Newbie Seeking Index Fund Info

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Newbie Seeking Index Fund Info

Postby beegee » Mon Jun 24, 2013 12:51 pm

:confused

Should I pick 3? (VTSAX, VASGX, VGTSX)

Or just go with the retirement 2045 fund?

Thanks for the help. It's nice to find some like minded people. I wonder what my employer will think when I tell them I don't want to participate in their 401K. :mrgreen:
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Re: Newbie Seeking Index Fund Info

Postby Elbowman » Mon Jun 24, 2013 10:23 pm

I know it seems like a lot of work, but you probably won't get any useful replies until you post in the format described here: viewtopic.php?f=1&t=6212 . Be sure to add the funds available in your 401k and their expense ratios, and if there is a company match. The tax advantage of a 401k can be so large that the expense ratios need to be truly horrendous before you avoid it entirely. Even a single, halfway decent S&P 500 index (which most plans have) can make it worthwhile.
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Re: Newbie Seeking Index Fund Info

Postby pkcrafter » Tue Jun 25, 2013 1:26 am

beegee wrote::confused

Should I pick 3? (VTSAX, VASGX, VGTSX)

VASGX is a life strategy fund. Did you mean to list total bond?


Or just go with the retirement 2045 fund?

Thanks for the help. It's nice to find some like minded people. I wonder what my employer will think when I tell them I don't want to participate in their 401K.

Don't be too hasty with that decision. It would help if you followed the recommended posting format (linked above). Then we can review the 401k funds. If there are too many to list, just list the ones with lower expense ratios.

Paul

When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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Re: Newbie Seeking Index Fund Info

Postby beegee » Tue Jun 25, 2013 3:00 pm

Here are some more details. Thanks for the help.

Emergency funds: I do not currently have
Tax Filing Status: Married Filing Jointly - 3 kids
Tax Rate: xx% Federal, xx% State - I make 60K/year and the wife (when she's not on maternity leave) makes about 40K
State of Residence: MN
Age: 35
Desired Asset allocation: Not sure. Willing to be aggressive at this point as I likely have at least 25 years until retirement.

Desired International allocation: Would like exposure to international markets

Please provide a hint as to the size of your current total portfolio: Approximately 16K in Roth IRA at local brokerage and 17K through my work's traditional 401K/profit sharing plan (they do not match).

My wife has no reitrement accounts. We have a house in her name.

New annual Contributions
At the moment I'm making contributions of $100/month to my roth and $30/week to my work's 401K.

Comments:

I'm considering the following: Roll over Roth to Vanguard (I don't even know what my guy currently has me invested in, but this seems like a no-brainer to avoid his fees?). Roll over work's 401K to vanguard and convert it to roth so that furture earnings won't be taxed. Invest it all in a Vanguard target retirement fund 2045.

My works' 401K is in an "aggressive" portfolio. It's spread out over 18 funds with expense ratios ranging from .86% to 1.5%

Questions:

1. Is this smart?

2. Am I correct when I say that it's smart to convert my 401K to a roth so that future earnings won't be taxed?

3. Can I even roll over a 401K that I have through my current employer?

4. The custodian of my work's 401K is the Newport Group. On top of that we have another company that provides "advice and model portfolio’s construction, fund selection and maintenance, detailed quarterly investment review". Is it safe to assume that I'm paying these people, along with the Newport Group, and the expense ratios of the individual funds themselves? :shock:

Thanks again for your help.

Ben
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Re: Newbie Seeking Index Fund Info

Postby pkcrafter » Tue Jun 25, 2013 8:15 pm

beegee wrote:Here are some more details. Thanks for the help.

Emergency funds: I do not currently have

It would be wise to have an emergency fund, especially with your wife's variable income.

Tax Filing Status: Married Filing Jointly - 3 kids
Tax Rate: xx% Federal, xx% State - I make 60K/year and the wife (when she's not on maternity leave) makes about 40K
State of Residence: MN
Age: 35
Desired Asset allocation: Not sure. Willing to be aggressive at this point as I likely have at least 25 years until retirement.

A stock allocation of around 65-75% would be in an acceptable range, but you really should read up on risk before making a decision. Check the Wiki for asset allocation and Risk.

Desired International allocation: Would like exposure to international markets

Recommended range for international is between 20% and 40% of equity.

Please provide a hint as to the size of your current total portfolio: Approximately 16K in Roth IRA at local brokerage and 17K through my work's traditional 401K/profit sharing plan (they do not match).

My wife has no retirement accounts. We have a house in her name.

Is this a second house, or the one you are living in?

New annual Contributions
At the moment I'm making contributions of $100/month to my roth and $30/week to my work's 401K.

Comments:

I'm considering the following: Roll over Roth to Vanguard (I don't even know what my guy currently has me invested in, but this seems like a no-brainer to avoid his fees?).

Transferring the Roth to Vanguard is an excellent idea. How much are you paying for management, and why don't you know what you own?

Roll over work's 401K to vanguard and convert it to roth so that furture earnings won't be taxed. Invest it all in a Vanguard target retirement fund 2045.

TR 3035 is 90% stock, too high in my opinion, and you have to check with your company to see if they allow an in service rollover. Does your 401k have a Roth option? I don't know if a Roth conversion is a good idea right now. I understand your reasoning, but I think it may be more important to invest the money rather than spend it on taxes. You could also increase contributions to your Roth once it's transferred to Vanguard.

My works' 401K is in an "aggressive" portfolio. It's spread out over 18 funds with expense ratios ranging from .86% to 1.5%

Please post the funds available in your 401k.

Questions:

1. Is this smart?

Moving Roth to Vanguard is smart. I don't know if converting to Roth is smart, and I'd be a little cautious about being too aggressive. You may have the emotional tolerance to lose 40-45% of your money, but you really don't have the financial risk capacity to lose that much.


2. Am I correct when I say that it's smart to convert my 401K to a roth so that future earnings won't be taxed?

I don't think so considering your current situation.


3. Can I even roll over a 401K that I have through my current employer?

Depends on your employer's rules.

4. The custodian of my work's 401K is the Newport Group. On top of that we have another company that provides "advice and model portfolio’s construction, fund selection and maintenance, detailed quarterly investment review". Is it safe to assume that I'm paying these people, along with the Newport Group, and the expense ratios of the individual funds themselves? :shock:

Oh, it's very safe. :moneybag

Thanks again for your help.

Ben
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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Re: Newbie Seeking Index Fund Info

Postby Default User BR » Wed Jun 26, 2013 12:42 pm

pkcrafter wrote:
beegee wrote:3. Can I even roll over a 401K that I have through my current employer?
Depends on your employer's rules.

This is not correct. As the OP is under age 59-1/2, none of the employee deferrals can be rolled over. As there are no employer contributions then no rollover is possible at all. This is a matter of law, not employer rules.


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Re: Newbie Seeking Index Fund Info

Postby Bogle101 » Wed Jun 26, 2013 12:53 pm

beegee wrote:I wonder what my employer will think when I tell them I don't want to participate in their 401K. :mrgreen:


If they offer you matching funds, they will probably think you are unwise.
Last edited by Bogle101 on Fri Jun 28, 2013 10:21 am, edited 1 time in total.
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Re: Newbie Seeking Index Fund Info

Postby Elbowman » Wed Jun 26, 2013 1:25 pm

You need to increase your savings rate substantially :| . It looks like you are saving 12 x $100 + 52 x $30 = $2760 a year. The recommended rate is 15% of your take home pay, or (assuming your effective tax rate is approximately 25%) $75,000 x 0.15 = $11,250.
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Re: Newbie Seeking Index Fund Info

Postby JupiterJones » Wed Jun 26, 2013 2:47 pm

beegee wrote:Emergency funds: I do not currently have


This should be your first priority, IMHO.
Stay on target...
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Re: Newbie Seeking Index Fund Info

Postby beegee » Fri Jun 28, 2013 11:35 am

Thanks everyone for your input. I need to vent.... :annoyed

I am in the 25% tax bracket and no my employer does not match funds.

Increasing my saving sounds like a good idea...and this is going to sound like I'm making excuses...but...

With a mortgage, car loan, daycare, 13K in healthcare costs this year, vehicle gas, natural gas, electricity, water, sewer, 1K/month in food-groceries-homegoods, home and vehicle maintenance, and 50K in student loan debt between my wife and I I'd say times are tight. I know I'm forgetting something.

I suppose I could cancel my satellite TV ($85/month) and my Gym membership ($20/month), but I already have no life. :oops:

Being a young family in the suburbs comes with ALOT of expenses. I'm looking forward to getting into my 40's. Maybe by then I'll have a few raises behind me and the kids will be in school (no daycare) and I can afford to save more.

I know that I'm responsible for all of the choices I've made (I guess I shouldn't been a doctor?) but I'm just saying...
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Re: Newbie Seeking Index Fund Info

Postby fulltilt » Fri Jun 28, 2013 1:50 pm

beegee wrote:Thanks everyone for your input. I need to vent.... :annoyed


Welcome to the forum.

Don't get discouraged.

Elbowman is correct. If you take the time to fill in the details of the funds in your 401k, and clarify some other details about your situation, you will get much better advice. Edit your previous to post to include any debts you have and their interest rates (credit cards, mortgate, car payments, student loans, etc) so everyone can get a better sense of your situation.
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Re: Newbie Seeking Index Fund Info

Postby Toons » Fri Jun 28, 2013 1:55 pm

50K in student loan debt ,Car loan?
Get Rid of the debt :happy
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Re: Newbie Seeking Index Fund Info

Postby JupiterJones » Mon Jul 01, 2013 4:39 pm

Toons wrote:50K in student loan debt ,Car loan?
Get Rid of the debt :happy


Agreed. The student loan and the car loan are nothing but big heavy anchors to your financial success. It might take awhile to hoist them up, but it's worth the time and effort.

Just think of how nice it will be when your paycheck came each month and you get to keep all that money that's currently going out the door as payments? Think of how much easier it would be to save and invest then?

(But I still stand by my recommendation that a larger emergency fund should be your first priority. Debt after that.)

Good luck! :beer
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