class J / Unknown / 0.72%
Goldman Sachs Growth Opportunities Fund - Class A Web Report / GGOAX / 1.35%
Victory Small Company Opportunity A LW / SSGSX / 1.34%
SSgA Russell Small Cap Index Securities Lending Series Fund - Class VIII / Unknown / 0.97%
Lord Abbett Developing Growth A LW / LAGWX / 1.11%
MainStay ICAP International R2 / ICEYX / 1.38%
Janus Overseas S / JIGRX / 0.93%
SSgA International Index Securities Lending Series Fund - Class VIII / Unknown / 0.99%
Funds available in her employer A 401(k) at Fidelity
Vanguard Target Retirement 2055 Trust I / 0.0825%
Vanguard Target Retirement 2050 Trust I / 0.0825%
Vanguard Target Retirement 2045 Trust I / 0.0825%
Vanguard Target Retirement 2040 Trust I / 0.0825%
Vanguard Target Retirement 2035 Trust I / 0.0825%
Vanguard Target Retirement 2030 Trust I / 0.0825%
Vanguard Target Retirement 2025 Trust I / 0.0825%
Vanguard Target Retirement 2020 Trust I / 0.0825%
Vanguard Target Retirement 2015 Trust I / 0.0825%
Vanguard Target Retirement 2010 Trust I / 0.0825%
Vanguard Target Retirement Income Trust I / 0.0825%
Vanguard Extended Market Index Fund Institutional Shares / VIEIX / 0.12%
Vanguard Institutional Index Fund Institutional Plus Shares / VIIIX / 0.02%
Vanguard Total International Stock Index Fund Institutional Shares / VTSNX / 0.13%
Vanguard Total Bond Market Index Fund Institutional Plus Shares / VBMPX / 0.05%
Fidelity® Low-Priced Stock Fund - Class K / FLPKX / 0.76%
Dodge & Cox Stock Fund / DODGX / 0.52%
Fidelity® Growth Company Fund - Class K / FGCKX / 0.70%
Fidelity® Contrafund® - Class K / FCNKX / 0.69%
Fidelity® Worldwide Fund / FWWFX / 1.11%
Dodge & Cox International Stock Fund / DODFX / 0.64%
Lazard Emerging Markets Equity Fund Class Institutional / LZEMX / 1.12%
TCM Small-Mid Cap Growth / TCMMX / 0.95%
Artisan International Fund Class Institutional / APHIX / 0.99%
Artisan Small Cap Value Fund Institutional Shares / APHVX / 1.02%
Perkins Mid Cap Value Separate Account / 0.5525%
Fidelity® Balanced Fund - Class K / FBAKX / 0.48%
PIMCO Total Return Fund Institutional Class / PTTRX / 0.46%
Galliard Stable Value Fund / 0.31%
BrokarageLink
Funds available in her employer B 401(k) at Fidelity
Vanguard Institutional Index Fund Institutional Share / VINIX / 0.04%
Vanguard Windsor II Fund Admiral Shares / 0.27%
Spartan® Extended Market Index Fund - Fidelity Advantage Class / FSEVX / 0.07%
Vanguard Small-Cap Growth Index Fund Institutional Shares / VSGIX / 0.08%
AllianzGI NFJ Small-Cap Value Fund Institutional Class / PSVIX / 0.86%
American Funds EuroPacific Growth Fund Class R-6 / RERGX / 0.50%
American Funds American Balanced Fund Class R-6 / RLBGX / 0.30%
Vanguard Target Retirement 2010 Fund Investor Shares / VTENX / 0.16%
Vanguard Target Retirement 2015 Fund Investor Shares / VTXVX / 0.16%
Vanguard Target Retirement 2020 Fund Investor Shares / VTWNX / 0.16%
Vanguard Target Retirement 2025 Fund Investor Shares / VTTVX / 0.17%
Vanguard Target Retirement 2030 Fund Investor Shares / VTHRX / 0.17%
Vanguard Target Retirement 2035 Fund Investor Shares / VTTHX / 0.18%
Vanguard Target Retirement 2040 Fund Investor Shares / VANG TARGET RET 2040 / VFORX / 0.18%
Vanguard Target Retirement 2045 Fund Investor Shares / VANG TARGET RET 2045 / VTIVX / 0.18%
Vanguard Target Retirement 2050 Fund Investor Shares / VANG TARGET RET 2050 / VFIFX / 0.18%
Vanguard Target Retirement 2055 Fund Investor Shares / VANG TARGET RET 2055 / VFFVX / 0.18%
Vanguard Target Retirement Income Fund Investor Shares / VTINX / 0.16%
PIMCO Total Return Fund Institutional Class / PTTRX / 0.46%
Managed Income Portfolio II Class 1 / Unknown / Unknown
BrokerageLink
Questions
- I would like to simplify the portfolio and move to 4 fund portfolio. I would have to sell Small Cap, Mid Cap holdings and Emerging Markets funds and wondering if I what's the best way to go about it given the tax implications.
- I would like to hold REIT in tax deferred account as recommended. But currently it is in taxable account because originally I started with only taxable account. Since I bought into REIT few years back, I'm wondering whether selling what I have and buying it again at this point makes sense.
- Given our high tax brackets, I think it is important to direct future investments in 529 plans, (backdoor) Roth IRAs and I-bonds before I invest it in taxable account. Is that right thinking?
- In order to open backdoor Roth IRA for myself, I first have to get rid of my rollover IRA account at Vanguard. I was thinking of rolling over my IRA to my 401K at Fidelity. Since I am already over allocated in Bonds, I need guidance in selecting stock fund for the rolled over funds.
- Just to confirm, when I rollover my IRA into 401K at Fidelity, it won't be a taxable event though that requires selling funds in Vanguard and buying funds in Fidelity. Is that right?
- I have almost all the Bonds portion invested in PIMCO fund because earlier I didn't have many options in terms of Bonds. Would it be better to exchange at least part of PIMCO with Total Bond Index which is now available in my wife's current 401K?
- I started buying Spartan Total Market Index in wife's 401K to adjust equities allocation. Can I consider that fund equivalent to Vanguard TSM?
- I am thinking that the new incoming funds in wife's 401K should go to Vanguard Total International fund till I reach desired AAP. Then it can go to TBM + TSIM as per AAP. Does that make sense?
- I believe it is recommended to open 2 separate 529 plans for 2 kids. I am planning to open it at Vanguard and funding with 50K each. I read that two of us can gift up to 13*2 = 26K per child per year. Given that shall I postpone remaining 24K funding to following year or is it better to invest it in lumpsum when I open the 529 accounts?
- I would like to put our emergency fund in either I-Bonds or in tax exempt funds. Do you guys see any issue with that approach?
- My employer offers Roth 401K in addition to traditional 401K. Would it be easier to go for that rather than backdoor Roth IRA?