Help with Rebalancing

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Help with Rebalancing

Postby jjordan » Thu Jan 24, 2013 12:08 pm

Hi All,

I’m currently reviewing my investments and would value your advice on rebalancing and simplifying my portfolio. I’m 49 years old and have an 8 yr old son. I’m currently investing 18% of my income into my 401k ($17,500) with a 2.5% company match ($2400) and contributing the max to my Roth. I also have a 529 plan for my son.

Emergency funds: 6 months living expenses
Debt: Mortgage - $51K @ 5.25% 15 year fixed, about 4 yrs remaining

Tax Filing Status: Head of Household
Tax Rate: 25% Federal, 7% State / North Carolina
Age: 49

Desired Asset allocation: 70/30
Intl allocation: 25-30% of stocks

Total portfolio – mid 6 figures

Taxable
.52% cash
12.48% Vanguard FTSE All-World ex-US Index Fund Admiral (VFWAX) (0.18%)
23.36% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.06%)

His 401k
11.63% Spartan 500 Index Fund - Fidelity Advantage Class (FUSVX) (0.05%)
10.75% Fidelity Low-Priced Stock Fund (FLPSX) (0.88%)
5.67% American Beacon Small Cap Value Fund Investor Class (AVPAX) (1.18%)
5.61% Touchstone Mid Cap Value Institutional Class (TCVIX) (0.90%)
5.45% Invesco Small Cap Discovery Y (VISCX) (1.18%)
4.03% PIMCO Total Return Fund Institutional Class (PTTRX) (0.46%)
3.77% MainStay ICAP Equity Fund Class I (ICAEX) (0.90%)
2.57% ING Global Real Estate Fund Class I (IGLIX) (0.99%)
2.50% T. Rowe Price Blue Chip Growth Fund (TRBCX) (0.77%)
1.76% American Funds EuroPacific Growth Fund Class R-5 (RERFX) (0.55%)
Company match: 50% up to 5% ($2400)

His Roth IRA at Vanguard
6.52% REIT Index Fund Admiral Shares (VGSLX) (0.10%)
3.40% Total International Stock Index Fund Admiral Shares (VTIAX) (0.18%)
100%

New annual Contributions
$17,500 his 401k (plus matching contributions $2,400)
$5,500 his Roth IRA

Funds available in his 401(k)
Large Cap

Calvert Equity Portfolio Class I (CEYIX) (0.69%)
Harbor Cap Appreciation Instl CL (HACAX) (0.67%)
Invesco Comstock Fund Class A (ACSTX) (0.88%)
MainStay ICAP Equity CL I (ICAEX) (0.90%)
Spartan 500 Index Fund - Fidelity Advantage Class (FUSVX) (0.05%)
T. Rowe Price Blue Chip Growth Fund (TRBCX) (0.77%)
Mid-Cap
Fidelity Low-Priced Stock Fund (FLPSX) (.99%)
Touchstone Mid Cap Value Institutional Class (TCVIX) (0.90%)
Small Cap
American Beacon Small Cap Value Fund Investor Class (AVPAX) (1.18%)
Invesvo Small Cap Discovery Y (VISCX) (1.18%)
International
American Funds® EuroPacific Growth Fund® Class R5 (RERFX) (.55%)
Dodge & Cox International Stock (DODFX) (0.64%)
Specialty
ING Global Real Estate Fund Class I (IGLIX) (0.99%)
Blended
BlackRock Global Allocation Fund Institutional Shares (MALOX) (.89%)
Fidelity Balanced Fund (FBALX) (.60%)
Fidelity Freedom K 2000 Fund (FFFBX) (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 2055 Fund (FDENX) (0.64%)
Fidelity Freedom K Income Fund (FFKAX) (0.39%)
Income
PIMCO Total Return Fund Institutional Class (PTTRX) (0.46%)
Vanguard Short-Term Federal Fund Admiral Shares (VSGDX) (0.10%)
Vanguard Total Bond Market Index Fund SignalTM (VBTSX) (0.10%)
Short-Term Investments
Fidelity Money Market Trust Retirement Money Market Portfolio (FRTXX) (0.40%)

Thanks in advance for your help!
JJ
Last edited by jjordan on Thu Jan 24, 2013 3:28 pm, edited 2 times in total.
jjordan
 
Posts: 9
Joined: 31 Jul 2008

Re: Help with Rebalancing

Postby linuxuser » Thu Jan 24, 2013 12:47 pm

dump everything in your 401K and allocate to the two below:
Vanguard Total Bond Market Index Fund SignalTM (VBTSX) (0.10%)
Fidelity Spartan U.S. Equity Index Fund - Investor Class (FUSEX) (0.05%)
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Re: Help with Rebalancing

Postby jjordan » Sat Jan 26, 2013 5:32 pm

What percentages should I allocate my current balances to VBTSX and FUSVX? Future contributions?
jjordan
 
Posts: 9
Joined: 31 Jul 2008

Re: Help with Rebalancing

Postby YDNAL » Sun Jan 27, 2013 8:43 am

jjordan wrote:Desired Asset allocation: 70/30
Intl allocation: 25-30% of stocks

Total portfolio – mid 6 figures

Taxable
.52% cash
12.48% Vanguard FTSE All-World ex-US Index Fund Admiral (VFWAX) (0.18%)
23.36% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.06%)

His 401k
24% 11.63% Spartan 500 Index Fund - Fidelity Advantage Class (FUSVX) (0.05%)
30% Vanguard Total Bond Market Index Fund SignalTM (VBTSX) (0.10%)
10.75% Fidelity Low-Priced Stock Fund (FLPSX) (0.88%)
5.67% American Beacon Small Cap Value Fund Investor Class (AVPAX) (1.18%)
5.61% Touchstone Mid Cap Value Institutional Class (TCVIX) (0.90%)
5.45% Invesco Small Cap Discovery Y (VISCX) (1.18%)
4.03% PIMCO Total Return Fund Institutional Class (PTTRX) (0.46%)
3.77% MainStay ICAP Equity Fund Class I (ICAEX) (0.90%)
2.57% ING Global Real Estate Fund Class I (IGLIX) (0.99%)
2.50% T. Rowe Price Blue Chip Growth Fund (TRBCX) (0.77%)
1.76% American Funds EuroPacific Growth Fund Class R-5 (RERFX) (0.55%)

Company match: 50% up to 5% ($2400)

His Roth IRA at Vanguard
6.52% REIT Index Fund Admiral Shares (VGSLX) (0.10%)
3.40% Total International Stock Index Fund Admiral Shares (VTIAX) (0.18%)
100%

New annual Contributions
$17,500 his 401k (plus matching contributions $2,400)
$5,500 his Roth IRA

Wow, JJ, you joined in 2008 and posted only 7 times!

Suggestions in blue.
  • Consider dropping VGSLX and use Roth IRA exclusively for Total International since the 401K builds-up using S&P 500 Fund. Alternatively, replace REIT VGSLX in Roth with Extended Mkt VEXMX to complement FUSVX in 401K. The issue being that to split $5,500 annually is not going to matter much and I would rather go 100% Roth with VTIAX - your call.
  • Use new contributions to maintain your desired 70/30 split - $7,700 (30%) VBTSX, $12,200 (48%) FUSVX, $5,500 (22%) VTIAX.
  • By the way, I find it a waste of time to look at 2 decimal places, perhaps you should consider this as well.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
YDNAL
 
Posts: 13286
Joined: 10 Apr 2007
Location: Biscayne Bay

Re: Help with Rebalancing

Postby jjordan » Sun Jan 27, 2013 10:03 am

I'm still very much a rookie but have just ordered several of the books recommended in the this forum. What I like about this forum is the advice given is consistent among members. I'm learning not to chase performance and pay more attention to expense ratios. Is this primarily why VBTSX is recommended over PTTRX? PTTRX was introduced to my 401k last year and I started allocating some dollars to it based on returns and the exp ratio under .50%.
jjordan
 
Posts: 9
Joined: 31 Jul 2008

Re: Help with Rebalancing

Postby YDNAL » Sun Jan 27, 2013 10:37 am

jjordan wrote:I'm still very much a rookie but have just ordered several of the books recommended in the this forum. What I like about this forum is the advice given is consistent among members. I'm learning not to chase performance and pay more attention to expense ratios. Is this primarily why VBTSX is recommended over PTTRX? PTTRX was introduced to my 401k last year and I started allocating some dollars to it based on returns and the exp ratio under .50%.

Sure!

Return/Risk are joined at the hip.
  • I personally own Bonds to mitigate Equity (Stock) risk, not to add risk.
  • PTTRX is not your typical Barclays Aggregate Total Bond Fund.
  • See, PIMCO currently has -34% Cash and has invested in Futures-Euro$, Long Term Fannie Mae, etc.
    http://portfolios.morningstar.com/fund/ ... ture=en-us
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
YDNAL
 
Posts: 13286
Joined: 10 Apr 2007
Location: Biscayne Bay

Re: Help with Rebalancing

Postby jjordan » Sun Jan 27, 2013 6:54 pm

Do these recommendations still meet my goal for international stock allocation of 25-30%?
jjordan
 
Posts: 9
Joined: 31 Jul 2008

Re: Help with Rebalancing

Postby YDNAL » Tue Jan 29, 2013 3:35 pm

jjordan wrote:Do these recommendations still meet my goal for international stock allocation of 25-30%?

Yes. Also, as important are $23K annual FUTURE contributions that you will make over the next 15-20 years.
jjordan wrote:Age: 49

See below.
YDNAL wrote:Taxable
.52% cash
12.48% Vanguard FTSE All-World ex-US Index Fund Admiral (VFWAX) (0.18%)
23.36% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.06%)

His 401k
24% 11.63% Spartan 500 Index Fund - Fidelity Advantage Class (FUSVX) (0.05%)
30% Vanguard Total Bond Market Index Fund SignalTM (VBTSX) (0.10%)

His Roth IRA at Vanguard
10% Total International Stock Index Fund Admiral Shares (VTIAX) (0.18%)
100%

Overall:
30% Bonds (VBTSX)
47% US (VTSAX, FUSVX) <-- this is 67% of Stocks
23% International (VFWAX, VTIAX) <-- this is 33% of Stocks
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
YDNAL
 
Posts: 13286
Joined: 10 Apr 2007
Location: Biscayne Bay


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