Mentorship Request for 2017 Allocation/Contributions

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Topic Author
chilllllout
Posts: 7
Joined: Wed Mar 14, 2012 1:25 pm

Mentorship Request for 2017 Allocation/Contributions

Post by chilllllout »

Emergency funds: In high-yield checking account (4.59% APY on $20,000)
Debt: $9,900 remaining on car loan (1.49%)
Tax Filing Status: Single
Tax Rate: 25%? Federal, 9.3% State (Income ~$70,000/year, Registered Nurse)
State of Residence: California
Age: 29
Desired Asset allocation: 90% stocks / 10% bonds (Pursuing further education/curious of consensus)
Desired International allocation: 32% of stocks (Pursuing further education/curious of consensus)

Current total portfolio: ~$44,500 (~$36,000 vested)

Current retirement assets
Taxable
2% in Robinhood account to learn/monitor/play (and satiate desire to be more active in investing). Holding SPY (S&P 500 ETF), GLD (SPDR Gold Trust ETF), BRK.B (Berkshire Hathaway), BND (Vanguard Total Bond Market ETF), VXUS (Vanguard Total International Stock ETF)

457b (Non-Government, hospital) (Fidelity)
30.5% FID 500 INDEX INST (FXSIX) (0.035%)
12% FID GLB XUS IDX PR (FSGDX) (0.11%)
2.5% FID DIVERSIFD INTL K (FDIKX) (0.92%)
2% FID GROWTH CO K (FGCKX) (0.77%)
Company match is something low, 50% of first 2%? (I can’t recall, will confirm) into 401a.

401a (Fidelity) ($10,500; $2,000 currently vested)
21% FID FDM IDX 2060 IPR (FFLEX) (0.1%)
3% FID 500 INDEX INST (FXSIX) (0.035%)
Company automatically contributes 7% of income.

Roth IRA at Vanguard
7% Vanguard Total Bond Market Index Fund Investor Shares (VBMFX) (0.16%)
8.5% Vanguard Total International Stock Index Fund Investor Shares (VGTSX) (0.19%)
11.5% Vanguard Total Stock Market Index Fund Investor Shares (VTSMX) (0.16%)

Annual Contributions
$18,500 457b (Contribution percentage is set such that maximum contribution will be met by year end)
$0 401a (Employer contribution, with match, is approx. $7,000 total per year)
$5,500 Roth IRA (already made for 2017)

Funds available in 457b and 401a
ABF SM CAP VAL INST (AVFIX) 0.82%
COL DIVIDEND INC Z (GSFTX) 0.77%
FID 500 INDEX INST (FXSIX) 0.035%
FID BLUE CHIP GR K (FBGKX) 0.70%
FID DIVERSIFD INTL K (FDIKX) 0.92%
FID DIVIDEND GR K (FDGKX) 0.50%
FID EXT MKT IDX PR (FSEVX) 0.07%
FID GLB XUS IDX PR (FSGDX) 0.11%
FID GROWTH CO K (FGCKX) 0.77%
FID INTL SM CAP OPP (FSCOX) 1.17%
FID LOW PRICED STK K (FLPKX) 0.78%
FID MID CAP STOCK K (FKMCX) 0.61%
H & W MID CAP VAL I (HWMIX) 1.02%
MSIF SMALL CO GRTH I (MSSGX) 1.11%
FID BALANCED K (FBAKX) 0.46%
FID FDM IDX 2005 IPR (FFGFX) 0.19%
FID FDM IDX 2010 IPR (FFWTX) 0.19%
FID FDM IDX 2015 IPR (FIWFX) 0.18%
FID FDM IDX 2020 IPR (FIWTX) 0.18%
FID FDM IDX 2025 IPR (FFEDX) 0.18%
FID FDM IDX 2030 IPR (FFEGX) 0.19%
FID FDM IDX 2035 IPR (FFEZX) 0.19%
FID FDM IDX 2040 IPR (FFIZX) 0.19%
FID FDM IDX 2045 IPR (FFOLX) 0.19%
FID FDM IDX 2050 IPR (FFOPX) 0.19%
FID FDM IDX 2055 IPR (FFLDX) 0.19%
FID FDM IDX 2060 IPR (FFLEX) 0.19%
FID FDM IDX INC IPR (FFGZX) 0.19%
FID GNMA (FGMNX) 0.45%
FID US BOND IDX PR (FSITX) 0.05%
MIP CL 1 0.77%
PIM TOTAL RT INST (PTTRX) 0.47%
FID RET GOVT MM (FGMXX) 0.42%

Questions:
Hi!

I’ve rented a few books from the library and researched online a great deal, but I know I am still a novice to investing and retirement planning! I am an aggressive novice though, reaching contribution limits for my 457b and Roth IRA for 2016 (and I intend to do the same each year until retirement). Seeking guidance/mentorship, my questions are to those with more knowledge and experience than me:

1. General opinion related to my current holdings and asset allocation - Are my holdings and asset allocation appropriate?

2. Considering how I will allocate my 457b contributions for this year to be as follow, I would be very appreciative of mentorship. My current plan for 2017 457b contributions is as follows:
  • 50% Target 2060 fund
    23% International Stocks (FID GLB XUS IDX PR [FSGDX])
    22% Domestic Stocks (15% FID 500 INDEX INST [FXSIX], 7% FID EXT MKT IDX PR [FSEVX])
    5% Bonds (FID US BOND IDX PR [FSITX])
3. For bond contributions in my 457b, is FID US BOND IDX PR (FSITX) the best choice?

4. I am considering doing away with the Target Date funds and “doing it myself.” Would you support this or advise against it? If supportive, how would you adjust/direct your contributions for this year?

5. Should I reconsider my contribution allocation between the 457b / 401a / Roth such that I am taking the best of the three worlds?

Thank you in advance, I look forward to learning and discussing in the comments! Honored to receive any advice and mentorship!
-Bud
LeeMKE
Posts: 2233
Joined: Mon Oct 14, 2013 9:40 pm

Re: Mentorship Request for 2017 Allocation/Contributions

Post by LeeMKE »

1. Yes, your holdings look appropriate.
2. You are using the target funds appropriately. Once your balances get closer to $100,000, you should transition to individual index funds. But at this point, the target fund serves you well until you have high enough balances to use the lowest cost index funds (minimum balances required of $10,000)
3. I use long term bonds, so I can't be positive, but I think that is the generally recommended US Bond fund.
4. Not this year, but two years out, yes.
5. Nah. Some folks try to put one or another asset into the Roth vs the taxable retirement accounts. I try to keep it simple and just focus on maxing out my allowed contributions to all accounts. When you have larger balances, you can slant the Roth to US stocks if you expect that asset to have the best gains. Me, I have enough to manage with multiple retirement accounts, and just keeping the splits organized so I can rebalance within the existing accounts.

Good work, keep going!
The mightiest Oak is just a nut who stayed the course.
User avatar
ruralavalon
Posts: 26353
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: Mentorship Request for 2017 Allocation/Contributions

Post by ruralavalon »

chilllllout wrote:Emergency funds: In high-yield checking account (4.59% APY on $20,000)
Debt: $9,900 remaining on car loan (1.49%)
Tax Filing Status: Single
Tax Rate: 25%? Federal, 9.3% State (Income ~$70,000/year, Registered Nurse)
State of Residence: California
Age: 29
Desired Asset allocation: 90% stocks / 10% bonds (Pursuing further education/curious of consensus)
Desired International allocation: 32% of stocks (Pursuing further education/curious of consensus)

Current total portfolio: ~$44,500 (~$36,000 vested)

Current retirement assets
Taxable
2% in Robinhood account to learn/monitor/play (and satiate desire to be more active in investing). Holding SPY (S&P 500 ETF), GLD (SPDR Gold Trust ETF), BRK.B (Berkshire Hathaway), BND (Vanguard Total Bond Market ETF), VXUS (Vanguard Total International Stock ETF)

457b (Non-Government, hospital) (Fidelity)
30.5% FID 500 INDEX INST (FXSIX) (0.035%)
12% FID GLB XUS IDX PR (FSGDX) (0.11%)
2.5% FID DIVERSIFD INTL K (FDIKX) (0.92%)
2% FID GROWTH CO K (FGCKX) (0.77%)
Company match is something low, 50% of first 2%? (I can’t recall, will confirm) into 401a.

401a (Fidelity) ($10,500; $2,000 currently vested)
21% FID FDM IDX 2060 IPR (FFLEX) (0.1%)
3% FID 500 INDEX INST (FXSIX) (0.035%)
Company automatically contributes 7% of income.

Roth IRA at Vanguard
7% Vanguard Total Bond Market Index Fund Investor Shares (VBMFX) (0.16%)
8.5% Vanguard Total International Stock Index Fund Investor Shares (VGTSX) (0.19%)
11.5% Vanguard Total Stock Market Index Fund Investor Shares (VTSMX) (0.16%)

Annual Contributions
$18,500 457b (Contribution percentage is set such that maximum contribution will be met by year end)
$0 401a (Employer contribution, with match, is approx. $7,000 total per year)
$5,500 Roth IRA (already made for 2017)

Funds available in 457b and 401a
ABF SM CAP VAL INST (AVFIX) 0.82%
COL DIVIDEND INC Z (GSFTX) 0.77%
FID 500 INDEX INST (FXSIX) 0.035%
FID BLUE CHIP GR K (FBGKX) 0.70%
FID DIVERSIFD INTL K (FDIKX) 0.92%
FID DIVIDEND GR K (FDGKX) 0.50%
FID EXT MKT IDX PR (FSEVX) 0.07%
FID GLB XUS IDX PR (FSGDX) 0.11%
FID GROWTH CO K (FGCKX) 0.77%
FID INTL SM CAP OPP (FSCOX) 1.17%
FID LOW PRICED STK K (FLPKX) 0.78%
FID MID CAP STOCK K (FKMCX) 0.61%
H & W MID CAP VAL I (HWMIX) 1.02%
MSIF SMALL CO GRTH I (MSSGX) 1.11%
FID BALANCED K (FBAKX) 0.46%
FID FDM IDX 2005 IPR (FFGFX) 0.19%
FID FDM IDX 2010 IPR (FFWTX) 0.19%
FID FDM IDX 2015 IPR (FIWFX) 0.18%
FID FDM IDX 2020 IPR (FIWTX) 0.18%
FID FDM IDX 2025 IPR (FFEDX) 0.18%
FID FDM IDX 2030 IPR (FFEGX) 0.19%
FID FDM IDX 2035 IPR (FFEZX) 0.19%
FID FDM IDX 2040 IPR (FFIZX) 0.19%
FID FDM IDX 2045 IPR (FFOLX) 0.19%
FID FDM IDX 2050 IPR (FFOPX) 0.19%
FID FDM IDX 2055 IPR (FFLDX) 0.19%
FID FDM IDX 2060 IPR (FFLEX) 0.19%
FID FDM IDX INC IPR (FFGZX) 0.19%
FID GNMA (FGMNX) 0.45%
FID US BOND IDX PR (FSITX) 0.05%
MIP CL 1 0.77%
PIM TOTAL RT INST (PTTRX) 0.47%
FID RET GOVT MM (FGMXX) 0.42%

Questions:
Hi!

I’ve rented a few books from the library and researched online a great deal, but I know I am still a novice to investing and retirement planning! I am an aggressive novice though, reaching contribution limits for my 457b and Roth IRA for 2016 (and I intend to do the same each year until retirement). Seeking guidance/mentorship, my questions are to those with more knowledge and experience than me:

1. General opinion related to my current holdings and asset allocation - Are my holdings and asset allocation appropriate?
At age 29 I suggest an asset allocation of about 80/20 stocks/bonds. Historically that has reduced portfolio volatility (risk) significantly, with relatively little negative impact on portfolio growth.

I usually suggest around 20 - 30 % of stocks in international stocks. I don't think that there is any real "consensus" about the allocation to international stocks.

That would break down to about: 20% bonds; 20% international stocks; and 60% domestic stocks.

chillout wrote:2. Considering how I will allocate my 457b contributions for this year to be as follow, I would be very appreciative of mentorship. My current plan for 2017 457b contributions is as follows:
  • 50% Target 2060 fund
    23% International Stocks (FID GLB XUS IDX PR [FSGDX])
    22% Domestic Stocks (15% FID 500 INDEX INST [FXSIX], 7% FID EXT MKT IDX PR [FSEVX])
    5% Bonds (FID US BOND IDX PR [FSITX])
I suggest:
50%, Fidelity 500 Index Fund Institutional
10%, Fidelity Extended Market Index Fund Premium
20%, Fidelity Global ex-U.S. index Fund Premium
20%, Fidelity U.S. Bond Index Fund Premium

chillout wrote:3. For bond contributions in my 457b, is FID US BOND IDX PR (FSITX) the best choice?
Yes.

chillout wrote:4. I am considering doing away with the Target Date funds and “doing it myself.” Would you support this or advise against it? If supportive, how would you adjust/direct your contributions for this year?
I think that is a very good idea. Using a retirement fund along with regular index funds, over multiple accounts, just makes it hard to manage your portfolio and keep track of your asset allocation.

chillout wrote:5. Should I reconsider my contribution allocation between the 457b / 401a / Roth such that I am taking the best of the three worlds?
I don't understand this question, sorry.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Topic Author
chilllllout
Posts: 7
Joined: Wed Mar 14, 2012 1:25 pm

Re: Mentorship Request for 2017 Allocation/Contributions

Post by chilllllout »

LeeMKE wrote:1. Yes, your holdings look appropriate.
2. You are using the target funds appropriately. Once your balances get closer to $100,000, you should transition to individual index funds. But at this point, the target fund serves you well until you have high enough balances to use the lowest cost index funds (minimum balances required of $10,000)
3. I use long term bonds, so I can't be positive, but I think that is the generally recommended US Bond fund.
4. Not this year, but two years out, yes.
5. Nah. Some folks try to put one or another asset into the Roth vs the taxable retirement accounts. I try to keep it simple and just focus on maxing out my allowed contributions to all accounts. When you have larger balances, you can slant the Roth to US stocks if you expect that asset to have the best gains. Me, I have enough to manage with multiple retirement accounts, and just keeping the splits organized so I can rebalance within the existing accounts.

Good work, keep going!
Thank you very much for your reply!!
Topic Author
chilllllout
Posts: 7
Joined: Wed Mar 14, 2012 1:25 pm

Re: Mentorship Request for 2017 Allocation/Contributions

Post by chilllllout »

ruralavalon wrote:At age 29 I suggest an asset allocation of about 80/20 stocks/bonds. Historically that has reduced portfolio volatility (risk) significantly, with relatively little negative impact on portfolio growth.

I usually suggest around 20 - 30 % of stocks in international stocks. I don't think that there is any real "consensus" about the allocation to international stocks.

That would break down to about: 20% bonds; 20% international stocks; and 60% domestic stocks.


I suggest:
50%, Fidelity 500 Index Fund Institutional
10%, Fidelity Extended Market Index Fund Premium
20%, Fidelity Global ex-U.S. index Fund Premium
20%, Fidelity U.S. Bond Index Fund Premium
Thank you very much for your reply! I've read articles that advocate for ~20% bonds as well, including historic examples. Though I notice that target date funds for someone my age are holding a much slimmer allocation of bonds. For example, Vanguards 2050 fund (VFIFX) is 10.15% bonds. And Fidelity's 2050 fund (FFFHX) is only 5.13% bonds! What's with that?

I've adjusted my contribution per your suggestion, Excel tells me that my allocation at year's end should be something around 60% US equity / 27% international / 13% bonds
User avatar
cinghiale
Posts: 1365
Joined: Wed Oct 17, 2007 4:37 pm
Location: A latare Mare Nostrum

Re: Mentorship Request for 2017 Allocation/Contributions

Post by cinghiale »

clilllllout mentioned,
Emergency funds: In high-yield checking account (4.59% APY on $20,000)
Pray tell! Where are you getting 4.59% in a checking account with 20,000 on deposit? I'll be happy to pull together $250,000,00 (the maximum for FDIC insurance) for a checking account like that.
"We don't see things as they are; we see them as we are." Anais Nin | | "Sometimes the first duty of intelligent men is the restatement of the obvious." George Orwell
Topic Author
chilllllout
Posts: 7
Joined: Wed Mar 14, 2012 1:25 pm

Re: Mentorship Request for 2017 Allocation/Contributions

Post by chilllllout »

cinghiale wrote:clilllllout mentioned,
Emergency funds: In high-yield checking account (4.59% APY on $20,000)
Pray tell! Where are you getting 4.59% in a checking account with 20,000 on deposit? I'll be happy to pull together $250,000,00 (the maximum for FDIC insurance) for a checking account like that.
From Consumers Credit Union!
https://www.myconsumers.org/personal/ch ... cking.html
$20,000 is the maximum balance to receive the APY on, with some easy monthly requisites: 12 debit transactions (I just buy twelve $0.50 Amazon giftcard balance reloads), use e-bill payment once (you could probably just pay a bill to yourself, I pay rent this route), and spend $1000 on their credit card. Without the credit card (which has respectable perks on its own), it's 3.09% APY on up to $10,000. They're out of Illinois but they're part of that big shared credit union system - so I'm states away but just use their online services and on the rarest occassion go to one of the many local sister branches.
User avatar
cinghiale
Posts: 1365
Joined: Wed Oct 17, 2007 4:37 pm
Location: A latare Mare Nostrum

Re: Mentorship Request for 2017 Allocation/Contributions

Post by cinghiale »

Intriguing! Thanks for including the link.
"We don't see things as they are; we see them as we are." Anais Nin | | "Sometimes the first duty of intelligent men is the restatement of the obvious." George Orwell
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