150k to invest. Portfolio advice.

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
bkkchris
Posts: 34
Joined: Tue Dec 28, 2010 11:30 am

150k to invest. Portfolio advice.

Post by bkkchris »

So much great info on this site, thought it was time to ask for my own.

I have roughly 150k to invest which has just been sitting in a savings account.

I currently only have a SEP IRA with the following AA:

500 Index VFIAX 20%
Small Cap Index Fund VSMAX 15%
Total International Stock Index VTIAX 30%
Total Bond Market VBTLX 20%

So, I can max out my 2012 SEP contribution of 50k, and can fully fund my SEP for 2013 of 51k? Then the remaining into a taxable account?

What would you recommend for taxable? Additional VFIAX & VTIAX but keeping my total combined around my target AA? I will be adding about $3000/month to this account assuming I have maxed out my IRA.

Currently in the 35% tax bracket, so maybe convert something from my SEP to a Roth IRA?

Any advice on my choice of funds? Add some REITs?

I am 35, single, no plans of any large purchases in the near future (home, etc.).
DSInvestor
Posts: 11647
Joined: Sat Oct 04, 2008 11:42 am

Re: 150k to invest. Portfolio advice.

Post by DSInvestor »

If you're self employed, consider switching from SEP-IRA to Solo 401k. This will make it easier for you to use the backdoor into Roth IRA and get a little more tax advantaged space (5.5K) every year. Having lots of pre-tax assets in SEP-IRA complicates the Roth conversion step of the backdoor into Roth IRA. Fidelity has a very nice Self Employed 401(k) plan that allows for incoming rollovers from IRAs.

You're in a very high tax bracket so tax efficiency is an important consideration.
Wiki article link: Principles of Tax-Efficient Fund Placement

If you hold Total International in the taxable account, you'd get the Foreign Tax Credit. Total Stock Market VTSAX is very tax efficient and would also be appropriate for a taxable account. If you want to hold some bonds in the taxable account look at Vanguard Intermediate Term Tax Exempt (VWIUX).
Wiki
illcrx
Posts: 25
Joined: Mon Dec 24, 2012 10:28 am
Location: Spammer

Re: 150k to invest. Portfolio advice.

Post by illcrx »

Its none of my business but owning a home is better than not, if you have the ability to spend 3k every month on investing you should take advantage of the current low interest rate environment and get a home in case things go south it would be great to have a place to live. Especially because the Fed just said they may stop their current policy at the end of 2013 or before which means interest rates will rise, a home is better than cash any day.

Now that is out of the way I think you have a pretty good allocation, although foreign mutual funds can be tricky due to so many markets pulling the fund in different directions. Domestic funds are easier to monitor progress on. [Commercial website promotion removed by admin LadyGeek]

What is your investment objective? Do you want to appreciate capital or make income?

As for SEP you should max those out, and since you are contributing 3k per month I would assume you wouldnt qualify for a Roth (under 127k income), so the previous posts suggestion on the backdoor is a good way to enter that arena. Since 2010 there has been no income limit on backdoor contributions also no time limit for holding in the 401k so you can do it right away up up to the limit (5500, 2013) (5000,2012).
assumer
Posts: 432
Joined: Fri Dec 21, 2012 10:11 pm

Re: 150k to invest. Portfolio advice.

Post by assumer »

illcrx wrote:[Commercial website promotion removed by admin LadyGeek]
I'm pretty sure most people here would not advocate such an attempt at market timing.

Edit: Forgetting about market timing in general, even the "[Commercial website removed by admin LadyGeek]"'s website is rife with typos... "If you do not have a retirement account and no nothing about any of this it will be confusing"
illcrx
Posts: 25
Joined: Mon Dec 24, 2012 10:28 am
Location: Spammer

Re: 150k to invest. Portfolio advice.

Post by illcrx »

Whats wrong with market timing, it can yield great results. So are you telling me you sat through 2008-2009?

Also if you know nothing about investing, an different concept like market timing a retirement account would be a bit confusing.
Keep It Simple
Posts: 298
Joined: Sat Nov 17, 2007 4:07 pm

Re: 150k to invest. Portfolio advice.

Post by Keep It Simple »

assumer wrote:
illcrx wrote:[Commercial website promotion removed by admin LadyGeek]
I'm pretty sure most people here would not advocate such an attempt at market timing.


x2

You won't find too many people here who agree with the idea of actively managing/timing anything.

K. I. S.
User avatar
Pennstateclj1
Posts: 501
Joined: Sun Apr 03, 2011 2:53 pm
Location: State College, PA

Re: 150k to invest. Portfolio advice.

Post by Pennstateclj1 »

How about just keeping it simple in taxable- you can rebalance in the IRA or Solo401k- whichever you go with.

150k split 3 ways-
Total Stock Index
Total International Index- foreign tax credit
Intermediate term tax-exempt (you have painful tax rates, this fund has no AMT bonds I believe.)

http://www.bogleheads.org/wiki/Principl ... _Placement

Add new money to whichever isn't doing so hot, or equally if they all are about the same.

You shouldn't be considering REITs for your taxable account,especially at 35% marginal. But in tax-advantaged they're appropriate.


I would disregard the market timing idea also, you can't do it consistently and effectively throughout your entire investing career.
Take what the market gives you, control what you can- costs, taxes, risk.
User avatar
Pennstateclj1
Posts: 501
Joined: Sun Apr 03, 2011 2:53 pm
Location: State College, PA

Re: 150k to invest. Portfolio advice.

Post by Pennstateclj1 »

illcrx wrote:
illcrx wrote:[Commercial website promotion removed by admin LadyGeek]
Where can I get your newsletter? How much is it?
User avatar
BolderBoy
Posts: 6753
Joined: Wed Apr 07, 2010 12:16 pm
Location: Colorado

Re: 150k to invest. Portfolio advice.

Post by BolderBoy »

illcrx wrote:Its none of my business but owning a home is better than not, if you have the ability to spend 3k every month on investing you should take advantage of the current low interest rate environment and get a home in case things go south it would be great to have a place to live. Especially because the Fed just said they may stop their current policy at the end of 2013 or before which means interest rates will rise, a home is better than cash any day.

Hmmmmm. There are millions of people in the country who would say otherwise. Doesn't it also depend upon why one buys a home? Is the home for shelter and refuge? Is it for an investment?

Owning a home isn't for everyone and ought not be assumed to be better than renting in every circumstance.
BuckyBadger
Posts: 1221
Joined: Tue Nov 01, 2011 11:28 am

Re: 150k to invest. Portfolio advice.

Post by BuckyBadger »

illcrx wrote:Whats wrong with market timing, it can yield great results. So are you telling me you sat through 2008-2009?
That was before I had anything more than a Target Retirement fund in a Roth IRA, but I think the answer to your question from most of the more mature bogleheads on this forum would be:

"Yes, I stayed the course in 2008 and 2009, rebalanced if necessary, and I have now recovered and made great gains."

Are YOU trying to say that you "market timed" 2008 and 2009? That is certainly a dangerous precedent. I'm surprised you didn't do something crazy like, say, sell all your holdings before the fiscal cliff...

To the OP -- Stay the Course. You'll find no support for attempted market timing here.
User avatar
roymeo
Posts: 1278
Joined: Sat Apr 28, 2007 7:19 pm
Location: Oakland, CA
Contact:

Re: 150k to invest. Portfolio advice.

Post by roymeo »

assumer wrote:Edit: Forgetting about market timing in general, even the "[Commercial website removed by admin LadyGeek]"'s website is rife with typos... "If you do not have a retirement account and no nothing about any of this it will be confusing"
Wow, the first post there I can find (consisting of "Current Outlook: Good") was 4 days before the poster joined bogleheads.
A whois reveals that site was registered less than 60 days before that. The owner who has the name of the blogger and the email address of the poster.
The sewer system is a form of welfare state. | -- "Libra", Don DeLillo
User avatar
LadyGeek
Site Admin
Posts: 95696
Joined: Sat Dec 20, 2008 4:34 pm
Location: Philadelphia
Contact:

Re: 150k to invest. Portfolio advice.

Post by LadyGeek »

Good eyes. I took care of it.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
Post Reply