Help with simplifying investments

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Help with simplifying investments

Postby dobrze13 » Sun Sep 01, 2013 3:59 pm

Hi Everyone, need some help with your advice about my investments.
I'm a 38 year old physician with 3 kids and a stay at home wife.
No debts except a 7/30 mortgage with an interest rate of 2.375%.
Monthly payment right now is $5300. The fixed period is up in 2019.
I earn a w2 salary as well as other contracting work with a 1099.
Florida resident
no state tax
marginal federal tax bracket 39.6%

My investments:

SEP-IRA Vanguard:
VWENX $112,527

TAXABLE
VTSAX $114,237
VTIAX $39,404

403B (PREVIOUS EMPLOYER)
ROTH PORTION
VANGUARD 2035 $67,244
PRE TAX
VANGUARD 2035 $40,279

457B (PREVIOUS EMPLOYER)
PRETAX
$107,068

ETRADE IRA
BRK.B $31,000
ROTH IRA
WLP $7700

529
UTAH
3 SEPARATE ACCOUNTS FOR 3 KIDS
TOTAL $65,000
EDVEST WISCONSIN
TOTAL $50,000

SEP IRA at work
$36,000
all in MIdcap with 5.5% sales fee
but 3% match to max $7500

I'm trying to fully fund the SEP IRA each year to get the match from employer and fully fund the simple ira.
(I did some research on the IRS website and apparently I can have both a sep and the simple ira. IS THAT CORRECT)
In addition, I'm also adding about $100,000 - $150,000 each year post tax into vanguard.
My goals with the 529 each year is to add about $10,000 per kid.

I'm not sure what asset allocation I should be seeking. I wish to be aggressive.
I'm avoiding pay down my mortgage..but will have to pay it down substantially by 2019 to get into non-jumbo loan status.
I have a principal agent trying to sign me to an investment plan with 1% fee.
All suggestions are welcome.
I am set with $2 million term life and comprehensive disability insurance.
I have a $5 million umbrella policy. (overinsurance)?
Thanks.
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Re: Help with simplifying investments

Postby livesoft » Sun Sep 01, 2013 4:41 pm

Welcome to the forum. I think there are no shortcuts for someone in your shoes: You will have to read some books.

May I suggest: William Bernstein's "The Investor's Manifesto" and Larry Swedroe's "The Only Guide to a Winning Investment Strategy ..." for starters?

Reading these books and some others like them will save you tens of thousands of dollars over the next decade or so.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Help with simplifying investments

Postby BolderBoy » Sun Sep 01, 2013 7:55 pm

>>SEP IRA at work
>>$36,000
>>all in MIdcap with 5.5% sales fee
>>but 3% match to max $7500


You should for sure find something without a sales fee.

Also, www.whitecoatinvestor.com is run by one of our forum members and is geared directly toward physicians.
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Re: Help with simplifying investments

Postby Grt2bOutdoors » Sun Sep 01, 2013 11:21 pm

Hello and welcome to the forum!

$5MM in umbrella liability insurance is not over-insured. You are in the highest tax bracket and you could theoretically work until no longer able. You could also be sued for future wages - so over insured, hardly in today's litigious society.

$2MM in term life insurance with a $60K annual mortgage payment, 3 kids, a SAHM? If anything, I'd say you are underinsured in that department. Your 529 plan is off to a good start, but $115K would barely pay for 4 years of state college in my locale, not sure how it is down by you. Your taxable portfolio is also off to a good start - but that together with your life insurance may or may not be sufficient to continue your present lifestyle for your family without your current source of income. Your current taxable income for a MFJ is $450K (taxable, not gross) - you are currently insured for less than 5 times gross income. I'd look into obtaining more term, you can always drop the additional policy as you get closer to retirement or after college.

Full disclosure - am not in insurance. I look at it from a practical point of view. You insure the risks you can't control or cover for the time being - no one knows when their number is up and if you do, no insurance company will sell you a policy.
"Luck is not a strategy" Asking Portfolio Questions
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Re: Help with simplifying investments

Postby Peter Foley » Mon Sep 02, 2013 12:05 am

You could certainly simplify by holding fewer funds in retirement accounts. For very good diversification you only need 3-4 (Total Stock, Total International, Total Bond and TIPs (optional).

Is there a low cost fund in your SEP IRA at work? If so, start with that and complete with the funds listed above.

You don't mention a desired asset allocation. Something in the 60-70% stocks with the rest in bonds would be a mainstream approach. If you've thought about asset allocation then you might reconsider mixing taget date funds with market index funds. Since target date funds are balanced funds that do their own rebalancing, mixing them with other funds kinda offsets the approach of the target retirement fund itself. Going one route or the other (target funds only or index funds only) would also help simplify your portfolio.
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