Seeking Investment Advice

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
archer1
Posts: 3
Joined: Wed Jun 14, 2017 9:34 pm

Seeking Investment Advice

Post by archer1 »

Greetings everyone! Just came across this site a few weeks ago and am impressed with the amount of knowledge and interaction. I'm learning a lot and thought I'd share my profile of investments to gain some further insights into how my wife and I can improve our long-term savings and investments. Thanks in advance for your time and expertise.

Personal
Age: mid 30s
Location: Washington DC
Tax Filing: Married jointly, no kids yet
Tax Bracket: 28%
Currently single income

Cash and Debt
Emergency Fund (1% savings): 6 mos.
Cash (.85% money market): $30k
Debt:
  • Credit Cards: $10k (0% 6 mos.)
    Car: $22k (1.9%)
    Mortgage: $380k (3.65%, 60% principal and 26 yrs remaining)
    Medical: $5k (0%)
Taxable Investments (95% stock, 5% bonds)
Fidelity: $15k (75% stocks / 25% cash)

Vanguard: $15k (Mutual Funds with biweekly auto investments of $100)
  • VTSAX 55% ($.15 ER)
    VGTSX 35% ($.18 ER)
    VWAHX 10% ($.19 ER)
Current Retirement Assets (90% stock, 10% bonds)
His Roth IRA (Vanguard): $23k
  • VTSAX 55% ($.04 ER)
    VGTSX 35% ($.18 ER)
    VBMFX 10% ($.15 ER)
Her Roth IRA (Vanguard): $5500
  • Target Retirement Fund 100%
His OLD 401k (Voya): $145k
  • Employer pays all expense / maintenance fees
    Current Investment Election: LifePath (2045) 100%
    401k Investment Options:
    • Stable Value Fund
      Bond Fund (SSFCX)
      S&P 500 Index Fund (SSSVX)
      US Structured Research Strat (TRISX)
      Russell Large Cap Value Index (IRVSX)
      Russell Large Cap Growth Index (IRLNX)
      Russell Small Cap Index (IIRSX)
      Euro Pacific Growth Fund (RERGX)
      EAFE Stock Index (SSILX)
      Real Asset Non-lending Series A
      LifePath XXXX
His NEW 401k (Fidelity): $1k
  • Fidelity Total Market (FSTVX) 55%, 0.045%
    Vanguard International Admirals (VTIAX) 35%, 0.11%
    Vanguard Short-Term Federal Fund Admiral (VSGDX) 10%, 0.10%
Her 401k: None

Contributions
Savings (cash after expenses/investments): $1500 / mo.
Both Roth IRAs: $11000/yr.
401k: 8% (4% employer match)

Questions
1. Regarding the old 401k, should we consider reallocating the fund to 2-3 other available funds? Or should I consider rolling the old into the new 401k? Also, should we increase our 401k contribution?
2. Overall, any areas of improvement or suggestions for maximizing our cash and investments?
Last edited by archer1 on Thu Jun 15, 2017 4:26 pm, edited 2 times in total.
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: Seeking Investment Advice

Post by PFInterest »

if you havent maxed the 401k yet, do that before taxable investing.
pay off your CC and medical debt before taxable investing.
Topic Author
archer1
Posts: 3
Joined: Wed Jun 14, 2017 9:34 pm

Re: Seeking Investment Advice

Post by archer1 »

PFInterest wrote:if you havent maxed the 401k yet, do that before taxable investing.
pay off your CC and medical debt before taxable investing.
Thanks for the advice. I'm hoping to tackle the credit card and medical debt this summer.

With respect to 401k , would it make sense to rollover my old 401k into my new 401k. There aren't any expense fees in the old (Voya) so I'm not sure if my current investment options with Fidelity are more appealing than the Voya LifePath Fund? Any thoughts.
livesoft
Posts: 74525
Joined: Thu Mar 01, 2007 8:00 pm

Re: Seeking Investment Advice

Post by livesoft »

That Voya fund has to have an expense ratio, right? And you are paying it whether you know it or not.
Wiki This signature message sponsored by sscritic: Learn to fish.
Topic Author
archer1
Posts: 3
Joined: Wed Jun 14, 2017 9:34 pm

Re: Seeking Investment Advice

Post by archer1 »

livesoft wrote:That Voya fund has to have an expense ratio, right? And you are paying it whether you know it or not.
I had the same understanding until I called them and they mentioned my former employer was paying for the fees. I looked at my statements for more detail and found this statement.

"According to the plan records, there were no fees deducted from your account during this statement period.
Plan administrative expenses for the preceding statement period were offset by revenue sharing amounts received from the plan's designated investment options."
livesoft
Posts: 74525
Joined: Thu Mar 01, 2007 8:00 pm

Re: Seeking Investment Advice

Post by livesoft »

An expense ratio is not a fee, so when you ask about fees, you get the answer ignoring the expense ratio.

If you have a "Prospectus" for the fund, what does it have written in it?
Wiki This signature message sponsored by sscritic: Learn to fish.
User avatar
dratkinson
Posts: 5198
Joined: Thu Jul 26, 2007 6:23 pm
Location: Centennial CO

Re: Seeking Investment Advice

Post by dratkinson »

The general advice is to invest for retirement in this order:
--401k to get the company match (its free money)
--IRA (probably more and better choices)
--Spousal IRA (if spouse not working, qualifies based on your earned income)
--401k to annual contribution limit (maximize annual tax-deferred space because more is better than less)
--Taxable investments (if you have more to invest after filling annual tax-advantaged space, no annual contribution limit)



Old 401k.
--Can roll your old 401k into your new 401k if new 401k is cheaper.
--Can roll you old 401k into an IRA and choose whatever you want. See: http://www.google.com/search?q=roll+401k+into+IRA
--Can convert old 401k-->IRA-->Roth IRA to tax-shelter future growth. (Convert only a little each year so you don't advance tax brackets.)

Instead of guessing about your ERs, can roll it over into your 401k/IRA and be done with it.



New 401k.

What are the options in your new 401k?

Assuming more tax-advantaged space is better than less, then you want to contribute the maximum to your 401k each year.

If you have the option of after-tax 401k contributions, then can consider that too.
See: https://www.bogleheads.org/wiki/After_tax_401k



IRA.

Backdoor Roth IRA. If the day comes that your increased income prevents you from contributing to a Roth IRA (only a nondeductible traditional IRA), then you can contribute to a backdoor Roth IRA. However, any existing tIRA (created by your old 401k rollover) causes a problem. The solution then is to roll your tIRA into your 401k. Why? No tIRA = no backdoor rIRA problem. In the meantime, you can be converting the tIRA to a rIRA.
See: https://www.bogleheads.org/wiki/Backdoor_Roth_IRA



Taxable investments.

Your VTSAX ER seems a little high.

VWAHX contains an exposure to AMT issues (20%, last I remember reading), so you may be losing some return to taxes. Check your last tax return to see if AMT took a bite. If so then might have better after-tax income using VWITX or VWLTX.

Vanguard's "daily accrual" muni funds are exempt from IRS 6-mo ownership requirement to protect tax-exempt dividends. Meaning: shares can be sold at any time and tax-exempt status is protected, so the fund can do double duty as (1) part of our bond allocation, and as (2) the last/largest tier of our formal emergency funds. Check VWAHX prospectus to see if it's "daily accrual", or not.
See "Loss on mutual fund shares held 6 months or less": https://www.bogleheads.org/wiki/Tax_los ... harvesting



Welcome.
d.r.a., not dr.a. | I'm a novice investor, you are forewarned.
Post Reply