Portfolio allocation advice - 30 yr old in CA

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ultros
Posts: 16
Joined: Tue Sep 03, 2013 10:51 pm

Portfolio allocation advice - 30 yr old in CA

Post by ultros » Wed Sep 04, 2013 12:29 am

Hi Bogleheads –
I’m a first time poster to the forum. I have a number of questions about my portfolio, so bear with me. The most time-sensitive question I have is about if and how to re-jigger my asset allocation.

About us:
Emergency funds: Recently took the $10k that was sitting in savings earning almost no interest and put it into Vanguard Balanced Index. A few thousand dollars scattered around checking accounts, and a $10k personal line of credit at 9.25% that has never been used.
Debt: $65k in student loans remaining, split like this:
- 6.55% - $55k
- 5% - $7k (will be fully forgiven as long as wife stays in her current profession for a few years)
- 2.75% - $3k
Tax status: Married filing jointly
Tax rate: 15% federal, 8% state (pre-tax contributions should put us at the very top of 15% range this year; next year we may land in 25%)
State of Residence: California
Age: 30 (wife 28)

Current asset allocation: 80% stocks / 20% bonds
Current stock allocation:
Large-cap growth (500 Index) – 20%
Value Index – 25%
Small Cap Index – 5%
Small_Cap Value Index – 15%
REIT Index – 13%
Total International – 22%
Bond allocation:
Short-term IG – 60%
TIPS – 40%

Actual accounts conform pretty closely to these allocations. Part of my issue is that I have funds split across many accounts, and the ones I’m contributing to actively (employer-sponsored 403(b) and 457(b) don’t have access to Small-Cap Value or a broad short-term bond fund, so it’s becoming quite difficult to manage new contributions in a balanced way.

Total portfolio size is currently about $65k, if you include the $10k “emergency fund” money that we recently put in a taxable brokerage account. This is not counting money I’ve contributed to employer pension, which is relevant for long-term financial independence calculations, but not meaningful to asset allocation. Here’s the breakout:

Taxable brokerage account (Vanguard):
VG Balanced Index Admiral - $9900

My Roth IRA (Vanguard):
VG Total International - $6500
VG Short-Term IG Bond - $3000
VG Value Index Admiral - $10,900

Wife’s Roth IRA (Vanguard):
VG 500 Index - $5400

Wife’s Traditional IRA (Vanguard):
VG Small Cap Value - $8400
VG Short-Term IG Bond - $3000

I work for University of California (UC), which has a pretty good menu of low-cost portfolio options, plus the ability to invest up to $35k/year in a 403(b) and a 457(b). I am actively contributing to those two. The funds are mostly Fidelity, with a few Vanguard options, and a few that are administered by UC.

UC 403(b)
Spartan US Bond Index - $200
UC TIPS Fund - $1900
Spartan International - $1400
VG REIT Index Institutional - $2600
VG Small Cap Index Institutional - $800
Spartan 500 Index - $1400

UC 457(b)
Spartan US Bond Index - $200
UC TIPS Fund - $2300
Spartan International - $1600
VG REIT Index Institutional - $2600
VG Small Cap Index Institutional - $1100
Spartan 500 Index - $1600

Wife’s 403(b)
Currently not contributing. Next year we might have to contribute to reach 15% bracket, but the fund choices here stink – all big ERs.

Contributions
The plan with contributions is this: Contribute to my pre-tax 403(b) and 457(b) until our taxable income reaches the 15% bracket. Then put any additional “savings” into extra student loan payments. We will come very close to $35k in contributions this year. Next year we will probably max out my 403(b)/457(b) at $35k (if I remain with my employer), then we would need to think about whether to contribute to my wife’s crappy plan and/or put some into her Traditional IRA at Vanguard. We should be able to contribute $5k to her traditional IRA next year.

Available funds
All IRAs are at Vanguard

403(b)/457(b)
- I should have access to all Fidelity funds, plus there are some administered by UC. Here’s the most noteworthy ones.
Spartan 500 Index FXSIX 0.04%
Spartan US Bond Index Fund FXSTX 0.07%
Spartan International Index FSPNX 0.07%
Vanguard REIT Index Institutional (Core) VGSNX 0.08%
Spartan Real Estate Index Fund FSRVX 0.10%
Vanguard Small Cap Index Institutional (Core) VSCIX 0.14%
UC Bond Fund (Core) 0.15%
UC TIPS Fund (Core) 0.15%
UC International Equity Index (Core) 0.15%
UC Domestic Equity Index (Core) 0.15%
Spartan Small Cap Index Fund FSSVX 0.16%
Spartan Global ex. US Index FSGDX 0.18%
Spartan Emerging Markets Index FPMAX 0.20%
Fidelity Value K (actively managed) FVLKX 0.54%
UC Short-Term TIPS fund 0.15%
In addition, I have access to all of Fidelity’s life cycle funds, plus a set of life cycle funds administered by UC with a 0.15% ER.

Goals:
- We would like to achieve early retirement (financial independence, if you prefer) in 12-ish years. With our current savings rate and expenses, this is achievable. Of course, if we experience lower-than-expected returns, we will certainly be young enough to continue to work, or to continue earning a part-time income.
- Sometime between now and then, we’d like to buy a house. However, home prices are so high in our area and our rent is so reasonable that it may never be a sound investment for us. Also, I’d like to get our student debt more under control before taking on a mortgage. Still, having $40-50k in taxable accounts that could be tapped for a down payment would be helpful in the next few years.
- Our cars are pretty old, and a new (used) car will be in order within the next 2-3 years. Figure about $9 for that.

A little other background:
- About six months ago, I set our asset allocation above out of the back of Bernstein’s Four Pillars of Investing. I knew I’d want to revisit it a few months down the road after I was a bit more confident. I’d like to make perhaps one more change to the allocation and then leave it mostly unchanged for many years. I have a few tweaks in mind, but the main problem is that I can’t contribute to a value or small-cap value index in my current 403/457 plans. It would also be nice to have an allocation that another employer’s funds might cover, too, as I will likely change jobs within the next 18 months.
- I’m taking a Value-Cost Averaging approach to my monthly contributions; that is, I’m adjusting my proportional contribution each month to bring my portfolio closer to my desired allocation. I built a fancy excel sheet to help me do this, and I’d like to continue this approach. But if I have to keep reallocating funds within my VG accounts to do it, I can see that it’s going to become unmanageable. So the best approach might be to adopt an asset allocation that’s possible the with the funds in my 403/457?

Questions about asset allocation.
1. The big one: How would you change my asset allocation to work within my current portfolio options?
2. I’m thinking of shifting to something like 30% or 35% international equities and down to only 15% bonds. That would increase my risk overall. Do you think my portfolio risk is appropriate for my goals and time horizon?
3. I think I’d like to maintain some weighting towards value and towards small-cap. Do the percentages in my allocation seem reasonable?
4. I have no way to get small-cap value exposure in my employer accounts. Should I remove this sector from my allocation and sell my small-value holdings at VG? Or do I just leave the Small-Cap Value fund alone and stop rebalancing it? How do you think I should handle?
5. I suppose we could put new money in VG through my wife’s Traditional IRA, but only $5k/year. I would prefer not to open a new Traditional IRA in my name unless it’s really necessary, since it’s yet another account to manage.
6. I’m thinking of switching my UC TIPS Fund to Short-Term TIPS Fund, to reduce interest rate risk in the portfolio. But I know this is edging into market timing. Thoughts?
7. I’ve been interested in allocating some % to international bonds, since I saw VG’s new VTIBX fund. But there’s no international fixed-income options through Fidelity with a reasonable ER (under 1%). So perhaps I need to hold off?

And a couple questions about emergency fund:
1. Do you think I’m crazy for eliminating the emergency fund? My rationale is that the money should be earning interest, which is impossible in a savings account these days. If I have a true emergency, I can either run a balance in the personal line of credit for a while and/or sell from the taxable portion of the portfolio (and rebalance the tax-sheltered portion to the proper allocation). Yes, I run a risk of selling during a market decline, but the flip slide is a near certainty of a negative real return in a savings account. A large expense that is forseeable a few months in the future can be funded by reducing retirement contributions or loan payments temporarily.
2. If I keep the emergency money invested as I’ve outlined (in a minimum $10k portion of the taxable portfolio), what fund should it be in? I put it in Vanguard Balanced Fund as a standalone investment, but I think it should be conceived as a part of the overall portfolio, especially as the Balanced Fund contains bonds that are not tax efficient.

As you can probably tell, I’m pretty detail-oriented and willing to hold a complex portfolio and be quite hands-on with it. Lately, though, it’s getting to be a bit much, so needs some streamlining.

If you read this far, thanks very much for your time! I’d love to hear your insights.

HurdyGurdy
Posts: 1170
Joined: Wed May 09, 2012 10:21 pm

Re: Portfolio allocation advice - 30 yr old in CA

Post by HurdyGurdy » Wed Sep 04, 2013 3:32 pm

I'd try to pay those student loans first.

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femur
Posts: 302
Joined: Fri Apr 11, 2008 2:07 pm

Re: Portfolio allocation advice - 30 yr old in CA

Post by femur » Wed Sep 04, 2013 4:34 pm

1. Do you think I’m crazy for eliminating the emergency fund? My rationale is that the money should be earning interest, which is impossible in a savings account these days. If I have a true emergency, I can either run a balance in the personal line of credit for a while and/or sell from the taxable portion of the portfolio (and rebalance the tax-sheltered portion to the proper allocation). Yes, I run a risk of selling during a market decline, but the flip slide is a near certainty of a negative real return in a savings account. A large expense that is forseeable a few months in the future can be funded by reducing retirement contributions or loan payments temporarily.
I will just touch on this question and leave the rest to others.

There is a difference between the need/wish to earn interest on money vs the need to be able to take care of emergencies without cashing out retirement accounts etc. There is even a (in my opinion complicated) methody whereby emergency money is kept in a Roth IRA: http://www.bogleheads.org/wiki/Roth_IRA ... gency_fund
which is impossible in a savings account these days
Let me at least just challenge that assumption. Here are some options:

Ibonds: the total current rate for an ibond is 1.18% (http://www.treasurydirect.gov/indiv/pro ... glance.htm)
CD at Ally Bank: 1.5% (http://www.ally.com/bank/high-yield-cd/ ... tabs=rates)
High Yield Checking Account: Some accounts can be as high at 2.5% (https://origin.bankrate.com/finance/che ... urvey.aspx)

I would not skip out on having some emergency cash just because you are missing out on a percent or two of earnings.

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ruralavalon
Posts: 13195
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Portfolio allocation advice - 30 yr old in CA

Post by ruralavalon » Wed Sep 04, 2013 5:04 pm

Welcome to the forum :) .

You have some wonderful choices in your 403b and 457b, you are very fortunate. Berstein's Four Pillars was an excellent place to start.
ultros wrote:Emergency funds: Recently took the $10k that was sitting in savings earning almost no interest and put it into Vanguard Balanced Index. A few thousand dollars scattered around checking accounts, and a $10k personal line of credit at 9.25% that has never been used.
. . . . .
Total portfolio size is currently about $65k, if you include the $10k “emergency fund” money that we recently put in a taxable brokerage account. . . . Here’s the breakout:

Taxable brokerage account (Vanguard):
VG Balanced Index Admiral - $9900
First of all, subtract out your emergency money from your long-term retirement investing analysis. So you have about $55k for long-term investing.

Second consider something other than the Balanced Index, for safety in the emergency fund. As you are aware, there are no really good choices at present, but look at: I-bonds; a good short term bond fund like, Vanguard Short-Term Investment-Grade Fund Investor Shares (VFSTX); or the much-despised savings account or CD. I do see the point of your choosing the Balanced Index, its less risky than an all-stock fund and gives the prospect of a positive real return, its not entirely crazy but still . . . .

Safety is the whole point of the emergency fund.

ultros wrote:The most time-sensitive question I have is about if and how to re-jigger my asset allocation.
. . . . .
Current asset allocation: 80% stocks / 20% bonds
Current stock allocation:
Large-cap growth (500 Index) – 20% 45%
Value Index – 25%
Small Cap Index – 5% 20%
Small_Cap Value Index – 15%
REIT Index – 13%
Total International – 22%
Bond allocation:
Short-term IG – 60%
TIPS – 40%
. . . . .
I’d like to make perhaps one more change to the allocation and then leave it mostly unchanged for many years. I have a few tweaks in mind, but the main problem is that I can’t contribute to a value or small-cap value index in my current 403/457 plans. It would also be nice to have an allocation that another employer’s funds might cover, too, as I will likely change jobs within the next 18 months.
- I’m taking a Value-Cost Averaging approach to my monthly contributions; that is, I’m adjusting my proportional contribution each month to bring my portfolio closer to my desired allocation. I built a fancy excel sheet to help me do this, and I’d like to continue this approach. But if I have to keep reallocating funds within my VG accounts to do it, I can see that it’s going to become unmanageable. So the best approach might be to adopt an asset allocation that’s possible the with the funds in my 403/457? (emphasis added)

In my opinion the best general approach is to adjust the sub-classes in your asset allocation to make use of the better choices offered in the retirement accounts. I think that your general asset allocation of: 80/20 stocks/bonds; with ~28% of total stocks in international is a reasonable one, and does not need to be adjusted.

Just adjust the sub-classes of the asset allocation, like small, value, and small value to make use of what is offered. This may involve keeping small cap, and dropping value and small cap value.

ultros wrote:3. I think I’d like to maintain some weighting towards value and towards small-cap. Do the percentages in my allocation seem reasonable?
In my opinion, to make good use of the low expense index funds that are offered is more important than straining to keep the sub-classes of the desired asset allocation, and may best be done by dropping use of small cap value. In other words, in my opinion low expense trumps desired sub-classes. Low investing expenses guatantee increased net return, but tilting to sub-classes doe not have that guarantee. I indicated some ideas in blue above, putting about 2/3 of domestic stocks in large cap funds and about 1/3 in small cap funds, while leaving everyting else alone.

Please don't get the idea that I am against tilting to small cap vlue. We do that in our own portfolio. Its just that I think that low investing expenses are more important.

ultros wrote:Wife’s 403(b)
Currently not contributing. Next year we might have to contribute to reach 15% bracket, but the fund choices here stink – all big ERs.

Some more detail might (or might not) help, "big" and "stinks" are sometimes in the eyes (or nose) of the beholder. Could you add the fund names tickers and expense ratios of the lowest expense stock funds in your wife's 403b, especially any that are value or small cap value funds?


ultros wrote:5. I suppose we could put new money in VG through my wife’s Traditional IRA, but only $5k/year. I would prefer not to open a new Traditional IRA in my name unless it’s really necessary, since it’s yet another account to manage.

I see the IRAs as your only good choice if you want to keep some tilt to small cap value, unless something in your wife's 403b can serve.

ultros wrote:2. I’m thinking of shifting to something like 30% or 35% international equities and down to only 15% bonds. That would increase my risk overall. Do you think my portfolio risk is appropriate for my goals and time horizon?
I see no issue with your increasing the international allocation to 30 or 35% of total stocks ( Vanguard, "Considerations for investing in non-U.S. equities" ), but I do advise agsinst decreasing the bond allocation. Please see: wiki, "Never bear too much or too little risk"; and 2011 regression, "% stocks vs age" . In my opinon at 20% and ages 28 and 30, you are already at the low end of what might be reasonable for bonds. So if you want to increase your international, do it at the expense of domestic stocks.


ultros wrote:6. I’m thinking of switching my UC TIPS Fund to Short-Term TIPS Fund, to reduce interest rate risk in the portfolio. But I know this is edging into market timing. Thoughts?
7. I’ve been interested in allocating some % to international bonds, since I saw VG’s new VTIBX fund. But there’s no international fixed-income options through Fidelity with a reasonable ER (under 1%). So perhaps I need to hold off?

I would do neither, but that's just me. We don't have any TIPS or any international bonds at all.

ultros wrote:Contributions
The plan with contributions is this: Contribute to my pre-tax 403(b) and 457(b) until our taxable income reaches the 15% bracket. Then put any additional “savings” into extra student loan payments. We will come very close to $35k in contributions this year. Next year we will probably max out my 403(b)/457(b) at $35k (if I remain with my employer), then we would need to think about whether to contribute to my wife’s crappy plan and/or put some into her Traditional IRA at Vanguard. We should be able to contribute $5k to her traditional IRA next year.

I won't weigh-in on the student loan part of the investing priority issue, at least yet. But how much per year total do you expect to be able to contribute toward saving and investing durng the next few years?



I know I haven't dealt with exact fund selection for the several accounts yet, but am out of time for now.

It would help if you addressed the underlined questions I asked above.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

ultros
Posts: 16
Joined: Tue Sep 03, 2013 10:51 pm

Re: Portfolio allocation advice - 30 yr old in CA

Post by ultros » Wed Sep 04, 2013 6:32 pm

Thanks very much to folks! Let me address a few of the issues:

I want to give some more thought to the emergency fund issue. Perhaps we should be a little more risk-averse in this respect. But here's one question:
Let me at least just challenge that assumption. Here are some options:

Ibonds: the total current rate for an ibond is 1.18% (http://www.treasurydirect.gov/indiv/pro ... glance.htm)
CD at Ally Bank: 1.5% (http://www.ally.com/bank/high-yield-cd/ ... tabs=rates)
High Yield Checking Account: Some accounts can be as high at 2.5% (https://origin.bankrate.com/finance/che ... urvey.aspx)
Why are some of those checking account yields so high? Seems fishy to me. I thought our Capital One 360 account (where the emergency money was living before) was close to the best game in town at 0.75% APY.
But how much per year total do you expect to be able to contribute toward saving and investing durng the next few years?
This year we will sock away about $56k, including both retirement contributions and student loan payments. Next year the savings rate should be higher, since DW was only working a portion of this year. Once a kid is in the picture, then income will decrease and expenses increase. We'll cross that bridge when we come to it.
I'd try to pay those student loans first.
Just to be clear on the loan payment strategy: we're contributing to pre-tax accounts until we get our taxable income down to $72,500 (15% bracket), then throwing everything past that into the loans until they're gone. This year we're throwing $1700/mo at the loans, and next year will likely be more, as we'll probably max out our pre-tax options. Plus there's forgiveness on the 5% loan, so we will not be responsible for any of that balance. At this rate, we should be debt-free in a little over three years. I'm comfortable with that time horizon.
Could you add the fund names tickers and expense ratios of the lowest expense stock funds in your wife's 403b, especially any that are value or small cap value funds?
I don't have them handy but will get them later tonight. As I recall, they all had ERs over 1%, but I will list them.

A couple other things I forgot to note:
  • That Fidelity Value K fund in my 403/457 portfolio options is the only way I can see to weight towards value in that portfolio. It's actively managed, but with a pretty reasonable ER (0.54%). Better to ditch my value allocation or go this route?
  • I excluded from my list of 403/457 fund options Spartan Total Market Index, at 0.07% ER. There's also a Spartan Extended Market Index (0.07%, mid/small, blend/growth) and a Spartan Mid Cap Index.(0.22%, blend) Neither seems to have much Value exposure, but might be useful tools?
I can post the whole list of fund options, but it'll be a little monstrous, so let me do it in a separate post.

ultros
Posts: 16
Joined: Tue Sep 03, 2013 10:51 pm

Re: Portfolio allocation advice - 30 yr old in CA

Post by ultros » Wed Sep 04, 2013 6:37 pm

Okay, here's my full list of fund options. There are a bunch of "Core Funds" and a bunch of "Non-Core" funds with more specialized market sectors.

Core funds:
Tier 1: Single, Diversified Options

UC Pathway Funds Brochure
UC Pathway Funds Overview
UC Pathway Income Fund
UC Pathway Fund 2015
UC Pathway Fund 2020
UC Pathway Fund 2025
UC Pathway Fund 2030
UC Pathway Fund 2035
UC Pathway Fund 2040
UC Pathway Fund 2045
UC Pathway Fund 2050
UC Pathway Fund 2055
UC Pathway Fund 2060
UC Balanced Growth Fund

Tier 2: Primary Asset Class Options

SHORT TERM INVESTMENTS
Short Term
UC Savings Fund
BOND INVESTMENTS
Stable Value
UC ICC Fund
Government
UC TIPS Fund
UC Short Term TIPS Fund
Intermediate Term
UC Bond Fund
STOCK INVESTMENTS
Large Cap Blend
UC Equity Fund
UC Domestic Equity Index Fund
Foreign
UC International Equity Index Fund

Tier 3: Specialized Asset Class Options

SHORT TERM INVESTMENTS
Money Market
Dreyfus Treasury Prime Cash Management Fund - Institutional Shares
STOCK INVESTMENTS
Socially Responsible
Vanguard FTSE Social Index Fund - Institutional Shares
Small Cap Blend
Vanguard Small-Cap Index Fund - Institutional Shares
Emerging Markets
Dimensional Emerging Markets Portfolio
Alternatives
Vanguard REIT Index Fund - Institutional Shares

Non-Core funds
(Sorry, no easy way to show ERs. The %s are returns for 1-year, 3-year, 5-year, and 10-year/length of fund.)

CALVERT EQUITY I (CEYIX)
11/01/1999
Stock Investments Large Cap Growth 22.70% 15.82% 7.96% 7.24% 07/31/2013 Show
CALVERT SOC INDEX I (CISIX)
06/30/2000
Stock Investments Large Cap Growth 27.56% 17.71% 8.80% 6.68% 07/31/2013 Show
FID BLUE CHIP GR K (FBGKX)
12/31/1987
Stock Investments Large Cap Growth 21.87% 20.84% 10.47% 7.66% 08/31/2013 Show
FID CONTRAFUND K (FCNKX)
05/17/1967
Stock Investments Large Cap Growth 17.22% 17.45% 7.95% 9.72% 08/31/2013 Show
FID EXPORT & MULTI K (FEXKX)
10/04/1994
Stock Investments Large Cap Growth 14.27% 15.06% 5.12% 7.25% 08/31/2013 Show
FID FUND K (FFDKX)
04/30/1930
Stock Investments Large Cap Growth 15.07% 16.73% 5.24% 6.67% 08/31/2013 Show
FID GROWTH CO K (FGCKX)
01/17/1983
Stock Investments Large Cap Growth 20.34% 21.64% 10.37% 10.23% 08/31/2013 Show
FID GROWTH DISC K (FGDKX)
03/31/1998
Stock Investments Large Cap Growth 18.41% 20.94% 7.20% 7.72% 08/31/2013 Show
FID INDEPENDENCE K (FDFKX)
03/25/1983
Stock Investments Large Cap Growth 25.16% 18.46% 4.46% 8.22% 08/31/2013 Show
FID MAGELLAN K (FMGKX)
05/02/1963
Stock Investments Large Cap Growth 20.30% 15.16% 3.21% 4.67% 08/31/2013 Show
FID OTC K (FOCKX)
12/31/1984
Stock Investments Large Cap Growth 29.22% 23.29% 12.29% 10.48% 08/31/2013 Show
FID STK SEL ALL CP K (FSSKX)
09/28/1990
Stock Investments Large Cap Growth 21.19% 18.17% 6.37% 7.04% 08/31/2013 Show
CALV LG CAP CORE I (CMIIX)
04/15/1998
Stock Investments Large Cap Blend 27.46% 17.14% 8.62% 6.05% 07/31/2013 Show
FID CAP APPREC K (FCAKX)
11/26/1986
Stock Investments Large Cap Blend 20.80% 19.47% 9.56% 8.16% 08/31/2013 Show
FID DISCIPLND EQ K (FDEKX)
12/28/1988
Stock Investments Large Cap Blend 21.28% 16.56% 4.26% 6.31% 08/31/2013 Show
FID DIVIDEND GR K (FDGKX)
04/27/1993
Stock Investments Large Cap Blend 19.92% 17.21% 8.18% 6.23% 08/31/2013 Show
FID GROWTH & INC K (FGIKX)
12/30/1985
Stock Investments Large Cap Blend 23.45% 21.05% 4.10% 3.19% 08/31/2013 Show
FID VALUE DISCOV K (FVDKX)
12/10/2002
Stock Investments Large Cap Blend 22.72% 18.82% 6.41% 8.46% 08/31/2013 Show
Investments you currently own SPTN 500 INDEX INST (FXSIX)
02/17/1988
Stock Investments Large Cap Blend 18.66% 18.36% 7.30% 7.08% 08/31/2013 Show
SPTN TOT MKT IDX INS (FSKTX)
11/05/1997
Stock Investments Large Cap Blend 20.12% 18.84% 7.73% 7.74% 08/31/2013 Show
FID EQ DIV INCOME K (FETKX)
08/21/1990
Stock Investments Large Cap Value 17.79% 16.12% 5.12% 5.20% 08/31/2013 Show
FID EQUITY INCOME K (FEIKX)
05/16/1966
Stock Investments Large Cap Value 20.48% 16.54% 6.01% 6.25% 08/31/2013 Show
CALVERT CAP ACC I (CCPIX)
02/26/1999
Stock Investments Mid-Cap Growth 25.76% 20.22% 10.13% 8.70% 07/31/2013 Show
FID GROWTH STRAT K (FAGKX)
12/28/1990
Stock Investments Mid-Cap Growth 24.47% 16.02% 7.23% 6.36% 08/31/2013 Show
FID MID CAP STOCK K (FKMCX)
03/29/1994
Stock Investments Mid-Cap Growth 24.24% 20.81% 9.19% 9.02% 08/31/2013 Show
FID LEVERGD CO STK K (FLCKX)
12/19/2000
Stock Investments Mid-Cap Blend 30.88% 22.07% 5.79% 12.00% 08/31/2013 Show
FID LOW PRICED STK K (FLPKX)
12/27/1989
Stock Investments Mid-Cap Blend 25.31% 19.77% 10.72% 10.75% 08/31/2013 Show
FID VALUE STRAT K (FVSKX)
12/31/1983
Stock Investments Mid-Cap Blend 24.30% 19.15% 8.95% 7.97% 08/31/2013 Show
SPTN EXT MKT IDX ADV (FSEVX)
11/05/1997
Stock Investments Mid-Cap Blend 26.71% 20.71% 9.60% 10.10% 08/31/2013 Show
SPTN MID CAP IDX ADV (FSCKX)
09/08/2011
Stock Investments Mid-Cap Blend 24.79% N/A N/A 20.79% 08/31/2013 Show
FID VALUE K (FVLKX)
12/01/1978
Stock Investments Mid-Cap Value 28.65% 19.52% 7.50% 8.97% 08/31/2013 Show
CALVERT SMALL CAP I (CSVIX)
04/29/2005
Stock Investments Small Cap Blend 42.88% 19.43% 10.21% 7.80% 07/31/2013 Show
SPTN SM CAP IDX ADV (FSSVX)
09/08/2011
Stock Investments Small Cap Blend 26.36% N/A N/A 22.51% 08/31/2013 Show
CALVERT INTL EQ I (CWVIX)
02/26/1999
Stock Investments Foreign 24.40% 7.72% -0.99% 5.27% 07/31/2013 Show
FID DIVERSIFD INTL K (FDIKX)
12/27/1991
Stock Investments Foreign 17.27% 10.18% 1.37% 7.71% 08/31/2013 Show
FID INTL DISCOVERY K (FIDKX)
12/31/1986
Stock Investments Foreign 18.45% 10.74% 2.53% 8.58% 08/31/2013 Show
FID OVERSEAS K (FOSKX)
12/04/1984
Stock Investments Foreign 20.73% 12.18% 1.00% 6.89% 08/31/2013 Show
SPTN GLB XUS IDX ADV (FSGDX)
09/08/2011
Stock Investments Foreign 12.70% N/A N/A 7.10% 08/31/2013 Show
Investments you currently own SPTN INTL INDEX INS (FSPNX)
11/05/1997
Stock Investments Foreign 18.73% 9.52% 1.91% 7.61% 08/31/2013 Show
FID EMERGING MKTS K (FKEMX)
11/01/1990
Stock Investments Diversfd Emerging Mkts 3.86% 0.60% -1.23% 10.87% 08/31/2013 Show
SPTN EM MKTS IDX ADV (FPMAX)
09/08/2011
Stock Investments Diversfd Emerging Mkts -1.29% N/A N/A -4.16% 08/31/2013 Show
SPTN REAL ES IDX ADV (FSRVX)
09/08/2011
Stock Investments Specialty -0.50% N/A N/A 9.67% 08/31/2013 Show
CALVERT BALANCED I (CBAIX)
02/26/1999
Stock Investments Asset Allocation 13.86% 11.85% 6.36% 5.03% 07/31/2013 Show
FID BALANCED K (FBAKX)
11/06/1986
Blended Investments* Asset Allocation 11.45% 12.50% 6.68% 7.53% 08/31/2013 Show
FID FREEDOM K 2000 (FFKBX)
07/02/2009
Blended Investments* Asset Allocation 2.46% 5.02% N/A 6.72% 08/31/2013 Show
FID FREEDOM K 2005 (FFKVX)
07/02/2009
Blended Investments* Asset Allocation 4.91% 7.37% N/A 9.22% 08/31/2013 Show
FID FREEDOM K 2010 (FFKCX)
07/02/2009
Blended Investments* Asset Allocation 6.68% 8.78% N/A 10.34% 08/31/2013 Show
FID FREEDOM K 2015 (FKVFX)
07/02/2009
Blended Investments* Asset Allocation 6.84% 8.96% N/A 10.60% 08/31/2013 Show
FID FREEDOM K 2020 (FFKDX)
07/02/2009
Blended Investments* Asset Allocation 7.90% 9.98% N/A 11.71% 08/31/2013 Show
FID FREEDOM K 2025 (FKTWX)
07/02/2009
Blended Investments* Asset Allocation 9.98% 11.14% N/A 12.59% 08/31/2013 Show
FID FREEDOM K 2030 (FFKEX)
07/02/2009
Blended Investments* Asset Allocation 10.62% 11.59% N/A 13.05% 08/31/2013 Show
FID FREEDOM K 2035 (FKTHX)
07/02/2009
Blended Investments* Asset Allocation 12.68% 12.42% N/A 13.59% 08/31/2013 Show
FID FREEDOM K 2040 (FFKFX)
07/02/2009
Blended Investments* Asset Allocation 12.86% 12.57% N/A 13.76% 08/31/2013 Show
FID FREEDOM K 2045 (FFKGX)
07/02/2009
Blended Investments* Asset Allocation 13.42% 12.80% N/A 13.96% 08/31/2013 Show
FID FREEDOM K 2050 (FFKHX)
07/02/2009
Blended Investments* Asset Allocation 13.71% 13.02% N/A 14.06% 08/31/2013 Show
FID FREEDOM K INCOME (FFKAX)
07/02/2009
Blended Investments* Asset Allocation 2.50% 4.89% N/A 6.57% 08/31/2013 Show
FID PURITAN K (FPUKX)
04/16/1947
Blended Investments* Asset Allocation 11.48% 12.83% 7.17% 7.04% 08/31/2013 Show
SPTN LT TR IDX ADV (FLBAX)
12/20/2005
Bond Investments Long Government -13.31% 2.69% 6.32% 6.25% 08/31/2013 Show
SPTN INT TR IDX ADV (FIBAX)
12/20/2005
Bond Investments Intermed Government -5.08% 2.44% 5.01% 5.63% 08/31/2013 Show
SPTN ST TR IDX ADV (FSBAX)
12/20/2005
Bond Investments Short Government -0.65% 0.96% 2.42% 3.54% 08/31/2013 Show
CALVERT BOND I (CBDIX)
03/31/2000
Bond Investments Intermediate-Term -0.33% 4.27% 4.98% 5.42% 07/31/2013 Show
Investments you currently own SPTN US BOND IDX IS (FXSTX)
03/08/1990
Bond Investments Intermediate-Term -2.75% 2.43% 4.72% 4.49% 08/31/2013 Show

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femur
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Re: Portfolio allocation advice - 30 yr old in CA

Post by femur » Thu Sep 05, 2013 9:10 am

Why are some of those checking account yields so high? Seems fishy to me.
They are able to provide high rates because the Banks make money on the debit and bill-pay requirements. It is quite legitimate but not really offered at such high rates by mega banks. Thats why that list I linked contains small community banks.

My personal bank i use gives me 2.5%. It is Texas Citizens Bank and i have been with them for years: http://texascitizensbank.com/rates.aspx#dep

Again, we are only talking a couple hundred bucks a year here. Sweating over an extra percent return on cash is not really worth it. I just wanted to provide you with another perspective.
I want to give some more thought to the emergency fund issue. Perhaps we should be a little more risk-averse in this respect.
That is the right way to go about it. The emergency fund decision should not be about how much you can earn on cash. It should be about covering unexpected expenses and bringing risk down to a level you are comfortable at. The bogleheads wiki says it great:

http://www.bogleheads.org/wiki/Emergency_fund
An emergency fund is a cash reserve required to meet unanticipated needs for cash, such as medical bills, car or home repair, or job loss. The quantity of emergency funds is usually specified as an integer multiple of monthly expenses, e.g., three months to one year's worth of expenses.

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swimirvine
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Re: Portfolio allocation advice - 30 yr old in CA

Post by swimirvine » Thu Sep 05, 2013 9:38 am

Pay off the high interest student loans. Put all of your bond money each month to pay down those. it's a guaranteed 6.55% or 5% return on investment. The 2.75% loans can be paid off slowly, but it's only 3K so you might as well get rid of those too. I have $165,000 in student loans but they're locked in at 2.5-2.8% and my mortgage is fixed at 3.75% (33% marginal tax rate so 2.5% effective mortgage rate) so I'm paying the minimum each month and investing everything I can.
The way I invest my money is not the right way to invest, it's the right way for ME to invest.

ultros
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Re: Portfolio allocation advice - 30 yr old in CA

Post by ultros » Thu Sep 05, 2013 3:59 pm

Okay, I tracked down DW's 401(k) fund options. It is worse than I remember. The good news is that her employer is contemplating changing plans, and if that happens it would go through before open enrollment in November.

The bad news: All the funds she has access to are actively managed, and it's a small set of options. The domestic equity funds have ERs that range from 0.97% to 1.41%... but that's not including a 1.00% annual "asset fee" that Nationwide charges. So total expenses are 2% and up on all funds. There's no small-cap value fund, though there's Columbia Mid Cap Value Opportunity A (2.18% fees) and Pioneer Fundamental Value A (large cap, 2.13% fees).

Under these circumstances, is it ever worth opening her 401(k)? Or would we do better to contribute the max $5500 to her Traditional IRA and hold whatever's left in taxable accounts?

Here's the menu, with the total expense %:

REIT:
Invsco RealESt A (IARAX) - 2.30%

International:
Jns Ovrseas S (JIGRX) - 2.19%
MFS Intl Val A (MGIAX) - 2.27%

Small-cap:
Vic Sm Co Oppr A (SSGSX) - 2.41%

Mid-cap:
Col MdCap Val Oppr A (AMVAX) - 2.18%
Prncpl MdCap Blnd A (PEMGX)- 2.08%

Large-cap:
AmFds Gr Fd Am r3 (RGACX) - 1.97%
NeuBer Soc Resp Tr (NBSTX) -2.08%
Pionr Cullen Val A (CVFCX) - 2.13%
Prudntl Jnisn 20 20 Focs A (PTWAX) - 2.18%
Ycktmn Focs (YAFFX) - 2.25%

There's also five different asset allocation funds with expenses around 2.11%, four bond funds from 1.85% to 2.15%, and a money market fund that charges 1.60% expenses per year! How about I keep my emergency fund there? I would do better burying it in a coffee can.

ultros
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Re: Portfolio allocation advice - 30 yr old in CA

Post by ultros » Thu Sep 05, 2013 4:21 pm

Pay off the high interest student loans. Put all of your bond money each month to pay down those. it's a guaranteed 6.55% or 5% return on investment. The 2.75% loans can be paid off slowly, but it's only 3K so you might as well get rid of those too. I have $165,000 in student loans but they're locked in at 2.5-2.8% and my mortgage is fixed at 3.75% (33% marginal tax rate so 2.5% effective mortgage rate) so I'm paying the minimum each month and investing everything I can.
Just to reiterate my point above, we're paying down the loans quite rapidly, and I'm very comfortable with being debt-free in a little over three years. Yes, we could pay them down in half the time or less if we put every available dollar toward them. But by reducing our taxable income down to the 15% bracket, we will save far more money on taxes than we will pay in interest by holding the loans a bit longer.

This year, the budget calls for us to put $32,500 into the 403/457 accounts. If we had thrown that money into the loans instead, we would have saved a substantial amount of interest this year. ($32,500 x 0.0655 = $2129 in interest, although in practice it would be less, since the payments would be made periodically throughout the year.) Interest savings = about $2000.

With the $32,500 decreasing our taxable income, my estimate of our federal tax liability is $10,100. If we put all that money to loans instead of contributing to pre-tax accounts, our federal tax liability increases to $18,227. Even ignoring state taxes, tax savings = about $8000.

For $6k/year savings, I can deal with holding that debt an extra year or two.

That's all to say: the loans we have under control. I need help with the asset allocation piece.

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ruralavalon
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Re: Portfolio allocation advice - 30 yr old in CA

Post by ruralavalon » Fri Sep 06, 2013 6:44 am

ultros wrote: . . . . .
This year, the budget calls for us to put $32,500 into the 403/457 accounts. If we had thrown that money into the loans instead, we would have saved a substantial amount of interest this year. ($32,500 x 0.0655 = $2129 in interest, although in practice it would be less, since the payments would be made periodically throughout the year.) Interest savings = about $2000.

With the $32,500 decreasing our taxable income, my estimate of our federal tax liability is $10,100. If we put all that money to loans instead of contributing to pre-tax accounts, our federal tax liability increases to $18,227. Even ignoring state taxes, tax savings = about $8000.

For $6k/year savings, I can deal with holding that debt an extra year or two.
It seems to me that you have a good handle on the student debt issue, and a good plan for addressing that problem. I would not suggest any changes to that.

ultros wrote:I want to give some more thought to the emergency fund issue. Perhaps we should be a little more risk-averse in this respect.
I'm glad to see you say that.

The Balanced Index fund is 60% stocks, 40% bonds. Again don't use that for an emergency fund, but I do get your point about trying to avoid a nearly guaranteed loss net of inflation. In my opinion (others may disagree) it would be OK to use the Balanced Index Fund as part of the emergrency fund, say 1/3, with the rest in the more stable and less productive alternatives of savings account, short-term or penalty-free CDs, I-bonds, and short-term bond funds.

ultros wrote:Okay, I tracked down DW's 401(k) fund options. It is worse than I remember. The good news is that her employer is contemplating changing plans, and if that happens it would go through before open enrollment in November.

The bad news: All the funds she has access to are actively managed, and it's a small set of options. The domestic equity funds have ERs that range from 0.97% to 1.41%... but that's not including a 1.00% annual "asset fee" that Nationwide charges. So total expenses are 2% and up on all funds. There's no small-cap value fund, though there's Columbia Mid Cap Value Opportunity A (2.18% fees) and Pioneer Fundamental Value A (large cap, 2.13% fees).

Under these circumstances, is it ever worth opening her 401(k)? Or would we do better to contribute the max $5500 to her Traditional IRA and hold whatever's left in taxable accounts?

Here's the menu, with the total expense %:
. . . . .
WOW!!!

That is awful, just as bad as you said.

Is there an employer match offered in her 401k? If so, how much in dollars does she have to contribute each year to get the full match each year, and how much in dollars is the full match? (A match is free money, and its always a good idea take free money when available.)

Is it expected that she will remain with this employer long term? (Sometimes if you don't expect to be with the employer very long its best to contrbute to a even a very bad plan just to create some tax-protected investing space. When the employment ends the 401k can be turned into a rollover IRA at a Vanguard and everything shifted to very low-expense investments.)


If you can give me answers to those questions, then I can start putting together a portfolio idea and inverstment plan for your consideration.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Gustie13
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Re: Portfolio allocation advice - 30 yr old in CA

Post by Gustie13 » Fri Sep 06, 2013 9:20 am

femur wrote:
Why are some of those checking account yields so high? Seems fishy to me.
They are able to provide high rates because the Banks make money on the debit and bill-pay requirements. It is quite legitimate but not really offered at such high rates by mega banks. Thats why that list I linked contains small community banks.

My personal bank i use gives me 2.5%. It is Texas Citizens Bank and i have been with them for years: http://texascitizensbank.com/rates.aspx#dep

Again, we are only talking a couple hundred bucks a year here. Sweating over an extra percent return on cash is not really worth it. I just wanted to provide you with another perspective.
I have $10k in an RCA (Rewards Checking Account) at Great Lakes Credit Union. It gets 4% but I have to jump through some hoops in order to qualify for that rate (10 swipes with their debit card per month, monthly direct deposit, 1 bill pay, log in on their mobile app) and if I don't meet them then the rate is almost nothing. Nothing fishy about RCAs imo, they make it up on the bill pay and swipes like femur mentions. There's a thread on FatWallet about them if you're interested.

ultros
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Re: Portfolio allocation advice - 30 yr old in CA

Post by ultros » Fri Sep 06, 2013 10:58 am

Thanks all! I will take a look at the rewards checking accounts. Seems like a lot of trouble, but possibly worthwhile.
Is there an employer match offered in her 401k? If so, how much in dollars does she have to contribute each year to get the full match each year, and how much in dollars is the full match? (A match is free money, and its always a good idea take free money when available.)
No, no employer match. They will occasionally give a small end-of-the-year bonus, but she wouldn't need to contribute anything to earn that. She is planning to be there for a while, though as I said there's a chance they might switch 401(k) providers in a few months.

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ruralavalon
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Re: Portfolio allocation advice - 30 yr old in CA

Post by ruralavalon » Fri Sep 06, 2013 5:36 pm

Total for investing $55k. I have tried to keep as close as seems feasible to your current asset allocation, including the desired sub-classes. When fund choices are limited, obviously there is always a balancing act among your several priorities. You give up or limit one to achieve or partially achieve the another. I will try to explain the tought process.

Factors to consider in fund selection here included: (1) that all or nearly all contributions will be to His UC 403(b) & 457b; and (2) the need to use all major asset types in His UC 403(b) & 457b for future portfolio management and rebalancing. (So look first at what you just can't get in that account, try to prioritize as to what missing pieces are more significant, considering also what options in that account can sort-of substitute for what is missing.) ( 3) the desire to keep the value and small value overweights and other asset sub-types like REIT; and (4) getting to the minimum inital investment required for lower expense ratio Admiral shares where feasible.

Here is one way you could accomodate your competing desires in asset allocation. This lets you keep the value and small value overweights plus the REIT allocation. You shift the desired bond allocation from short term bond to total bond market, so you can use value funds in the IRAs that can't be had in the work-based accounts. (In spite of all the noise about using short term bonds, in my view its best to stay with intermediate term bond funds in spite of the current concern-du-jour on that subject. Personally I would rather keep a value tilt than try to guess what may, or may not, happen in the bond market. Also at ages 28 and 30 I don't think your priority should be a TIPs fund, your primary inflation protection at that age is your earning potential.)

His UC 403(b) & 457b (32%; $17.7k; budgeted to add $32.5k/yr; no match)
01.6%, $01.0k, Spartan 500 Index, FXSIX, er = 0.04%
00.0%, $00.0k, Vanguard Small Cap Index Inst, VSCIX, er = 0.14%, <= add later if needed to keep desired asset allocation
00.0%, $00.0, Fidelity Spartan Int'l Index, FSPNX, er = 0.07%, <= add later if needed to keep desired asset allocation
20.0%, $11k, Fidelity Spartan US Bond Index, FXSTX, er = 0.07%
10.4%, $5.7k, Vanguard REIT Index Institutional, VGSNX, er = 0.08%

His Roth IRA @ Vanguard (37%; $20.4k)
18.5%, $10.2k, Vanguard Total Int Stock Index Fund Admiral, VTIAX, er = 0.16%,
18.5%, $10.2k, Vanguard Value Index Admiral, VIVAX, er = 0.10%
(Need to use $10k to get Adm shares, but otherwise I would suggest less value and instead some more domestic large blend [VTSMX]. Personally I would keep it simple, just skip large value and move that all to large blend admiral shares [VTSAX] ).

Her Roth IRA @ Vanguard (10%; $5.4k)
10%, $5.4k, Vanguard Total Stock Market Index Fund Investor Shares (VTSMX), er = 0.17%

Her Traditional IRA @ Vanguard (21%; $11.4k; add $5.5k/yr???)
13.8%, $7.4k, Vanguard Small Cap Value Index, er = 0.24%
07.2%, $4.0k, Vanguard Total Stock Market Index Fund Investor Shares (VTSMX), er = 0.17%

His Traditional IRA @ Vanguard??? (00%; $00k; add $5.5k/yr???))

Wife’s 403(b) (00%; $00, currently not contributing. No match. Next year may have to contribute to reach 15% bracket, but the fund choices here stink – all big ERs. But there's a chance they might switch providers in a few months.)


Here is a summary overview. This gives an asset allocation of 80% stocks and 20% bonds. I have rounded off the percentages, so sometimes things won't add up exactly.

Of the stocks, the breakdown is:
23% large blend (19% of total portfolio)
23% large value (19% of total portfolio)
17% small Value (14% of total portfolio)
14% REIT (10% of total portfolio)
23% international (19% of total portfolio)
(VTSMX includes 09% small cap [incl. 03% small value], so there is actually more small & small value than it looks like in the summary.)

All bonds are in total bond market.


If you have any questons, just ask.


I hope that this helps.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

ultros
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Re: Portfolio allocation advice - 30 yr old in CA

Post by ultros » Sat Sep 07, 2013 3:21 pm

Thanks ruralavalon, this is very helpful.

One big question, though: How do I maintain the value and small-value weighting as I keep contributing to the 403/457? Won't my allocation be out of whack after the first month?

Also: If I understand the income limits correctly, both my wife and I can each make $5500 Traditional IRA contributions (or Roth, for that matter), even if I max my employer plans, as long as our AGI is under $95k? I suppose that would allow us to make regular pre-tax contributions to the Vanguard accounts, though not quite as simply as through the employer plan.

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ruralavalon
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Re: Portfolio allocation advice - 30 yr old in CA

Post by ruralavalon » Sat Sep 07, 2013 3:48 pm

ultros wrote: One big question, though: How do I maintain the value and small-value weighting as I keep contributing to the 403/457? Won't my allocation be out of whack after the first month?
To keep up the small cap value (SCV) allocation as needed you can: (A) in Her Traditional IRA @ Vanguard move some Total Stock Market (TSM) to SCV, then make up for the decrease in TSM there by adding in His UC 403(b) & 457(b) more to S&P 500 (a very good effective substitute for TSM that many people use when there is no TSM offered in their 401k, 403b, etc. ); and/or (B) in Her Traditional IRA @ Vanguard use new contributions to add to SCV; and/or (C) in His UC 403(b) & 457b) add some Vanguard Small Cap Index Inst, VSCIX being a different but somewhat reasonable and the only available substitute for the SCV short-fall (you can see why thats plan "C", the last fall-back).

To keep up the large value allocation as needed, you can go to His Roth IRA @ Vanguard and shift money from Total International Index to Value index, making up for the decrease in international by adding some Fidelity Spartan Int'l Index, FSPNX in His UC 403(b) & 457b. The Fidelity Spartan Int'l Index Fund is not as diversified as the Vangusard fund, but is still a good substitute.

In each case you buy more value in an IRA, and make up for whatever you had to sell in the IRA to do that by shifting to a fund that is fairly similar and a good substitiute fund in His UC 403(b) & 457b. This is what I meant when I talked about "the need to use all major asset types in His UC 403(b) & 457b for future portfolio management and rebalancing . . . . [and then] considering also what options in that account can sort-of substitute for what is missing."

Initially you will have to adjust a bit each month, but thats only because new contributions will initially be fairly large as a percent of total portfolio size. But after a little while you will not need to rebalance every month unless you want. Just set limits on how much "out of whack" seems sensible and rebalance when the limit is hit, or set a schedule such as every 3, 6, or 12 months for rebalancing. Some people combine the 2 ideas by rebalancing every xx months, but only if an "out of whack" limit has been hit. wiki, "Rebalancing" . Don't be too concerned, rebalancing sounds more complicated than it really is.

I tried to set it up so that you could rebalance without needing to contribute to the IRAs or add more IRAs, since you seemed to want or need to avoid that. But yes you can contribute to a tIRA as long as your Modified AGI is within the appropriate limit, wiki, "Contribution Eligibility and Limits". I'm definitely not a tax guy, so I won't try to suggest what that limit is or whether you meet it. I don't even do my own taxes, and haven't for a long time.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

ultros
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Re: Portfolio allocation advice - 30 yr old in CA

Post by ultros » Mon Sep 09, 2013 2:30 pm

Okay, I see. So the idea then is to use the VG Small-Cap Index in the 403/457 and the VG Small-Cap Value Index basically interchangeably, and also to use Total Stock Market and the Spartan 500 Index interchangeably. There is actually a Spartan TSM Index in my 403/457, so I could use that instead of the 500.

Sounds like the philosophy is to use TSM for all domestic stock allocation unless there's a reason not to (i.e., the value and small-cap weightings). Is that about right?

I was trying to avoid a monthly rebalancing in the existing accounts, but it's not too bad if it's really only the value index. Especially next year, if we plan to make monthly contributions to the Traditional IRAs.

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ruralavalon
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Re: Portfolio allocation advice - 30 yr old in CA

Post by ruralavalon » Mon Sep 09, 2013 3:06 pm

ultros wrote:Okay, I see. So the idea then is to use the VG Small-Cap Index in the 403/457 and the VG Small-Cap Value Index basically interchangeably, and also to use Total Stock Market and the Spartan 500 Index interchangeably. There is actually a Spartan TSM Index in my 403/457, so I could use that instead of the 500.
Yes but reverse order, the TSM to S&P 500 (or TSM) switch the better switch. The SCV to small cap switch less desireable.

Yes, better to use the TSM rather than S&P 500 since the TSM is available.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

ultros
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Re: Portfolio allocation advice - 30 yr old in CA

Post by ultros » Mon Sep 09, 2013 3:27 pm

Okay, I think this all makes sense. Thanks ruralavalon!

So glad to have this forum as a resource. I set up a free consultation with a Fidelity advisor a few months ago (my employer pays for this service), but she spent most of the time trying to talk me into actively managed funds.

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