Need investing advice.....

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Joined: Sat Jan 23, 2016 3:12 pm

Need investing advice.....

Post by wantnirvananow » Sat Jan 23, 2016 6:03 pm

Emergency funds: I have it.
Debt: No Debt
Tax Filing Status: Married Filing Jointly,
but we are managing finances separately.
Tax Rate: 25% Federal
State of Residence: NJ
Age: 36
Desired Asset allocation: Trying to figure out.
Desired International allocation: Trying to figure out.

Amount invested in IRA in Target Date fund for 2040 is 183 K
LifePath Index 2040 Non-Lendable Fund G
A Commingled Fund

Amount at hand to be invested : 200K
Monthly Saving of 3000 for next 6 years = 36 K per year = 212 K over 6 years

After 6 years, I will be withdrawing $2000 per month from this money.

I don’t have any other investments or any other source of income.

I need suggestions on how to invest
* the 200K I have at hand and
* 3K saving I will have every month for the next 6 years

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Posts: 256
Joined: Tue Dec 09, 2008 1:08 am

Re: Need investing advice.....

Post by windhog » Mon Feb 01, 2016 8:31 pm

I would like to be helpful here, but I am having trouble understanding your situation as well as I would like. It seems I need to understand what your objectives are, and since your post lacks a clear statement, I will need to read between the lines.

It seems you have decided to fund an IRA with a target date fund, which I assume is intended for retirement. The AA of the fund is about 90:10 stocks to bonds, so it seems you have (perhaps unwittingly) already chosen a Desired Asset Allocation figure. If you were sold this fund without understanding its composition, I suggest you start your homework there. You should do a forum search for threads that discuss the pros and cons of a 90:10 AA and soak in both sides of the argument.

I don’t see any indication in your post that you have a “Number” in mind that represents a target for retirement savings. Without some ballpark idea of this, it is impossible to advise you on what your portfolio should look like. A good rule of thumb is that your retirement nest-egg should be about 25-30x your annual cost of living. You can read tons about the notion of SWR, which stands for Safe Withdrawal Rate in retirement. Another rule of thumb is that you should be saving somewhere in the neighborhood of 20% (or more) of your income each year to fund your retirement needs. I have no clue how these numbers relate to your accumulated savings, your 200k cash on hand, or your 3k monthly. Care to elaborate?

Short-term money that you must have in 6 years should be going into a savings account rather than invested in the equity market. If you were hoping your portfolio could generate 24k per year, you would need at least 600k (and lots of good luck) to make that happen in six years.

These comments cannot rise above a back-of-the-envelope response to your questions, because there are too many relevant unknowns. In the absence of more detail, I can only suggest that you fully fund all tax-advantaged (i.e. 401k, IRA) accounts available, that you use the lowest cost index funds available, and that you use either Target-Date or Life Strategy funds that make a three-fund portfolio simple.
I hope this helps.


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Joined: Thu Mar 15, 2012 8:15 pm

Re: Need investing advice.....

Post by investor1 » Mon Feb 01, 2016 8:44 pm

Wait, so the IRA, $200k, and $1k/month for the next six years is pegged for retirement, and around $2k/month (minus growth after taxes) is for spending in six years???

I think you need to start at square one and come up with an investment plan. Figure out what you wish to invest in and what your desired asset allocation is, then move your retirement savings into that/those fund(s). I recommend reading the wiki on lazy portfolios. The three fund portfolio is popular around here. Since you have a taxable account in the mix, read the wiki on tax efficient fund placement. If you are going to have foreign stock, a taxable account is a great place to hold those funds. If you are going to have bonds, a taxable account is not a good place to hold those funds (unless they are tax exempt). Is this a regular IRA or a SEP IRA? Do you have access to a 401k or similar plan and/or an HSA?

Six years is not a long horizon. I'd simply put $2k/month into a CD ladder.

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