Boglehead WIP

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
BeanyMan
Posts: 3
Joined: Tue Dec 30, 2014 1:32 pm

Boglehead WIP

Post by BeanyMan » Tue Dec 30, 2014 1:52 pm

Hello all - recent lurker here.

I'm looking for some guidence on how to clean up a (rather messy and young) portfolio.

Note: My investment picture is all over the place and I don't like it. Since I have a lot of different funds/stocks I decided to put the percentage of the 130k that each investment place holds. The %'s infront of the tickers are how much within, for exampe, His 401k that he is weighted.

*************************************
Emergency funds: Three months
Debt:
Credit Card: None.
School: $29,014.42 ( $1885.55 @ 5.35%, $2208.35 @ 5.75%, $2526.65 @ 6.55%, $3224.47 @ 6.05%, $3722.73 @ 6.3%, 15480.61 @ 6.55%)
Car: 20k @ 1.99%
Mortgage: 320k @ 3.85%

Tax Filing Status: Married Filing Jointly
Tax Rate: ~18% Federal, 0% State
State of Residence: Tx
Age: 29 / 27 (no kids)
Desired Asset allocation: 85% stocks / 15% bonds (I'm not convinced this is the best breakdown. Just chose these based on reading these and other forums)
Desired International allocation: 20% of stocks

Current portfolio (wife and I) is 130k.


Current retirement assets
Taxable (1% of 130k)
100% VTI (Vanguard Total Stock Market) thru Schwab Brokerage (recent gift from in-laws) (does this go in this category?)


His 401k at Fidelity (60% of 130k)
I was fortunate enough to have double digit growth the past 4 or 5 years on my companies stock (which up until Jan2014 I was 100% invested in). I finally got the bug to read about investing properly, hence my post :).
85%FTI STOCK FUND (FTI) (Gross Expense Ratio .0055)
11% FID FREEDOM K 2050 (FFKHX) (.65)

The following add up to 4%
Cameron Internatioal Corp COM (CAM) (NA?)
Fidelity MID CAP VALUE (FSMVX) ( .80)
SPDR S&P 500 ETF TRUST UNTI SER 1 S&P (SPY) ( .09)

I recently took 10K from the FTI stock fund and plan to purchase FSTVX via my Fidelity brokerage link.

His company matches 9% (technically they match 5% and provide an extra 4% in lieu of a pension).

His Roth IRA at Scottrade (4% of 130k)
$5,300 thru Scotttrade Roth across a few individual stocks (my early attempt 2 years ago / this year)

Her 403b at AXA (funds were picked for her) (35% of 130k)
25% AXA Lg Cap Grw Managed Vol (I can't find a ticker) (.90%)
25% EQ/Large Cap Growth Index (I can't find a ticker) (1.09%)
25% AXA Int Core Managed Vol (I can't find a ticker) (.73%)
25% Cash

Her company does not match.

Total of All Accounts Together (not each account individually) should equal 100%. Taxable (1% of 130k) + His 401k at Fidelity (60% of 130k)+ His Roth IRA at Scottrade (4% of 130k)+ Her 403b at AXA (funds were picked for her) (35% of 130k) = 100%



Contributions

2014 annual Contributions
$17,500 his 401k (includes 5% match plus 4% extra for 9 total) (I actually over intexted to about $18,500)
$8,500 her 403b (no match)
$ 1000 his IRA/Roth IRA
$ 1000 taxable

2015 Planned Contributions
$18,000 his 401k (includes 5% match plus 4% extra for 9 total) (I actually over intexted to about $18,500)
$8,000 her 403b (no match)
$ 0 his IRA/Roth IRA
$ 0 taxable

Available funds

Funds available in his 401(k)
I have a brokerage link thru Fidelity and have access to just about anything.

Funds available in her 403(b)
I can't seem to find ticker symbols for most of these. If you would like to know more about them please ask (such as if they are large cap, bond, income, etc).
All Asset Aggressive Alt 25 (1.43)
All Asset Growth Alt Twenty (1.32)
AXA 400 Managed Vol (.93)
AXA 500 Managed Vol (.87)
AXA Aggressive Allocation (1.22)
AXA Balanced Strategy (1.05)
AXA Conserv Allocation (1.0)
AXA Conserv-Plus Allocation (1.10)
AXA Conservative Growth Strtgy (1.00)
AXA Conservative Strategy (.95)
AXA Glb Eqty Managed Vol (1.18)
AXA Int Core Managed Vol (1.09)
AXA Int Val Managed Vol (1.03)
AXA International Managed Vol (.91)
AXA Lg Cap Core Managed Vol (.93)
AXA Lg Cap Grw Managed Vol (.90)
AXA Lg Cap Val Managed Vol (.88)
AXA Mid Cap Val Managed Vol (.99)
AXA Moderate Allocation (1.15)
AXA Moderate Growth Strategy (1.10)
AXA Moderate-Plus Allocation (1.19)
AXA/Fr Sm Cap Val Managed Vol (1.19)
AXA/Fr Tmp Alloc Managed Vol (1.27)
AXA/Frnkln Blncd Managed Vol (1.07)
AXA/Loomis Sayles Growth (1.15)
AXA/Mut Lg Cp Eqty Managed Vol (1.14)
AXA/Tempelton Glb Eqty Managed Vol (1.16)
Charter Multi-Sector Bond (1.21)
Charter Small Cap Growth (1.66)
Charter Small Cap Value (1.60)
EQ/AllianceBernstein Dyn Wt St (1.21)
EQ/AllianceBernstein Sm Cp Gr (1.01)
EQ/BlackRock Basic Value Eqty (.95)
EQ/Boston Advisors Eqty Income (1.05)
EQ/Calvert Socially Resp (.96)
EQ/Capital Guardian Research (.97)
EQ/Com Stck Index (.72)
EQ/Core Bond Index (.72)
EQ/Emerging Markets Eqty PLUS (1.43)
EQ/Equity 500 Index (.62)
EQ/GAMCO Mergers & Acquisition (1.32)
EQ/GAMCO Small Company Value (1.08)
EQ/Global Bond PLUS (1.00)
EQ/High Yield Bond (1.28)
EQ/Intermediate Government Bnd (.74)
EQ/Invesco Comstock (1.00)
EQ/International Equity Index (.79)
EQ/JPMorgan Val Opportunities (1.00)
EQ/Large Cap Growth Index (.73)
EQ/Large Cap Value Index (.75)
EQ/MFS International Growth (1.24)
EQ/Mid Cap Index (.73)
EQ/Money Market (.72)
EQ/Morgan Stanley Mid Cap Gr (1.08
EQ/Oppenheimer Global (1.25)
EQ/PIMCO Global Real Return (1.0)
EQ/PIMCO Ultra Short Bond (.85)
EQ/Quality Bond PLUS (.85)
EQ/Small Company Index (.72)
EQ/T. Rowe Price Growth Stock (1.10)
EQ/UBS Growth and Income (1.05)
EQ/Wells Fargo Omega Growth (1.04)
Multimanager Aggressive Equity (1.03)
Multimanager Core Bond (1.00)
Multimanager Mid Cap Growth (1.25)
Multimanager Mid Cap Value (1.30)
Multimanager Technology (1.44)
Target 2035 Allocation (1.18)
Target 2045 Allocation (1.17)


Questions:
1. I don't quite understand what account types are considered taxable. Does this simply been post-tax investments? (i.e. brokerage account, roth)

2. What other investment buckets can I potentially use in the future? My Fidelity plan has pre-tax, ROTH, and after-tax allocations. I currently only use the pre-tax option as the ROTH and after-tax were only added Jan2014.

3. I don't mind keeping the small amount in the Scottrade account incase BBRY ever truns around into a 10 bagger (I bought at 6 dollars) or BABA turns into something good, but I'm not opposed to dumping the stocks in this account in favor of funds.

4. What is the best way to get out of the investments I'm currently in and get into the 3 or 4 portfolio model? Simply sell them?


Comments:
My new years resolution is to get rid of as much SL debt as possible before contributing more to investments.
The current stocks/funds I have I purchased before discovering Bogle and MMM. I like what I read and am planning to reallocate monies/funds into a more bogle head style approach.
I have an HSA that I haven't previously maxed out. I chose to max it out for 2015.

I appreciate the feedback anyone is willing to give!

Thanks

ieee488
Posts: 1989
Joined: Thu Dec 10, 2009 8:57 am

Re: Boglehead WIP

Post by ieee488 » Tue Dec 30, 2014 2:43 pm

For the 403(b), I would take a look at
EQ/Com Stck Index (.72)
EQ/Core Bond Index (.72)

Read the prospectus and see which benchmark those fund uses.
Dell Optiplex 3020 (Win7 Pro), Dell Precision M6300 (Ubuntu Linux 12.04), Dell Precision M6300 (Win7 Pro), Dell Latitude D531 (Vista)

BeanyMan
Posts: 3
Joined: Tue Dec 30, 2014 1:32 pm

Re: Boglehead WIP

Post by BeanyMan » Tue Dec 30, 2014 2:51 pm

EQ/Com Stck Index (.72) Russel 3000 index
EQ/Core Bond Index (.72)Approximates total return performance of the Barclays Intermediate U.S. Government/Credit Index

ieee488
Posts: 1989
Joined: Thu Dec 10, 2009 8:57 am

Re: Boglehead WIP

Post by ieee488 » Tue Dec 30, 2014 2:56 pm

BeanyMan wrote:EQ/Com Stck Index (.72) Russel 3000 index
EQ/Core Bond Index (.72)Approximates total return performance of the Barclays Intermediate U.S. Government/Credit Index
I would definitely use those as part of your asset allocation plan.

For his 401(k), I am not big on anything other than Fidelity Spartan funds. Take a look at those.
Owning company stock is a big no-no. I am guessing that is what FTI is.
Dell Optiplex 3020 (Win7 Pro), Dell Precision M6300 (Ubuntu Linux 12.04), Dell Precision M6300 (Win7 Pro), Dell Latitude D531 (Vista)

Laura
Posts: 7973
Joined: Mon Feb 19, 2007 7:40 pm

Re: Boglehead WIP

Post by Laura » Tue Dec 30, 2014 10:02 pm

Beanyman,

Let's start with your question about taxable funds.

Taxable (1% of 130k) Taxable and VTI goes in that category if not in your retirement accounts.

His 401k at Fidelity (60% of 130k) (pre-tax which means you will pay tax at normal income tax rates when you withdraw)
I was fortunate enough to have double digit growth the past 4 or 5 years on my companies stock (which up until Jan2014 I was 100% invested in). I finally got the bug to read about investing properly, hence my post :).
85%FTI STOCK FUND (FTI) (Gross Expense Ratio .0055) (This is way, way too much. Your income is dependent on your job and your portfolio should not be. You should plan to sell all of this and invest as part of your target allocation. Ignore the past returns and consider yourself lucky.)

I recently took 10K from the FTI stock fund and plan to purchase FSTVX via my Fidelity brokerage link. (Hold off on this until you have a plan.)


His Roth IRA at Scottrade (4% of 130k) (post tax but it grows tax free forever) Move this to Vanguard and get rid of the individual stocks.

Her 403b at AXA (funds were picked for her) (35% of 130k) (since you said not a roth this is a pre-tax account which will be taxed at normal income rates upon withdrawal)


The big issue that jumps out at me is your student loan debt. You have a lot of high cost debt.
School: $29,014.42 ( $1885.55 @ 5.35%, $2208.35 @ 5.75%, $2526.65 @ 6.55%, $3224.47 @ 6.05%, $3722.73 @ 6.3%, 15480.61 @ 6.55%)

Any dollar you pay toward those loans gives you that rate as a guaranteed, risk free rate. After getting matching funds, your best return is paying down debt rather than investing in the market. This is a type of investing which gives you a very high return.

In fact, it is so important that you should sell that taxable account and take the money to pay down some of that debt. I know it was a gift from your in-laws but you need to use it for debt reduction. You should apply it to the highest interest rate debt and then work down from there.

I strongly suggest that you put your investing plans on hold until you pay off that debt. Just do this:

1. 401k to get the full match only and not one dollar more
2. Debt payment - only once all the debts are gone should you continue with
3. roths
4. 403b
5. taxable investing

So you would take anything above the amount required to get the full match in your 401k and all of her $8k contribution and pay down debt. This should take you less than 24 months. Once those debts are gone then resume investing. In the meantime, here is how to structure your existing portfolio.

taxable - eliminated to pay down debt

his 401k
100% Fidelity Freedom Index 2030

her 403b
85% EQ Com Stock Index
15% EQ Core Bond Index

his roth
100% Vanguard Target Retirement 2035


New Contributions:

his 401k
100% Fidelity Freedom Index 2030

I know this isn't what you were expecting to hear but with those debts hanging over you at that interest rate you are not going to build a strong financial future. Focus and pay off those debts as quickly as possible then return to investing.

Laura
The views presented are my own and not necessarily those of the Department of State or the U.S. Government.

BeanyMan
Posts: 3
Joined: Tue Dec 30, 2014 1:32 pm

Re: Boglehead WIP

Post by BeanyMan » Wed Dec 31, 2014 10:13 am

Laura,

Thanks for taking the time to reply. Your advice is sound. I know the school debt is an issue and my goal for 2015 is to reduce it as much as possible. I've booked marked this thread and will repost when the time comes!

I'm curious as to why you reccomend the FREEDOM 2030 over another year. Is this based on the asset allocation within that fund?

yosef
Posts: 337
Joined: Tue May 24, 2011 2:10 pm

Re: Boglehead WIP

Post by yosef » Wed Dec 31, 2014 11:46 am

In general it is preferable to use the asset allocation rather than the date when choosing a target retirement fund. Most firms (including Vanguard) have gotten very aggressive with their glide paths in an effort to avoid looking like they underperform when compared with other firms funds with the same target date. The glide paths are typically significantly more aggressive than most Bogleheads would choose.

Lafder
Posts: 3844
Joined: Sat Aug 03, 2013 7:56 pm
Location: East of the Rio Grande

Re: Boglehead WIP

Post by Lafder » Wed Dec 31, 2014 11:57 am

In general:

Nontaxable = retirement = can move/transfer between funds/investments without paying capital gains, can not tax loss harvest, taxes only due when you begin to take withdrawls. Such accounts could be IRA, 401k, 403b, 457, Roths and more. Longer term investments for most. Investing in these funds can lower your taxable income. (Roths are a little different since post tax income, and different taxes at withdrawl, but over the years you can move funds as in other retirement accounts)

Taxable = non retirement specific accounts, though can certainly be used for retirement. Taxes due along the way on dividends. There are tax consequences of selling at a gain. You can tax loss harvest from these accounts if there is a loss.

Note "tax advantaged" is not the same as nontaxable, since it implies best space in regards to tax effects. The terms can be very confusing. You can have a tax advantaged-taxable-nonretirement account.

Those are my descriptions, this may help you https://www.bogleheads.org/wiki/Princip ... _placement

Go back and add the expense ratios for all of your accounts such as the Roth IRA at Scott Trade, and Taxable at Schwab brokerage. You can go back and edit your original post.

I chose 80/20 when I was your age to have more bond space to rebalance in the next big stock drop. I choose 30% International (Vanguard rec 20-40). I think your numbers are very reasonable and you just need to pick what sounds best to you after reading and thinking it through. These % will change for you over the years. (We are at 70/30 now, which may be a bit aggressive for our ages of 46, 50)

It helps me to put my final decision/investment plan in writing. As I read or even hear things on the news or talk to friends I find myself wanting to make changes. So it really helps to have my written plan to remind me to stay the course. It is my plan and I can change it at any time if I want to. But making myself keep "the plan" in writing means it takes more thought and commitment to make a change. (I only change my actual plan less than once a year, and my desired AA I have only changed once)

Best wishes,
lafder

Laura
Posts: 7973
Joined: Mon Feb 19, 2007 7:40 pm

Re: Boglehead WIP

Post by Laura » Wed Dec 31, 2014 6:32 pm

I'm curious as to why you recommend the FREEDOM 2030 over another year. Is this based on the asset allocation within that fund?
I recommended those funds because of the asset allocation inside. Like others have said, ignore the date and select the fund that matches your target asset allocation.

Make 2015 the year of DEBT REDUCTION. Your life will be much better once out from under that burden. If you can reduce other expenses for the year you can then apply that extra money to those debts. Good luck on this journey.

Laura
The views presented are my own and not necessarily those of the Department of State or the U.S. Government.

Post Reply