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Best way to re-allocate to get admiral in IRA and reduce funds

Posted: Sat Oct 17, 2015 9:24 am
by runner23
Hi all,

I have read a lot on these boards over the past few months. While I mostly was a passive indexer before finding this site, I still dabbled in individual stocks. Those days are now behind me. I am confident that I am invested in the best options in his and her 401k accounts. Therefore, I have not listed out all 401k options in this post. I can post any other information you may need.

Emergency funds: Three months of expenses
Debt: No Debt
Tax Filing Status: MFJ
Tax Rate: 25% Federal, 6% State
State of Residence: GA
Age: Both 25
Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: 27% of stocks

Equities: (27% large caps, 36% mid/small caps, 27% international)
International equities (64% large caps, 36% mid/small caps)

Portfolio: $65k.

Current retirement assets:

His 401k
16% Northern Trust S&P 500 (NOSIX) (.11%)
15% Norther Trust Small Cap (NSIDX) (.15%)

His Roth IRA at Vanguard
7% Vanguard 500 Index Fund (VFINX) (.17%)
9% Vanguard Small Cap Growth (VISGX) (.23%)
6% Vanguard Small Index (NAESX) (.23%)
5% Vanguard FTSE All-World ex-US Small-Cap (VFSVX) (.37%)

Her 401k
22% Vanguard Total International (VTIAX) (.14%)
8% Vanguard Total Bond (VBTLX) (.07%)
5% Vanguard Extended Market (VEXAX) (.10%)

Her Roth IRA at Merrill
7% Vanguard Total US Stock (VTSMX) (.17%)

New annual Contributions:
$18k his 401k, match 25% up to 6% contributions. Additional flat 4% of salary.
$18k her 401k, match 50% up to 6% contributions.
$5.5k his Roth IRA
$5.5k her Roth IRA
$2k ESPP - sell when vest for 15% discount to fund her IRA

Questions:
1. I want to see if you all have any suggestions on how best to get admiral shares in his IRA. Mainly, I want to get admiral in the small cap index. I would not mind getting away from the small cap growth. I accidentally stumbled into the small cap growth when I did not know much about tilting when I was 20.
2. Do you have any suggestions to potentially reduce number of funds? I know there is currently overlap among the different accounts.
3. What do you think of my asset allocation? For some perspective, we were 100% U.S. stocks (60% small cap and 40% large cap) until June 2015.

Cheers,
:sharebeer

Re: Best way to re-allocate to get admiral in IRA and reduce funds

Posted: Sat Oct 17, 2015 12:03 pm
by ruralavalon
Welcome to the forum :) .

Its great to see that you are debt free.
runner23 wrote:Questions:
1. I want to see if you all have any suggestions on how best to get admiral shares in his IRA. Mainly, I want to get admiral in the small cap index. I would not mind getting away from the small cap growth. I accidentally stumbled into the small cap growth when I did not know much about tilting when I was 20.
2. Do you have any suggestions to potentially reduce number of funds? I know there is currently overlap among the different accounts.
3. What do you think of my asset allocation? For some perspective, we were 100% U.S. stocks (60% small cap and 40% large cap) until June 2015.
1) You could sell both of the small cap funds and buy Vanguard Small-Cap Value Index Fund Admiral (VSIAX) ER 0.09%.

2) What are the funds offered in his 401k? What are the funds offered in her 401k? Please give fund names, tickers & expense ratios. What is the capital gain/loss status of the funds in the taxable account? Is there some reason that her Roth IRA is at Merrill Lynch? Please just add this to your original post using the edit button. It helps a lot to have all of your information in one place.

3) I suggest a minimum of 20% in bonds. Wiki, "Never bear too much or too little risk". Forum discussion, "What ratio are you stocks/bonds and how old are you?". & "Bogleheads' stock allocation, percent". I think that you are very heavily overweight in domestic mid/small caps. If you want a domestic overweight, I suggest just 30% or so of domestic stocks in small cap value and 70% in S&P 500 or total market. R. Ferri blog post, "Winning with Small Value Stocks".

Re: Best way to re-allocate to get admiral in IRA and reduce funds

Posted: Sat Oct 17, 2015 12:12 pm
by mhalley
I wouldn't go changing all my funds in mutiple accounts just to get admiral shares. You will save a little money, but i don't think it is worth the hassle. A simpler way might be to switch to the etfs. Ex us in particular is much cheaper in the etf, and it does not have admiral shares. As to simplifying, cutting back to just one sc fund would be fine.
Mike