Portfolio Review

[bulldog1]

Portofolio Review

I did my research and followed this forum for a long time. I learned quite a bit and I feel confident I can finally do this myself. Thanks to everyone who contribute to this forum. Hopefully I’m on the right track. Thanks for any feedback you can offer.

Key Points:
1. My international percentage is low and I will fix this by allocating new money to the international fund.

2. I will re-balance annually using our Roth accounts. I keep a spreadsheet that will assist me with the calculations.

3. I won’t even bother listing the available funds in our 401k and 403b accounts because the listed funds were the only available index funds. The rest were actively managed funds with high expense ratios.

4. All dividends in the taxable account will not be reinvested. They will get sent to the prime money market account and used later for re-balancing in the Roth and adding new money to the taxable.

Emergency funds: 9 months of expenses.
Debt: Mortgage $89,000 15 year at 3.875%
Tax Filing Status: Married Filing Jointly
Tax Rate: 25% Federal, 6.5% State
State of Residence:WI
Age:37 Wife 35, No Children
Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation: 20% of stocks

Current retirement assets:

Taxable-Vanguard
23% Vanguard Total Stock Market Index Fund Admiral (VTSAX) (0.06%)
3% Vanguard Total International Stock Index Fund Investor (VGTSX) (0.22%)

His Roth IRA at Vanguard
13% Vanguard Total Bond Market Index Fund Admiral (VBTLX) (0.10%)

Her Roth IRA at Vanguard
9% Vanguard Total Bond Market Index Fund Admiral (VBTLX) (0.10%)

His 401k-Fidelity
40% of portfolio Fidelity Freedom Index 2035 W (FIHFX) (0.19%)
Company match equals Safe Harbor 2% of salary
Stocks 33.04%
Bonds 7.36%

Her 403b at ING
12% of total portfolio Vanguard Target Retirement 2035 Fund (VTTHX) (0.19%+0.35%) 0.34% is ING’s management fee.
Stocks 10.24%
Bonds 1.67%

New annual Contributions
$17,500 his 401k (Company deposits a Safe Harbor contribution 2% of my salary every year)
$3000 her 403b (no match, gets pension that averages about 2k a year) I have her up 1% point every year when she gets a raise.
$5,500 his Roth IRA
$5,500 her Roth IRA
$17,550 taxable


Thank you for any feedback and criticism you may have.

[Duckie]

New annual Contributions
$17,500 his 401k (Company deposits a Safe Harbor contribution 2% of my salary every year)
$3000 her 403b (no match, gets pension that averages about 2k a year) I have her up 1% point every year when she gets a raise.
$5,500 his Roth IRA
$5,500 her Roth IRA
$17,550 taxable

Why $17,550 to taxable but only $3,000 to Her 403b? I'd swap that.

[bulldog1]

Duckie,

Thanks for the advice. I crunched the numbers and that does make more sense for her to max out her 403(b). I will readjust our budget to accommodate it.

Bulldog

[Bob's not my name]

$17,500 of taxable investing would convert to about $14,500 of additional 403b contributions and $7,500 of taxable investing.

[bulldog1]

Thanks for the replies so far.

Do the fund placements look good so far? Is there a good process for requesting an employer to provide certain funds? I'm guessing just an e-mail or letter to HR.

[Duckie]

Do the fund placements look good so far?

They're not bad, but it's possible they could be better. It depends on what your plans offer. If you showed the available options (name, ticker symbol, expense ratio) we could judge better.

Is there a good process for requesting an employer to provide certain funds? I'm guessing just an e-mail or letter to HR.

See How to Campaign for a Better 401k Plan.

[bulldog1]

Here is an updated plan for me that includes my 401k and 403b options. I did this myself so please feel free to come up with something better. I've been reading the wiki's and documentation for the past few months but I'm still a novice. The PIMCO bond funds seem expensive but according to the wiki, bond funds should go there first and the Roth accounts as an alternative. i can re-balance in my 401K.

Emergency funds: 9 months of expenses.
Debt: Mortgage $89,000 15 year at 3.875%
Tax Filing Status: Married Filing Jointly
Tax Rate: 25% Federal, 6.5% State
State of Residence:WI
Age:37 Wife 35
Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation: 20% of stocks

Retirement Assets Plan

Taxable-Vanguard
24% Vanguard Total Stock Market Index Fund Admiral (VTSAX) (0.06%)
3% Vanguard Total International Stock Index Fund Investor (VGTSX) (0.22%)

His Roth IRA at Vanguard
12% Vanguard Total Stock Market Index Fund Admiral (VTSAX) (0.06%)

Her Roth IRA at Vanguard
9% Vanguard Total Stock Market Index Fund Admiral (VTSAX) (0.06%)

His 401k-Fidelity
22% Vanguard Institutional Index Fund Institutional Shares VINIX (0.08%)
18% PIMCO Total Return Fund Institutional Class PTTRX (0.92%)

Her 403b at ING
12% PIMCO Total Return Fund - Admin Class PTRAX (0.71%)

His 401K Funds at Fidelity
These are funds I would only consider
Vanguard Institutional Index Fund Institutional Shares VINIX (0.08%)
PIMCO Total Return Fund Institutional Class PTTRX (0.92%)
Vanguard Inflation-Protected Securities Fund Admiral Shares VAIPX (0.19%)

Her 403b Funds at ING
These are funds I would only consider
PIMCO Total Return Fund - Admin Class PTRAX (0.71%)
SSgA S&P 500 Index Fund - Institutional Class SVSPX (0.18%)
Vanguard Total Stock Market Index Fund - Signal Shares VTSSX (0.42%)
Vanguard Small-Cap Index Fund - Signal Shares VSISX (0.52%)
Vanguard Mid-Cap Index Fund - Signal Shares VMISX (0.47%)


Contributions

New annual Contributions
$17,500 his 401k (Safe Harbor contribution 2% of my salary)
$17,500 her 403b (no match, gets pension that averages about 2k a year)
$5,500 his Roth IRA
$5,500 her Roth IRA
$7,500 Taxable

[bdpb]

Debt: Mortgage $89,000 15 year at 3.875%
Tax Rate: 25% Federal, 6.5% State

New annual Contributions
$7,500 Taxable

Why don't you pay down your mortgage instead of taxable investing? Your mortgage costs more than your bonds are earning and you have to pay taxes annually on taxable investments.

Are there lower cost funds in your 401k? You should use low cost bond funds in your IRAs and use the lowest cost stock funds in your 401k/403b.

[bulldog1]

I'll seriously consider working on paying that off. I reset the plan to put bond funds into our Roth IRAs. My original plan for our 401k and 403b I had the Fidelity Freedom Fund 2035 in my 401k and the Vanguard Target Retirement 2035 in her 403b.

1.Based on the 401k and 403b fund selections below I revised my plan. How does this look so far? I feel I can do my re-balancing between stocks and bonds in my 401k and maybe Roth. Thanks for any feedback you may have.

I appreciate all of the suggestions thus far.

Taxable-Vanguard
24% Vanguard Total Stock Market Index Fund Admiral (VTSAX) (0.06%)
3% Vanguard Total International Stock Index Fund Investor (VGTSX) (0.22%)

His Roth IRA at Vanguard
12% Vanguard Total Bond Market Index Fund Admiral (VBTLX) (0.10%)

Her Roth IRA at Vanguard
9% Vanguard Total Bond Market Index Fund Admiral (VBTLX) (0.10%)

His 401k-Fidelity
31% Vanguard Institutional Index Fund Institutional Shares VINIX (0.08%)
9% PIMCO Total Return Fund Institutional Class PTTRX (0.92%)

Her 403b at ING
8% SSgA S&P 500 Index Fund - Institutional Class SVSPX (0.18%)
4% Vanguard Small-Cap Index Fund - Signal Shares VSISX (0.52%)


His 401K Funds
Vanguard Institutional Index Fund Institutional Shares VINIX (0.08%)
Vanguard Inflation-Protected Securities Fund Admiral Shares (0.19%)
Vanguard REIT Index Fund Signal Shares VGRSX (0.08%)
Vanguard Wellington Fund Admiral VWENX (0.36)
Fidelity Freedom Index Funds 2000-2055 (Average ER 0.19%)
PIMCO Total Return Fund Institutional Class PTTRX (0.92%)
Dodge & Cox Stock DODGX (0.57%)
Harbor Cap Appreciation Fund Institutional Class (0.72%)
Perkins Mid CP VAL I (1.27%)
Wasatch SM Cap Growth (1.24%)
William Blair Small Cap Value (2.2%)
American Funds EuroPacific Growth Fund Class R-6 RERGX (0.92%)
Oppenheimer Developing Markets Fund Class Y ODVYX (1.82%)
Thornburg International Value Fund Class R5 TIVRX (1.67%)
PIMCO All Asset Fund Institutional Class PAAIX (1.19%)

Her 403b Funds
Vanguard Total Stock Market Index Fund - Signal Shares VTSSX (0.42%)
Vanguard Small-Cap Index Fund - Signal Shares VSISX (0.52%)
Vanguard Mid-Cap Index Fund - Signal Shares VMISX (0.47%)
Vanguard Target Retirement Funds 2015-2035 (Average ER 0.53%)
PIMCO Total Return Fund - Admin Class PTRAX (0.71%)
SSgA S&P 500 Index Fund - Institutional Class SVSPX (0.18%)
Pioneer Strategic Income Fund - Class Y PTRAX (0.71%)
Vanguard Target Retirement Funds 2015-2035 (Average ER 0.53%)
PAX World balanced Fund PAXWX (0.96%)
ING T. Row Price Capitalization Appreciation Portfolio - Inst Class ITRIX (0.65%)
Wells Fargo Advantage Growth Fund - Admin Class SGRKX (0.96%)
Fidelity Contra Fund FCNTX (0.92%)
ING Stable Value

[vtanzi]

I might add a Vanguard Small Cap or REIT into your mix.

[stilts1007]

The PIMCO bond funds seem expensive but according to the wiki, bond funds should go there first and the Roth accounts as an alternative. i can re-balance in my 401K...

PIMCO Total Return Fund Institutional Class PTTRX (0.92%)

If this changes your thinking at all, PTTRX has an ER of 0.46% according to M*, not 0.92%. I have this one in my 401(k) and I thought it looked a little high reading your post..

[Duckie]

If this changes your thinking at all, PTTRX has an ER of 0.46% according to M*, not 0.92%. I have this one in my 401(k) and I thought it looked a little high reading your post..

It depends on the plan. Some add extra fees that increase the expense ratio.