Need some insight into my investments - 401k/Roth Vanguard

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IMacD
Posts: 17
Joined: Thu Feb 09, 2017 3:35 pm

Need some insight into my investments - 401k/Roth Vanguard

Post by IMacD » Thu Feb 09, 2017 6:21 pm

Hello,

I am glad to have found the forum and would appreciate any and all feedback possible. I'm currently 29 years old and looking to have a more than comfortable nest egg at retirement (or earlier).

Emergency Funds/Income
Yes - 12 months of expenses in standard savings account
Income - $115k/yr

Current Debt
Mortgage - $123,000 at 3% interest with $100k equity

Tax
Married filing jointly, $10,367 + 25% after $75k tax bracket, this turns into about 19% after child deductions (2), No state tax (WA resident)

Current Portolio
Company sponsored Vanguard 401K valued at $73K
I invest 13% per pay period with 3% company match @ 100%

I was invested in Vanguard Target Retirement 2050 Fund 100% but re-allocated recently to this:
TIAA-CREF Small-Cap Eq Fd Instl - 30%, .42% expense ratio
Vanguard 500 Index - 30%, .05% expense
Vanguard Mid-cap Value Index - 30%, .08% expense
Vanguard Emerging Mkt Stk Index - 10%, .15% expense

Do you think I should re-think my allocation? Here are my other options in the 401K:

Vanguard 500 Index Adm 0.05%
T. Rowe Price Blue Chip Growth Inv 0.71%
Vanguard Mid-Cap Value Index Adm 0.08%
JPMorgan Mid Cap Growth R6 0.78%
Vanguard Small-Cap Growth Index Adm 0.08%
TIAA-CREF Small-Cap Eq Fd Instl 0.42%
Vanguard Total Intl Stock Index Adm 0.12%
Oppenheimer International Growth I 0.70%
Vanguard Emerging Mkt Stk Index Adm 0.15%
American Century Emerging Markets R6 1.34%
Vanguard Total Bond Market Index Adm 0.06%
AB Bond Inflation Strategy 2 0.93%
Federated Instl High Yield Bond Instl 0.58%
DFA Short-Term Government Portfolio I 0.19%
"Vanguard Federal Money Market Inv 0.11%
Vanguard LifeStrategy Growth Inv 0.15%
Vanguard LifeStrategy Moderate Gr Inv 0.14%
Vanguard LifeStrategy Conserv Growth Inv 0.13%

Vanguard Roth IRA
I just opened this a few weeks ago and will be funding with $5.5K for 2016/2017 respectively.
I have not yet invested into a fund, I am still researching what to do. Ideally, id like to have an aggressive split around 80/20 and at least 30 - 40% in international stock. I really don't want to over think my IRA and would prefer to set it and possible re-address it annually.
Are there any recommendations as to what mutual funds i should be in?

Thank you ahead of time respectfully. Also, please let me know if i'm way off target here.
Last edited by IMacD on Fri Feb 10, 2017 10:25 am, edited 1 time in total.

Nate79
Posts: 3493
Joined: Thu Aug 11, 2016 6:24 pm
Location: Portland, OR

Re: Need some insight into my investments - 401k/Roth Vanguard

Post by Nate79 » Fri Feb 10, 2017 1:44 am

Can you max out your 401k? In your tax bracket I would max this if possible.

For Roth how about Life Strategy Growth? Simple and looks like it would meet your needs. You should decide on an asset allocation over all your accounts and not just pick funds that you like. Or just use Target date funds across your accounts and sleep well at night.

billfromct
Posts: 748
Joined: Tue Dec 03, 2013 9:05 am

Re: Need some insight into my investments - 401k/Roth Vanguard

Post by billfromct » Fri Feb 10, 2017 4:53 am

Mac,

You will get more responses if you list the names of the mutual funds you have in your "current portfolio".

People don't memorize the thousands of mutual fund ticker symbols & are too lazy (me anyway) to look them up & will just go to another post.

I don't remember the 10 or so Vanguard funds I have in my Vanguard rollover IRA, Vanguard Roth IRA & Vanguard annuity, let alone other mutual fund companies. I'm assuming TISEX is a T Rowe Price fund. (You know what happens when you assume!).

bill

rakornacki1
Posts: 163
Joined: Mon Mar 24, 2014 4:02 pm
Location: South Carolina

Re: Need some insight into my investments - 401k/Roth Vanguard

Post by rakornacki1 » Fri Feb 10, 2017 7:17 am

Since you are investing for the long-term and desire a comfortable retirement, I suggest that you automatically eliminate all funds with an expense ration >0.20%.
High ER funds will drain your portfolio through many years of savings, more than you can imagine. Further, you do have other stellar funds that can produce good returns at a much lower cost.
Good luck & great profits! :moneybag

KlangFool
Posts: 10190
Joined: Sat Oct 11, 2008 12:35 pm

Re: Need some insight into my investments - 401k/Roth Vanguard

Post by KlangFool » Fri Feb 10, 2017 8:50 am

IMacD wrote:Hello,

I am glad to have found the forum and would appreciate any and all feedback possible. I'm currently 29 years old and looking to have a more than comfortable nest egg at retirement (or earlier).

Emergency Funds/Income
Yes - 6 months of income in standard savings account
Income - $115k/yr

Current Debt
Mortgage - $123,000 at 3% interest with $100k equity

Tax
Married filing jointly, 28% current federal tax rate, no state tax (WA resident)

Current Portolio
Company sponsored Vanguard 401K valued at $73K
I invest 13% per pay period with 3% company match @ 100%
IMacD,

<<Yes - 6 months of income in standard savings account>>

1) How much is your annual expense? Emergency Fund is based on months of expense

<< A) Income - $115k/yr

Tax
B) Married filing jointly, 28% current federal tax rate, no state tax (WA resident)>>

https://www.nerdwallet.com/blog/taxes/f ... -brackets/
2) This is plainly wrong. At 115K/year, you are not at 28% federal tax rate. Do you do your own tax?

<< Current Portolio
Company sponsored Vanguard 401K valued at $73K
I invest 13% per pay period with 3% company match @ 100%>>

3) You should max up your Trad. 401K and contribute to Roth IRA. Where are Roth IRA accounts?

KlangFool

IMacD
Posts: 17
Joined: Thu Feb 09, 2017 3:35 pm

Re: Need some insight into my investments - 401k/Roth Vanguard

Post by IMacD » Fri Feb 10, 2017 10:28 am

Can you max out your 401k? In your tax bracket I would max this if possible.

For Roth how about Life Strategy Growth? Simple and looks like it would meet your needs. You should decide on an asset allocation over all your accounts and not just pick funds that you like. Or just use Target date funds across your accounts and sleep well at night.
Yes I would have to bump it to 17% contribution and have thought about doing that. That would be $18K max + the company match.

Thanks for the input on the Roth. Id rather keep it easy.

IMacD
Posts: 17
Joined: Thu Feb 09, 2017 3:35 pm

Re: Need some insight into my investments - 401k/Roth Vanguard

Post by IMacD » Fri Feb 10, 2017 10:30 am

Bill,
Mac,

You will get more responses if you list the names of the mutual funds you have in your "current portfolio".

People don't memorize the thousands of mutual fund ticker symbols & are too lazy (me anyway) to look them up & will just go to another post.

I don't remember the 10 or so Vanguard funds I have in my Vanguard rollover IRA, Vanguard Roth IRA & Vanguard annuity, let alone other mutual fund companies. I'm assuming TISEX is a T Rowe Price fund. (You know what happens when you assume!).

bill
I have updated the post to reflect the names of the funds. I wondered about that as I was typing the tickers too :shock:

IMacD
Posts: 17
Joined: Thu Feb 09, 2017 3:35 pm

Re: Need some insight into my investments - 401k/Roth Vanguard

Post by IMacD » Fri Feb 10, 2017 10:33 am

Since you are investing for the long-term and desire a comfortable retirement, I suggest that you automatically eliminate all funds with an expense ration >0.20%.
High ER funds will drain your portfolio through many years of savings, more than you can imagine. Further, you do have other stellar funds that can produce good returns at a much lower cost.
Good luck & great profits! :moneybag
That's was a definite question I had. I know that the expense ratios can add up significantly over time. I will be sure to take this into account when I am re-balancing.

What stellar funds might you be talking about if you don't mind my asking? :sharebeer

IMacD
Posts: 17
Joined: Thu Feb 09, 2017 3:35 pm

Re: Need some insight into my investments - 401k/Roth Vanguard

Post by IMacD » Fri Feb 10, 2017 10:43 am

IMacD,

<<Yes - 6 months of income in standard savings account>>

1) How much is your annual expense? Emergency Fund is based on months of expense

<< A) Income - $115k/yr

Tax
B) Married filing jointly, 28% current federal tax rate, no state tax (WA resident)>>

https://www.nerdwallet.com/blog/taxes/f ... -brackets/
2) This is plainly wrong. At 115K/year, you are not at 28% federal tax rate. Do you do your own tax?

<< Current Portolio
Company sponsored Vanguard 401K valued at $73K
I invest 13% per pay period with 3% company match @ 100%>>

3) You should max up your Trad. 401K and contribute to Roth IRA. Where are Roth IRA accounts?

KlangFool
Klang,

I fixed all this in my original post to reflect the proper Emergency Funds. I have seen it asked for in different ways. If I go off expenses I have 12-13 months of emergency saved up.

On the taxes... I updated this section as well using your link. I do my own taxes every year using Turbo Tax. With our deductions we are around %19 tax.

Your not the first person that has told me to max the 401K. I would contribute 17% with a company match of 3% so I will make this my first order of business. My Roth IRA is through Vanguard and I just recently opened it. I am contributing $5500 for both 2016 and 2017. The only thing I need is to choose my allocation and a fund that matches which seems to be the consensus of what I should do.

Thanks,

Mac

Elbowman
Posts: 491
Joined: Tue Apr 03, 2012 2:25 pm

Re: Need some insight into my investments - 401k/Roth Vanguard

Post by Elbowman » Fri Feb 10, 2017 10:54 am

Hi IMacD,

First off I'd drop the "TIAA-CREF Small-Cap Eq Fd Instl". I have nothing against small-caps, I hold Vanguard SCV myself, but only because I can get it for 0.08%. If you really want small-caps you could hold a lower cost option in your Roth IRA. 0.42% is too much of a headwind for a small-cap fund with a mild growth tilt.

Second, your proposal for your Roth IRA (80/20 stock/bond, 60/04 US/international split) is pretty standard for your age and is something most people here could get behind. But for your 401k you are 100/0 stock/bond and 90/10 US/emerging. Why the difference? You have a nice option of "Vanguard LifeStrategy Growth" in your 401k which would exactly match the proposed allocation for your Roth IRA, with no portfolio complexity.

IMacD
Posts: 17
Joined: Thu Feb 09, 2017 3:35 pm

Re: Need some insight into my investments - 401k/Roth Vanguard

Post by IMacD » Fri Feb 10, 2017 11:40 am

Hi IMacD,

First off I'd drop the "TIAA-CREF Small-Cap Eq Fd Instl". I have nothing against small-caps, I hold Vanguard SCV myself, but only because I can get it for 0.08%. If you really want small-caps you could hold a lower cost option in your Roth IRA. 0.42% is too much of a headwind for a small-cap fund with a mild growth tilt.

Second, your proposal for your Roth IRA (80/20 stock/bond, 60/04 US/international split) is pretty standard for your age and is something most people here could get behind. But for your 401k you are 100/0 stock/bond and 90/10 US/emerging. Why the difference? You have a nice option of "Vanguard LifeStrategy Growth" in your 401k which would exactly match the proposed allocation for your Roth IRA, with no portfolio complexity.
Thanks for the input. I will stick with the 80/20 stock/bond, 60/40 US/international split. This is something that I am comfortable with.

Side question: Once I have my Roth and 401K in place at the set allocations, what are some options to do with the rest of my money? I don't want it wasting away in savings getting beat down by inflation over the years. I suppose opening a taxable account and mimicking the same there...

KlangFool
Posts: 10190
Joined: Sat Oct 11, 2008 12:35 pm

Re: Need some insight into my investments - 401k/Roth Vanguard

Post by KlangFool » Fri Feb 10, 2017 12:39 pm

IMacD wrote:
IMacD,

<<Yes - 6 months of income in standard savings account>>

1) How much is your annual expense? Emergency Fund is based on months of expense

<< A) Income - $115k/yr

Tax
B) Married filing jointly, 28% current federal tax rate, no state tax (WA resident)>>

https://www.nerdwallet.com/blog/taxes/f ... -brackets/
2) This is plainly wrong. At 115K/year, you are not at 28% federal tax rate. Do you do your own tax?

<< Current Portolio
Company sponsored Vanguard 401K valued at $73K
I invest 13% per pay period with 3% company match @ 100%>>

3) You should max up your Trad. 401K and contribute to Roth IRA. Where are Roth IRA accounts?

KlangFool
Klang,

I fixed all this in my original post to reflect the proper Emergency Funds. I have seen it asked for in different ways. If I go off expenses I have 12-13 months of emergency saved up.

On the taxes... I updated this section as well using your link. I do my own taxes every year using Turbo Tax. With our deductions we are around %19 tax.

Your not the first person that has told me to max the 401K. I would contribute 17% with a company match of 3% so I will make this my first order of business. My Roth IRA is through Vanguard and I just recently opened it. I am contributing $5500 for both 2016 and 2017. The only thing I need is to choose my allocation and a fund that matches which seems to be the consensus of what I should do.

Thanks,

Mac
Mac,

1) We are looking for the marginal tax rate. So, you are probably in 25% marginal tax rate / tax bracket,

<< My Roth IRA is through Vanguard and I just recently opened it. I am contributing $5500 for both 2016 and 2017. >>

2) If you open a Roth IRA for your spouse, you could contribute another $5,500 for 2016 and 2017 with your spouse IRA account.

KlangFool

IMacD
Posts: 17
Joined: Thu Feb 09, 2017 3:35 pm

Re: Need some insight into my investments - 401k/Roth Vanguard

Post by IMacD » Fri Feb 10, 2017 11:05 pm

I plan to open hers shortly. Her company just transferred her from a company sponsored IRA to a 401k but the rollover hasn't taken place yet. Once that happens I'll have her in a Roth as well through Vanguard. Hopefully before April 15th.

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