Our finances in a nutshell:
Emergency funds: Six months of expenses
Debt: Mortgage $93K @ 2.75%, Car $16K @ 1.9%
Filing status: Married Filing Jointly
Tax rate: 33% federal, 8.8% state
State of residence: Vermont
Ages: 49 & 41
Portfolio size: Upper six figures
Desired asset allocation (generally 80 stocks/20 bonds):
- 10% TIPS - TSP G Fund (I know it’s not exactly TIPS, but it’s close enough)
- 10% Bond Index - Vanguard Total Bond Market Index Adm (VBTLX) & TSP F Fund
- 40% US Stock Index - Vanguard Total Stock Market Index Adm (VTSAX) & TSP C Fund
- 30% Int’l Stock Index - Vanguard Total Int’l Stock Index Adm (VTIAX) & TSP I Fund
- 10% REIT Index - Vanguard REIT Index Fund Adm (VGSLX)
1. We have two kids nearing college age. We already contribute enough to 529 accounts to get the $250 per kid Vermont tax credit, and I’m not too worried about the risk of the kids deciding to be professional snowboarders or whatever instead of going to school. What do you all think of directing a significant share of ongoing taxable savings into 529 funds?
2. I like my job and don’t object to the risk of having to work until, say, age 70 in exchange for a chance at higher portfolio returns. Given that, is an 80/20 split at my age grotesquely risky?
3. We’ve been in our home for 15+ years, and have no plans to move. We just refinanced our mortgage from a 30 year fixed rate at 5.625% to a 5/1 ARM at 2.75%, intending to pay it off over 5 years (having no debt will make us happier). Considering the carnage in the housing market and the extremely low interest rates, is this a terrible idea?