Help with portfolio

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Help with portfolio

Postby kfindley79 » Fri Feb 08, 2013 11:03 pm

Any guidance would be greatly appreciated...


Emergency funds: 4 months of expenses
Debt: Student Loan (6K @ 4.75% fixed), Car Loan (10K @ 1.99%), and Mortgage (223K @ 3.00% for 20 years)
Tax Filing Status: Married Filing Joint
Tax Rate: 25% Federal, 6% State
Income: 102K
State of Residence: AL
Age: 33
Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation: 20% of stocks

Portfolio: 70K

Current retirement assets:

Taxable

.5% Vanguard Extended Market (VXF) (0.14%)

His Roth IRA at Vanguard
23% Vanguard Life Strategy Growth (VASGX) (0.17%)
3.5% Vanguard REIT (VNQ) (.10%)

Her SIMPLE IRA at Schwab
55% Vanguard Wellington (VWELX) (0.27%)

Her Roth IRA at Vanguard
18% Target Retirement 2040 (VFORX) (0.18%)


Contributions

New annual Contributions
$5,500 his Roth IRA
$5,500 her Roth IRA
$2,200 her Simple IRA (10% employee plus additional 3% company match)
$1,200 taxable



Questions:
1. Are we too conservative in the Simple IRA since 100% of those funds are held in Vanguard Wellington?

2. How should I fund our accounts in order to best achieve a goal AA of 70% stocks / 30% bonds?

Thanks in advance,

KF
kfindley79
 
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Re: Help with portfolio

Postby bdpb » Sat Feb 09, 2013 10:06 am

kfindley79 wrote:Tax Rate: 25% Federal, 6% State

New annual Contributions
$5,500 his Roth IRA
$5,500 her Roth IRA
$2,200 her Simple IRA (10% employee plus additional 3% company match)
$1,200 taxable


Contribute to her Simple IRA instead of taxable. A 1200 taxable contribution is about the same as an 1800 Simple IRA contribution. It will effectively leave her with the same take home pay.

At these tax rates, I would contribute even more to her Simple IRA before Roth IRA. Same calculation, a 1000 contribution to Roth is about equal to 1500 in Simple IRA.
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Re: Help with portfolio

Postby kfindley79 » Sat Feb 09, 2013 9:33 pm

Bump...
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Re: Help with portfolio

Postby Bob's not my name » Sat Feb 09, 2013 10:01 pm

kfindley79 wrote:Tax Rate: 25% Federal, 6% State
Income: 102K
You shouldn't be in the 25% bracket.

$102,000 gross income
- $2,000 SIMPLE contributions
- $4,000 pre-tax health, dental, and disability insurance premiums withheld from your pay (guess)
- $0 FSA contributions
------------
$96,000 AGI
- $7,800 personal exemptions (no kids)
- $12,200 standard deduction (you probably itemize and this should be more like $15,000)
-------------
$76,000 --> only $3,500 into the 25% bracket, so if I'm right about your itemized deductions you're right at the threshold

At any rate, you shouldn't be making primarily post-tax savings contributions (Roth and taxable) until you're below the 25% bracket, and far enough below to get a 0% federal rate on your LTCG and QD from your taxable account.

Also, I'd pay off the student loan before investing in taxable.
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Re: Help with portfolio

Postby kfindley79 » Sun Feb 10, 2013 10:39 am

First time poster so I just realized that I wasn't as detailed in my original post as I should have been. You can add mandatory contributions to state retirement (457). That amounts to ~$7500 pretax per year. Corrections are found below. Sorry!

Bob's not my name wrote:
kfindley79 wrote:Tax Rate: 25% Federal, 6% State
Income: 102K
You shouldn't be in the 25% bracket.

$102,000 gross income
- $2,000 SIMPLE contributions
- $4,000 pre-tax health, dental, and disability insurance premiums withheld from your pay (guess) ^$6100
- $0 FSA contributions
------------
$96,000 AGI
- $7,800 personal exemptions (no kids) ^ 1 Child
- $12,200 standard deduction (you probably itemize and this should be more like $15,000) ^28K in itemized roughly per year
-------------
$76,000 --> only $3,500 into the 25% bracket, so if I'm right about your itemized deductions you're right at the threshold

At any rate, you shouldn't be making primarily post-tax savings contributions (Roth and taxable) until you're below the 25% bracket, and far enough below to get a 0% federal rate on your LTCG and QD from your taxable account.

Also, I'd pay off the student loan before investing in taxable.
kfindley79
 
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Re: Help with portfolio

Postby Bob's not my name » Sun Feb 10, 2013 11:08 am

OK, then you should edit your OP to show that you're in the 15% bracket, or you'll have more respondents steering you away from Roth.

So is this right?

$102,000 gross income
- $2,000 SIMPLE contributions
- $6,000 pre-tax health, dental, and disability insurance premiums withheld from your pay
- $7,500 457 contributions
- $0 FSA contributions
------------
$86,500 AGI --> eligible for deductible traditional IRA contributions if you so choose
- $11,700 personal exemptions
- $28,000 itemized deductions
-------------
$47,000 taxable income --> way down in the 15% bracket
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Re: Help with portfolio

Postby kfindley79 » Sun Feb 10, 2013 11:19 am

Bob's not my name wrote:OK, then you should edit your OP to show that you're in the 15% bracket, or you'll have more respondents steering you away from Roth.

So is this right?

$102,000 gross income
- $2,000 SIMPLE contributions
- $6,000 pre-tax health, dental, and disability insurance premiums withheld from your pay
- $7,500 457 contributions
- $0 FSA contributions
------------
$86,500 AGI --> eligible for deductible traditional IRA contributions if you so choose
- $11,700 personal exemptions
- $28,000 itemized deductions
-------------
$47,000 taxable income --> way down in the 15% bracket


Sorry again for the confusion. Yes, those numbers are pretty close to accurate.
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