Hi everyone. I've been following bogleheads for several years in order to construct a portfolio in my taxable account. Firstly, thank you for everything that you have taught me. I found this site when googling for valuation formulas to try to beat the market. It was a relief to finally find the reason why they didn't exist.
I now have access to my first 401k, and I would please appreciate advice on how to proceed, as well as comments on the comparably large taxable account that is already fully invested. I have a large annual income and reserve funds. Barring extraordinarily bad planning, I will never need to access any funds I invest, but I am on this forum to prevent that.
My thought process on the allocations:
I have a very large time horizon, so I wanted to try to increase the risk/return a bit. I tried to tilt to just about double the US market's mid cap and small cap percentages. I also wanted a value tilt. I realize I have no idea if this will pay off in the end, but this is my best guess at trying to increase returns a little. Having both blend and value funds for mid/small should also allow me to tax loss harvest if I choose to, unless I'm mistaken.
I have a spreadsheet to help me rebalance, so having a few extra funds as opposed to a 3-fund portfolio does not really bother me. Accounting might get messy down the road.
I plan to rebalance mostly through deposits, not through selling funds in the taxable account. Emergency funds:
None.Tax Filing Status:
39.6% Federal, 10.3% StateState of Residence:
24Desired Asset allocation
: 85% stocks / 15% bondsDesired International allocation:
40% of stocksCurrent retirement assetsTaxable at Vanguard
US (60% of stocks), percentages are for US stocks only:
65% VTSAX (total) - ER: 0.05%
10% VIMAX (mid blend) - ER: 0.10%
10% VMVAX (mid value) - ER: 0.10%
7.5% VSMAX (small blend) - ER: 0.10%
7.5% VSIAX (small value) - ER: 0.10%
Style boxes illustrating that I tried to double mid & small, instead of quadrupling small cap value:
100% VTSAX - total US
70% VTSAX, 30% VSIAX - small cap value (suggested by a poster below)
My US allocation
International (40% of stocks), percentages are for international stocks only:
85% VTIAX (total, ex-US) - ER: 0.16%
15% VSS (ex-US small/mid blend) - ER: 0.25%
Bonds (15% of portfolio), percentages are for bonds only
100% VCADX (intermediate term, california muni) - ER: 0.12%401k
Nothing yet. Planned max contribution per year.IRA
Taxable contributions unlikely this year.Available Funds
Fidelity BrokerageLink is available with no annual fees. From here, I can buy Fidelity funds with no transaction fees. I can also buy ETFs for a $7.95 commission.
In addition to BrokerageLink, I have access to the following funds:
Fidelity Government Securities (FGOVX) - ER: 0.45%
Dimensional Emerg Mrkts ValueP (DFEVX) - ER: 0.61%
Fidelity Institu Money Mkt - I (FMPXX) - ER: 0.21%
Fidelity Contrafund - Class K (RCNKX) - ER: 0.62%
Fidelity OTC Port - Class K (FOCKX) - ER: 0.77%
Fidelity LowPrice Stk - ClassK (FLPKX) - ER: 0.76%
American EuroPac Grwth R6 (RERGX) - ER: 0.50%
Amer Capital Wrld Grwth&Inc R6 (RWIGX) - ER: 0.45%
Vanguard Windsor II Adm (VWNAX) - ER: 0.27%
American Beacon Sml Cap Val (AVFIX) - ER: 0.92%
PIMCO Total Return Inst (PTTRX) - ER: 0.46%
Vanguard Explorer Fund-Admiral (VEXRX) - ER: 0.32%
Vanguard Inst Index Fund (VIIIX) - ER: 0.02%
Vanguard Target Ret 2015 (VTXVX) - ER: 0.16%
Vanguard Target Ret 2025 (VTTVX) - ER: 0.17%
Vanguard Target Ret 2035 (VTTHX) - ER: 0.18%
Vanguard Target Ret 2045 (VTIVX) - ER: 0.18%
Vanguard Target Ret Income (VTINX) - ER: 0.16%
Vanguard Mid-Cap Index Fund (VMCPX) - ER: 0.06% Updated Concerns:
1) There don't seem to be any Fidelity index funds tracking value stocks.
2) I don't have anything to sell in my taxable account (capital gains from the market surge, and my muni bond fund was recently taken to the minimum value for admiral class). I don't have any new money to add to it, but the 401k is getting large deposits every 2 weeks. Should I buy a Spartan international fund in the 401k and forget about the tax implications?
3) The large cap fund in my 401k with a 0.02% expense ratio tracks the S&P 500, not the total stock market. My allocation up to this point has been based on the total stock market VTSAX fund. Buying just large caps would throw off my intended 2x the market in mid & small caps. Should I switch to the S&P 500 fund, or get a Spartan total market?
I didn't take into account a 401k when I originally set up my taxable, so I am slightly regretting having a mid cap value fund in my allocation, but I think there is a way to make it all work. Do you have any suggestions for how I can structure my 401k to reach my target allocation, using my available 401k funds and/or the BrokerageLink account?
Thank you very much for your time. I greatly respect your opinions and appreciate your responses.