Finally getting our finances in order and would love any help with how to proceed

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Topic Author
Grassisgreen
Posts: 6
Joined: Mon May 03, 2021 12:17 pm

Finally getting our finances in order and would love any help with how to proceed

Post by Grassisgreen »

Emergency funds: Three to six months of expenses (indicate if you have this, but it is generally not part of your asset allocation)

Yes

Debt: Indicate if you have any debt (credit card, school loans, car loans, mortgage) and the interest rate you are paying on each loan.

one student loan for my husband for $5,031 but not paying interest at the moment

Tax Filing Status: (Single, Married Filing Jointly, Married Filing Separately, Head of Household, Qualifying Widow/Widower with Dependent Children)

Married Filing Jointly

Tax Rate: xx% Federal, xx% State

12% Federal, 4% State

State of Residence:

California

Age:

Late 30's

Desired Asset allocation: xx% stocks / xx% bonds
Desired International allocation: xx% of stocks

Unsure honestly. I know we are starting later in life and need to catch up while not being overly aggressive

Please provide a hint as to the size of your current total portfolio (as in high four-figures, mid five-figures, low six-figures, etc.) What might be appropriate for a very large portfolio might not be appropriate for a new investor.

We don't have our cash invested yet so right now we only have 1k invested in Vanguard and are looking for help on investing around 75-100k

Show us your current portfolio including all investment and retirement accounts (yourself and spouse or civil partner, if applicable) as it's important to look at the portfolio as a unified whole rather than look at accounts in isolation. Also include the available funds in your employer provided retirement plans.

We have around 1k invested in Vanguard VYM, 9K in an easy start certificate 'Roth IRA' at Navy Fed, 20K at an easy start certificate 'Traditional IRA' at Navy Federal, 13K at my husbands pension CalStrs and under 1k at Victory Capital (which is being rolled over into our future account as soon as we figure out how to proceed).

Show each fund or holding as a percentage of the entire portfolio, not as a percentage of the account that holding is in. If this instruction is not clear, see the example under the Key Points section below. For example:

I'm unsure how to do this without including the 75-100k we want to invest?

Current retirement assets
* The format below is shown using his/her pronouns. Use whatever pronouns or identifying names you prefer as long as it is clear which assets belong to which person.

Taxable
xx% cash (for investing – do not include emergency funds)
75-100k
xx% fund name (ticker symbol) (expense ratio)
Not invested yet
xx% stock company name (ticker symbol)

His 401k
xx% fund name (ticker symbol) (expense ratio)
Company match?

He contributes 10.25% to a CalStrs Pension which will eventually give us the average of his top three years earnings wise

His Roth IRA at Vanguard
None yet. We are hoping to move all of our Roth & Tradition contributions (around 30K) into new account at Vanguard but unsure what accounts to open/how much to contribute
xx% fund name (ticker symbol) (expense ratio)
xx% fund name (ticker symbol) (expense ratio)

His Rollover IRA at Schwab
None


Her 403b
None


Her SIMPLE IRA at Fidelity
None


Her Traditional IRA at Vanguard
None yet

_______________________________________________________________
Note: Total percentage of all the above accounts together (not each account individually) should equal 100%.

Contributions

New annual Contributions
$xx his 401k (also specify any employer matching contributions)
10.25% to CalStrs Pension (around 800 a paycheck/10 paychecks a year)

$xx his IRA/Roth IRA
$xx her IRA/Roth IRA
$xx taxable (for retirement, not short term goals)
This is the really confusing part for us. I am self employed and would like to start contributing the max to retirement but am unsure how much we can both contribute

Available funds
75-100K

Funds available in his 401(k)
We have 30K together in Roth/Traditional IRAS at Navy Federal

Funds available in her 403(b)
Fund name (ticker symbol) (expense ratio)
Fund name (ticker symbol) (expense ratio)
Fund name (ticker symbol) (expense ratio)

Questions:
We live in a very HCOL area and have 4 children and an annual salary of around 80k for my husband. I am self employed and my business fluctuates so we don't typically count on it as part of our income. Last year, I brought home about 30k gross or 15k after deductions

1. We are hoping to understand how to move forward with building a portfolio. I have 1k invested in Vanguard over the past year and was worried I was investing in the wrong thing and stopped. We have a CD maturing mid summer that will give us an extra 15k to invest, in addition to the almost 75k we have waiting to be invested right now. We are both on the journey of becoming financially literate but could use any and all help until we get on our feet with it. I am hoping to not have to closely monitor/change these investments much once we set them. Should we be looking at VTWAX or a Target Fund instead?

2. We will be contributing 800$ a month (for ten months since my husband is not typically working 2 months of the year per his contract) to his Calstrs which is matched fully and provides us with the average of his top highest 3 years when he retires. We will also be contributing to a 457b and were thinking of also doing 800$ a month (also for the 10 months) since we're so far behind on saving. I would additionally like to invest 6k a year into a Roth or Traditional IRA but am unsure which to do and what accounts we need to open. Should we consolidate the Navy Federal Traditional and Roth IRA's into one Vanguard account? Also is my husband able to contribute to a Roth or Traditional in addition to his Calstrs pension and a 457b and if so how much a year can we both contribute?

3. Any future additional income from my business we would like to be a little more aggressive with investing, should we be adding into the same fund/s we start with or would it be better to diversify with something more aggressive?

Thank you, thank you, thank you. I wish I had known communities like this existed years ago.
Last edited by Grassisgreen on Wed May 12, 2021 11:50 am, edited 1 time in total.
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retired@50
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Location: Living in the U.S.A.

Re: Finally getting our finances in order and would love any help with how to proceed

Post by retired@50 »

Grassisgreen wrote: Mon May 03, 2021 12:44 pm
We have around 1k invested in Vanguard VYM, 9K in a Roth IRA at Navy Fed, 20K at a Traditional IRA at Navy Federal, 13K at my husbands pension CalStrs and under 1k at Victory Capital.
Welcome to the forum. :happy

Can you elaborate on the above at all? You'll likely need to use the pencil icon in the upper right corner of your original post to add the needed details as other forum members ask additional questions. Keep editing your original post to keep all relevant information in one place.

All you've told us is that you have $1k in VYM.

What is the $9k and the $20k invested in? Cash? Stocks? Bonds? something else?

What is the $13k at CalStrs invested in? Does your husband have any discretion over how this money is invested, or is it just a pension plan that handles all investing decisions for him?

What is the $1k invested in?

Also, see this link: https://www.bogleheads.org/wiki/Getting_started

Regards,
This is one person's opinion. Nothing more.
Topic Author
Grassisgreen
Posts: 6
Joined: Mon May 03, 2021 12:17 pm

Re: Finally getting our finances in order and would love any help with how to proceed

Post by Grassisgreen »

Hi,

Thank you. I am ashamed to say I don't know the answers to most of these. The Navy federal IRA's look like they're in CD's that mature every so often.

The Calstrs is a pension so he has no say over how it's invested, we just pay the amount they tell us and they invest it.

The 1k is only invested in VYM.

I'm sorry! I feel so lost and wish I had the answers to these questions. Thank you for taking the time to respond
wetgear
Posts: 237
Joined: Thu Apr 06, 2017 10:14 am

Re: Finally getting our finances in order and would love any help with how to proceed

Post by wetgear »

Grassisgreen wrote: Tue May 04, 2021 12:48 pm Hi,

Thank you. I am ashamed to say I don't know the answers to most of these. The Navy federal IRA's look like they're in CD's that mature every so often.

The Calstrs is a pension so he has no say over how it's invested, we just pay the amount they tell us and they invest it.

The 1k is only invested in VYM.

I'm sorry! I feel so lost and wish I had the answers to these questions. Thank you for taking the time to respond
Welcome to the forum Grassisgreen :happy

Only you can get the answer to these questions and knowing where you are is important to knowing how to proceed. We can't really give you any advice let alone good advice without more information. Contact the companies holding your money and ask them for information to answer the questions or alternatively log into the websites and look around until you find the answers. Once you have them come on back to the forum and the friendly people here will be happy to help.
Topic Author
Grassisgreen
Posts: 6
Joined: Mon May 03, 2021 12:17 pm

Re: Finally getting our finances in order and would love any help with how to proceed

Post by Grassisgreen »

Thank you, I will! I appreciate the help and the kind tone, especially when it's very clear I'm such a newbie!
User avatar
retired@50
Posts: 5863
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Finally getting our finances in order and would love any help with how to proceed

Post by retired@50 »

Grassisgreen wrote: Tue May 04, 2021 12:48 pm I'm sorry! I feel so lost and wish I had the answers to these questions. Thank you for taking the time to respond
Hey, no judgement here. Everyone starts somewhere, and nobody is born knowing this stuff.

I love to read. It's one of my preferred ways of learning. There are all sorts of wiki pages, like the one I linked to in my earlier post, which can help get you started, ** IF ** you like to read. There are also videos in the wiki. You're going to need to spend some time on this, so get comfy, and dig in when you have the time.

Recommended reading (books):
https://www.bogleheads.org/wiki/Books:_ ... nd_reviews

Wiki Videos:
https://www.bogleheads.org/wiki/Video:B ... philosophy

Get a library card. Do some reading. Watch your world open up.

Regards,
This is one person's opinion. Nothing more.
Topic Author
Grassisgreen
Posts: 6
Joined: Mon May 03, 2021 12:17 pm

Re: Finally getting our finances in order and would love any help with how to proceed

Post by Grassisgreen »

Thanks so much!
stuper1
Posts: 318
Joined: Tue Apr 03, 2018 9:30 am

Re: Finally getting our finances in order and would love any help with how to proceed

Post by stuper1 »

Grassisgreen wrote: Mon May 03, 2021 12:44 pm

His 401k
xx% fund name (ticker symbol) (expense ratio)
Company match?

He contributes 10.25% to a CalStrs Pension which will eventually give us the average of his top three years earnings wise

Welcome to the forum. You have come to the right place to learn how to manage your personal finances. There's no rush. Take it in small bites.

A few things I want to comment on. Regarding your comment that I quoted above, I just want to make sure that you understand how this works. He won't automatically get the average of his top three years of earnings. It depends on how many years he works and what age he retires. If he retires say at age 62 with 25 years of service, he may only get 50% of the average of his top three years of earnings. Also, I don't believe that CalStrs pays into the Social Security system, so he won't be getting a separate Social Security check (at least not based on his CalStrs years, and any check he receives from other work will be reduced based on the Windfall Elimination Provision of Social Security -- this is something you can learn about later, don't worry about it too much right now).

Since you are in the 12% federal tax bracket, and since it looks like you don't have anybody providing matching funds for retirement savings (some people have this from an employer, but it looks like you guys don't have this), the best place for you to put your savings will be into Roth IRAs, one for you and one for your husband. You can put $6,000 per year into your Roth IRA and another $6,000 per year into your husbands. Do a little research on say Fidelity, Vanguard, and Schwab to figure out which place to open a Roth IRA. Any one of them will be fine. I personally prefer Vanguard. After you get the accounts open, you can have that company request a rollover from the Roth IRA that is already set up at Navy Federal, and the money will get moved over into your new account.

Anything extra that you want to invest each year above that $12,000, I believe your husband can invest in the 457b account, up to $19,500 per year.
26% US large cap, 26% US small-cap value, 15% long-term Treasuries, 15% short-term Treasuries, 18% gold
Topic Author
Grassisgreen
Posts: 6
Joined: Mon May 03, 2021 12:17 pm

Re: Finally getting our finances in order and would love any help with how to proceed

Post by Grassisgreen »

Thank you! That was super helpful!

It's confusing because it was matched before he got a full-time contract. I just looked at his paystub and it's still matched but I am very confused on how the whole pension vs 401k thing works and if we get the money back if he ends up leaving this job (highly unlikely).

Thank you so much for your help!
stuper1
Posts: 318
Joined: Tue Apr 03, 2018 9:30 am

Re: Finally getting our finances in order and would love any help with how to proceed

Post by stuper1 »

Ok, the pension money may be matched by CalStrs. That's not really relevant to where you invest your remaining available money, because the pension contribution is mandatory. When I mentioned matching, I was talking about the typical situation of a person working for a private employer where the employer will match a certain percentage of contributions to a 401k. In that case, the match is free money, so you want to take advantage of it. In your case, the pension contribution is mandatory, so you don't have any choice. I'm talking about the money you have available after you've made the pension contribution. In your case, it makes sense to start using that money for Roth IRA contributions. Once you have the Roth space filled, then you can either invest remaining money in a 457b (pre-tax) or in a taxable account (post-tax) or some combination thereof. I would probably do 50/50 at your tax bracket.
26% US large cap, 26% US small-cap value, 15% long-term Treasuries, 15% short-term Treasuries, 18% gold
Topic Author
Grassisgreen
Posts: 6
Joined: Mon May 03, 2021 12:17 pm

Re: Finally getting our finances in order and would love any help with how to proceed

Post by Grassisgreen »

Thank you! I appreciate the help!
Sam_78
Posts: 57
Joined: Tue Oct 27, 2020 7:04 pm
Location: Sonoran Desert Biome

Re: Finally getting our finances in order and would love any help with how to proceed

Post by Sam_78 »

My employer matches 457 with .5% of salary. Also many times pensions refund money. Details around how much you get back, employer contributions, interest rate etc. employer should have 457 info and pension site should have info on refund policies, so you are informed.

https://www.calstrs.com/refunds
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