, you want an AA of 75% stocks, 25% bonds (a little low for age 36), with 30% of stocks in international. That breaks down to 52% US stocks, 23% international stocks, and 25% bonds. Here is a possible retirement portfolio:Taxable at Vanguard -- 15%
) Vanguard Total Stock Market Index Fund Admiral Shares (0.05%)
) Vanguard Total International Stock Index Fund Admiral Shares (0.16%)His 401k at Fidelity -- 69%
) Dreyfus Basic S&P 500 Stock Index Fund (0.21%)
) Janus Triton Fund I Class (0.79%) <-- Roughly 80% large caps (S&P 500) plus 20% mid/small caps (Triton) makes up the total US stock market.
) Ivy International Core Equity I Class (1.07%)
) PIMCO Total Return Fund Institutional Class (0.46%)Her 401k at American -- 12%
) American Funds Bond Fund of America R3 Class (0.92%)His Roth IRA at Vanguard -- 2%
) Vanguard Emerging Markets Stock Index Fund Investor Shares (0.33%) <-- Roughly 75% developed markets plus 25% emerging markets makes up most of the international stock market. It's still missing small caps and Canada, but it'll do.Her Roth IRA at Vanguard -- 2%
) Vanguard Emerging Markets Stock Index Fund Investor Shares (0.33%)My comments:
-- This ignores the tax cost of selling in taxable.
-- Bonds don't belong in taxable unless there's no room in tax-sheltered, and you have room, so I removed them.
-- This has TISM in taxable to take advantage of the
Foreign tax credit
. You could have it all TISM but I left TSM there because of the potential tax hit.Your questions:
1. My wife just stopped working, we should roll her 401k into a Vanguard IRA when the year ends? There will be no difference from a tax point of view to leaving it in the 401k but more investment options with lower er. Is this correct?-- An IRA gives you better options, but if you're going to need to use the
Backdoor Roth IRA
method in the future, rolling to an IRA is not a good option because of the pro-rata rule.
2. I like the three fund style of investing. What is the best way to work the fidelity 401k into this with the available funds?-- See above. This does not put the three funds (or equivalents) into each account, but uses the best/cheapest choices available.
3. I have never paid any attention to tax efficiency while investing but we are in such a high tax bracket that we might really benefit from it. What’s the best way to achieve this?-- Put bonds in tax-sheltered (except
I Savings Bonds through Treasury Direct). Put TISM in taxable for the FTC.
4. Do you factor the 529 into your total portfolio even though it's not for retirement? I would think no and that it should have it's own asset allocation.-- No. It has a different purpose and time-frame.
Something to think about.
Edited to correct His 401k international fund.