35 year old seeking Roth 401K investment help

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Gregory82
Posts: 4
Joined: Tue Apr 18, 2017 7:28 pm

35 year old seeking Roth 401K investment help

Post by Gregory82 »

Emergency funds: 3 months collected - Savings account. No allocation
Debt: Credit Card - no more that $1500 at any given time.
No mortgage, yet. Currently working on that. Rent expense approx $1200 monthly.
Tax Filing Status: Single
Tax Rate: 28% Federal, 3.75% State
State of Residence: IL
Age: 35
Desired Asset allocation: 80% stocks / 20% bonds (From my research this seems as if its the best option. )
Desired International allocation: xx% of stocks (Unknown territory for me, seeking advise.)

Roth 401k
Expense ratio is 0.05% as of 4/2015
Pricing for NAV currently is 32.69
Salary low 100K with annual raises of approx 5% yearly. Very Stable
10% 401K contribution per month + 4% Company Match quarterly
Included company Pension plan as well. Fully vested


Approx mid 5-figure balance currently in Roth 401K fidelity account. Invested 100% into MSCI US Broad Mkt (Vanguard Target 2045)

No other investments outside of Roth 401K unfortunately.

Investment options offered are as follows:

FID GROWTH CO POOL (Russell 3000 Growth)
US EQUITY FUND (Russell 3000)
US EQUITY INDEX (Russell 3000)
INTERNATIONAL EQ IDX (MSCI AC Wld ex US (N))
INTERNATIONAL EQUITY (MSCI AC Wld ex US (N))
Vanguard Targets with selections for 2030,2040, 2045, 2050..etc
STABLE VALUE FUND (Hueler SV Pooled Fund Index)
GLOBAL BOND FUND (United Air Blended Bd Ind)
GLOBAL BOND INDEX (United Air Blended Bd Ind)

What am I looking for? Not really sure. this 401K stuff has been incredibly overwhelming and while I am starting to understand an average knowledge base, I want to make sure I am invested properly in order to benefit the most in the future. Looking for the best possible investment options for a 35 year old in my income range. recently almost 100% debt free as of year end 2016. Paid 100+K in student loan debt and want to start off on the best foot possible, even if its a little late. (I apologize if that is a little too generic of a goal.)

Thanks in advance
Gregory82
Last edited by Gregory82 on Tue Apr 18, 2017 9:04 pm, edited 3 times in total.
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: 35 year old seeking Roth 401K investment help

Post by PFInterest »

first what are the fees/expense ratios associated with your 401k?
no mortgage?

first would set contributions to max in 401k.
lazylarry
Posts: 498
Joined: Sat Apr 04, 2015 10:35 pm
Contact:

Re: 35 year old seeking Roth 401K investment help

Post by lazylarry »

-need more emergency funds - IMHO 6 months better unless your job is super stable.
-international: 20-40% of equities
-Why are you looking at Roth 401k investments? Unless there is no traditional 401k, which would be weird. You should be investing in 401k like 99.99% chance given your tax bracket.
-would list the expense ratios for each fund. Honestly though I think the targets are good funds and probably the best unless their expense ratios are crazy. They don't cover just US stocks btw, they have domestic/international/bonds. Just make sure you are not looking at the year but are rather looking at the allocation - target 45 only has 10% bonds. Either allocation is fine.
-I'd read the basic boglehead books in the sticky as well, I think it's worth your time.
My profile: https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=86026 | Virtua lBogleheads® Blog: https://virtualbogleheads.wordpress.com/
Topic Author
Gregory82
Posts: 4
Joined: Tue Apr 18, 2017 7:28 pm

Re: 35 year old seeking Roth 401K investment help

Post by Gregory82 »

PFInterest wrote:first what are the fees/expense ratios associated with your 401k?
no mortgage?

first would set contributions to max in 401k.
No mortgage, yet. Currently working to buy a house. (started a little late)

Expense ratio is 0.05% as of 4/2015
Pricing for NAV currently is 32.69

As far as contributions set to max, that would be my max allowable per year, correct?

Thanks in advance.
Topic Author
Gregory82
Posts: 4
Joined: Tue Apr 18, 2017 7:28 pm

Re: 35 year old seeking Roth 401K investment help

Post by Gregory82 »

lazylarry wrote:-need more emergency funds - IMHO 6 months better unless your job is super stable.
-international: 20-40% of equities
-Why are you looking at Roth 401k investments? Unless there is no traditional 401k, which would be weird. You should be investing in 401k like 99.99% chance given your tax bracket.
-would list the expense ratios for each fund. Honestly though I think the targets are good funds and probably the best unless their expense ratios are crazy. They don't cover just US stocks btw, they have domestic/international/bonds. Just make sure you are not looking at the year but are rather looking at the allocation - target 45 only has 10% bonds. Either allocation is fine.
-I'd read the basic boglehead books in the sticky as well, I think it's worth your time.
Job is very stable with expected long-term stability. Still working on saving up a significant amount.
Worked last 3.5 years to pay off a significant amount of debt, which has been paid off in full at year end 2016 (outside of the CC debt listed above)

There is a standard 401K option as well, I was under the assumption the Roth was a better option as I pay the taxes now, correct?

Thank you for the advise. Much appreciated. I will take a look at the boglehead books as well. :)

Greg
Dilbydog
Posts: 99
Joined: Mon May 23, 2016 10:17 pm

Re: 35 year old seeking Roth 401K investment help

Post by Dilbydog »

You want to start contributing to your traditional 401k now, just for the tax benefits. Every dollar you contribute up to the $18k max is a dollar deduction to you taxable income, at the federal level. Have you had a chance to read the forums Wiki?
lazylarry
Posts: 498
Joined: Sat Apr 04, 2015 10:35 pm
Contact:

Re: 35 year old seeking Roth 401K investment help

Post by lazylarry »

Yes at your tax rate, I really doubt that you would have enough saved to be earning enough to warrant a 28% tax rate during retirement. So a traditional 401k is definitely the way to go.
Some links in case you did not see them - they are in the stickies on the forum.
https://www.bogleheads.org/wiki/Getting_started
viewtopic.php?f=1&t=6211
https://www.bogleheads.org/wiki/Three-fund_portfolio
My profile: https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=86026 | Virtua lBogleheads® Blog: https://virtualbogleheads.wordpress.com/
User avatar
Nate79
Posts: 6729
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: 35 year old seeking Roth 401K investment help

Post by Nate79 »

I would not be contributing to a Roth 401k. Traditional is a better choice in your tax bracket unless you expect to have everything a significant pension in retirement. And even then I would fill up a traditional 401k to a certain level depending on the size of the pension.

I would choose the target date fund for simplicity unless there is a decent expense ratio difference between it and the index funds.
Topic Author
Gregory82
Posts: 4
Joined: Tue Apr 18, 2017 7:28 pm

Re: 35 year old seeking Roth 401K investment help

Post by Gregory82 »

Great info guys. Thanks for all your help, it is very appreciated.
Currently planning on reading all the links/wiki/videos right now.

:)
Post Reply