This will help in getting a clearer picture of my situation:
Emergency funds: Yes. 6 months worth
Debt: school loan = $12,000 (2.9%), school loan = $10,000 (6.8%), car loan = $17,000 (1.9%). I am looking to pay off the loan at 6.8%. , and 30-year mortgage = $250,000 (3.4%)
Tax Filing Status: Married Filing Jointly
Tax Rate: 28%
State of Residence: SC
Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation: 30% of stocks
Portfolio size = low six-figures (IVO $200,000)
Current retirement assets
His 401k at TSP = 2.5%
$5,000 in L Fund-2040 (0.025%). I contribute about $1,600 per year in traditional IRA or 4% per month. I can switch to Roth TSP as it's now an option.
Company match? NO
His Roth IRA at Vanguard = 20%
$40,000 in VG 2040 (0.18%) 62% total stock market / 27 % in international stock index/10% in total bond market
Her Roth IRA at Vanguard = 30%
$60,000 at VG 2040 (0.18%) 62% total stock market / 27 % in international stock index/10% in total bond market
VG Wellington (admiral) = 30%
65% stocks/ 35% bonds-short-term reserves
$15,000 emergency fund and $20,000 to invest = 17.5% of assets
New annual Contributions
$5,500 his Roth IRA
$5,500 her Roth IRA
After emergency fund, I have roughly $15,000 that I need to invest in a non-retirement account (taxable).
1. Based on above, where do I invest the $15,000? I was looking at VG Wellesley or the LifeCycle Growth Fund ( I am drawn to the "three-fund portfolio" which the 2040 follows, but I can only deposit $5,500 into my ROTH VG 2040 ).
2. How focused should I be on paying off those loans? My real concern is the school loan at near %7. I am looking at paying that off in-full this week! The other school loan and car loan have reasonable rates, but I still want to chip-away at those.
3. Would you switch from the traditional TSP to Roth TSP and increase the monthly allotment to TSP? I read about the pros/cons of each TSP, but I sort of like having tax-free money when I eventually withdraw. The TSP has the lowest expense ratios around, so increasing my allotment is something I am considering. I can max that out at $17,500 a year.
4. My goal with these non-retirement funds is long-term growth towards retirement. Am I on the right track with the right asset allocations, rate of saving, and level of aggression?
5. We're going to have about $3,000 a month to contribute to a taxable account, so is the right move to put it into the Wellington or another fund I dont have opened yet? Any advantage to ETFs vs other type of fund?
Last edited by TVKNSC
on Mon Feb 04, 2013 11:05 am, edited 2 times in total.
AA for 35 y/o: | VG VTSAX = 35% | VG VTIAX = 30% | Roth TSP F Fund = 5% | Roth TSP G Fund = 25% | VG 2040 Roth IRA = 5%