Portfolio Suggestions Requested - Vanguard 401k

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AlwaysAStudent
Posts: 83
Joined: Mon Dec 07, 2015 11:38 am

Portfolio Suggestions Requested - Vanguard 401k

Postby AlwaysAStudent » Wed Jan 11, 2017 1:51 pm

Emergency funds: Working on this.
Debt:
Rental: $112k @ 4.0% – Rent covers PITI, manager fee, maintenance/vacancies
Mortgage: $133k @ 4.125%
School loans: $10k @ 7% - Currently at 0% while taking Master’s classes
Car loan: $26k @ 2.74%

Tax Filing Status: Married Filing Jointly
Tax Rate: 15% Federal, 6% State
State of Residence: MO
Age: 33
Desired Asset allocation: Currently - 90% stocks / 10% bonds
Desired International allocation: Not sure


Current retirement assets: $70k

Her 401k
100% Vanguard Target Retirement 2050 Fund (VFIFX)

Vanguard Total Stock Market Index Fund Investor Shares 54.3%
Vanguard Total International Stock Index Fund Investor Shares 35.6%
Vanguard Total Bond Market II Index Fund Investor Shares* 7.1%
Vanguard Total International Bond Index Fund Investor Shares 3.0%

Safe Harbor Company Contributions = 3%
Company Match Contributions = max of 3% (0.5% for every 1-6% I contribute)
Potential additional Company Match Contributions = Depends on previous year performance, 2016 was additional 0.23% for every 1-6% I contribute.

His Roth IRA - less than $1k and not counted in retirement assets above
Vanguard Money Market until it has over $1k

Contributions

New annual Contributions
~$8-10k her 401k (includes company match)
Goal to start contributing max Roth IRA for him starting in 2018


Available funds

Funds available in her 401(k)

All-in-one options
Vanguard Target Retirement Income
VTINX0308 0.14%

Vanguard Target Retirement 2010
VTENX0681 0.14%

Vanguard Target Retirement 2015
VTXVX0303 0.14%

Vanguard Target Retirement 2020
VTWNX0682 0.14%

Vanguard Target Retirement 2025
VTTVX0304 0.15%

Vanguard Target Retirement 2030
VTHRX0695 0.15%

Vanguard Target Retirement 2035
VTTHX0305 0.15%

Vanguard Target Retirement 2040
VFORX0696 0.16%

Vanguard Target Retirement 2045
VTIVX0306 0.16%

Vanguard Target Retirement 2050
VFIFX0699 0.16%

Vanguard Target Retirement 2055
VFFVX1487 0.16%

Vanguard Target Retirement 2060
VTTSX1691 0.16%


Short-Term Reserves
Vanguard Prime Money Mkt Fund
VMMXX0030 0.16%

Vanguard Retirement Savings Trust
—0034 0.51%

Bond Funds
Vanguard Total Bond Mkt Index Inv
VBMFX0084 0.16%

Domestic Stock Funds
Vanguard 500 Index Fund Inv
VFINX0040 0.16%

Vanguard Mid-Cap Index Fund Inv
VIMSX0859 0.20%

Vanguard PRIMECAP Fund Investor
VPMCX0059 0.40%

Vanguard Small-Cap Index Fund Inv
NAESX0048 0.20%

Vanguard Windsor Fund Investor
VWNDX0022 0.39%

Vanguard Windsor II Fund Inv
VWNFX0073 0.34%

International Stock Funds
Vanguard International Growth Inv
VWIGX0081 0.46%


Questions:
1. Should I move out of the Target Fund? I am not one to try to actively manage my 401k but with hearing lots of talk about all of the gains people have seen in the last couple months I am beginning to wonder if a Target Fund is the right long term “set it and forget it” plan. Looking at Q4 of 2016 my portfolio gain/loss show a -$520 (not counting earnings & contributions). Once upon a time I had my 401k separated based on certain allocations and would just re-balance 1-2x per year but I thought the Target Fund would be an even lazier way to “set it and forget it”. Are Target Funds a good long term plan?


I understand some might be tempted to discuss our lack of emergency fund, amount of debt, and the fact that we are not using all the tax advantaged space available but please know in advance that we are aware that we need to focus on these areas and will be over the next year or two. We gave/loaned money to a close family member that was in a real emergency, knowing we would need to rebuild it. We are currently a 1 income family (working Mom) and are planning baby #2. We will be saving for maternity leave over the next few months, then emergency fund/Roth IRA and student loan payoff. The car is a low enough interest rate I am not sure I am interested in accelerating that payoff.

User avatar
Duckie
Posts: 4790
Joined: Thu Mar 08, 2007 2:55 pm

Re: Portfolio Suggestions Requested - Vanguard 401k

Postby Duckie » Wed Jan 11, 2017 8:45 pm

AlwaysAStudent wrote:Should I move out of the Target Fund?

No. None of the separate options costs less. Since all you have are the 401k and Roth IRA, using the target-date fund in both accounts is just fine.

Are Target Funds a good long term plan?

They're good until you add a taxable account for retirement purposes. Then they complicate things.

AlwaysAStudent
Posts: 83
Joined: Mon Dec 07, 2015 11:38 am

Re: Portfolio Suggestions Requested - Vanguard 401k

Postby AlwaysAStudent » Thu Jan 12, 2017 11:23 am

Duckie wrote:
AlwaysAStudent wrote:Should I move out of the Target Fund?

No. None of the separate options costs less. Since all you have are the 401k and Roth IRA, using the target-date fund in both accounts is just fine.

Are Target Funds a good long term plan?

They're good until you add a taxable account for retirement purposes. Then they complicate things.


Thank you! I find clear precise answers, very useful.


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