| View previous topic :: View next topic |
| Author |
Message |
fame
Joined: 21 Oct 2009
Posts: 5
|
 Posted: Tue Nov 03, 2009 6:27 pm Post subject: Needs help rebalancing 28-old male 401(k) |
 |
|
My current 401(K) are all in money market, thinking about aggresively rebalancing my account. 
I tried my best to follow the template, but please let me know if you need any more information.
No Emergency funds
Debt: can loan 30K, have plan to buy house within 1-2 years
Tax Filing Status: Married filing Jointly
Tax Rate: 28% Federal 0 State State of Residence (but expect to be in 33% Federal when wife goes to work next year)
Age: 28
Desired Asset allocation: 90/10 (stock/bond)
Intl allocation: 25% of stocks
Current portfolio (please provide a hint as to the size of the total portfolio like 4 figures, 5 figures, 7 figures, etc.). What might be appropriate for a very large portfolio might not be appropriate for a new investor.
His 401(k): 100% Fidelity Money Market (0.23%)
Proposed Portfolio:
10% bond
25% Intl Stock
65% US Stock
Breakdown:
10% PIMCO Total Return Account (Bond)(0.27%)
50.70% Vanguard Institutional Index Fund Institutional Plus (VIIIX) (Large Blend Stock) (0.03%)
14.30% Vanguard Small-Cap Growth Index Institutional Shares (VSGIX) (Small Growth Stock) (0.09%)
15.50% Russell International Growth Account (Stock) (0.61%)
9.50% Russell International Value Account (Stock) (0.66%)
Funds available in his 401(k)
Artisan Mid Cap Account 0.60%
BGI LifePath 2010 Fund Class M 0.22%
BGI LifePath 2020 Fund Class M 0.22%
BGI LifePath 2030 Fund Class M 0.22%
BGI LifePath 2040 Fund Class M 0.22%
BGI LifePath 2050 Fund Class M 0.22%
BGI LifePath Retirement Fund Class M 0.22%
Fidelity Contrafund - Class K 0.82%
Fidelity Growth Company Fund - Class K 0.81%
Fidelity Institutional Money Market - Money Market Portfolio - Class I 0.23%
Company Common Stock
Oakmark Equity and Income Account 0.66%
PIMCO Total Return Account 0.27%
Russell International Growth Account 0.61%
Russell International Value Account 0.66%
Russell Small/Mid Cap Value Account 0.70%
Vanguard Growth Index Fund Institutional Shares 0.09%
Vanguard Institutional Index Fund Institutional Plus 0.03%
Vanguard Short-Term Bond Index Fund SignalTM 0.14%
Vanguard Small-Cap Growth Index Institutional Shares 0.09%
Vanguard Value Index Fund Institutional Shares 0.09%
===============================================
Additional Information about Russell International Growth Account:
Holdings
Top Ten Holdings 2 as of 09/30/2009
INFOSYS TECHNOLOGIES SP ADR
STANDARD CHARTERED ORD USD0.50
LI & FUNG HKD0.025
SCHNEIDER ELECTRIC EUR8
NESTLE SA CHF0.1 (REGD)
HSBC HLDGS ORD USD0.50 (UK)
ROCHE HLDG AG GENUSSCHEINE NPV
MTN GROUP LTD
LVMH MOET HENNESSY EUR0.30
DEUTSCHE BOERSE AG NPV
17.66% of the portfolio
--------------------------------------------------------------------------------
Major Market Sectors 2 as of 09/30/2009
09/30/2009
CONSUMER DISCRETIONARY AND SERVICES 11.8%
CONSUMER STAPLES 8.5%
FINANCIAL SERVICES 23.2%
HEALTH CARE 5.1%
MATERIALS AND PROCESSING 13.7%
OTHER ENERGY 11.3%
PRODUCER DURABLES 7.2%
TECHNOLOGY 13.0%
UTILITIES 6.1%
--------------------------------------------------------------------------------
Asset Allocation 2 as of 09/30/2009
09/30/2009
Equities 98.63%
Cash and Other 1.37%
--------------------------------------------------------------------------------
Turnover Rate as of 09/20/0009 %
Additional Information About Russell International Value Account
Holdings
Top Ten Holdings 2 as of 09/30/2009
BP PLC ORD USD.25
GLAXOSMITHKLINE ORD GBP0.25
CASH EQUIVALENT FUND
EURO CASH OTHER
CANON INC NPV
TELEFONICA S A ORD
SANOFI-AVENTIS EUR2
ROYAL DUTCH SHELL PLC SHS A
AUSTRALIA CASH OTHER
JAPAN CASH OTHER
16.66% of the portfolio
--------------------------------------------------------------------------------
Major Market Sectors 2 as of 09/30/2009
09/30/2009
CONSUMER DISCRETIONARY AND SERVICES 13.4%
CONSUMER STAPLES 7.1%
FINANCIAL SERVICES 26.0%
HEALTH CARE 8.8%
MATERIALS AND PROCESSING 7.1%
OTHER 0.1%
OTHER ENERGY 8.3%
PRODUCER DURABLES 6.6%
TECHNOLOGY 8.2%
UTILITIES 14.4%
--------------------------------------------------------------------------------
Asset Allocation 2 as of 09/30/2009
09/30/2009
Equities 96.92%
Bonds .5%
Convertibles .27%
Cash and Other 2.3%
Foreign 98.59% |
|
| Back to top |
|
 |
ruralavalon
Joined: 02 Feb 2008
Posts: 579
Location: Illinois
|
| Posted: Tue Nov 03, 2009 7:46 pm Post subject: |
|
|
Welcome to the forum .
| fame wrote: | Proposed Portfolio:
10% bond
25% Intl Stock
65% US Stock
Breakdown:
10% PIMCO Total Return Account (Bond)(0.27%)
50.70% Vanguard Institutional Index Fund Institutional Plus (VIIIX) (Large Blend Stock) (0.03%)
14.30% Vanguard Small-Cap Growth Index Institutional Shares (VSGIX) (Small Growth Stock) (0.09%)
15.50% Russell International Growth Account (Stock) (0.61%)
9.50% Russell International Value Account (Stock) (0.66%) |
1. Your general asset allocation looks reasonable, except that I would suggest 20 - 25% in bonds, and a reduced percentage in equities. Being 90% in stocks does not improve expected performance much (if at all), but greatly increases risk (volatility).
2. Your idea "tilts" toward Growth funds. If you want a tilt,I would not suggest any tilt toward Growth funds (either domestic or international), but would instead suggest a tilt toward Value funds (for historical, for what thats worth, better performance).
I assume from your post that your only money for investments is in the 401k. How about this for a suggestion for your 401k--
20% PIMCO Total Return Account (Bond)(0.27%)
35% Vanguard Institutional Index Fund Institutional Plus (VIIIX) (Large Blend Stock) (0.03%)
25 Vanguard Value Index Institutional (stock)(0.09%)
5% Russell International Growth Account (Stock) (0.61%)
15% Russell International Value Account (Stock) (0.66%)
I hope that this helps.
_________________
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
|
| Back to top |
|
|
retiredjg
Joined: 10 Jan 2008
Posts: 4179
|
| Posted: Tue Nov 03, 2009 8:02 pm Post subject: |
|
|
fame, welcome to the forum!
Is the 401 the only retirement investment your family has? No IRAs?
What is the interest rate on the car?
_________________
Links to Investment Planning and Asking Portfolio Questions |
|
| Back to top |
|
|
fame
Joined: 21 Oct 2009
Posts: 5
|
| Posted: Tue Nov 03, 2009 8:23 pm Post subject: |
|
|
| retiredjg wrote: | fame, welcome to the forum!
Is the 401 the only retirement investment your family has? No IRAs?
What is the interest rate on the car? |
I just got married this year. Before marriage, I exceeded the limit of IRA for singles. I will start contributing to IRA next year.
The car's APR is 2.9%.
Thanks. |
|
| Back to top |
|
|
fame
Joined: 21 Oct 2009
Posts: 5
|
| Posted: Tue Nov 03, 2009 8:25 pm Post subject: |
|
|
| ruralavalon wrote: | Welcome to the forum .
| fame wrote: | Proposed Portfolio:
10% bond
25% Intl Stock
65% US Stock
Breakdown:
10% PIMCO Total Return Account (Bond)(0.27%)
50.70% Vanguard Institutional Index Fund Institutional Plus (VIIIX) (Large Blend Stock) (0.03%)
14.30% Vanguard Small-Cap Growth Index Institutional Shares (VSGIX) (Small Growth Stock) (0.09%)
15.50% Russell International Growth Account (Stock) (0.61%)
9.50% Russell International Value Account (Stock) (0.66%) |
1. Your general asset allocation looks reasonable, except that I would suggest 20 - 25% in bonds, and a reduced percentage in equities. Being 90% in stocks does not improve expected performance much (if at all), but greatly increases risk (volatility).
2. Your idea "tilts" toward Growth funds. If you want a tilt,I would not suggest any tilt toward Growth funds (either domestic or international), but would instead suggest a tilt toward Value funds (for historical, for what thats worth, better performance).
I assume from your post that your only money for investments is in the 401k. How about this for a suggestion for your 401k--
20% PIMCO Total Return Account (Bond)(0.27%)
35% Vanguard Institutional Index Fund Institutional Plus (VIIIX) (Large Blend Stock) (0.03%)
25 Vanguard Value Index Institutional (stock)(0.09%)
5% Russell International Growth Account (Stock) (0.61%)
15% Russell International Value Account (Stock) (0.66%)
I hope that this helps. |
Thanks a lot ruralavalon. I will look into your suggestions. |
|
| Back to top |
|
|
Laura
Joined: 19 Feb 2007
Posts: 4415
|
| Posted: Tue Nov 03, 2009 9:15 pm Post subject: spouse |
|
|
fame,
Does your spouse have any investments? It is usually best to look at all of your holdings together as one unified portfolio.
Laura |
|
| Back to top |
|
|
fame
Joined: 21 Oct 2009
Posts: 5
|
| Posted: Tue Nov 03, 2009 10:46 pm Post subject: Re: spouse |
|
|
| Laura wrote: | fame,
Does your spouse have any investments? It is usually best to look at all of your holdings together as one unified portfolio.
Laura |
\
Hi Laura, no my wife is still a student this year. |
|
| Back to top |
|
|
Laura
Joined: 19 Feb 2007
Posts: 4415
|
| Posted: Wed Nov 04, 2009 6:28 am Post subject: options |
|
|
fame,
With only a 401k and the possibility of a roth in the future the easiest way to set this up is using the BGI Lifepath fund that most closely matches your desired asset allocation. Probably the 2040 or 2050 fund would be close but you will need to do some research.
When you open a roth you can use one of the Vanguard Target Retirement funds. Again, pick the fund that matches your target asset allocation and just ignore the date.
Once you are fully maximizing all tax advantaged accounts then you can look at adding a taxable investment account. At that time you will want to shift to individual funds in the 401k and roth but until then just keep it simple and let the fund companies do the work of maintaining your asset allocation.
Laura |
|
| Back to top |
|
|
SSS
Joined: 20 Jun 2009
Posts: 4
|
| Posted: Wed Nov 04, 2009 10:00 am Post subject: |
|
|
Hello Fame,
Welcome. I would suggest you look into building your emergency fund as soon as possible |
|
| Back to top |
|
|
retiredjg
Joined: 10 Jan 2008
Posts: 4179
|
| Posted: Wed Nov 04, 2009 1:12 pm Post subject: |
|
|
| SSS wrote: | | Welcome. I would suggest you look into building your emergency fund as soon as possible |
Agreed. Emergency fund comes before investing (other than contributing enough to get an employer match on your 401k).
_________________
Links to Investment Planning and Asking Portfolio Questions |
|
| Back to top |
|
|
fame
Joined: 21 Oct 2009
Posts: 5
|
| Posted: Wed Nov 04, 2009 1:24 pm Post subject: Re: options |
|
|
| Laura wrote: | fame,
With only a 401k and the possibility of a roth in the future the easiest way to set this up is using the BGI Lifepath fund that most closely matches your desired asset allocation. Probably the 2040 or 2050 fund would be close but you will need to do some research.
When you open a roth you can use one of the Vanguard Target Retirement funds. Again, pick the fund that matches your target asset allocation and just ignore the date.
Once you are fully maximizing all tax advantaged accounts then you can look at adding a taxable investment account. At that time you will want to shift to individual funds in the 401k and roth but until then just keep it simple and let the fund companies do the work of maintaining your asset allocation.
Laura |
Great suggestions! Thanks Laura. |
|
| Back to top |
|
|
|
Wiki
FAQ
Search
Memberlist
Usergroups
Register
Profile
Log in to check your private messages
Log in
