We have a lot going on .... Input Requested.

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soccerrules
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Joined: Mon Nov 14, 2016 4:01 pm

We have a lot going on .... Input Requested.

Post by soccerrules » Wed Apr 05, 2017 2:57 pm

I have posted a thread about 6 mo's ago, however I will provide a little background. I have had our portfolio (20+ years) with a firm started by longtime friends (30+ yrs); although my direct adviser is no longer these individuals. Over the last 5-8 years I have been charged 1% per year on what they manage. I know that is very non-Boglehead, so please refrain from beating me up (again) on that subject. :( ( i'm feeling the 1% fee equals 25% of my 4% SWR) After looking into our ER's, I now know they are way out of line with traditional BH's, I didn't know, what I didn't know. Quite frankly I've not ever thought about ER's before 6 months ago (trust I guess). :oops:

One of the reasons I am posting again is because I am feeling more inclined to sever that relationship and go on my own, DIY. :happy One of my biggest questions is how to "go from here, to there" and make the switch. :shock: Questions at the bottom and thank you in advance for input and guidance. Here is our situation.

Emergency funds: @ 5-6 Months with firm; plus $50K in bank savings acct to cash flow (upcoming car purchase, college cash flow, prop taxes etc) Backfill cash flow acct from current income. Probably a little loose for most BH's.

Debt: Mortgage 15 year (refi 12/2010). 106K Balance, 4.125% - $1506/mo, last payment 12/2023 without add'tl payments (worth $350K, maybe more)
Car @ $12K bal, 1.75% - $533/mo - 23 mo left. (poor decision - used luxury car)

Tax Filing Status: Married Filing Jointly: combined Income $200-225K.
Tax Rate: 28% Federal, 0% State (Fed effective rate has been less than 15% most years due to itemized deductions; 2016 was a one off year due to job change/seperation pay)
State of Residence: Texas
Age: Him 52, Her 50 (Kids: 21, 19,15)
Desired Asset allocation: not sure. Current 58% Stocks: 42% Bonds/Cap Preservation (based on below)
Desired International allocation: not sure

Current Total Retirement Focused assets: $ 950K

Taxable - 294K
1.05% AMN Healthcare Services Inc (Stock) AMN
11.98% AQR Style Premia Alternative I QSPIX 1.56% ER :annoyed
8.89% Berkshire Hathaway Inc B BRKB
6.61% Harbor Capital Appreciation HACAX .65 % ER
12.06% Harbor International HAINX .79 % ER
11.34% Longleaf Partners LLPFX .93% ER
13.54% Schwab Fdmtl US Large Company Idx SFLNX .35% ER
8.78% Seafarer Overseas Grwth & Incm Instl SIGIX .98% ER
9.06% Smith Large Core Growth BSLGX .79 % ER
8.86% WisdomTree Emerging Markets Equity Income DEM ? ER
3.76% Eagle MLP Strategy I EGLIX 1.41% ER :annoyed
4.07 Cash

Taxable 2 $113K (50K alloted for Emergency Fund )
15.48% AMN Healthcare Services Inc (Stock) AMN
2.62% Cash CASH
33.23% FPA New Income FPNIX .49% ER
36.96% Vanguard S/T Investment Grade Adm VFSUX .10 % ER
11.71% Eagle MLP Strategy I EGLIX 1.41% ER :annoyed

His Rollover IRA - $ 400K
2.01% AQR Style Premia Alternative I QSPIX 1.56% ER :annoyed
4.05% Boston Ptnrs Glbl Long/Short Instl BGLSX 1.96% ER :annoyed
12.21% FPA Crescent FPC1Z 1.07 % ER
10.16% IVA Worldwide IVWIX 1 % ER
4.07% PRIMECAP Odyssey Aggressive Growth POAGX .64% ER
8.78% Thornburg International Value I TGVIX .90% ER
41.29% GROWTH TOTAL 165,119

2.57% Cash CASH
10.44% Dodge and Cox Income DODIX .43% ER
6.37% DoubleLine Flexible Income I DFLEX .84% ER
10.18% DoubleLine Total Return Bond I DBLTX .47% ER
0.59% FPA New Income FPNIX .49% ER
6.32% Metropolitan West Unconstrained Bd I MWCIX .74% ER
10.26% Western Asset Core Plus Bond I WACPX .45% ER
46.74% CAPITAL PRESERVATION TOTAL 186,908

1.90% First Eagle Gold I FEGIX .98% ER
6.10% PIMCO All Asset All Authority Instl PAUIX 1.22% ER
3.97% PIMCO Commodities PCRIX .74% ER
11.98% INFLATION PROTECTION TOTAL 47,895

HER Rollover IRA - $92K
26.42% Boston Ptnrs Glbl Long/Short Instl BGLSX 1.96% ER :annoyed
34.09% IVA Worldwide IVWIX 1.00% ER
6.85% Royce Premier RYP1X ??
16.94% Royce Premier RYPRX 1.13% ER
84.30% GROWTH TOTAL

1.82% Cash CASH 1,672.94
1.82% CAPITAL PRESERVATION TOTAL

13.88% First Eagle Gold I FEGIX .98% ER
13.88% INFLATION PROTECTION TOTAL

Her 403b - $ 37K (no match)
5.39% Vanguard International Value Inv VTRIX .43% ER
16.09% Vanguard S&P 500 Inv VFINX .16% ER
5.26% Vanguard Wellington Inv VWELX .25 % ER
26.74% GROWTH TOTAL

71.59% VANGUARD INTERMEDIATE-TERM BOND INDEX FUND INVESTO VBIIX .16% ER
1.68% Vanguard Prime Money Market Inv VMMXX .16% ER
73.26% CAPITAL PRESERVATION TOTAL

HIS 401K @ 1.5K --Vanguard Target 2030 VTHRX .15% ER (Not included in $950K)

529 Kids - @ 150K (Not included in $950K)-- should be OK and we plan to cash flow difference.

His HSA - started 2017 - $1000 balance. (Not included in $950K) Plan to build this for pre/post Medicare and pay out of pocket while working as much as possible

SS His - I'll project $2,900/mo at 67 (SS website says $2900 if I earn $118K until retire, but should earn SS max each year)
SS Hers - $ 1450 spousal benefit of his. (did not work enough to beat $1450/mo )
Project combined $50K a year. Leaning toward delaying until 67.

New annual Contributions (expect $250K over 8 years, hope for more)
$4,500 his 401k (available matching in 3/2018, match vests after 12 months)
$24,000 her 403b ($2,000/mo - no matching)
$3,500 his HSA (company adds additional $2000)
$300/mo to 529 for next 36 mo until youngest heads to college and then will use to cashflow college or increase his 401K or taxable add.
$0 his IRA/Roth IRA
$0 her IRA/Roth IRA
$0 taxable

Questions/Thoughts:
1. Systematically how do I leave my adviser ? What steps do I need to take to move the money and get a handle on it?
2. We would like $100K year for retirement ($50K should cover all basics excluding Healthcare) We want to retire in 8 years (60,58). Desire to travel some internationally/domestically while young (60-70), assume good health. If I add $2500/mo for Healthcare and Travel that pushes us to $80K. We anticipate @ $500K inheritance in the next 10 years, maybe as much as $750K. I have done some firecalc with various "fire" dates, expense proj ranging from 75K to 100K and adding in $250K (yes low number) and $ 500K inheritance starting in 4,6,8 years. I know the inheritance makes a difference. With Inheritance, probabilities were 95% and above, some even FI at 58. Thoughts on probability of making the above work even without inheritance?
3. Thoughts on asset allocation ? 58% Stocks, 42% Bonds ?
4. How would you structure the $950K -- 3 fund or 2 fund.
5. Other than cutting the cord going on my own and lowering ER's, would you do anything more, different ?

Again thanks for being gentle :wink:
Don't let your outflow exceed your income or your upkeep will be your downfall.

bloom2708
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Re: We have a lot going on .... Input Requested.

Post by bloom2708 » Wed Apr 05, 2017 3:05 pm

1. Contact Vanguard and start the move. No need to inform your current advisor. Expect a call when things start to move. Transfer in kind where possible, evaluate gains/losses once everything at Vanguard (or Fidelity)
2. You will need $2.5 million to $3 million to support ~$100k per year (not counting SS)
3. 58/42 seems reasonable. Anywhere from 40/60 to 60/40 would be reasonable at your age
4. Start with 3 fund, once you understand it, list reasons to deviate. Drop international, ok, why vs. low 20% allocation, etc.
5. I was where you were..once you know, you can't un-know. I was awake at night seeing high ER and AUM fees dancing in my head. The only medicine is parting ways and getting to Vanguard (Fidelity)

The only way to start is to finish. Moving is just talking to Vanguard Concierge service, opening accounts and initiating transfer/paperwork. Expect it to take 2-4 weeks.

Good luck!
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

aristotelian
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Re: We have a lot going on .... Input Requested.

Post by aristotelian » Wed Apr 05, 2017 3:28 pm

Just seconding the above, call Vanguard, fill out their paperwork, and don't look back. It is possible that you will not have to even speak to our current firm.

The only hard part will be coming up with a liquidation plan for the taxable accounts that does not cost too much in capital gains tax. In the meantime, transfer everything in-kind and set the current funds to pay out dividends and capital gains rather than reinvest. Selling everything in the IRA's and replacing with Total Stock and Total Bond will be the greatest feeling.

retiredjg
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Re: We have a lot going on .... Input Requested.

Post by retiredjg » Wed Apr 05, 2017 3:38 pm

Here's the ugly part first. I'll try to be gentle.

If you retired today with about $1 million, you could take out $40k a year including taxes and investment expenses. So, $10k of that goes to your "advisor" and maybe $8k goes to taxes. This leaves $22k for you to live on. As you can see, that is a FAR CRY from the $100k you'd like to have.

Obviously, that is not going to be your final outcome because you are considering getting rid of the 1% drain (more if you include the high expense ratios), you will continue working for awhile and saving more money, and you expect an inheritance which may help some. Even with all that, you may have to save more or or longer or spend less in retirement. But clearly, the best thing you can do is get rid of the 1% drain.

I think Bloom2708's suggestions are pretty good.

One thing you need to find out is the cost of getting rid of all those funds.

In taxable, there are two kinds of costs. If you have capital gains (seems likely) you need to find out what they are for each fund. Perhaps you have website access to your accounts. Look for the unrealized capital gain/loss for each of the 15 or so funds you have. Each gain or loss can have a short or long term component. Gather this information. Do you know how capital gains are taxed?

I'm not suggesting you sell everything in taxable right now. I'm saying you need this information to make decisions about what and when to sell.

The other cost in taxable (and in your IRAs and other accounts) will be how much it costs to sell each fund. Look on the fee schedule for your current firm and see if there is a cost to sell a fund. When you decide which custodian you want to move to, ask them the cost of selling these same funds. It might be cheaper to sell the funds and move money. It might be cheaper to move the funds and sell at the new location. I'm talking about your IRAs here, not the taxable account.

I think 58/42 is reasonable. There are other reasonable numbers as well.

Have you decide where you want to move the money?

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djpeteski
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Re: We have a lot going on .... Input Requested.

Post by djpeteski » Wed Apr 05, 2017 3:40 pm

Congratulations on being pretty dang good with money. Your net worth is around 1.3 million at a pretty young age and I bet you have colleagues that are flat out broke.

You do have a lot going on how about simplifying some things?

You have a car loan for 12K, and a home loan for 106K, and 407K in taxable investments. Be done with that. By the end of the month have no debt and 289K in taxable. Your life got a bit simpler and you just found a risk free investment.

delamer
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Re: We have a lot going on .... Input Requested.

Post by delamer » Wed Apr 05, 2017 3:44 pm

As bloom2708 said, Vanguard (or whatever other custodian you choose) will do the heavy lifting to get your assets moved. I'd be inclined to move eveything in-kind, particularly the taxable accounts, and figure out your allocation and specific funds once the move is done.

You will have a two-part retirement, if you go ahead with your planned ages 60/58.

Part 1 will be the portion where you will not be collecting Social Security and/or Medicare. Part 2 will be when your are collecting SS and are able to enroll in Medicare. This is a little simplistic since you and your wife are a couple years apart in age, plus you each may not begin SS and Medicare simultaneously. But you get the idea.

I'd recommend setting up a spreadsheet for each retirement year and figuring out where your needed income and healthcare (including cost) will come from each year. This should give you a pretty good idea of how much in total you'll need to save in order meet your income needs. You might end up with two buckets of assets (in theory if not literally) -- one to cover the pre-Social Security years that you expect to deplete and one that you will use to supplement your SS which you'd drawdown using the the standard 4% rate. You can, of course, do spreadsheets for different income and SS scenarios. You also should do some projections based on one of you dying prematurely.

Given your current assets, income, and savings rate and an eight-year window to get your finances in shape, it seems to me that you are in a good position to meet your goals.

Vanguard Fan 1367
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Re: We have a lot going on .... Input Requested.

Post by Vanguard Fan 1367 » Wed Apr 05, 2017 4:33 pm

I have "heard" that typically financial advisors set up complex portfolios.

I am glad to hear that you are willing to take the plunge and move things to Vanguard. I appreciate their Total Stock Market Index Admiral fund ER of .05 percent. I have had a painful 2 years where I did the Boglehead thing and paid a lot of capital gains taxes but now I have recovered from that and am living the Boglehead life. Of course 2016 was a fabulous year for index investing.

I would echo what a poster said, get a good idea of what sort of capital gains you are looking at so that you won't be shocked by the tax bill. But I think it is worth it, especially if you can find some Vanguard .05 expense ratio funds that you like.

soccerrules
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Re: We have a lot going on .... Input Requested.

Post by soccerrules » Wed Apr 05, 2017 4:58 pm

Thanks for the thoughtful speedy replies: bloom2708, aristotlian,retiredjg, djpeteski, delamer, Vanguard fan 1367

Digesting :|
Don't let your outflow exceed your income or your upkeep will be your downfall.

SimplicityNow
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Re: We have a lot going on .... Input Requested.

Post by SimplicityNow » Wed Apr 05, 2017 5:15 pm

I will start by agreeing with the rest of the wisdom you have already received from my fellow bogleheads.

Secondly, don't beat yourself up over the mistakes you made. Most here have made similar ones at one time or another and to various degrees. The most important thing is that you now realize it and are moving in a positive direction towards financial independence. That alone is huge!

I agree that tomorrow isn't too soon to get started with this. First pick a company that you want to move your assets to. Many here pick Vanguard but Fidelity and Schwab are also good choices. You want to consider index funds with low expense ratios.

I agree your present asset allocation is reasonable for your ages. A good book to provide more info is Rick Ferri's "All About Asset Allocation".

I encourage you to read the wiki on the website, the getting started section and a few books from the recommended reading list.

Take a deep breath and realize you already have taken the first steps to a more enjoyable retirement.

soccerrules
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Re: We have a lot going on .... Input Requested.

Post by soccerrules » Thu Apr 06, 2017 11:06 am

retiredjg wrote:In taxable, there are two kinds of costs. If you have capital gains (seems likely) you need to find out what they are for each fund. Perhaps you have website access to your accounts. Look for the unrealized capital gain/loss for each of the 15 or so funds you have. Each gain or loss can have a short or long term component. Gather this information. Do you know how capital gains are taxed?


Capital Gains Info. I believe I am aware of how capital gains are taxed based on how long you have held the asset, whether Short or Long term at differing rates. Here is what is listed as unrealized cap gains. My advisor did harvest some LT gains in 2016 and I'm feeling the impact on my taxes for 2016.

Type of Account / Unrealized Short Cap Gain / Unrealized Long Cap Gain
Taxable 1 / $ 6,102 / $ 32,397
Taxable 2 / $ 1,489 / $ 15,347
His Rollover IRA / showing "none to report" / " none to report"
Her Rollover IRA / showing "none to report" / " none to report"

I saw a note to set funds to PAY out dividends, not reinvest ? Why ? Pay them to where ? (maybe I missed that in my reading)

Our accounts are currently with Schwab, does that make a difference in moving/separating from advisor ? Can I stay with Schwab ?

Again thanks for the guidance.
Don't let your outflow exceed your income or your upkeep will be your downfall.

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siamond
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Re: We have a lot going on .... Input Requested.

Post by siamond » Thu Apr 06, 2017 11:48 am

soccerrules, you're not exactly the only one to wake up a tad 'late' in the process. Heck, I did the same. And so did most participants to this forum. So stop beating you up, it's water over the bridge, what matters is the future. And the future will be much brighter, given that you've learned some lessons the hard way, which is (unfortunately) the most effective way to learn.

At 50-ish, you're in pretty good shape with your savings, assuming that you expect decent SSA (and/or Pension) for yourself and your spouse - plus the inheritance at some point. One would have to do more precise math, but I strongly suspect that the net present value of your expected inheritance would easily cover the gap between your retirement and the age at which you'll file for SSA (do delay to 70!). In other words, spending some of your portfolio in the mean time will probably be fine. But again, you need to do some more precise math before reaching such conclusion, running a couple of scenarios, including very conservative ones. Those considerations can get a tad complicated, I would suggest you put it aside and focus on your transition to passive investing with no advisor in the way, that is the top priority.

About Schwab, they do offer a set of passive indexed funds which is as good as Vanguard. Or you can buy Vanguard funds with a Schwab account. I see no problem staying with them. Call their support line and explain your situation (get out of the crutches of the financial advisors, move to passive investing). I'm sure they will be very intent to keep your business, hence be very helpful in the process. Ask for a transfer in-kind (i.e. nothing sold, just transfer the shares) to new accounts that you will fully operate. I'd suggest you stay polite with the (former) advisors and inform them, but make crystal clear you are NOT willing to discuss any more, you are just telling them what is going to happen.

Once this is done, your tax-sheltered accounts (IRAs, etc) should be no problem, since you can exchange whatever active funds you'll have in there for index funds at no cost. You should do it ASAP. There is really no point paying any of those hefty fees for one more day. The more difficult part is the taxable account. You'll have to define a transition plan, so that you don't get hammered by capital gains and related taxes, maybe transitioning over a couple of years to passive funds, giving the priority to high return-on-investment moves (e.g. a position with low capital gains and high ER should be transitioned first). And if it happens that a big stock crisis erases gains in the mean time, do jump on the opportunity (I did exactly that in 2011).

About your AA, you are still very young (yes, you are!). You should plan for some 50 years of life expectancy in front of you if you're in good health. I see absolutely no reason to go lower than 60/40 (too many bonds would definitely be damaging to your purchasing power during retirement, and you still need some growth). Personally, I would say that you should go 70/30 for at least 10 to 20 more years, but well, we're all different in this respect, it's a tough balance between emotions/behavior and expected returns. That's your call, take your time to make it, and then stick to it for good. As to International, you can find many threads on this forum passionately discussing the matter with zero agreement between participants! Personally, I cannot understand how one can say that diversifying is a fundamental tenet of being a Bogleheads and yet not diversify with International funds (at the very minimum 20% of your equities), but that's just me. At the end, you need something that you truly believe in, or you will keep changing your mind. GOOD LUCK!

PS. oh, and you should definitely reinvest dividends. You can either ask Schwab to automate the process, or set the money aside in a money market fund, and use it to rebalance your accounts from time to time. Either approach works. I prefer the former, to easily keep my money at work at all times.
Last edited by siamond on Thu Apr 06, 2017 11:56 am, edited 1 time in total.

delamer
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Re: We have a lot going on .... Input Requested.

Post by delamer » Thu Apr 06, 2017 11:55 am

soccerrules wrote:
retiredjg wrote:In taxable, there are two kinds of costs. If you have capital gains (seems likely) you need to find out what they are for each fund. Perhaps you have website access to your accounts. Look for the unrealized capital gain/loss for each of the 15 or so funds you have. Each gain or loss can have a short or long term component. Gather this information. Do you know how capital gains are taxed?


Capital Gains Info. I believe I am aware of how capital gains are taxed based on how long you have held the asset, whether Short or Long term at differing rates. Here is what is listed as unrealized cap gains. My advisor did harvest some LT gains in 2016 and I'm feeling the impact on my taxes for 2016.

Type of Account / Unrealized Short Cap Gain / Unrealized Long Cap Gain
Taxable 1 / $ 6,102 / $ 32,397
Taxable 2 / $ 1,489 / $ 15,347
His Rollover IRA / showing "none to report" / " none to report"
Her Rollover IRA / showing "none to report" / " none to report"

I saw a note to set funds to PAY out dividends, not reinvest ? Why ? Pay them to where ? (maybe I missed that in my reading)

Our accounts are currently with Schwab, does that make a difference in moving/separating from advisor ? Can I stay with Schwab ?

Again thanks for the guidance.


If the dividends on your taxable account are being paid out, then they are going into a "settlement fund" (money market fund). They sit there until they are reinvested.

You should be able to keep your assets at Schwab and just dismiss your advisor. I don't know the procedure though. You might want to talk to someone about this: https://intelligent.schwab.com.

Presumably Schwab would rather keep your assets even if your current advisor will be unhappy to lose you.

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CAsage
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Re: We have a lot going on .... Input Requested.

Post by CAsage » Thu Apr 06, 2017 12:07 pm

With regard to liquidating/selling your taxable account... Estimate your taxes for this year, and see what the impact would be to add that amount of long and short term capital gains is. Might not be that bad, or you can split it across the next year or two. Lowering the expense ratio will make up for the hit over time... and capital gains are taxed less than income. I use HRBlock, others use Turbo tax but play with your taxes for 2017 by doing a trial run (using 2016 software pretty close). Putting just a couple funds in each account makes life simpler!
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.

jlcnuke
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Re: We have a lot going on .... Input Requested.

Post by jlcnuke » Thu Apr 06, 2017 12:33 pm

soccerrules wrote:
retiredjg wrote:In taxable, there are two kinds of costs. If you have capital gains (seems likely) you need to find out what they are for each fund. Perhaps you have website access to your accounts. Look for the unrealized capital gain/loss for each of the 15 or so funds you have. Each gain or loss can have a short or long term component. Gather this information. Do you know how capital gains are taxed?


Capital Gains Info. I believe I am aware of how capital gains are taxed based on how long you have held the asset, whether Short or Long term at differing rates. Here is what is listed as unrealized cap gains. My advisor did harvest some LT gains in 2016 and I'm feeling the impact on my taxes for 2016.

Type of Account / Unrealized Short Cap Gain / Unrealized Long Cap Gain
Taxable 1 / $ 6,102 / $ 32,397
Taxable 2 / $ 1,489 / $ 15,347
His Rollover IRA / showing "none to report" / " none to report"
Her Rollover IRA / showing "none to report" / " none to report"

I saw a note to set funds to PAY out dividends, not reinvest ? Why ? Pay them to where ? (maybe I missed that in my reading)

Our accounts are currently with Schwab, does that make a difference in moving/separating from advisor ? Can I stay with Schwab ?

Again thanks for the guidance.


Based on this, to liquidate your investments in the taxable accounts and move them to dissimilar funds would likely result in about $9.3k in tax liabilities (rough estimate, your exact tax situation may be less, concur with running tax software simulation). That's about one year's "advisor 1% fee" worth of charges to get out from under the current expenses and fees, so not too bad really.

aristotelian
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Re: We have a lot going on .... Input Requested.

Post by aristotelian » Thu Apr 06, 2017 2:12 pm

soccerrules wrote:Capital Gains Info. I believe I am aware of how capital gains are taxed based on how long you have held the asset, whether Short or Long term at differing rates. Here is what is listed as unrealized cap gains. My advisor did harvest some LT gains in 2016 and I'm feeling the impact on my taxes for 2016.


Let me get this straight, you have been paying him to cost you money? :oops:

NancyABQ
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Re: We have a lot going on .... Input Requested.

Post by NancyABQ » Thu Apr 06, 2017 2:31 pm

soccerrules wrote:I saw a note to set funds to PAY out dividends, not reinvest ? Why ? Pay them to where ? (maybe I missed that in my reading)


Normally you would probably want to automatically reinvest your dividends (assuming you don't need them for living expenses). This logic assumes you are invested in that fund because you want to be invested in that fund. :)

The reason to turn off dividend reinvesting in your case would be specifically for a fund that you would like to stop investing in, such as one with a high ER. Maybe you have too many unrealized capital gains to just sell the fund immediately, but meanwhile you can stop reinvesting the dividends so you don't make the problem worse by buying more of it!

So if somebody says "I have this expensive fund in a taxable account that I think I should get rid of but I don't want to sell and pay taxes on the gain right now" then my first response is "While you figure out what you want to do, turn off dividend reinvesting for those holdings!".

The money from the dividends would then go into your sweep account (money market probably) at the brokerage and you can take those funds and invest them in a nice low-expense index fund, thus very gradually shifting your holdings over towards lower ER funds without any extra tax consequences. So you're still investing the dividends, just not in the undesirable high-ER fund you would like to eventually get rid of.

Fox
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Re: We have a lot going on .... Input Requested.

Post by Fox » Thu Apr 06, 2017 2:52 pm

For your #1 question: We left our financial advisor earlier this year, since I discovered the BH way last year. Our advisor was in the middle of working with me to restructure what funds we were using in our Roth and 529 accounts. Because I'm a nice, respectful, small-town person, I sent him a polite email informing him of our decision to move our accounts.

I have not gotten any calls or emails to try to persuade me otherwise and I'm simply doing the transfers online through Vanguard and our state 529 plan. I can send you a copy of my email if you PM me.

retiredjg
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Re: We have a lot going on .... Input Requested.

Post by retiredjg » Thu Apr 06, 2017 4:07 pm

aristotelian wrote:
soccerrules wrote:Capital Gains Info. I believe I am aware of how capital gains are taxed based on how long you have held the asset, whether Short or Long term at differing rates. Here is what is listed as unrealized cap gains. My advisor did harvest some LT gains in 2016 and I'm feeling the impact on my taxes for 2016.

Let me get this straight, you have been paying him to cost you money? :oops:

I had a similar thought. Tax gain harvesting is a great tool for people in the very low tax brackets (15% and lower) because they don't have to pay any tax on long term gains.

It's is hard to know what your advisor had in mind so it is hard to be critical. But I'm not sure this was in your best interests.

retiredjg
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Re: We have a lot going on .... Input Requested.

Post by retiredjg » Thu Apr 06, 2017 4:13 pm

If all these assets are held at Schwab, you may be able to just stay at Schwab and sell things according to your own schedule. Schwab has a few reasonable index funds and many good ETFs.

If you agree that the tax cost of just dumping everything in the taxable account is about the same as one year's fee with your advisor, that is something to consider.

Is there anything in the taxable account at a loss? Do you have any carryover losses from years past?

soccerrules
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Re: We have a lot going on .... Input Requested.

Post by soccerrules » Fri Apr 07, 2017 8:43 am

retiredjg wrote:Is there anything in the taxable account at a loss? Do you have any carryover losses from years past?


I do not believe we have any losses from previous years not recognized, but I believe there may be some smaller losses baked into the 2 taxable accounts currently. I'll look. The net totals were $7500 ST and $48K LT.

Thanks again for the continued thoughts and questions.

I'm inclined to move to Vanguard.
With our current assets of $950K ($406K Taxable and $544 Tax deferred) looking at a 65/35 or 60/40 stocks/bonds with 10-20% International exposure. Thoughts on this as a starting point.

45% Vanguard Total Stock Market Index Fund I.S.(VTSMX)
20% Vanguard Total International Stock Fund I.S. (VGTSX)
35% Vanguard Total Bond Market Index Fund I.S. (VBMFX)

75% of our new additions ($24K) will be going to 403B Vanguard (I think Target 2030 Fund, need to look but these are current %'s)
5% Vanguard International Value Inv VTRIX .43% ER
16% Vanguard S&P 500 Inv VFINX .16% ER
5% Vanguard Wellington Inv VWELX .25 % ER
71% VANGUARD INTERMEDIATE-TERM BOND INDEX FUND INVESTO VBIIX .16% ER
2% Vanguard Prime Money Market Inv VMMXX .16% ER
(looks like I will need to rebalance to AA for total portfolio)

what is the scoop on the Admiral Shares, is that something to consider ?
Don't let your outflow exceed your income or your upkeep will be your downfall.

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BL
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Re: We have a lot going on .... Input Requested.

Post by BL » Fri Apr 07, 2017 9:15 am

Admiral shares are simply a cheaper version (lower ER) of the same fund, available at Vanguard if you meet the minimum, usually 10k/fund of the index funds (I believe 50k for the Wellington/Wellesley funds). V has upgraded them automatically when I reached 10k, unless I did it myself first.

My ERs on these Admiral funds at V. are:
Total bond: 0.06%
Total Stock US: 0.05%
Total Int: 0.11%

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Re: We have a lot going on .... Input Requested.

Post by retiredjg » Fri Apr 07, 2017 9:36 am

soccerrules wrote:I do not believe we have any losses from previous years not recognized, but I believe there may be some smaller losses baked into the 2 taxable accounts currently. I'll look. The net totals were $7500 ST and $48K LT.

I think I might keep the shares with short term gains until they become long term gains. Lower taxes.



I'm inclined to move to Vanguard.
With our current assets of $950K ($406K Taxable and $544 Tax deferred) looking at a 65/35 or 60/40 stocks/bonds with 10-20% International exposure. Thoughts on this as a starting point.

45% Vanguard Total Stock Market Index Fund I.S.(VTSMX)
20% Vanguard Total International Stock Fund I.S. (VGTSX)
35% Vanguard Total Bond Market Index Fund I.S. (VBMFX)

Well, this is fine if you have those funds available. You don't want the total bond market in taxable.

75% of our new additions ($24K) will be going to 403B Vanguard (I think Target 2030 Fund, need to look but these are current %'s)
5% Vanguard International Value Inv VTRIX .43% ER
16% Vanguard S&P 500 Inv VFINX .16% ER
5% Vanguard Wellington Inv VWELX .25 % ER
71% VANGUARD INTERMEDIATE-TERM BOND INDEX FUND INVESTO VBIIX .16% ER
2% Vanguard Prime Money Market Inv VMMXX .16% ER

There is really no need to hold all these. What do you have in mind?

what is the scoop on the Admiral Shares, is that something to consider ?

Admiral shares are lower cost shares of the same funds as Investor shares. When you get over the minimum needed, things change to Admiral shares. But they are not often available inside a 403b.

soccerrules
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Re: We have a lot going on .... Input Requested.

Post by soccerrules » Mon Apr 10, 2017 1:35 pm

retiredjg wrote:
soccerrules wrote:I do not believe we have any losses from previous years not recognized, but I believe there may be some smaller losses baked into the 2 taxable accounts currently. I'll look. The net totals were $7500 ST and $48K LT.

I think I might keep the shares with short term gains until they become long term gains. Lower taxes.
It looks like i have about $12K in losses baked into LT Cap


I'm inclined to move to Vanguard.
With our current assets of $950K ($406K Taxable and $544 Tax deferred) looking at a 65/35 or 60/40 stocks/bonds with 10-20% International exposure. Thoughts on this as a starting point.

45% Vanguard Total Stock Market Index Fund I.S.(VTSMX)
20% Vanguard Total International Stock Fund I.S. (VGTSX)
35% Vanguard Total Bond Market Index Fund I.S. (VBMFX)

Well, this is fine if you have those funds available. You don't want the total bond market in taxable.
Noted. I am looking to move "In-Kind" to Vanguard and then adjust to 3 Fund considering tax consequences to sell from Taxable account.

75% of our new additions ($24K) will be going to 403B Vanguard (I think Target 2030 Fund, need to look but these are current %'s)
5% Vanguard International Value Inv VTRIX .43% ER
16% Vanguard S&P 500 Inv VFINX .16% ER
5% Vanguard Wellington Inv VWELX .25 % ER
71% VANGUARD INTERMEDIATE-TERM BOND INDEX FUND INVESTO VBIIX .16% ER
2% Vanguard Prime Money Market Inv VMMXX .16% ER

There is really no need to hold all these. What do you have in mind?
I believe these are the holdings in 403B Target 2025-2028 account

Thanks Retiredjg for the insight. Still trying to get my brain around everything. I guess I need to pull the trigger and get it away from advisor (1% savings) and then adjust over time to reduce the ER's.
Don't let your outflow exceed your income or your upkeep will be your downfall.

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Re: We have a lot going on .... Input Requested.

Post by retiredjg » Mon Apr 10, 2017 1:43 pm

soccerrules wrote:I believe these are the holdings in 403B Target 2025-2028 account

I doubt it. They are all Vanguard funds, but the Vanguard Target funds do not hold any of the listed funds.

soccerrules
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Re: We have a lot going on .... Input Requested.

Post by soccerrules » Mon Apr 10, 2017 1:45 pm

djpeteski wrote:Congratulations on being pretty dang good with money. Your net worth is around 1.3 million at a pretty young age and I bet you have colleagues that are flat out broke.
Thanks for the compliment, but I feel like I'm behind (maybe online BH wise), but probably know I'm really not.
You have a car loan for 12K, and a home loan for 106K, and 407K in taxable investments. Be done with that. By the end of the month have no debt and 289K in taxable. Your life got a bit simpler and you just found a risk free investment.

I have been mulling over this especially the mortgage. I have a strong desire to be debt free. I would save $15K in interest by paying mortgage off early and then be able to put that $1500/mo into 401K, lowering my taxes.
Don't let your outflow exceed your income or your upkeep will be your downfall.

soccerrules
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Re: We have a lot going on .... Input Requested.

Post by soccerrules » Mon Apr 10, 2017 1:46 pm

retiredjg wrote:
soccerrules wrote:I believe these are the holdings in 403B Target 2025-2028 account

I doubt it. They are all Vanguard funds, but the Vanguard Target funds do not hold any of the listed funds.

10-4, I'll check it.
Don't let your outflow exceed your income or your upkeep will be your downfall.

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Re: We have a lot going on .... Input Requested.

Post by retiredjg » Mon Apr 10, 2017 2:05 pm

I suppose it is possible for your 403b to have some weird conglomeration target fund series of it's own, made up of Vanguard funds. Can't say that I've seen it done, especially with a value tilt. And a combination of a balanced fund and individual funds. But I don't think I've ever seen one with a 3 year range either ('25 to '28).

If you find out your 403b really does have a target series made up of those funds, I'd be interested in hearing about it.

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Re: We have a lot going on .... Input Requested.

Post by dratkinson » Mon Apr 10, 2017 4:22 pm

Option: Municipal bond fund. If you need/want bonds in taxable in your tax brackets (28% fed, 0% state), many advise using an intermediate-term national municipal bond fund. Why?
--It's good diversification---provides beneficial exposure to a new market segment.
--IT bond funds are reported to have the higher risk-adjusted total return.
--"Daily accrual" muni funds (not ETFs) exempted from IRS 6-mo holding period requirement, so are easily another tier of your EFs.
--Easily substitutes for TBM so you can extend your 3-fund investing into your taxable account.

Vanguard's IT national muni fund is VWITX. It will be converted to Admiral shares (VWIUX) after you have $50K. Both are daily accrual.


Funds in taxable. For funds in your taxable account, it is recommended that you (1) try to use unique funds---not duplicated in any other family account, (2) don't reinvest distributions, and (3) select the "specific ID" method of selling. Why? These steps help reduce the possibility of inadvertently purchasing "replacement shares" (triggers IRS wash sale issue) and makes tax loss harvesting (TLHing) easier.


Suggest reading. finding the Wiki topic on recommended "books" (search term) and reading these:
--The Boglehead's Guide to Investing. Why? It covers the same material as the Wiki, but in a structured walk-through.
--Swedroe's bond book. Why? So you know what bond funds to avoid, and how to use the correct bond funds.

Get the books from your local library.
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

soccerrules
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Re: We have a lot going on .... Input Requested.

Post by soccerrules » Mon Apr 10, 2017 4:47 pm

retiredjg wrote:I suppose it is possible for your 403b to have some weird conglomeration target fund series of it's own, made up of Vanguard funds. Can't say that I've seen it done, especially with a value tilt. And a combination of a balanced fund and individual funds. But I don't think I've ever seen one with a 3 year range either ('25 to '28).

If you find out your 403b really does have a target series made up of those funds, I'd be interested in hearing about it.


You are correct, it was a selection of individual funds to balance our overall AA. The Target fund is actually in my new 401K, need to simplify. :shock:
Don't let your outflow exceed your income or your upkeep will be your downfall.

soccerrules
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Re: We have a lot going on .... Input Requested.

Post by soccerrules » Mon Apr 10, 2017 4:51 pm

dratkinson wrote:Option: Municipal bond fund. If you need/want bonds in taxable in your tax brackets (28% fed, 0% state), many advise using an intermediate-term national municipal bond fund. Why?
--It's good diversification---provides beneficial exposure to a new market segment.
--IT bond funds are reported to have the higher risk-adjusted total return.
--"Daily accrual" muni funds (not ETFs) exempted from IRS 6-mo holding period requirement, so are easily another tier of your EFs.
--Easily substitutes for TBM so you can extend your 3-fund investing into your taxable account.

Vanguard's IT national muni fund is VWITX. It will be converted to Admiral shares (VWIUX) after you have $50K. Both are daily accrual.


Funds in taxable. For funds in your taxable account, it is recommended that you (1) try to use unique funds---not duplicated in any other family account, (2) don't reinvest distributions, and (3) select the "specific ID" method of selling. Why? These steps help reduce the possibility of inadvertently purchasing "replacement shares" (triggers IRS wash sale issue) and makes tax loss harvesting (TLHing) easier.


Suggest reading. finding the Wiki topic on recommended "books" (search term) and reading these:
--The Boglehead's Guide to Investing. Why? It covers the same material as the Wiki, but in a structured walk-through.
--Swedroe's bond book. Why? So you know what bond funds to avoid, and how to use the correct bond funds.

Get the books from your local library.


dratkinson-- thanks for info and input. I have one of the Boglehead books but read it 9-12 months ago without "knowledge" and set it down. Need to re-read and grab a few of the others on the recommendation list.
Don't let your outflow exceed your income or your upkeep will be your downfall.

soccerrules
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Re: We have a lot going on .... Input Requested.

Post by soccerrules » Wed Apr 26, 2017 12:58 pm

djpeteski wrote: You do have a lot going on how about simplifying some things?

You have a car loan for 12K, and a home loan for 106K, and 407K in taxable investments. Be done with that. By the end of the month have no debt and 289K in taxable. Your life got a bit simpler and you just found a risk free investment.
DJ-
This has been on my mind the last few weeks. Paying off the car and house would free up $2000/mo. I am low on my 401K contributions currently and I could funnel that money into 401K thus reducing my taxable income and dropping me below the Roth threshold as well.
Win (debt free, not paying interest)
Win (increase 401K contributions, lowering taxable income an additional $18-20K year)
Win (under Income threshold for Roth contributions)

Other than considering the tax hit on selling from the taxable account, am I missing something ? It seems like a positive cascading effect.
Don't let your outflow exceed your income or your upkeep will be your downfall.

krow36
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Re: We have a lot going on .... Input Requested.

Post by krow36 » Wed Apr 26, 2017 1:42 pm

If her Vanguard 403b is with a K-12 school district, it would be Vanguard's generic 403b plan which uses Investor class funds, not Admiral class. There's a $15/year per fund and a limit of 5 funds. So it makes sense to use a single Target Retirement or Life Strategy fund. The fee is waived if the family's household total Vanguard balance is over $50k.
Choose your investments. You may select up to five Vanguard funds for your account. Refer to the enclosed fund prospectus(es) or go to vanguard.com for fund names, numbers, and minimum investment amounts. Be sure the funds you want are currently open to new investors.
We charge participants a $15 annual recordkeeping fee (i.e., account service fee) for each mutual fund they hold in their Vanguard 403(b)(7) account. We’ll withdraw the fee directly from the fund accounts in late summer. This fee doesn’t apply
to Flagship, Voyager Select, or Voyager Services clients. (If you have a 403(b)(7) account, you must have an additional Vanguard mutual fund account relationship to qualify for these services.)
https://personal.vanguard.com/pdf/0020.pdf?2210110187

soccerrules
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Re: We have a lot going on .... Input Requested.

Post by soccerrules » Wed Apr 26, 2017 3:03 pm

krow36 wrote:If her Vanguard 403b is with a K-12 school district, it would be Vanguard's generic 403b plan which uses Investor class funds, not Admiral class. There's a $15/year per fund and a limit of 5 funds. So it makes sense to use a single Target Retirement or Life Strategy fund. The fee is waived if the family's household total Vanguard balance is over $50k.
Choose your investments. You may select up to five Vanguard funds for your account. Refer to the enclosed fund prospectus(es) or go to vanguard.com for fund names, numbers, and minimum investment amounts. Be sure the funds you want are currently open to new investors.
We charge participants a $15 annual recordkeeping fee (i.e., account service fee) for each mutual fund they hold in their Vanguard 403(b)(7) account. We’ll withdraw the fee directly from the fund accounts in late summer. This fee doesn’t apply
to Flagship, Voyager Select, or Voyager Services clients. (If you have a 403(b)(7) account, you must have an additional Vanguard mutual fund account relationship to qualify for these services.)
https://personal.vanguard.com/pdf/0020.pdf?2210110187
Thanks krow36. I have recently moved her balance and contributions to a single Target Retirement Fund. Good to know.
Don't let your outflow exceed your income or your upkeep will be your downfall.

Inframan4712
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Re: We have a lot going on .... Input Requested.

Post by Inframan4712 » Wed Apr 26, 2017 3:23 pm

soccerrules wrote:
djpeteski wrote: You do have a lot going on how about simplifying some things?

You have a car loan for 12K, and a home loan for 106K, and 407K in taxable investments. Be done with that. By the end of the month have no debt and 289K in taxable. Your life got a bit simpler and you just found a risk free investment.
DJ-
This has been on my mind the last few weeks. Paying off the car and house would free up $2000/mo. I am low on my 401K contributions currently and I could funnel that money into 401K thus reducing my taxable income and dropping me below the Roth threshold as well.
Win (debt free, not paying interest)
Win (increase 401K contributions, lowering taxable income an additional $18-20K year)
Win (under Income threshold for Roth contributions)

Other than considering the tax hit on selling from the taxable account, am I missing something ? It seems like a positive cascading effect.
LOSS: tax hit
LOSS: decrease in taxable account - missing out on future gains on that money.
LOSS: losing out on tax deduction for mortgage - which also lowers your taxable income like a 401k contribution does.
LOSS: 106k tied up in illiquid investment. Very painful to get back out once you retire

I swear some bogleheads would pay off a 0% mortgage. 4.125% is not terrible. I would only pay it off if variable interest rate.

Your real problem is not your mortgage. It is your expense ratios and 1% fee and any tax-inefficient investments. But you know that.

And possibly your spending. You have an income of $200k and you should be able to fully fund your 401k on that amount.

soccerrules
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Re: We have a lot going on .... Input Requested.

Post by soccerrules » Wed Apr 26, 2017 4:00 pm

Inframan4712 wrote:
soccerrules wrote:
djpeteski wrote: You do have a lot going on how about simplifying some things?

You have a car loan for 12K, and a home loan for 106K, and 407K in taxable investments. Be done with that. By the end of the month have no debt and 289K in taxable. Your life got a bit simpler and you just found a risk free investment.
DJ-
This has been on my mind the last few weeks. Paying off the car and house would free up $2000/mo. I am low on my 401K contributions currently and I could funnel that money into 401K thus reducing my taxable income and dropping me below the Roth threshold as well.
Win (debt free, not paying interest)
Win (increase 401K contributions, lowering taxable income an additional $18-20K year)
Win (under Income threshold for Roth contributions)

Other than considering the tax hit on selling from the taxable account, am I missing something ? It seems like a positive cascading effect.
LOSS: tax hit
LOSS: decrease in taxable account - missing out on future gains on that money.
LOSS: losing out on tax deduction for mortgage - which also lowers your taxable income like a 401k contribution does.
LOSS: 106k tied up in illiquid investment. Very painful to get back out once you retire

I swear some bogleheads would pay off a 0% mortgage. 4.125% is not terrible. I would only pay it off if variable interest rate.

Your real problem is not your mortgage. It is your expense ratios and 1% fee and any tax-inefficient investments. But you know that.

And possibly your spending. You have an income of $200k and you should be able to fully fund your 401k on that amount.
Inframan- Thanks for the input, food for thought.
Don't let your outflow exceed your income or your upkeep will be your downfall.

bloom2708
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Re: We have a lot going on .... Input Requested.

Post by bloom2708 » Wed Apr 26, 2017 4:01 pm

Inframan4712 wrote:
LOSS: tax hit
LOSS: decrease in taxable account - missing out on future gains on that money.
LOSS: losing out on tax deduction for mortgage - which also lowers your taxable income like a 401k contribution does.
LOSS: 106k tied up in illiquid investment. Very painful to get back out once you retire

I swear some bogleheads would pay off a 0% mortgage. 4.125% is not terrible. I would only pay it off if variable interest rate.

Your real problem is not your mortgage. It is your expense ratios and 1% fee and any tax-inefficient investments. But you know that.

And possibly your spending. You have an income of $200k and you should be able to fully fund your 401k on that amount.
Each of your "LOSS" also has a flip side or a "but".

Interest not paid
avoiding big losses in taxable account, gains are not guaranteed
What if the OP is below or just over the standard deduction? No to minimal tax savings
You need a place to live, a paid off house > a mortgaged house. People sell houses daily.

I vote to pay them off as long as you don't plan to borrow again. I would pay off a 0% mortgage. :shock:
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

Inframan4712
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Re: We have a lot going on .... Input Requested.

Post by Inframan4712 » Wed Apr 26, 2017 4:15 pm

bloom2708 wrote:
What if the OP is below or just over the standard deduction? No to minimal tax savings
You need a place to live, a paid off house > a mortgaged house. People sell houses daily.

I vote to pay them off as long as you don't plan to borrow again. I would pay off a 0% mortgage. :shock:
Just about everyone with $200k in income is going to be well above the standard deduction. State income tax vs sales tax in a no-state-tax state, charitable deductions, property tax on house and vehicles, etc.

It's mind-boggling that someone (and you aren't alone, I'm sure) would pay off a 0% mortgage. At the very least, one could put that in a 5 year CD at 2.25%. On a $100k, that's more than $10 thousand dollars over that 5 year period! Risk-free.

The real eye-opener for me was putting every inflow and outflow into a spreadsheet that also allows me to track my net worth. It becomes very clear that a monthly house payment at a low interest rate for a reasonable term decreases your checking account balance but increases your net worth by a significant portion of the payment. As do payments on other low-interest debts such as a 1.75% car loan.

bloom2708
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Re: We have a lot going on .... Input Requested.

Post by bloom2708 » Wed Apr 26, 2017 4:21 pm

Inframan4712 wrote:
bloom2708 wrote:
What if the OP is below or just over the standard deduction? No to minimal tax savings
You need a place to live, a paid off house > a mortgaged house. People sell houses daily.

I vote to pay them off as long as you don't plan to borrow again. I would pay off a 0% mortgage. :shock:
Just about everyone with $200k in income is going to be well above the standard deduction. State income tax vs sales tax in a no-state-tax state, charitable deductions, property tax on house and vehicles, etc.

It's mind-boggling that someone (and you aren't alone, I'm sure) would pay off a 0% mortgage. At the very least, one could put that in a 5 year CD at 2.25%. On a $100k, that's more than $10 thousand dollars over that 5 year period! Risk-free.

The real eye-opener for me was putting every inflow and outflow into a spreadsheet that also allows me to track my net worth. It becomes very clear that a monthly house payment at a low interest rate for a reasonable term decreases your checking account balance but increases your net worth by a significant portion of the payment. As do payments on other low-interest debts such as a 1.75% car loan.
Fair enough. I'll do it my way. You do it your way. Works for all. $200k incomes don't last forever. Stocks don't always go up. Priorities change. Much room for variation in thinking.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

soccerrules
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Re: We have a lot going on .... Input Requested.

Post by soccerrules » Fri May 19, 2017 4:09 pm

Aim, Aim, Aim ........SHOOT!

I've initiated the Vanguard paperwork yesterday to move the money from Advisor (using Schwab) to Vanguard and hope to have transfer completed in a few more days. I've read some of the Wiki's, The Little Book of Common Sense Investing, and All About Asset Allocation. I just started The Bogleheads Guide to Investing. and have Your Money and Your Brain waiting. I know there is overlap in content but I am enjoying the reading and trying to make sure I have the basics down.

I will be back soon with my projected portfolio changes for feedback.

Thanks again for the solid advice thus far.

Off to the Pitch!
Don't let your outflow exceed your income or your upkeep will be your downfall.

Vanguard Fan 1367
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Re: We have a lot going on .... Input Requested.

Post by Vanguard Fan 1367 » Sat May 20, 2017 12:04 pm

soccerrules wrote:Aim, Aim, Aim ........SHOOT!

I've initiated the Vanguard paperwork yesterday to move the money from Advisor (using Schwab) to Vanguard and hope to have transfer completed in a few more days. I've read some of the Wiki's, The Little Book of Common Sense Investing, and All About Asset Allocation. I just started The Bogleheads Guide to Investing. and have Your Money and Your Brain waiting. I know there is overlap in content but I am enjoying the reading and trying to make sure I have the basics down.

I will be back soon with my projected portfolio changes for feedback.

Thanks again for the solid advice thus far.

Off to the Pitch!
I am glad that you pulled the trigger and are going to enjoy the gift that John Bogle gave the investing community in Vanguard.

mmcmonster
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Re: We have a lot going on .... Input Requested.

Post by mmcmonster » Sat May 20, 2017 3:18 pm

Fox wrote:Because I'm a nice, respectful, small-town person, I sent him a polite email informing him of our decision to move our accounts.

I have not gotten any calls or emails to try to persuade me otherwise and I'm simply doing the transfers online through Vanguard and our state 529 plan. I can send you a copy of my email if you PM me.
As a big city guy, I sent my financial advisor an email as well, thanking him for his years of service and informing him that I would be transfering my accounts over to Vanguard as I now had the confidence to manage my own investment portfolio.

As with you, not a single email or phone call from him (or his 'people'). I initiated the transfer from Vanguard and things went fairly smoothly. (A had to talk to an associate of the advisor to liquidate a single position which was not able to be transfered out in-kind from their institution.)

The apprehension of getting a call-back from the advisor was wasted, and they didn't bother me whatsoever. :D I guess a $500k account was not worth his time?

bayview
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Re: We have a lot going on .... Input Requested.

Post by bayview » Sun May 21, 2017 6:58 am

soccerrules wrote:Aim, Aim, Aim ........SHOOT!

I've initiated the Vanguard paperwork yesterday to move the money from Advisor (using Schwab) to Vanguard and hope to have transfer completed in a few more days. I've read some of the Wiki's, The Little Book of Common Sense Investing, and All About Asset Allocation. I just started The Bogleheads Guide to Investing. and have Your Money and Your Brain waiting. I know there is overlap in content but I am enjoying the reading and trying to make sure I have the basics down.

I will be back soon with my projected portfolio changes for feedback.

Thanks again for the solid advice thus far.

Off to the Pitch!
Congratulations!

DH and I are representatives of the small "poor as church mice" demographic here on BH :D, so I only have two comments:

-- I know you have kids, at least two not yet in college, and you will be supplementing your college savings with current income, which is fine. But holy cow, I can't fathom not being able to fully fund both employer retirement accounts on your combined incomes. (I fully fund my TSP at $24k a year on an earned income of $70k plus DH's SS.) Retirement savings come first, before college or anything else. And as you say, that can help with your taxes. As you have both hit the nifty fifties, you should be budgeting $48k a year right off the top into tax-deferred. The money is there, you can find it! You're dreaming of a great early retirement lifestyle, which sounds wonderfully exciting, but I would suggest a cold-eyed examination of your expenses today, cutting back on some frills and flourishes, so that you can lock in those great adventures in the future. Since your home is worth around $350k, it seems like you aren't sucked into the keeping up with the Joneses mentality, so that's great. I think one thing that can happen to those who have had FAs who set up ridiculously complex investments is that there is such a fog around investment finances that it can extend to overall money issues. Just a thought.

-- I noticed that you had Berkshire Hathaway in Taxable 1. BRK is one of the guilty pleasures that BH indexers often hold on to, and you might do the same for a while, as it is almost a mini-index fund in itself. Just factor it into your overall portfolio AA. Or I'll take it, if you like. :greedy

Play on.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

livesoft
Posts: 56558
Joined: Thu Mar 01, 2007 8:00 pm

Re: We have a lot going on .... Input Requested.

Post by livesoft » Sun May 21, 2017 7:36 am

soccerrules wrote:I have posted a thread about 6 mo's ago, howeverTax Filing Status: Married Filing Jointly: combined Income $200-225K.
Tax Rate: 28% Federal, 0% State (Fed effective rate has been less than 15% most years due to itemized deductions; 2016 was a one off year due to job change/seperation pay)
State of Residence: Texas
Age: Him 52, Her 50 (Kids: 21, 19,15)
I didn't go back and look at your old post, but you fit the demographic that we were in almost exactly, so this may be a repeat: Here is a thread on how to pay almost no taxes:
Taxes on a family with $200,000 gross income
Part of the ability to pay no taxes is to invest tax efficiently. You will be able to do that cost effectively now that you have started to switch your investments to Vanguard.

Your family should look at your Form 1040 to check investing tax efficiency. Schedule B should have less than $10 in the top half and the bottom half should have only qualified dividend income. Your Schedule D should have only a net loss. This probably won't be the case this year because you are switching investments, but is something to strive for in the future.

With the savings on taxes and advisor fees, this should free up another $20K to $25K to add to retirement plans without changing your lifestyle.
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dratkinson
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Re: We have a lot going on .... Input Requested.

Post by dratkinson » Sun May 21, 2017 3:50 pm

Topic: Your saving for your kids' education vs for your retirement.

+1 on bayview's comments.

Your kids can get a loan to pay for their education, you can't get a loan to pay for your retirement. (Or they can work PT, or work FT and go to school part time. I did.)

Bottom line. Your kids have more flexibility in paying for their education than you do in saving for your retirement. If you don't do it for yourself. then it won't get done.
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

Vanguard Fan 1367
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Joined: Wed Feb 08, 2017 3:09 pm

Re: We have a lot going on .... Input Requested.

Post by Vanguard Fan 1367 » Sun May 21, 2017 4:01 pm

dratkinson wrote:Topic: Your saving for your kids' education vs for your retirement.

+1 on bayview's comments.

Your kids can get a loan to pay for their education, you can't get a loan to pay for your retirement. (Or they can work PT, or work FT and go to school part time. I did.)

Bottom line. Your kids have more flexibility in paying for their education than you do in saving for your retirement. If you don't do it for yourself. then it won't get done.
Now that I have been involved in several of my kids and their college education I agree with the above advice. The author Larry Burkett said that you shouldn't sacrifice your retirement to pay for college and I can see his wisdom. If someone is college material and motivated there are a number of ways to make that happen without wrecking folks retirement.

soccerrules
Posts: 159
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Re: We have a lot going on .... Input Requested.

Post by soccerrules » Mon May 22, 2017 8:46 am

bayview wrote:
soccerrules wrote:Aim, Aim, Aim ........SHOOT!

I've initiated the Vanguard paperwork yesterday to move the money from Advisor (using Schwab) to Vanguard and hope to have transfer completed in a few more days. I've read some of the Wiki's, The Little Book of Common Sense Investing, and All About Asset Allocation. I just started The Bogleheads Guide to Investing. and have Your Money and Your Brain waiting. I know there is overlap in content but I am enjoying the reading and trying to make sure I have the basics down.

I will be back soon with my projected portfolio changes for feedback.

Thanks again for the solid advice thus far.

Off to the Pitch!
Congratulations!

DH and I are representatives of the small "poor as church mice" demographic here on BH :D, so I only have two comments:

-- I know you have kids, at least two not yet in college, and you will be supplementing your college savings with current income, which is fine. But holy cow, I can't fathom not being able to fully fund both employer retirement accounts on your combined incomes. (I fully fund my TSP at $24k a year on an earned income of $70k plus DH's SS.) Retirement savings come first, before college or anything else. And as you say, that can help with your taxes. As you have both hit the nifty fifties, you should be budgeting $48k a year right off the top into tax-deferred. The money is there, you can find it! You're dreaming of a great early retirement lifestyle, which sounds wonderfully exciting, but I would suggest a cold-eyed examination of your expenses today, cutting back on some frills and flourishes, so that you can lock in those great adventures in the future. Since your home is worth around $350k, it seems like you aren't sucked into the keeping up with the Joneses mentality, so that's great. I think one thing that can happen to those who have had FAs who set up ridiculously complex investments is that there is such a fog around investment finances that it can extend to overall money issues. Just a thought.

-- I noticed that you had Berkshire Hathaway in Taxable 1. BRK is one of the guilty pleasures that BH indexers often hold on to, and you might do the same for a while, as it is almost a mini-index fund in itself. Just factor it into your overall portfolio AA. Or I'll take it, if you like. :greedy

Play on.
Bayview, appreciate the perspective. I will add a little bit of insight and I guess this falls under personal preference and different beliefs and desires.
1) I had 2 in college this past year and now will have 1 for the next 7 years (2 kids).
2) I have stopped a $300/mo 529 contribution mainly because I am not eligible to purchase the same shares my advisor was buying. It would only have added $10K to the account over next 3 years before youngest is set to start college. I do not plan to add additional to 529's. If there is money left in 529's I have documented my cash expenses to withdraw from accounts to a 0 balance.
3) 1st 2 kids are at a private institution, 3rd may follow.
4) We consistently tithe to our church and support other ministries.
5) Don't want our kids to start off life with student debt.
6) I'm OK working an additional 1-2 years to offset these decisions.

Currently I am in expense reduction mode. Changed Auto/Home Insurance, dropping wife's life insurance-reducing mine, looking hard at other area's that we can reduce expenses without giving up our life.

I do seem to find it interesting that a number of BH's don't have children. Having kids or not having kids, changes the game.

Appreciate you and others challenging our situation, it forces me to evaluate and think.
Don't let your outflow exceed your income or your upkeep will be your downfall.

soccerrules
Posts: 159
Joined: Mon Nov 14, 2016 4:01 pm

Re: We have a lot going on .... Input Requested.

Post by soccerrules » Mon May 22, 2017 8:50 am

livesoft wrote:
soccerrules wrote:I have posted a thread about 6 mo's ago, howeverTax Filing Status: Married Filing Jointly: combined Income $200-225K.
Tax Rate: 28% Federal, 0% State (Fed effective rate has been less than 15% most years due to itemized deductions; 2016 was a one off year due to job change/seperation pay)
State of Residence: Texas
Age: Him 52, Her 50 (Kids: 21, 19,15)
I didn't go back and look at your old post, but you fit the demographic that we were in almost exactly, so this may be a repeat: Here is a thread on how to pay almost no taxes:
Taxes on a family with $200,000 gross income
Part of the ability to pay no taxes is to invest tax efficiently. You will be able to do that cost effectively now that you have started to switch your investments to Vanguard.

Your family should look at your Form 1040 to check investing tax efficiency. Schedule B should have less than $10 in the top half and the bottom half should have only qualified dividend income. Your Schedule D should have only a net loss. This probably won't be the case this year because you are switching investments, but is something to strive for in the future.

With the savings on taxes and advisor fees, this should free up another $20K to $25K to add to retirement plans without changing your lifestyle.
Live-
Thanks for the link, TAXES have been on my mind. I do have about $40K in LT Gains and $8K in ST gains that I need to deal with appropriately.
Don't let your outflow exceed your income or your upkeep will be your downfall.

livesoft
Posts: 56558
Joined: Thu Mar 01, 2007 8:00 pm

Re: We have a lot going on .... Input Requested.

Post by livesoft » Mon May 22, 2017 8:58 am

soccerrules wrote:Thanks for the link, TAXES have been on my mind. I do have about $40K in LT Gains and $8K in ST gains that I need to deal with appropriately.
You have 2 adult children. If they are in low tax brackets, then their long-term capital gains tax rate can be 0% for some portion of their LTCG. You can then gift them shares with unrealized gains, they can sell and not pay taxes on the gains. This is tricky because there is a limit to the gains they can have and a few other things. They can use the shares you give them to pay for college, books, room & board, etc. so this is money you would pay for college anyways.

Read up about the the so-called "Kiddie Tax" for more information. Better yet, have your college students do it. They are smart.
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soccerrules
Posts: 159
Joined: Mon Nov 14, 2016 4:01 pm

Re: We have a lot going on .... Input Requested.

Post by soccerrules » Mon May 22, 2017 8:58 am

Vanguard Fan 1367 wrote:
dratkinson wrote:Topic: Your saving for your kids' education vs for your retirement.

+1 on bayview's comments.

Your kids can get a loan to pay for their education, you can't get a loan to pay for your retirement. (Or they can work PT, or work FT and go to school part time. I did.)

Bottom line. Your kids have more flexibility in paying for their education than you do in saving for your retirement. If you don't do it for yourself. then it won't get done.
Now that I have been involved in several of my kids and their college education I agree with the above advice. The author Larry Burkett said that you shouldn't sacrifice your retirement to pay for college and I can see his wisdom. If someone is college material and motivated there are a number of ways to make that happen without wrecking folks retirement.
VF1367-
Thanks for your perspective appearing to be on the backside of raising kids. I do get that I can't borrow for retirement.

I am going to do whatever possible to do both,pay for kids college and save for retirement. If that means I reduce our desired standard of living by $10K a year, then we are willing to do that.
OK off to reduce my current expenses. :D
Don't let your outflow exceed your income or your upkeep will be your downfall.

soccerrules
Posts: 159
Joined: Mon Nov 14, 2016 4:01 pm

Re: We have a lot going on .... Input Requested.

Post by soccerrules » Mon May 22, 2017 9:05 am

livesoft wrote:
soccerrules wrote:Thanks for the link, TAXES have been on my mind. I do have about $40K in LT Gains and $8K in ST gains that I need to deal with appropriately.
You have 2 adult children. If they are in low tax brackets, then their long-term capital gains tax rate can be 0% for some portion of their LTCG. You can then gift them shares with unrealized gains, they can sell and not pay taxes on the gains. This is tricky because there is a limit to the gains they can have and a few other things. They can use the shares you give them to pay for college, books, room & board, etc. so this is money you would pay for college anyways.

Read up about the the so-called "Kiddie Tax" for more information. Better yet, have your college students do it. They are smart.
Thanks for the suggestion, I'll research this.
Don't let your outflow exceed your income or your upkeep will be your downfall.

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