First, a bit about my mindset: I've always been a minimalist and a saver and have always felt more secure having my money stashed away in a savings account (as a bloated emergency fund...I grew up poor, just feels comforting to have it right there) versus an investment vehicle. I've tried educating myself about investing and financial planning and quickly get frustrated with the complexity of information and overwhelmed by the number of investment options, and typically have just thrown up my arms and walked away from the entire game. Not this time! I'm excited to have learned about Bogleheads and am going to pick up a few of the books recommended at the top of this board.
With that preamble, here's my situation:
Emergency funds: 12 months
Debt: Effectively none, though I do pay the minimum on my remaining grad school loan ($700 remaining) just to string along positive credit reporting.
Tax Filing Status: Married Filing Jointly
Effective Tax Rate: 25% Federal, 5.3% State
State of Residence: MA
Age: Me 36, Wife 40 (no children, no intentions)
Desired Asset allocation: I'm not sure
Desired International allocation: I'm not sure
Household income: ~$170,000
Portfolio size: ~$20,000 (excluding emergency funds)
Current Retirement Assets
Taxable -- 63%
- 40% Series-I Savings Bond
15% BWEN (85% unrealized loss, ~$12k)
15% RAD (24% unrealized loss, ~$600)
7% AUQ (20% unrealized loss, ~$200)
4% ASTI (94% unrealized loss, ~$7k)
Non-Taxable -- 37%
Fidelity Rollover IRA from Former Employer -- 65%
- 100% Fidelity Intermediate Bond (FTHRX) -- .45%
Current Employer Fidelity 401k -- 35%
- 50% PIMCO Total Return Fund Class A (PTTAX) -- .85%
25% American Century Investments Equity Income Fund Class A (TWEAX) -- 1.2%
15% Fidelity Advisor® Government Income Fund - Class A (FVIAX) -- .77%
10% Fidelity Advisor® International Discovery Fund - Class A (FAIDX) -- 1.3%
1. We live on about 50% of our income, hoping to knock that down to 40% this year with salary raises and either buying a condo (mortgage would be cheaper than our current rent) or finding a cheaper rental.
2. I currently contribute 10% of my salary to my company's 401k plan (allocations described above). I plan to bump my contributions up to 15-20% in 2013.
3. Company matches 50% of contributions up to 10% of salary.
4. Company was recently acquired and we are being moved over to our new parent company's 401k plan. Listed below are the funds available in the new plan. Any recommendations on which I should select or which should be weighted more heavily?
- Fidelity® Contrafund® - Class K (FCNKX) -- .69%
Neuberger Berman Socially Responsive Fund Institutional Class (NBSLX) -- .71%
T. Rowe Price Institutional Large Cap Core Growth Fund (TPLGX) -- .65%
Spartan® 500 Index Fund - Institutional Class (FXSIX) -- .05%
Eaton Vance Large-Cap Value Fund Class I (EILVX) -- .73%
Dreyfus Opportunistic Midcap Value Fund Class A (DMCVX) -- 1.17%
RS Partners Fund Class Y (RSPYX) -- 1.21%
Morgan Stanley Institutional Small Company Growth Portfolio Class I (MSSGX) -- 1.1%
Fidelity® Low-Priced Stock Fund - Class K (FLPKX) -- .76%
Fidelity® Diversified International Fund - Class K (FDIKX) -- .73%
PIMCO Total Return Fund Institutional Class (PTTRX) -- .46%
Stable Value Fund -- .1%
Fidelity® Money Market Trust Retirement Money Market Portfolio (FRTXX) -- .42%
Fidelity Freedom K Funds
5. My wife is going to begin contributing 20% to her 401k this year. Her company's plan is through John Hancock and there just aren't many fund options. Her company matches 100% up to 3%.
Below are the options available in her 401k plan:
- Equity Income Fund (JIEMX) -- 87%
The Investment Company of America (RICFX) -- .80%
Prudential Jennison 20/20 Focus Fund (PTWZX) -- 1.13%
Capital Appreciation Fund (JICPX) -- .78%
Value Fund (JEVLX) -- .83%
Mid Value Fund (JEMUX) -- 1.06%
Small Cap Value Fund (JESVX) -- 1.33%
Small Company Value Fund (JISVX) -- 1.33%
Invesco Small Cap Growth Fund (GTSAX) -- 1.27%
DFA Emerging Markets Value Fund (DFEVX) -- 1.11%
New World Fund (RNWFX) -- 1.16%
Oppenheimer International Growth Fund (OIGYX) -- 1.12%
U.S. Government Securities Fund (RGVFX) -- .79%
Capital World Bond Fund (RCWFX) -- 1.03%
International Equity Index Fund -- .62%
Small Cap Index Fund (JESIX) -- .60%
Mid Cap Index Fund (JECIX) -- .54%
Total Stock Market Index Fund (JETSX) -- .57%
500 Index Fund -- .53%
Total Bond Market Fund -- .56%
Real Estate Securities Fund (JIREX) -- .79%
Natural Resources Fund (JINRX) -- 1.10%
Energy Fund (VGENX) -- .84%
MFS Utilities Fund (MMUHX) -- 1.04%
Lifestyle Fund - Aggressive Portfolio (JILAX) -- 1.10%
Lifestyle Fund - Growth Portfolio (JILGX) -- 1.07%
Lifestyle Fund - Balanced Portfolio (JILBX) -- 1.00%
Lifestyle Fund - Moderate Portfolio (JILMX) -- .99%
Lifestyle Fund - Conservative Portfolio (JILCX) -- .92%
6. I was thinking to open a Roth IRA (through Vanguard or Fidelity) and start socking money away in that. I just don't like the idea of not having access to the money if necessary.
7. I have a rollover IRA (listed above) from a former employer. I haven't done anything with it in 10 years and it's increased in value by 50%. Should I continue to just let it sit or start making contributions to it or merge it into something else?
Responses to Questions Posed Below
How much do you anticipate being able to contribute toward investments annually in the next few years?
Rather than continuing to channel money into savings account every month, I'd like to start putting more into investments -- probably $20-25k per year over the next few years.
What is your preference about leaving existing accounts at Fidelity vs moving them to Vanguard?
I have no particular loyalty to Fidelity though would prefer to not pay fees for moving an account. I looked into Vanguard this morning and will likely open a Roth account after the new year.
I really appreciate any guidance you can give to help get us on the right track.
Thanks! Happy holidays!