Please Criticize my Funds.

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Bradley37
Posts: 19
Joined: Tue Oct 03, 2017 3:30 pm

Please Criticize my Funds.

Post by Bradley37 » Wed Oct 11, 2017 2:43 pm

Hi, Bogleheads.

I'm new here and really am thankful that i found a forum like this one. I'm so new to investing. Just learned one or two from financial audiobooks and podcasts that I've been listening since spring of this year for my drive to work. I started paying attention to investing probably 18 months ago and it doesn't take a lot to make my head spin with the 'language' of investing :confused. Here's my retirement profile. Please feel free to criticize. I'm not sure I know what i am doing but I'm am very willing to learn. Thank you so much for all your time.

Emergency Funds: 4 months of expenses
Debt: None, renter
Tax Filing Status: Single (No kids)
Tax Rate: 25% Federal, 3.75% State
State of Residence: IL
Age: 44
Desired Asset Allocation: 90% Stocks; 10% Bonds
Desired International Allocation: 20% of stocks
Total Current Portfolio: ~ 240K

Current Retirement Assets

401k Fidelity (Old job, working casual now)
5.4% US Bond Index (FXNAX) (0.025%)
64.9% Fidelity 500 Index Inst Fund (FXSIX) (0.03%)
1.8% Vanguard Small Cap Index Inst Fund (VSCIX) (0.05%)
4.3% Target Retirement 2045 Fund (0.07%)
** match 6%; they're offering Roth 401k**

403b Vanguard (New Job, Full Time)
7.9% Vanguard 500 Index Fund Inv Shares (VFINX) (0.14%)
1.2% Vanguard Long Term Bond Index Fund (VBLTX) (0.15%)
0.7% Vanguard Mid-cap Index Inv. Shares (VIMSX) (0.18%)
0.6% REIT Index Fund Inv Shares (VGSIX) (0.26%)
0.4% Target Retirement 2040 Fund (VFORX) (0.16%)
1.0% Total International Stock Index Fund Inv. Shares (VGTSX) (0.18%)
**match 4% starting 2018**

Roth IRA Vanguard
9.8% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.04%)

Taxable Vanguard
1.9% Life Strategy Growth Fund Inv Shares (VASGX) (0.15%)

HSA
- will start investing on Jan 2018

Frozen Funds from my previous employer (Employer managing this account)
- 8K (did not include in my calculation)


Annual Contributions
$ 3500 401k (6% matching) - part time job
$14500 403b (4% matching starting 2018)
$ 5500 Roth IRA
$ 3400 HSA (including $400 from employer; will start investing Jan 2018)
$ 3600 Taxable


Available Funds:

Funds Available in my 401k Fidelity
Large Cap
FID 500 Index Inst (FXSIX) (0.03)*****
FID Growth CO K (FGCKX) (0.66)
JH DISCPL Value R6 (JDVWX) (0.72)
Mid Cap
Ariel Apprec Inst (CAAIX) (0.82)
Small Cap
Royce Special Eq IS (RSEIX) (1.07)
Vang SM Cap Idx Inst (VSCIX) (0.05)*****
International
Dodge & Cox Intl Stk (DODFX) (0.64)
FID Diversified Intl K (FDIKX) (0.92)
HTFD Intl Sm Co Y (HNSYX) (1.05)
Vang Tot Intl Stk Ad (VTIAX) (0.11)
Blended Investment
PIF DVRSD RA CIT T1 (0.07)
Vang Target 2020 (0.07)
Vang Target 2025 (0.07)
Vang Target 2030 (0.07)
Vang Target 2035 (0.07)
Vang Target 2040 (0.07)
Vang Target 2045 (0.07) 90% stock/ 10% Bonds*****
Vang Target 2050 (0.07)
Vang Target 2055 (0.07)
Vang Target 2060 (0.07)
Vang Target 2065 (0.07)
Vang Target RET (0.07)
Bonds
Drey/s GLBFX Inc Y (DSDYX) (0.46)
FID US Bond Index Inst Premium Class (FXNAX) (0.025)*****
PIM Total RT Inst (PTTRX) (0.51)
Vang St Bond Inx IS (VBITX) (0.05)
Short Term
FID Govt MMkt (SPAXX) (0.42)


Funds Available in my 403b Vanguard
All-in-One Options
Target Retirement 2015 (VTXVX) (0.14)
Target Retirement 2020 (VTWNX) (0.14)
Target Retirement 2025 (VTTVX) (0.14)
Target Retirement 2030 (VTHRX) (0.15)
Target Retirement 2035 (VTTHX) (0.15)
Target Retirement 2040 (VFORX) (0.16) 85% stocks/15% Bonds *****
Target Retirement 2045 (VTIVX) (0.16)
Target Retirement 2050 (VFIFX) (0.16)
Target Retirement 2055 (VFFVX) (0.16)
Target Retirement 2060 (VTTSX) (0.16)
Target Retirement Income (VTINX) (0.13)
Short - Term Reserves
Federal Money Mkt Fund (VMFXX) (0.11)
Prime Money Mkt Fund (VMMXX) (0.16)
Treasury Money Market (VUSXX) (0.09)
Bond Funds
GNMA Fund Inv Shares (VFIIX) (0.21)
High-Yield Corp Fund Inv (VWEHX) (0.23)
I-T Investment-Grade Inv (VFICX) (0.20)
Inflation -Protect Sec Inv (VIPSX) (0.20)
Inter-Term Bond Index Inv (VBIIX) (0.15)
Inter-Term Treasury Inv (VFITX) (0.20)
Long-Term Bond Index (VBLTX) (0.15) *****
Long-Term Invest-Gr Inv (VWESX) (0.22)
Long-Term Treasury Inv (VUSTX) (0.20)
S-T Investment Grade Inv (VFSTX) (0.20)
Short-Term Bond Inex Inv (VBISX) (0.20)
Short-Term Federal Inv (VSGBX) (0.20)
Short-Term Treasury Inv (VFISX) (0.20)
Total Bond Mkt Index Inv (VBMFX) (0.15)
Balanced Funds (Stocks and Bonds)
Balanced Index Fund Inv (VBINX) (0.19)
Convertible Securities (VCVSX) (0.34)
Life Strategy Consrv Grwth (VSCGX) (0.13)
Life Strategy Growth Fund (VASGX) (0.15)
Life Strategy Income Fund (VASIX) (0.12)
Life Strategy Mod Growth (VSMGX) (0.14)
STAR Fund (VGSTX) (0.32)
Wellesley Income Fund Inv (VWINX) (0.22)
Wellington Fund Inv (VWELX) (0.25)
Domestic Stock Funds
500 Index Fund Inv (VFINX) (0.14)*****
Capital Opportunity Inv (VHCOX) (0.45)
Capital Value Fund (VCVLX) (0.25)
Diversified Equity Inv (VDEQX) (0.36)
Dividend Apprec Idx Inv (VDAIX) (0.17)
Dividend Growth Fund (VDIGX) (0.30)
Equity Income Fund Inv (VEIPX) (0.26)
Explorer Fund Investor (VEXPX) (0.46)
Extended Market Index Inv (VEXMX) (0.21)
FTSE Social Index Inv (VFTSX (0.22)
Growth and Income Inv (VQNPX (0.34)
Growth Index Fund Inv (VIGRX) (0.18)
High Dividend Yld Inx Inv (VHDYX) (0.14)
Large-Cap Index Fund Inv (VLACX) (0.18)
Mid-Cap Growth Fund (VMGRX) (0.36)
Mid-Cap Growth Index Inv (VMGIX) (0.19)
Mid-Cap Index Fund Inv (VIMSX) (0.18) *****
Mid-Cap Value Index Inv (VMVIX) (0.19)
Morgan Growth Fund Inv (VMRGX) (0.38)
PRIMECAP Core fund (VPCCX) (0.46)
PRIMECAP Fund Investor (VPMCX) (0.39)
Selected Value Fund (VASVX) (0.36)
Small-Cap Growth Idx Inv (VISGX) (0.19)
Small-Cap Index Fund Inv (NAESX) (0.18)
Small-Cap Value Index (VISVX) (0.19)
Strategic Equity Fund (VSEQX) (0.18)
Strategic Sm-Cap Equity (VSTCX) (0.29)
Total Stock Mkt Idx Inv (VTSMX) (0.15)
US Growth Fund In (VWUSX) (0.46)
US Value Fund (VUVLX) (0.23)
Value Index Fund Inv (VIVAX) (0.18)
Windsor Fund Investor (VWNDX) (0.30)
Widsor II Fund Inv (VWNFX) (0.33)
International Stock Funds
Developed Markets Idx Inv (VDVIX) (0.17)
Emerging Mrkts Stk Idx Inv (VEIEX) (0.32)
European Stock Index Inv (VEURX) (0.26)
FTSE All-World ex-US Inv (VFWIX) (0.23)
FTSE AW xUS Sm-Cp Idx Inv (VFSVX) (0.27)
Global Equity Fund (VHGEX) (0.51)
International Growth Inv (VWIGX) (046)
International Value Fund (VTRIX) (0.43)
International Explorer Fund (VINEX) (0.41)
Pacific Stock Index Inv (VPACX) (0.26)
Total Intl Stock Inv (VGTSX) (0.18) *****
Total World Stock Idx Inv (VTWSX) (0.21)
Specialty Stocks
Energy Fund Investor (VGENX) (0.41)
Health Care Fund Inv (VGHCX) (0.37)
Precious Metals & Mining (VGPMX (0.43)
REIT Index Fund Inv (VGSIX) (0.26) *****

***** - Funds I own


Funds Available in my HSA
Large Cap
American Funds Invmt Co of Amer (AICFX) (0.69)
BlackRock Equity Dividend* (MDDVX) (0.97)
Franklin Growth* (FKGRX) (0.90)
Vanguard 500 Index (VFIAX) (0.04)
Mid Cap
Dreyfus Opportunistic Midcap Value* (DMCVX) (1.21)
Vanguard Mid Cap Index (VIMAX) (0.06)
Small Cap
Janus Henderson Venture* (JVTAX) (1.04)
PIMCO StocksPLUS Small* (PCKAX) (1.13)
Vanguard Small Cap Index (VSMAX) (0.06)
International
American Funds New Perspective* (NPFFX) (0.84)
Vanguard Total Intl Stock Index (VGTSX) (0.18)
Fixed Income
Loomis Sayles Core Plus Bond* (NEFRX) (0.73)
PIMCO Total Return* (PTTAX) (0.86)
Franklin High Income* (FHAIX) (0.79)
Lifestyle
MFS Conservative Allocation* (MACFX) (0.94)
MFS Moderate Allocation* (MAMAX) (0.99)
MFS Growth Allocation* (MAGWX) (1.06)
Specialty
Cohen & Steers Real Estate Securities (CSEIX) (1.19)
Money Market
PIMCO Government Money Market (AMAXX) (0.33)

* - Load Waived

Questions:
1. What's the best choice of fund for my HSA? I would like to have 1 fund for simplicity.
2. VTIAX (0.11%) in Fidelity vs VGTSX (0.18%) in Vanguard. I didn't realized that I can save more if i bought VTIAX. What's the best approach? I'm thinking of unloading VGTSX and put the funds to VBLTX, buy VTIAX and concentrate on funding it with 80% of $3500 and 20% of $3500 to VSCIX.
3. My casual job offers Roth 401K, does it makes sense to participate in it or just stick to Traditional 401K?
4. My Target Retirement plans, should I just leave it? It looks like it's redundant and overlaps with my other funds, i choose it when i don't have any idea yet about investing.
5. Can anybody please comment about my taxable account? It has bonds on it. I just learned from this site to keep bonds on tax differed accounts.

mega317
Posts: 1263
Joined: Tue Apr 19, 2016 10:55 am

Re: Please Criticize my Funds.

Post by mega317 » Wed Oct 11, 2017 3:50 pm

Bradley37 wrote:
Wed Oct 11, 2017 2:43 pm
Please Criticize my Funds.
They stink! Just kidding you're doing ok.

Here is my most important point: I think 90/10 is WAY too aggressive for someone your age. I would suggest something like 30% bonds minimum.

Overall you have some overlap and complexity that you don't need. Why hold 1.8% small cap and 0.7% mid cap? You don't have nearly 20% of stocks international.
Questions:
1. What's the best choice of fund for my HSA? I would like to have 1 fund for simplicity.
2. VTIAX (0.11%) in Fidelity vs VGTSX (0.18%) in Vanguard. I didn't realized that I can save more if i bought VTIAX. What's the best approach? I'm thinking of unloading VGTSX and put the funds to VBLTX, buy VTIAX and concentrate on funding it with 80% of $3500 and 20% of $3500 to VSCIX.
3. My casual job offers Roth 401K, does it makes sense to participate in it or just stick to Traditional 401K?
4. My Target Retirement plans, should I just leave it? It looks like it's redundant and overlaps with my other funds, i choose it when i don't have any idea yet about investing.
5. Can anybody please comment about my taxable account? It has bonds on it. I just learned from this site to keep bonds on tax differed accounts.
1. Are you using the HSA to pay medical expenses or are you paying out of pocket and saving the HSA for retirement?
2. 0.07% ER doesn't move the needle for me. Do whatever is most convenient. Your plan seems fine.
3. This is a complex question but traditional is right for most people. Do you think you'll be in a higher tax bracket in retirement?
4. Agree there is overlap here. If it were me I would clean it up so you don't have any funds of funds, and I'd also get rid of all those holdings of less than 2%.
5. Yeah I would switch the taxable to stock index fund(s) unless you have large capital gains taxes to pay.

User avatar
Duckie
Posts: 5135
Joined: Thu Mar 08, 2007 2:55 pm

Re: Please Criticize my Funds.

Post by Duckie » Wed Oct 11, 2017 7:08 pm

Bradley37, welcome to the forum.
Bradley37 wrote:Age: 44
Desired Asset Allocation: 90% Stocks; 10% Bonds
At age 44 only 10% bonds is very, very aggressive. I'd increase that to 30% bonds.
Desired International Allocation: 20% of stocks
Vanguard has found between 20% and 40% of stocks in international to be the "sweet spot". See the Vanguard paper link and the discussion. I usually split the difference and recommend 30% of stocks. Your 20% is reasonable.
Frozen Funds from my previous employer (Employer managing this account)
- 8K (did not include in my calculation)
Are these taxable or tax-sheltered?
Funds Available in my 401k Fidelity
The best options are:
  • FID 500 Index Inst (FXSIX) (0.03) -- Large caps, 80% of US stocks
  • Vang SM Cap Idx Inst (VSCIX) (0.05) -- Small caps, 14% of US stocks
  • Vang Tot Intl Stk Ad (VTIAX) (0.11) -- Complete international stocks
  • FID US Bond Index (FXNAX) (0.025) -- US bonds
Funds Available in my 403b Vanguard
The best options are:
  • Total Stock Mkt Idx Inv (VTSMX) (0.15) -- Complete US stocks
  • REIT Index Fund Inv (VGSIX) (0.26) -- US REITs (if you want to overweight them)
  • Total Intl Stock Inv (VGTSX) (0.18) -- Complete international stocks
  • Total Bond Mkt Index Inv (VBMFX) (0.15) -- US bonds
Funds Available in my HSA
The best options are:
  • Vanguard 500 Index (VFIAX) (0.04) -- Large caps, 80% of US stocks
  • Vanguard Mid Cap Index (VIMAX) (0.06) -- Mid caps, 6% of US stocks
  • Vanguard Small Cap Index (VSMAX) (0.06) -- Small caps, 14% of US stocks
  • Vanguard Total Intl Stock Index (VGTSX) (0.18) -- Complete international stocks
What's the best choice of fund for my HSA? I would like to have 1 fund for simplicity.
If you only want one fund then pick 500 Index.
VTIAX (0.11%) in Fidelity vs VGTSX (0.18%) in Vanguard. I didn't realized that I can save more if i bought VTIAX. What's the best approach? I'm thinking of unloading VGTSX and put the funds to VBLTX, buy VTIAX and concentrate on funding it with 80% of $3500 and 20% of $3500 to VSCIX.
Put all your international AA in the Fidelity 401k. Put all your bond AA there also. The remainder will be 85% 500 Index and 15% Small Cap Index.
My casual job offers Roth 401K, does it makes sense to participate in it or just stick to Traditional 401K?
The choice between pre-tax and Roth is affected by your current tax rate versus your tax rate when retired. There are two articles by tfb about this:
My Target Retirement plans, should I just leave it? It looks like it's redundant and overlaps with my other funds, i choose it when i don't have any idea yet about investing.
Get rid of all the balanced funds (funds holding both stocks and bonds). They complicate things.
Can anybody please comment about my taxable account? It has bonds on it. I just learned from this site to keep bonds on tax differed accounts.
Sell the LifeStrategy fund and buy Total Stock Market.

The following example has an AA of 70% stocks, 30% bonds, with 20% of stocks in international. That breaks down to 56% US stocks, 14% international stocks, and 30% bonds. You could have:

Taxable at Vanguard -- 2%
2% (VTSMX) Vanguard Total Stock Market Index Fund Investor Shares (0.15%)

401k at Fidelity -- 76%
27% (FXSIX) Fidelity 500 Index Fund Institutional Class (0.03%)
5% (VSCIX) Vanguard Small-Cap Index Fund Institutional Shares (0.05%)
14% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)
30% (FXNAX) Fidelity U.S. Bond Index Fund Institutional Premium Class (0.025%)

403b at Vanguard -- 12%
12% (VTSMX) Vanguard Total Stock Market Index Fund Investor Shares (0.15%)

Roth IRA at Vanguard -- 10%
5% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)
5% (VGSLX) Vanguard REIT Index Fund Admiral Shares (0.12%)

HSA -- 0%
0% (VFIAX) Vanguard 500 Index Fund Admiral Shares (0.04%)

My comments:
  • This puts REITs in the Roth IRA because it has cheaper Admiral class shares. If you don't want REITs just make the Roth IRA all Total Stock Market.
  • If you use only VFIAX in the HSA then eventually you'll have to consider that when figuring the amount of small-caps in your 401k at Fidelity. It won't matter for a few years.
Something to think about.

User avatar
ruralavalon
Posts: 11896
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Please Criticize my Funds.

Post by ruralavalon » Wed Oct 11, 2017 7:27 pm

Welcome to the forum :) .

It's good to see that you are debt free, and using low expense ratio mutual funds.

You have some good low expense ratio funds offered in both of your work-based accounts, you are fortunate.


Asset allocation.
Bradley37 wrote:
Wed Oct 11, 2017 2:43 pm
Age: 44
Desired Asset Allocation: 90% Stocks; 10% Bonds
Desired International Allocation: 20% of stocks
In my opinion an asset allocation using about 30% bonds would be more reasonable.

In my opinion 20% of stocks in international stocks is within the range of what you is reasonable.

That works out to about 30% bonds, 15% international stocks, and 55% domestic stocks.


Fund selection.
In selecting funds strive for a good combination of broad diversification (to decrease your risk) and low expense ratios (to increase your net returns). To achieve this I suggest using a three-fund type portfolio. Please see the wiki article "three-fund portfolio" and the forum discussion "the three-fund portfolio".

Domestic stocks. I suggest using a total stock market index fund for domestic stocks whenever available. If not available then a S&P 500 index fund is good enough for domestic stocks. An S&P 500 index fund covers 81% of the domestic stock market. In the 25 years since the creation of the first total stock market index fund the two types of fund have had almost identical performance. So adding some small-cap and more mid-cap stocks trying to mimic a total stock market index fund has historically added little in terms of performance.

If you want to add small-cap and more mid-cap stocks, then an 82/18 mix of S&P 500/small-cap funds will mimic the content of a total stock market index fund. Please see the wiki article "approximating total stock market".

International stocks. I suggest using Vanguard Total International Stock Index Fund for international stocks. That fund is very diversified, it covers both larger and smaller companies in both emerging and developed markets.

Bonds. I suggest using an intermediate-term bond fund like Vanguard Total Bond Market Index Fund, rather than a long-term bond fund. A long-term bond fund is riskier than an intermediate-term bond fund. Vanguard Total Bond Market Index Fund used the Bloomberg Barclays U.S. Aggregate Float Adjusted Bond Index, the broadest most diversified U.S. bond index.

It's helpful to have all three basic asset types in the work-based accounts, in order to make portfolio management and rebalancing easy.


Example portfolio.
Here is an example portfolio which you could consider.This is a three-fund type portfolio. The asset allocation is about 30% bonds, 15% international stocks, and 55% domestic stocks.

401k @ Fidelity (Old job, working casual now; 76% of current portfolio)
39%, Fidelity 500 Index Fund Institutional (FXSIX) (0.03%)
00%, Vanguard Small Cap Index Fund Institutional (VSCIX) (0.05%) (optional)
11%, Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.12%
26%, Fidelity U.S. Bond Index Fund Institutional Premium Class (FXNAX) ER 0?025%


403b @ Vanguard (New Job, Full Time; 12% of current portfolio)
04%, Vanguard 500 Index Fund Investor Shares (VFINX) (0.14%)
00%, Vanguard Small-cap Index Fund Investor Shares (NAESX) ER 0.18% (optional)
04%, Vanguard Total International Stock Index Fund Investor Shares (VGTSX) (0.18%)
04%, Vanguard Total Bond Market Index Fund Investor Shares (VBMFX) ER 0.15%


Roth IRA @ Vanguard (10% of current portfolio)
10% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.04%)

Taxable account @ Vanguard (02% of current portfolio)
02%, Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%

HSA
00%, Vanguard 500 Index Fund Admiral Shares (VFIAX) ER 0.04%


Contributions.
Bradley37 wrote:Annual Contributions
$ 3500 401k (6% matching) - part time job
$14500 403b (4% matching starting 2018)
$ 5500 Roth IRA
$ 3400 HSA (including $400 from employer; will start investing Jan 2018)
$ 3600 Taxable
I suggest consolidating an additional $3.6k per year to one of the work-based accounts, rather than to a taxable account.

The maximum employee contribution to your work-based accounts is $18k per year total for both accounts. The employers' matching contributions do not count toward that employee maximum.

In general it's better to make maximum contributions to the tax-advantaged accounts before contributing to a taxable account. Please see the wiki article "prioritizing investments".

For most people it probably better to make traditional 401k contributions, for the tax deduction. The exception would be if you will be eligible for a substantial pension.


Rebalancing.
Because the funds will grow at different and unpredictable rates, every year or two you will need to rebalance in order to keep your desired asset allocation. Please see the wiki article "rebalancing". You can easily rebalance simply by exchanging between funds inside the work-based accounts.

. . . . .

I suggest that you read one or two books on general investing. Please see the wiki article "books: recommendations and reviews".

If you have any questions just ask.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

AlohaJoe
Posts: 2636
Joined: Mon Nov 26, 2007 2:00 pm
Location: Saigon, Vietnam

Re: Please Criticize my Funds.

Post by AlohaJoe » Wed Oct 11, 2017 7:48 pm

I would take the comments saying that 90/10 is "very aggressive" for someone your age with a grain of salt. They are recommending bond percentages higher than Vanguard has for its own target date funds. Vanguard would have you at somewhere between 13% and 20%, not that you should believe everything Vanguard says and does. But it is hardly "very aggressive" when you aren't that far off of what $30 billion of target date funds is doing.
it doesn't take a lot to make my head spin with the 'language' of investing
Why don't you just put everything in target date funds, then?

dcarste
Posts: 118
Joined: Mon Apr 27, 2015 4:55 pm

Re: Please Criticize my Funds.

Post by dcarste » Wed Oct 11, 2017 8:17 pm

everyone else already gave you the funds to use.

But you should be IMO 100-your age in bonds...give or take 5 to 10 points.

I'd be 40% bonds at your age and your balance. Have you been battle tested during 2008 with your asset allocation WITH six figures in your account and a 90% allocation to stocks and what did you do?

Just because this time we bounced back fast, within a couple years, there is NO REASON the market can't drop 40% and stay down there for a LONG time. It can be irrational at both tops AND BOTTOMS.

User avatar
Bradley37
Posts: 19
Joined: Tue Oct 03, 2017 3:30 pm

Re: Please Criticize my Funds.

Post by Bradley37 » Wed Oct 11, 2017 8:27 pm

mega317 wrote:
Wed Oct 11, 2017 3:50 pm
Bradley37 wrote:
Wed Oct 11, 2017 2:43 pm
Please Criticize my Funds.
They stink! Just kidding you're doing ok.

Here is my most important point: I think 90/10 is WAY too aggressive for someone your age. I would suggest something like 30% bonds minimum.

Overall you have some overlap and complexity that you don't need. Why hold 1.8% small cap and 0.7% mid cap? You don't have nearly 20% of stocks international.
Questions:
1. What's the best choice of fund for my HSA? I would like to have 1 fund for simplicity.
2. VTIAX (0.11%) in Fidelity vs VGTSX (0.18%) in Vanguard. I didn't realized that I can save more if i bought VTIAX. What's the best approach? I'm thinking of unloading VGTSX and put the funds to VBLTX, buy VTIAX and concentrate on funding it with 80% of $3500 and 20% of $3500 to VSCIX.
3. My casual job offers Roth 401K, does it makes sense to participate in it or just stick to Traditional 401K?
4. My Target Retirement plans, should I just leave it? It looks like it's redundant and overlaps with my other funds, i choose it when i don't have any idea yet about investing.
5. Can anybody please comment about my taxable account? It has bonds on it. I just learned from this site to keep bonds on tax differed accounts.
1. Are you using the HSA to pay medical expenses or are you paying out of pocket and saving the HSA for retirement? I'll be saving my HSA for retirement.
2. 0.07% ER doesn't move the needle for me. Do whatever is most convenient. Your plan seems fine.
3. This is a complex question but traditional is right for most people. Do you think you'll be in a higher tax bracket in retirement? I'll be in a higher tax bracket in retirement i think.
4. Agree there is overlap here. If it were me I would clean it up so you don't have any funds of funds, and I'd also get rid of all those holdings of less than 2%. I'll keep this in mind.
5. Yeah I would switch the taxable to stock index fund(s) unless you have large capital gains taxes to pay. I think this is a good suggestion.

User avatar
Bradley37
Posts: 19
Joined: Tue Oct 03, 2017 3:30 pm

Re: Please Criticize my Funds.

Post by Bradley37 » Wed Oct 11, 2017 8:31 pm

Duckie wrote:
Wed Oct 11, 2017 7:08 pm
Bradley37, welcome to the forum.
Bradley37 wrote:Age: 44
Desired Asset Allocation: 90% Stocks; 10% Bonds
At age 44 only 10% bonds is very, very aggressive. I'd increase that to 30% bonds.
Desired International Allocation: 20% of stocks
Vanguard has found between 20% and 40% of stocks in international to be the "sweet spot". See the Vanguard paper link and the discussion. I usually split the difference and recommend 30% of stocks. Your 20% is reasonable.
Frozen Funds from my previous employer (Employer managing this account)
- 8K (did not include in my calculation)
Are these taxable or tax-sheltered?
Funds Available in my 401k Fidelity
The best options are:
  • FID 500 Index Inst (FXSIX) (0.03) -- Large caps, 80% of US stocks
  • Vang SM Cap Idx Inst (VSCIX) (0.05) -- Small caps, 14% of US stocks
  • Vang Tot Intl Stk Ad (VTIAX) (0.11) -- Complete international stocks
  • FID US Bond Index (FXNAX) (0.025) -- US bonds
Funds Available in my 403b Vanguard
The best options are:
  • Total Stock Mkt Idx Inv (VTSMX) (0.15) -- Complete US stocks
  • REIT Index Fund Inv (VGSIX) (0.26) -- US REITs (if you want to overweight them)
  • Total Intl Stock Inv (VGTSX) (0.18) -- Complete international stocks
  • Total Bond Mkt Index Inv (VBMFX) (0.15) -- US bonds
Funds Available in my HSA
The best options are:
  • Vanguard 500 Index (VFIAX) (0.04) -- Large caps, 80% of US stocks
  • Vanguard Mid Cap Index (VIMAX) (0.06) -- Mid caps, 6% of US stocks
  • Vanguard Small Cap Index (VSMAX) (0.06) -- Small caps, 14% of US stocks
  • Vanguard Total Intl Stock Index (VGTSX) (0.18) -- Complete international stocks
What's the best choice of fund for my HSA? I would like to have 1 fund for simplicity.
If you only want one fund then pick 500 Index.
VTIAX (0.11%) in Fidelity vs VGTSX (0.18%) in Vanguard. I didn't realized that I can save more if i bought VTIAX. What's the best approach? I'm thinking of unloading VGTSX and put the funds to VBLTX, buy VTIAX and concentrate on funding it with 80% of $3500 and 20% of $3500 to VSCIX.
Put all your international AA in the Fidelity 401k. Put all your bond AA there also. The remainder will be 85% 500 Index and 15% Small Cap Index.
My casual job offers Roth 401K, does it makes sense to participate in it or just stick to Traditional 401K?
The choice between pre-tax and Roth is affected by your current tax rate versus your tax rate when retired. There are two articles by tfb about this:
My Target Retirement plans, should I just leave it? It looks like it's redundant and overlaps with my other funds, i choose it when i don't have any idea yet about investing.
Get rid of all the balanced funds (funds holding both stocks and bonds). They complicate things.
Can anybody please comment about my taxable account? It has bonds on it. I just learned from this site to keep bonds on tax differed accounts.
Sell the LifeStrategy fund and buy Total Stock Market.

The following example has an AA of 70% stocks, 30% bonds, with 20% of stocks in international. That breaks down to 56% US stocks, 14% international stocks, and 30% bonds. You could have:

Taxable at Vanguard -- 2%
2% (VTSMX) Vanguard Total Stock Market Index Fund Investor Shares (0.15%)

401k at Fidelity -- 76%
27% (FXSIX) Fidelity 500 Index Fund Institutional Class (0.03%)
5% (VSCIX) Vanguard Small-Cap Index Fund Institutional Shares (0.05%)
14% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)
30% (FXNAX) Fidelity U.S. Bond Index Fund Institutional Premium Class (0.025%)

403b at Vanguard -- 12%
12% (VTSMX) Vanguard Total Stock Market Index Fund Investor Shares (0.15%)

Roth IRA at Vanguard -- 10%
5% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)
5% (VGSLX) Vanguard REIT Index Fund Admiral Shares (0.12%)

HSA -- 0%
0% (VFIAX) Vanguard 500 Index Fund Admiral Shares (0.04%)

My comments:
  • This puts REITs in the Roth IRA because it has cheaper Admiral class shares. If you don't want REITs just make the Roth IRA all Total Stock Market.
  • If you use only VFIAX in the HSA then eventually you'll have to consider that when figuring the amount of small-caps in your 401k at Fidelity. It won't matter for a few years.
Something to think about.
Thanks a lot Duckie. I'm learning a lot. Thanks for your suggestions and the link.

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Bradley37
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Re: Please Criticize my Funds.

Post by Bradley37 » Wed Oct 11, 2017 8:57 pm

Duckie wrote:
Wed Oct 11, 2017 7:08 pm
Bradley37, welcome to the forum.
Bradley37 wrote:Age: 44
Desired Asset Allocation: 90% Stocks; 10% Bonds
At age 44 only 10% bonds is very, very aggressive. I'd increase that to 30% bonds.
Desired International Allocation: 20% of stocks
Vanguard has found between 20% and 40% of stocks in international to be the "sweet spot". See the Vanguard paper link and the discussion. I usually split the difference and recommend 30% of stocks. Your 20% is reasonable.
Frozen Funds from my previous employer (Employer managing this account)
- 8K (did not include in my calculation)
Are these taxable or tax-sheltered?
- I'll have to call my previous employer. Thanks for pointing it out.
Funds Available in my 401k Fidelity
The best options are:
  • FID 500 Index Inst (FXSIX) (0.03) -- Large caps, 80% of US stocks
  • Vang SM Cap Idx Inst (VSCIX) (0.05) -- Small caps, 14% of US stocks
  • Vang Tot Intl Stk Ad (VTIAX) (0.11) -- Complete international stocks
  • FID US Bond Index (FXNAX) (0.025) -- US bonds
Funds Available in my 403b Vanguard
The best options are:
  • Total Stock Mkt Idx Inv (VTSMX) (0.15) -- Complete US stocks
  • REIT Index Fund Inv (VGSIX) (0.26) -- US REITs (if you want to overweight them)
  • Total Intl Stock Inv (VGTSX) (0.18) -- Complete international stocks
  • Total Bond Mkt Index Inv (VBMFX) (0.15) -- US bonds
Funds Available in my HSA
The best options are:
  • Vanguard 500 Index (VFIAX) (0.04) -- Large caps, 80% of US stocks
  • Vanguard Mid Cap Index (VIMAX) (0.06) -- Mid caps, 6% of US stocks
  • Vanguard Small Cap Index (VSMAX) (0.06) -- Small caps, 14% of US stocks
  • Vanguard Total Intl Stock Index (VGTSX) (0.18) -- Complete international stocks
What's the best choice of fund for my HSA? I would like to have 1 fund for simplicity.
If you only want one fund then pick 500 Index.
VTIAX (0.11%) in Fidelity vs VGTSX (0.18%) in Vanguard. I didn't realized that I can save more if i bought VTIAX. What's the best approach? I'm thinking of unloading VGTSX and put the funds to VBLTX, buy VTIAX and concentrate on funding it with 80% of $3500 and 20% of $3500 to VSCIX.
Put all your international AA in the Fidelity 401k. Put all your bond AA there also. The remainder will be 85% 500 Index and 15% Small Cap Index.
My casual job offers Roth 401K, does it makes sense to participate in it or just stick to Traditional 401K?
The choice between pre-tax and Roth is affected by your current tax rate versus your tax rate when retired. There are two articles by tfb about this:
My Target Retirement plans, should I just leave it? It looks like it's redundant and overlaps with my other funds, i choose it when i don't have any idea yet about investing.
Get rid of all the balanced funds (funds holding both stocks and bonds). They complicate things.
Can anybody please comment about my taxable account? It has bonds on it. I just learned from this site to keep bonds on tax differed accounts.
Sell the LifeStrategy fund and buy Total Stock Market.

The following example has an AA of 70% stocks, 30% bonds, with 20% of stocks in international. That breaks down to 56% US stocks, 14% international stocks, and 30% bonds. You could have:

Taxable at Vanguard -- 2%
2% (VTSMX) Vanguard Total Stock Market Index Fund Investor Shares (0.15%)

401k at Fidelity -- 76%
27% (FXSIX) Fidelity 500 Index Fund Institutional Class (0.03%)
5% (VSCIX) Vanguard Small-Cap Index Fund Institutional Shares (0.05%)
14% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)
30% (FXNAX) Fidelity U.S. Bond Index Fund Institutional Premium Class (0.025%)

403b at Vanguard -- 12%
12% (VTSMX) Vanguard Total Stock Market Index Fund Investor Shares (0.15%)

Roth IRA at Vanguard -- 10%
5% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)
5% (VGSLX) Vanguard REIT Index Fund Admiral Shares (0.12%)

HSA -- 0%
0% (VFIAX) Vanguard 500 Index Fund Admiral Shares (0.04%)

My comments:
  • This puts REITs in the Roth IRA because it has cheaper Admiral class shares. If you don't want REITs just make the Roth IRA all Total Stock Market.
  • If you use only VFIAX in the HSA then eventually you'll have to consider that when figuring the amount of small-caps in your 401k at Fidelity. It won't matter for a few years.
Something to think about.
Really appreciate your time.

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Bradley37
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Re: Please Criticize my Funds.

Post by Bradley37 » Wed Oct 11, 2017 9:24 pm

Hi, all. Im struggling on how to reply individually.

@ Mega317. - I'll be using my HSA for retirement.
- I'm not sure if I'll be in a higher tax bracket when i retire, but before retirement, i know i'll be in a higher bracket. :confused
- I'll do your suggestion about my taxable account.

@ Duckie - I have to contact my previous employer about the status of my frozen funds whether it's tax sheltered or not.
- Thank you so much for your suggestions.

@ Ruralavalon - I'll definitely do a lot of reading about a 3 fund portfolio.
- I'm already contributing 18K to both 403b and 401k. Can i contribute 18K to each of these accounts?

@ AlohaJoe - Thanks a lot for the feedback. I am trying to learn about investing.

@ Dcarste - I was not here yet during 2008 in the US but i heard and read a lot about it. I'm an immigrant and just groping around about this investing.

To all of you who replied to my post, thanks a lot for your time.. I learn a lot tonight and I'll continue on learning.

spammagnet
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Re: Please Criticize my Funds.

Post by spammagnet » Wed Oct 11, 2017 11:03 pm

Bradley37 wrote:
Wed Oct 11, 2017 9:24 pm
... I'm already contributing 18K to both 403b and 401k. Can i contribute 18K to each of these accounts?
$18K is an annual total limit, across all accounts. When you hit age 50 you can go up to $24K. Another type of employer-sponsored account (457b) has a separate additional limit but if your employer doesn't offer one, it's a moot point. 457s are available only from government entities and certain non-profits.

IRS.gov: How Much Salary Can You Defer if You’re Eligible for More than One Retirement Plan?

jalbert
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Re: Please Criticize my Funds.

Post by jalbert » Thu Oct 12, 2017 2:50 am

This needs to be greatly simplified.

If you can get a high quality target retirement fund for .07% in the 401K, that is a screaming good deal.

Here is a simple, but very effective approach:

Target Retirement 2035 in both 401K and 403b.

LifeStrategy Moderate Growth or Balanced Index fund (vbiax) in Roth IRA.

VTSAX in taxable account.

Everything is self-managing.
Risk is not a guarantor of return.

sambb
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Re: Please Criticize my Funds.

Post by sambb » Thu Oct 12, 2017 3:04 am

jalbert wrote:
Thu Oct 12, 2017 2:50 am
This needs to be greatly simplified.

If you can get a high quality target retirement fund for .07% in the 401K, that is a screaming good deal.

Here is a simple, but very effective approach:

Target Retirement 2035 in both 401K and 403b.

LifeStrategy Moderate Growth or Balanced Index fund (vbiax) in Roth IRA.

VTSAX in taxable account.

Everything is self-managing.
+1000

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ruralavalon
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Location: Illinois

Re: Please Criticize my Funds.

Post by ruralavalon » Thu Oct 12, 2017 8:40 am

Bradley37 wrote:
Wed Oct 11, 2017 9:24 pm
@ Ruralavalon - I'll definitely do a lot of reading about a 3 fund portfolio.
- I'm already contributing 18K to both 403b and 401k. Can i contribute 18K to each of these accounts?
No, you can contribute a total of $18k/year.

The employer matching contributions do not count toward that maximum, only your employee contributions count.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

bubbly
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Re: Please Criticize my Funds.

Post by bubbly » Thu Oct 12, 2017 12:38 pm

I'm not sure if you are aware but the state tax rate was increased to 4.95%, effective July 1st, 2017. Not that it makes a big difference in the overall scheme of things but just good to know when you notice a discrepancy vs what you expected.

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Bradley37
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Re: Please Criticize my Funds.

Post by Bradley37 » Thu Oct 12, 2017 12:48 pm

bubbly wrote:
Thu Oct 12, 2017 12:38 pm
I'm not sure if you are aware but the state tax rate was increased to 4.95%, effective July 1st, 2017. Not that it makes a big difference in the overall scheme of things but just good to know when you notice a discrepancy vs what you expected.
:oops: Thanks for that info.

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Bradley37
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Re: Please Criticize my Funds.

Post by Bradley37 » Thu Oct 12, 2017 12:56 pm

Duckie wrote:
Wed Oct 11, 2017 7:08 pm
Can anybody please comment about my taxable account? It has bonds on it. I just learned from this site to keep bonds on tax differed accounts.
Sell the LifeStrategy fund and buy Total Stock Market.

Roth IRA at Vanguard -- 10%
5% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)
5% (VGSLX) Vanguard REIT Index Fund Admiral Shares (0.12%)
I need to sell some of my VTSAX to have money to buy REIT in Roth IRA. If I earn some $$$ from selling it, do I have to pay any tax on the profit? Same question for my Taxable account if I sell the life strategy fund. Thanks.

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ruralavalon
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Location: Illinois

Re: Please Criticize my Funds.

Post by ruralavalon » Thu Oct 12, 2017 1:01 pm

Bradley37 wrote:
Thu Oct 12, 2017 12:56 pm
Duckie wrote:
Wed Oct 11, 2017 7:08 pm
Can anybody please comment about my taxable account? It has bonds on it. I just learned from this site to keep bonds on tax differed accounts.
Sell the LifeStrategy fund and buy Total Stock Market.

Roth IRA at Vanguard -- 10%
5% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)
5% (VGSLX) Vanguard REIT Index Fund Admiral Shares (0.12%)
I need to sell some of my VTSAX to have money to buy REIT in Roth IRA. If I earn some $$$ from selling it, do I have to pay any tax on the profit? Same question for my Taxable account if I sell the life strategy fund. Thanks.
An exchange inside an IRA does not create tax liability.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Duckie
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Re: Please Criticize my Funds.

Post by Duckie » Thu Oct 12, 2017 2:09 pm

Bradley37 wrote:I need to sell some of my VTSAX to have money to buy REIT in Roth IRA. If I earn some $$$ from selling it, do I have to pay any tax on the profit?
Not inside an IRA.
Same question for my Taxable account if I sell the life strategy fund.
In a taxable account you may have a capital gain when you sell. Figure your cost basis (what you paid, including any reinvested dividends) and then find out what you could sell it for now. That will give you an idea of the tax-hit.

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dratkinson
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Location: Centennial CO

Re: Please Criticize my Funds.

Post by dratkinson » Thu Oct 12, 2017 7:26 pm

jalbert wrote:
Thu Oct 12, 2017 2:50 am
This needs to be greatly simplified.

If you can get a high quality target retirement fund for .07% in the 401K, that is a screaming good deal.

Here is a simple, but very effective approach:

Target Retirement 2035 in both 401K and 403b.

LifeStrategy Moderate Growth or Balanced Index fund (vbiax) in Roth IRA. Or a target date retirement fund.

VTSAX in taxable account. Or also add a muni bond fund.

Everything is self-managing.
+1

Bonds. I also believe you should have more bonds. Suggest 30% in bonds. Why?
--25-30% is recommended for new investors with unknown risk tolerance.
--Moving from 10% to 30% is a conservative move,
--but 30% bonds fits the aggressive rule-of-thumb "age - 10 in bonds".


Bonds in taxable. The addition of a muni bond fund can help to keep your AA (stocks/bonds) in balance. The TDR funds take care of rebalancing themselves in your tax-advantaged accounts, and you keep your taxable account in balance.

In the 25% fed tax bracket, the only Vanguard muni bond fund that has consistently outperformed TBM (total bond market fund of 3-fund portfolio fame) has been VWLTX (long-term national muni fund).

Note. VWLTX is a "daily accrual" fund, meaning it's exempt from the IRS 6mo holding period requirement to protect tax-exempt dividends. Meaning it's easy to sell shares during an emergency.

See "Loss on mutual fund shares held 6 months or less": https://www.bogleheads.org/wiki/Tax_los ... harvesting


Disclosure. Many prefer shorter-duration muni funds to minimize (interest rate) risk by increased price stability (52wk price spread: VWSTX ~10-cents, VWITX ~50 cents, VWLTX <$1). But I prefer Vanguard's long-term muni fund. Why? When considering total return investing (= share price appreciate + distributions (dividends + capital gains)), the majority of a bond fund's total return comes from dividends. So, within reason and since I'm not selling (so don’t worry too much about share price stability), I prefer more dividends to less.

I do use the daily-accrual VWITX/VWIUX (intermediate-term national muni fund) as the last/largest tier of my formal EFs, home projects, new car, dry powder fund. Why? Thought it's after-tax return is not always as good as TBM in the 25% fed tax bracket, it is better than bank CDs.

But my major muni holdings are in VWLTX/VWLUX and a single-state muni.

I avoid Vanguard's HY muni fund, which has higher SEC yield than VWLTX, because it comes with an AMT (alternative minimum tax) exposures, which I and you are subject to in the 25% fed tax bracket.



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

jalbert
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Re: Please Criticize my Funds.

Post by jalbert » Fri Oct 13, 2017 4:19 pm

dratkinson wrote:
Thu Oct 12, 2017 7:26 pm
+1

Bonds. I also believe you should have more bonds. Suggest 30% in bonds. Why?
--25-30% is recommended for new investors with unknown risk tolerance.
--Moving from 10% to 30% is a conservative move,
--but 30% bonds fits the aggressive rule-of-thumb "age - 10 in bonds".

Bonds in taxable. The addition of a muni bond fund can help to keep your AA (stocks/bonds) in balance. The TDR funds take care of rebalancing themselves in your tax-advantaged accounts, and you keep your taxable account in balance
The OP's taxable space is a very small percentage of assets and has the lowest contribution rate. LifeStrategy Moderate in the Roth account would be 40% in bonds. Add the small allocation to vtsax in a taxable account and bond allocation between the two is still over 30%. If more precise control of AA in the Roth and taxable space is desired, holding a stock index fund in taxable and a 3-fund portfolio in the Roth account would be my preference over holding munis-- capture all of the rebalancing premium in the Roth account. Such an arrangement would also facilitate including REITs in the allocation if desired.
Risk is not a guarantor of return.

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Bradley37
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Re: Please Criticize my Funds.

Post by Bradley37 » Fri Oct 13, 2017 9:07 pm

jalbert wrote:
Fri Oct 13, 2017 4:19 pm
[quote=dratkinson post_id=3570425 time=<a href="tel:1507854401">1507854401</a> user_id=2831]
+1

Bonds. I also believe you should have more bonds. Suggest 30% in bonds. Why?
--25-30% is recommended for new investors with unknown risk tolerance.
--Moving from 10% to 30% is a conservative move,
--but 30% bonds fits the aggressive rule-of-thumb "age - 10 in bonds".

Bonds in taxable. The addition of a muni bond fund can help to keep your AA (stocks/bonds) in balance. The TDR funds take care of rebalancing themselves in your tax-advantaged accounts, and you keep your taxable account in balance
The OP's taxable space is a very small percentage of assets and has the lowest contribution rate. LifeStrategy Moderate in the Roth account would be 40% in bonds. Add the small allocation to vtsax in a taxable account and bond allocation between the two is still over 30%. If more precise control of AA in the Roth and taxable space is desired, holding a stock index fund in taxable and a 3-fund portfolio in the Roth account would be my preference over holding munis-- capture all of the rebalancing premium in the Roth account. Such an arrangement would also facilitate including REITs in the allocation if desired.
[/quote]

What is OP? Forgive my asking.

spammagnet
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Re: Please Criticize my Funds.

Post by spammagnet » Fri Oct 13, 2017 9:38 pm

Bradley37 wrote:
Fri Oct 13, 2017 9:07 pm
What is OP? Forgive my asking.
Original Poster. Forum-speak abbreviation for the person who initiated the topic/question.

Wiki: Abbreviations and Acronyms

jalbert
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Re: Please Criticize my Funds.

Post by jalbert » Fri Oct 13, 2017 10:00 pm

Summarizing, I think a good balance between all-in-one funds and a DIY portfolio would be achieved with:

403b and 401K:
Target Retirement 2035

Taxable:
VTSAX (or VTIAX)

Roth:
VTSAX + VTIAX + VBTLX

Set asset allocation and rebalance in Roth so that the combined allocation of VTSAX (US equity), VTIAX (non-US equity) and VBTLX (bonds) across both accounts achieves the desired ratio of equity and fixed income, and desired percentage of non-US equity.
Risk is not a guarantor of return.

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ruralavalon
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Re: Please Criticize my Funds.

Post by ruralavalon » Sat Oct 14, 2017 5:01 am

In my opinion it is not a good idea to use a balanced fund, like a target retirement fund, in some accounts while using regular funds in other accounts.

The major advantage of a target retirement fund is that it can be a single fund all-in-one portfolio, which requires no attention or management by the investor. You never have to rebalance and don't have to monitor your investment.

If you use a target retirement fund with regular funds you lose that advantage, and it just makes it harder to achieve and keep track of your asset allocation.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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dratkinson
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Re: Please Criticize my Funds.

Post by dratkinson » Sat Oct 14, 2017 9:27 pm

jalbert wrote:
Fri Oct 13, 2017 4:19 pm
dratkinson wrote:
Thu Oct 12, 2017 7:26 pm
+1

Bonds. I also believe you should have more bonds. Suggest 30% in bonds. Why?
--25-30% is recommended for new investors with unknown risk tolerance.
--Moving from 10% to 30% is a conservative move,
--but 30% bonds fits the aggressive rule-of-thumb "age - 10 in bonds".

Bonds in taxable. The addition of a muni bond fund can help to keep your AA (stocks/bonds) in balance. The TDR funds take care of rebalancing themselves in your tax-advantaged accounts, and you keep your taxable account in balance
(1) The OP's taxable space is a very small percentage of assets and has the lowest contribution rate. LifeStrategy Moderate in the Roth account would be 40% in bonds. Add the small allocation to vtsax in a taxable account and bond allocation between the two is still over 30%. (2) If more precise control of AA in the Roth and taxable space is desired, holding a stock index fund in taxable and a 3-fund portfolio in the Roth account would be (3) my preference over holding munis-- capture all of the rebalancing premium in the Roth account. (4) Such an arrangement would also facilitate including REITs in the allocation if desired.
(1) That does make sense for now. But assuming OP's taxable account grows, then I'd rather not need to consider the LifeStrategy bonds in tax-advantaged when rebalancing taxable. Which is why I suggested all TDR funds in TA. I believe it's simpler to rebalance two funds (stocks/bonds in taxable), rather than rebalance based on three funds (stocks/bonds/LS).

(2) Using 3-funds in any TA account gives us the problem of having duplicate funds in TA and taxable, which exposes OP to the issue of replacement-shares/wash-sale should he decide to tax-loss harvest. We could turn off reinvested distributions in TA to avoid the replacement shares issue, but that just causes another problem... where to send those distributions?

(3) Concede I'm a novice investor and not sensitive enough to the often-mentions additional muni risks. However I did go through 2008-2009 with munis as my only bonds in my 50/50 AA (large taxable, small TA). While the market lost ~40%, my investments lost ~20%, which is what is expected from a 50/50 AA. So, while munis are reported to have more risk, I have not noticed it. (Concede the day could come when this could change.)


So because of (1) + (2), I prefer TDR funds in TA, and discrete funds in taxable. If OP wants to choose a more conservative (more bonds) TDR fund to balance against his taxable TSM, then that seems okay too. At least then the TDR fund should be becoming more conservative (increasing bonds) as OP's taxable stocks grow each year.

But because of my one-off anecdotal experience in 2008-2009, I believe the ultimate simplicity is had by letting the TA accounts run on their own with appropriate TDR funds, leaving only OP's taxable account that needs to be managed. Which can be done* with TSM and munis, and without reference to any other account to rebalance. (* Because it’s what I do.)

(4) I believe TDR + REITs is also a valid combination in TA accounts.



OP. Notice two things from these diverse points of view: (A) more simplicity is advised, and (B) more bonds are advised. However you get there is up to you. Why? Because you are the only one who must be satisfied with your investments. If you can justify your investing game plan to yourself, then that is good enough.

How do you justify your investing game plan to yourself? If you've read the Wiki and a few BH-recommended books on how to invest for retirement, and constructed your game plan based on that advice, then that is a good start.

When experts (BH-recommended authors) agree, that is the central route. When experts disagree, those are optional routes. So if every facet of your investing game plan can be shown to follow the major route, with one or two optional routes to tailor it to your situation, then your investing game plan is "justifiable" as being correct for you.

The SWAN test. It is believed that our investments are correct (for us) if they allow us to Sleep Well At Night.



Disclosure. I began investing by copying an existing lazy portfolio off the MarketWatch website. It was based on good advice, but not completely suitable for me. So it required ~10 years of tweaking (reading books/forum/Wiki, forum review, more reading) to tailor my investments to be more suitable for me.

The 3-fund-portfolio part was easy and put in place at the beginning. But it was the other stuff (any tilts, taxable vs muni bonds, duplicate funds in TA,...) that often required me to live/sleep with an option for a while---sometimes years---before completely accepting/rejecting it.

Today all my investments pass the SWAN test and I have zero desire remaining to tweak more. So now they just get rebalance based on my IPS. (Search forum/Wiki for investment policy statement.)
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

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Bradley37
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Re: Please Criticize my Funds.

Post by Bradley37 » Sun Oct 15, 2017 3:50 pm

dratkinson wrote:
Sat Oct 14, 2017 9:27 pm
jalbert wrote:
Fri Oct 13, 2017 4:19 pm
dratkinson wrote:
Thu Oct 12, 2017 7:26 pm
+1
The SWAN test. It is believed that our investments are correct (for us) if they allow us to Sleep Well At Night.
Thanks for the best advise.

jalbert
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Re: Please Criticize my Funds.

Post by jalbert » Mon Oct 16, 2017 7:05 pm

The major advantage of a target retirement fund is that it can be a single fund all-in-one portfolio, which requires no attention or management by the investor. You never have to rebalance and don't have to monitor your investment.
I think the major advantage is that portion of the portfolio is managed/rebalanced for you. This is true whether or not it is the entire portfolio. The remaining assets are managed according to asset allocation and can be any percentage of the portfolio (from 0% to 100%).

I disagree that the OP should hold munis in taxable space, but do not wish to debate the matter.
Risk is not a guarantor of return.

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dratkinson
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Re: Please Criticize my Funds.

Post by dratkinson » Thu Oct 19, 2017 7:27 pm

jalbert wrote:
Mon Oct 16, 2017 7:05 pm
The major advantage of a target retirement fund is that it can be a single fund all-in-one portfolio, which requires no attention or management by the investor. You never have to rebalance and don't have to monitor your investment.
I think the major advantage is that portion of the portfolio is managed/rebalanced for you. This is true whether or not it is the entire portfolio. The remaining assets are managed according to asset allocation and can be any percentage of the portfolio (from 0% to 100%).

I disagree that the OP should hold munis in taxable space, but do not wish to debate the matter.
+1 I would never argue against anyone's informed personal investing choice.

The best we can do for new folks is point them toward the recommended books. They can't go wrong following mainstream investing advice.

Where some similarities exist between their/our situations, I believe it's also helpful to discuss why we chose what we did where it deviates from mainstream advice.

Bottom line. It's up to each of us to create our own investing road to Dublin.



Disclosure. I followed the forum's mainstream advice for several years while I learned more.

I didn't realize I could tweak my investments to better suit my needs until after reading Norstad's "Behavioral Reasons for Differing from the Market".
See: http://www.norstad.org/finance/total.html#beh

And Swedroe and Thau bond books---read both looking for agreement (mainstream advice), disagreement (optional routes)---gave me some ideas to investigate.

Following what I learned from the forum, I was able to perform my due diligence to select a single-state muni fund (WTCOX) in 2015. In 2017, two years later!, that fund won a Lipper Fund Award to "... honor fund management firms and individual mutual funds that excel in delivering consistently strong, risk-adjusted performance relative to their peers." :)
See: https://globenewswire.com/news-release/ ... wards.html

There's a lot of good information on the forum and in the recommended books and linked articles. So much so that it took me ~10 years to create my investing road to Dublin. I only wish I could have done it faster.



OP is correct to start with the 3-fund portfolio and implement it however he wants: as an all-in-one fund or discrete funds, only giving consideration to management costs and tax-efficiency.

If he has little time/interest to devote to investing, then he is correct to stop with the 3-fund portfolio.

If he has more time/interest to devote to investing, then he may one day learn something to tweak his investments to better suit his needs. But going this route---deviating from mainstream investing advice---means we must accept the risk of being wrong.
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

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