Help on simplifying my portfolio

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Topic Author
29er
Posts: 39
Joined: Fri Oct 13, 2017 2:59 pm

Help on simplifying my portfolio

Post by 29er »

Hello,

I have been following this board for a while and I think it's time for me to simplify my portfolio. My intermediate goal (about 5 years) is to pay off my mortgage (from my stocks).

My ultimate questions:
- the best gradual or maybe lump sump path to 3 funds portfolio + REIT
- 401k allocation considering the selections that are available
- which assets need to be liquidated first

With that, here is my information:

Estimated Yearly expenses (including mortgage): +/- 90K
Emergency Funds: 75K (scattered in Chase, WellsFargo and Capital One Online)
Chase (Her); no interest, avg. balance 6k (mortgage payment, her paycheck)
Wells (His and Hers); no interest, avg. balance 5k (his paycheck, heavy traffic for automatic saving, bill pay, cc payment etc.)
Capital One Saving (His and Her); bucket into multiple accounts; travel fund, her shopping fund, true emergency no touch fund (money market)
Debt: 137500 mortgage (15Y @ 2.875); house value +/- 350K; taxes 7500; pay additional principal monthly about 350
Tax Filing Status: MJF; no kids; no other dependents
Tax Rate: 28% Federal, 4.95% State
State: IL
Age: 41/41
Desired AA: 90 Stocks/10 Bonds (maybe to aggressive)
Desired International: 20% of Stocks (not sure the right amount)
Desired REIT: 10% of stocks

Current Investment 100%
Hers 401K #1 (no public ticker) 18% of total
State Street Small-Mid Cap Index 72% 0.15%
T Rowe Price Large Cap Growth 28% 0.53%

His 401K #2 4% of total (via Fidelity)
Vanguard 2040 (VIRSX) 63% 0.09%
Fidelity Brokerage Link (iShares Total International ETF - IXUS) 37% 0.11%

His Old 401K #3 (no public ticker) 31% of total (via Fidelity)
Dodge and Cox Large Value 37% 0.258%
Fisher Small Cap Value 37% 0.72%
BNY Mellon Stable Value 16% 0.328%
Stock Fund 10% 0.0268%

His Old 401K #4 10% of total (via Vanguard)
REIT Index VGSNX 16% 0.10%
PRIMECAP Admiral VPMAX 46% 0.33%
Small Cap Growth VSGIX 38% 0.06%

Roth IRA 16% of total
at Vanguard
His Vanguard MidCap VIMAX 51% 0.06%
at T Rowe Price
Hers T Rowe Price New Horizon PRNHX 32% 0.79%
Hers T Rowe Price Real Estate TRREX 5% 0.74%
at Fidelity
His Fidelity Four in One FFNOX 8% 0.11
His Fidelity Cash 4%

Joint HSA 2% of total (via Fidelity)
not planning to use it until retirement
Fidelity Puritan FPURX 60% 0.56%
Fidelity Short Term Treasury Bonds FSBAX 40% 0.06%

Joint Taxable Vanguard 8% of total
Vanguard 500 VFIAX 47% 0.04%
Vanguard Total International VTIAX 27% 0.11%
Vanguard REIT ETF VNQ 2% 0.12%
Individual Stocks (C, BAC, BRKB, AAPL) 24%

Joint Taxable Fidelity 8% of total
Stocks (GILD,MCK) 100%

Taxable T Rowe Price 3% of total
Health Sciences PRHSX 100% 0.77%

Contributions
Hers 401K #1 Max Out (no matching)
His 401K#2 Max Out (matching +/- 6k)
His 401K#2 has Post Tax Option (contribution[18k] + matching[6k] + post tax[30k] = 54K) Max Out - move to Fidelity Roth FFNOX every 2 months
Joint HSA Max Out
Roth IRA Max out for both (backdoor)
Taxable:
T Rowe Price Health Sciences 1476 per year
Fidelity Brokerage 1476 per year
Vanguard S&P 900 per year
Vanguard Total International 900 per year
Vanguard Brokerage 600 per year

Available Funds:
Hers 401k #1
Goldman Sach Stable Value 0.42% (Yields @1, 3 and 5 year = 1.69, 1.61, 1.63)
State Street Target 0.22%
Large Cap Value (DODGX) 0.52%
State Street S&P Index 0.14%
T Rowe Large Cap Growth 0.53%
Donald Smith, NWQ Investment Small Cap Value 0.93%
State Street Small MidCap Index 0.15%
Small Cap Growth William Blair, Columbus Circle 1.00%
State Street Global Equity 0.18%
Internal Equity (DODFX) 0.64%
State Street US Bonds 0.15%
[Funds that invest primarily in highly-rated corporate and government bonds;
most of these bonds are scheduled to mature in five to ten years.]
TCW Bonds 0.41%
[Funds that invest at least 65% in domestic investment-grade debt issues (rated in the top four grades) with any remaining investment
in non-benchmark sectors such as high-yield, global and emerging market debt. These funds maintain dollar-weighted average
maturities of five to ten years]

His 401K #2 (Fidelity)
iShares Tot Us (BKTSX) 0.04%
iShares MSCI Total International (BDOKX) 0.11%
Vanguard Target (VIRSX) 0.09%
iShares US AGG Bond Index (WFBIX) 0.05%
Vanguard Money Market (VMFXX) 0.11%
Brokerage Link

His Old 401K#3 (Fidelity)
Company Stock Fund 0.0268%
PSIP Large Growth 0.493%
State Street S&P 500 0.024%
Dodge & Cox Large Value 0.258%
PSIP Small Cap Value 0.677%
Fisher Small Cap Value 0.72%
Vanguard Target 0.06%
PSIP Bond 0.29% (Yields = 2.03 1Y, 4.02 Life of Fund)
BNY Melon Stable Value 0.328% (Yields = 1.96 1Y, 2.02 3Y and 5Y, 2.65 10Y)
Brokerage Link

His Old 401K#4 (I remove non vanguard funds - this is at Vanguard)
They offer Dreyfus and T Rowe Price as well - but plan to stick with Vanguard
Institutional Total Bond Market Index Trust 0.029%
Institutional Total International Stock Market Index Trust 0.065%
Institutional 500 Index Trust 0.013%
Institutional Total Stock Market Index Trust 0.0175%
Short-Term Inflation-Protected Securities Index Fund Institutional Shares (VTSPX) 0.04
Total International Bond Index Fund Institutional Shares (VTIFX) 0.07%
Balanced Index Fund Institutional Shares (VBAIX) 0.06%
Convertible Securities Fund (VCVSX) 0.34
Developed Markets Index Fund Institutional Shares (VTMNX) 0.06%
Dividend Growth Fund (VDIGX) 0.3
Emerging Markets Stock Index Fund Institutional Shares (VEMIX) 0.11%
Equity Income Fund Admiral Shares (VEIRX) 0.17
Explorer Fund Admiral Shares (VEXRX) 0.34
FTSE All-World ex-US Small-Cap Index Fund Institutional Shares (VFSNX) 0.12
Global Equity Fund (VHGEX) 0.51
Growth Index Fund Institutional Shares (VIGIX) 0.05
High-Yield Corporate Fund Admiral Shares (VWEAX) 0.13
International Growth Fund Admiral Shares (VWILX) 0.33
Mid-Cap Index Fund Institutional Plus Shares (VMCPX) 0.04
PRIMECAP Fund Admiral Shares (VPMAX) 0.33
REIT Index Fund Institutional Shares (VGSNX) 0.10
Small-Cap Index Fund Institutional Plus Shares (VSCPX) 0.04
Small-Cap Growth Index Fund Institutional Shares (VSGIX) 0.06%
Small-Cap Value Index Fund Institutional Shares (VSIIX) 0.06%
Value Index Fund Institutional Shares (VIVIX) 0.05
Wellesley Income Fund Admiral Shares (VWIAX) 0.15%
Wellington Fund Admiral Shares (VWENX) 0.16

His and Hers HSA at Fidelity
All Fidelity Funds

Thank You so much for your time reading this and helping me.
Last edited by 29er on Mon Oct 16, 2017 4:15 pm, edited 5 times in total.
mega317
Posts: 5705
Joined: Tue Apr 19, 2016 10:55 am

Re: Help on simplifying my portfolio

Post by mega317 »

Hoo boy, that's a little bit of a mess. A few ideas to simplify:

1. Consolidate your emergency fund into one account; the Capital One would work fine. Why is it scattered?

2. Your current 401ks seem to have good options. Can you roll the old ones into one of those? I don't think you can max 2 401ks.

3. I would consider these the best fund options:
401k #1
State Street S&P Index 0.14%
State Street Global Equity 0.18%
State Street US Bonds 0.15%

401k #2
iShares Tot Us (BKTSX) 0.2%
iShares MSCI Total International (BDOKX) 0.14%
iShares US AGG Bond Index (WFBIX) 0.07%

4. I wouldn't rush to pay off the mortgage especially if you itemize. That's a good rate.

5. Your accounts add up to 108% so this is a little bit of a fudge but you can consider something like this:
401ks: 10% bonds, 51% US stock, 10% international stock
Roth: 10% REIT, 2% US stock
HSA: depends on if you're using it for current expenses or not touching it for retirement, but it's tiny so whatever
Taxable: 10% US stock, 10% international stock
I think that gets your close to your desired. Keep the REITs out of taxable.

6. In the tax-advantaged accounts you can make any changes without tax consequences. I would just make all the moves you want right now.

7. For the taxable accounts, you likely have capital gains which will complicate any changes. If you have shares will minimal gains, or losses, those might be good candidates to sell now. For anything you don't want to sell because of taxes, you can stop reinvesting dividends if applicable. You might also want to consolidate those into one taxable account.
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ruralavalon
Posts: 26351
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: Help on simplifying my portfolio

Post by ruralavalon »

Welcome to the forum :) .

It's good to see that you are debt free, other than the mortgage note. You have some good funds offered in the current 401ks, you are fortunate.

In my opinion at age 41 an asset allocation around 25-30% in bonds would be more reasonable. In my opinion 20% of stocks in international stocks is within the range of what is reasonable. In my opinion 10% in a REIT fund is within the range of what is reasonable.

Once you decide on a new plan including the desired asset allocation, accounts to use, and funds to use, then I suggest switching over all at once to the new plan. I see no benefit to stringing the process out.

. . . . .

mega317 is right that one person cannot max out two different 401ks. How to simplify will depend on who owns each account.

Please state which of you owns each account.

Will the current 401ks accept rollovers from the old 401ks?

What fund firm is the Roth IRA with?

You can simply add this to your original post using the edit button, so that all of your information is in one place.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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celia
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Location: SoCal

Re: Help on simplifying my portfolio

Post by celia »

Your actual holdings are not that complex. It just looks that way because of the space that is taken up by your future contributions and your various fund choices

It would help if you went back and edited your original post for a couple of things. When logged in, click on the pencil symbol at the top of the post to be able to edit it.

First, designate who owns each 401K and if it is through a current employer or not. You can use "HIS" and "HERS" instead of names. We don't know if all the 401Ks belong to your wife and her current employer is sponsoring the 2nd 401K. What I would start with is consolidating so you don't have so many custodians. But we can't combine retirement accounts that belong to different people.

Then re-calculate the percents so all percents are part of the total family's portfolio. For example, you should change this:
Current Investment 100%
401K #1 (no public ticker) 18% of total
State Street Small-Mid Cap Index 72% 0.15%
T Rowe Price Large Cap Growth 28% 0.53%
to:
Current Investment 100%
HER 401K #1 (from a former employer) 18% of total portfolio
13% State Street Small-Mid Cap Index 0.15%
5% T Rowe Price Large Cap Growth 0.53%
Then make sure all the percents on the left side of your holdings add up to about 98% to 102% (to allow for rounding errors). Right now everything in your portfolio adds up to 108%.
Topic Author
29er
Posts: 39
Joined: Fri Oct 13, 2017 2:59 pm

Re: Help on simplifying my portfolio

Post by 29er »

Hi mega317, thanks for your inputs. To response on your inputs ...
1. Consolidate your emergency fund into one account; the Capital One would work fine. Why is it scattered?
Yeah, we are too lazy to change the automatic payment, paycheck etc. The true emergency fund is actually at Capital One Money Market
2. Your current 401ks seem to have good options. Can you roll the old ones into one of those? I don't think you can max 2 401ks.
I added clarification, 401k #1 is for my wife, and 401k #2 is mine. I could roll my old ones to Fidelity. But I like the stock fund from my previous employer; additionally the other old one 401k is at vanguard.
3. I would consider these the best fund options:
401k #1
State Street S&P Index 0.14%
State Street Global Equity 0.18%
State Street US Bonds 0.15%
How do you evaluate funds option? Does rating important or expenses is #1 criteria? How about brand name (like State Street - I ignored them because i just know the bigger name like Vanguard - i am too ignorant)
401k #2
iShares Tot Us (BKTSX) 0.2%
iShares MSCI Total International (BDOKX) 0.14%
iShares US AGG Bond Index (WFBIX) 0.07%
My current company is private and under BlackRock; therefore they offer iShares - what is the risk of this?
4. I wouldn't rush to pay off the mortgage especially if you itemize. That's a good rate.
That is what I told my wife; she doesn't like to have debt. So we came into agreement to pay it off in 5 - 6 years, maybe i can stretch it out a little bit more
5. Your accounts add up to 108% so this is a little bit of a fudge but you can consider something like this:
401ks: 10% bonds, 51% US stock, 10% international stock
Roth: 10% REIT, 2% US stock
HSA: depends on if you're using it for current expenses or not touching it for retirement, but it's tiny so whatever
Taxable: 10% US stock, 10% international stock
I think that gets your close to your desired. Keep the REITs out of taxable.
I fat fingered during my calculation. I fixed it.
6. In the tax-advantaged accounts you can make any changes without tax consequences. I would just make all the moves you want right now.
Its just a little uncomfortable to me to make big lump sump, but i read the posting about DCA and lump sump, i think i just need to pull the plug.
Topic Author
29er
Posts: 39
Joined: Fri Oct 13, 2017 2:59 pm

Re: Help on simplifying my portfolio

Post by 29er »

ruralavalon wrote: Sat Oct 14, 2017 5:44 am Welcome to the forum :) .

It's good to see that you are debt free, other than the mortgage note. You have some good funds offered in the current 401ks, you are fortunate.

In my opinion at age 41 an asset allocation around 25-30% in bonds would be more reasonable. In my opinion 20% of stocks in international stocks is within the range of what is reasonable. In my opinion 10% in a REIT fund is within the range of what is reasonable.

Once you decide on a new plan including the desired asset allocation, accounts to use, and funds to use, then I suggest switching over all at once to the new plan. I see no benefit to stringing the process out.

. . . . .

mega317 is right that one person cannot max out two different 401ks. How to simplify will depend on who owns each account.

Please state which of you owns each account.

Will the current 401ks accept rollovers from the old 401ks?

What fund firm is the Roth IRA with?

You can simply add this to your original post using the edit button, so that all of your information is in one place.
Thanks ruralavalon, i have edited my original post for clarification.
Topic Author
29er
Posts: 39
Joined: Fri Oct 13, 2017 2:59 pm

Re: Help on simplifying my portfolio

Post by 29er »

celia wrote: Sat Oct 14, 2017 6:50 am Your actual holdings are not that complex. It just looks that way because of the space that is taken up by your future contributions and your various fund choices

It would help if you went back and edited your original post for a couple of things. When logged in, click on the pencil symbol at the top of the post to be able to edit it.

First, designate who owns each 401K and if it is through a current employer or not. You can use "HIS" and "HERS" instead of names. We don't know if all the 401Ks belong to your wife and her current employer is sponsoring the 2nd 401K. What I would start with is consolidating so you don't have so many custodians. But we can't combine retirement accounts that belong to different people.

Then re-calculate the percents so all percents are part of the total family's portfolio. For example, you should change this:
Current Investment 100%
401K #1 (no public ticker) 18% of total
State Street Small-Mid Cap Index 72% 0.15%
T Rowe Price Large Cap Growth 28% 0.53%
to:
Current Investment 100%
HER 401K #1 (from a former employer) 18% of total portfolio
13% State Street Small-Mid Cap Index 0.15%
5% T Rowe Price Large Cap Growth 0.53%
Then make sure all the percents on the left side of your holdings add up to about 98% to 102% (to allow for rounding errors). Right now everything in your portfolio adds up to 108%.
Thanks celia, yup i fixed the original post :)
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ruralavalon
Posts: 26351
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: Help on simplifying my portfolio

Post by ruralavalon »

Will his current 401k accept rollovers from his old 401ks?

His current 401k offers good funds with low expense ratios, so consolidating his old 401ks there would make sense as a way to simplify.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Topic Author
29er
Posts: 39
Joined: Fri Oct 13, 2017 2:59 pm

Re: Help on simplifying my portfolio

Post by 29er »

Yes, I can rollover my old one to my current 401k; but the one thing that holding me back is the company stock fund that is available there. Its been a bad year, and would like to wait a little bit to re-balance before roiling over.
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ruralavalon
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Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: Help on simplifying my portfolio

Post by ruralavalon »

It looks like these may be the funds to consider using in her current 401k plan (18% of total). Can you provide links to the fact sheets for these funds in her current 401k?
State Street S&P Index Fund ER 0.14%
State Street Global Equity ER 0.18%
State Street U.S. Bonds ER 0.15%

What is the index used by the first fund? What are the stated investment strategies and benchmarks for the other two funds?

In my opinion the funds to consider using in his current 401k (41% of total if all his 401ks are combined) will include the following:
iShares Total U.S. Stock Market Index Fund Class K (BKTSX) ER 0.20 (???)
iShares MSCI Total International Index Fund Class K (BDOKX) ER 0.14%
iShares U.S. Aggregate Bond Index Fund Class K (WFBIX) ER 0.07%

Could you double check the expense ratio on the first fund? The expense ratio seems out of line with the other funds in her 401k, and seems out of line with the normal expense ratio for that fund.
Last edited by ruralavalon on Sat Oct 14, 2017 6:05 pm, edited 2 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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ruralavalon
Posts: 26351
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: Help on simplifying my portfolio

Post by ruralavalon »

29er wrote: Sat Oct 14, 2017 5:32 pm Yes, I can rollover my old one to my current 401k; but the one thing that holding me back is the company stock fund that is available there. Its been a bad year, and would like to wait a little bit to re-balance before roiling over.
I don't understand, please elaborate.

I don't see how the company stock in his current 401k prevents rollovers of his old 401ks.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
noco-hawkeye
Posts: 465
Joined: Sat Aug 16, 2014 8:20 am

Re: Help on simplifying my portfolio

Post by noco-hawkeye »

ruralavalon wrote: Sat Oct 14, 2017 5:59 pm
29er wrote: Sat Oct 14, 2017 5:32 pm Yes, I can rollover my old one to my current 401k; but the one thing that holding me back is the company stock fund that is available there. Its been a bad year, and would like to wait a little bit to re-balance before roiling over.
I don't understand, please elaborate.

I don't see how the company stock in his current 401k prevents rollovers of his old 401ks.
I took that to mean that the old 401k has company stock, and you don't want to roll out of that (locking in a loss). Wait for it to recover, then rollover (was how I read that).
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celia
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Location: SoCal

Re: Help on simplifying my portfolio

Post by celia »

You don't have to sell your company stock at this time, but you could ask Fidelity if all your 401K holdings can be held in your current 401K AND be sold in the future when you are ready to sell/re-balance. It's harder to re-balance when things are all over the place. Rolling over your company stock has no impact on that stock. You would just be moving it from one account to another (unless the old 401K plan has some kind of special agreement with the custodian that it can only be held in that company 401K.)

You should also consider moving all your Roth holdings to one account. Will the current custodian or any of the other custodians be able to hold all your Roth assets and allow you to sell in the future? (If you have any Roth conversions that are still able to be recharacterized, do not move them until you know you will not be recharacterizing.)

Same thing for your joint?? taxable accounts. Be sure you capture your purchase history before closing out any account, since you will need it when you eventually sell.

The next step after you consolidate where everything is held is to calculate what your Asset Allocation should be (ie, what assets you should hold).

Before you make any changes, though, consider the third step which is to consider Asset Location. See Tax-efficient Fund Placement for where to hold each kind of asset.

Transferring assets to different custodians will not have any tax consequences if you transfer in-kind (transfer shares instead of selling and later re-buying). It is only selling of assets in taxable accounts that will have tax consequences.
Topic Author
29er
Posts: 39
Joined: Fri Oct 13, 2017 2:59 pm

Re: Help on simplifying my portfolio

Post by 29er »

ruralavalon wrote: Sat Oct 14, 2017 5:54 pm It looks like these may be the funds to consider using in her current 401k plan (18% of total). Can you provide links to the fact sheets for these funds in her current 401k?
State Street S&P Index Fund ER 0.14%
State Street Global Equity ER 0.18%
State Street U.S. Bonds ER 0.15%

What is the index used by the first fund? What are the stated investment strategies and benchmarks for the other two funds?

In my opinion the funds to consider using in his current 401k (41% of total if all his 401ks are combined) will include the following:
iShares Total U.S. Stock Market Index Fund Class K (BKTSX) ER 0.20 (???)
iShares MSCI Total International Index Fund Class K (BDOKX) ER 0.14%
iShares U.S. Aggregate Bond Index Fund Class K (WFBIX) ER 0.07%

Could you double check the expense ratio on the first fund? The expense ratio seems out of line with the other funds in her 401k, and seems out of line with the normal expense ratio for that fund.
Hi ruralavalon,

here are the links for the StateStreet
S&P - https://hewitt.lipperweb.com/?Symbol=0132900044#viewall
Global - https://hewitt.lipperweb.com/?Symbol=0135900025#viewall
Bond - https://hewitt.lipperweb.com/?Symbol=0135500015#viewall

The Lipper ratings are not that great, not sure whether that matters or not.

You were right on the expenses, I used the gross ER instead of Net Er, so for BKTSX is actualy 0.04, BDOKX is 0.11 and WFBIX is 0.05.

Should we set each 401K as a bucket. For example, hers 401k, we will put all bonds, and his 401k will be International and US? Or it is better to set AA on each 401K. I still need a lot to read on this ... Thanks again!
Topic Author
29er
Posts: 39
Joined: Fri Oct 13, 2017 2:59 pm

Re: Help on simplifying my portfolio

Post by 29er »

ruralavalon wrote: Sat Oct 14, 2017 5:59 pm
29er wrote: Sat Oct 14, 2017 5:32 pm Yes, I can rollover my old one to my current 401k; but the one thing that holding me back is the company stock fund that is available there. Its been a bad year, and would like to wait a little bit to re-balance before roiling over.
I don't understand, please elaborate.

I don't see how the company stock in his current 401k prevents rollovers of his old 401ks.
OK, on my old 401k, they have my own company stock that they created as one of the Fund selection. The fund ER is very low, this year the stock price fluctuated so much and its down. So I am planning to wait a little bit longer and then roll over.
Topic Author
29er
Posts: 39
Joined: Fri Oct 13, 2017 2:59 pm

Re: Help on simplifying my portfolio

Post by 29er »

noco-hawkeye wrote: Sat Oct 14, 2017 6:07 pm
ruralavalon wrote: Sat Oct 14, 2017 5:59 pm
29er wrote: Sat Oct 14, 2017 5:32 pm Yes, I can rollover my old one to my current 401k; but the one thing that holding me back is the company stock fund that is available there. Its been a bad year, and would like to wait a little bit to re-balance before roiling over.
I don't understand, please elaborate.

I don't see how the company stock in his current 401k prevents rollovers of his old 401ks.
I took that to mean that the old 401k has company stock, and you don't want to roll out of that (locking in a loss). Wait for it to recover, then rollover (was how I read that).
Yes that is what i meant, thanks for clarifying that. By the way, go Cyclones! :)
Topic Author
29er
Posts: 39
Joined: Fri Oct 13, 2017 2:59 pm

Re: Help on simplifying my portfolio

Post by 29er »

celia wrote: Sat Oct 14, 2017 6:17 pm You don't have to sell your company stock at this time, but you could ask Fidelity if all your 401K holdings can be held in your current 401K AND be sold in the future when you are ready to sell/re-balance. It's harder to re-balance when things are all over the place. Rolling over your company stock has no impact on that stock. You would just be moving it from one account to another (unless the old 401K plan has some kind of special agreement with the custodian that it can only be held in that company 401K.)

You should also consider moving all your Roth holdings to one account. Will the current custodian or any of the other custodians be able to hold all your Roth assets and allow you to sell in the future? (If you have any Roth conversions that are still able to be recharacterized, do not move them until you know you will not be recharacterizing.)

Same thing for your joint?? taxable accounts. Be sure you capture your purchase history before closing out any account, since you will need it when you eventually sell.

The next step after you consolidate where everything is held is to calculate what your Asset Allocation should be (ie, what assets you should hold).

Before you make any changes, though, consider the third step which is to consider Asset Location. See Tax-efficient Fund Placement for where to hold each kind of asset.

Transferring assets to different custodians will not have any tax consequences if you transfer in-kind (transfer shares instead of selling and later re-buying). It is only selling of assets in taxable accounts that will have tax consequences.
I don't think I can merge my old 401k to my new one without selling it. They are both at Fidelity, however the fund selections are different. For example my old 401k has fund a, b and c. My new one doesn't have that option. So when I roll over, essentially they need to liquidate to cash or some kind and i need to select new fund. Is my assumption correct?

Same thing with my Roth. Hers Roth is in TRowe Price, mine is in Vanguard. Are you saying that I can essentially buy TRowe Price Funds under Vanguard brokerage account? Might be some fees I suppose - I need to research this option then.

Thanks for the links, will read it tonight regarding AA.
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ruralavalon
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Location: Illinois

Re: Help on simplifying my portfolio

Post by ruralavalon »

It is important to know who owns each account.

Who owns each of the three Roth IRAs? You said yours is Vanguard, and hers is T. Rowe Price. Who owns the Fidelity Roth IRA? Also what percentage of the portfolio is in each of the Roth IRAs?

I assume that all taxable accounts are joint accounts. Is that assumption correct?

You can simply add this to your original post using the edit button, so that all of your information is in one place.

. . . . . .

I suggest that you ask Fidelity where you have your current 401k (# 2) if the company stock from your old 401k (#3) can be "transferred in kind" to the Fidelity 401k and held there. I notice you have a BrokerageLink in your current 401k (# 2) .

. . . . . .

I think you are imagining difficulties which don't exist in combining accounts. You can simplify by combining 401k accounts you own even if the funds in the accounts are currently different. You sell the funds in the account being transferred, and use the cash to buy funds offered in the account receiving the transfer. You wind up with fewer accounts, and fewer funds because you just use the funds offered in the accounts receiving the transfers.

If she owns (or you own) two Roth IRAs, they can still be combined even if they currently use different funds. You can sell the funds in the account being transferred, and use the cash to buy funds in the account receiving the transfer. In the case of an IRA you might be able to keep the funds from the transferred account.

It's not possible to combine her Roth IRA with your Roth IRA.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
pkcrafter
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Re: Help on simplifying my portfolio

Post by pkcrafter »

29er, I think I'm seeing some behavioral errors in your posts, and that can be a problem. It may be one reason why your portfolio is out of control, and definitely why you want to continue to hold company stock.
I could roll my old ones to Fidelity. But I like the stock fund from my previous employer;
Do you like it or are you holding because it's down?
Yes, I can rollover my old one to my current 401k; but the one thing that holding me back is the company stock fund that is available there. Its been a bad year, and would like to wait a little bit to re-balance before roiling over.
Your stock is worth X and it will be worth X if you transfer it, or sell it. If you are waiting for it to go up (anchoring) what will you do if the market falls and your stock falls even further? A single stock also carries specific stock risk, which you can diversify away by holding a fund with lots of stocks. If you keep thinking like that it may take a very long time before you get things simplified.
How do you evaluate funds option? Does rating important or expenses is #1 criteria? How about brand name (like State Street - I ignored them because i just know the bigger name like Vanguard
Cost is always important, ratings on all funds will change over time, so you really can't use them as buying guides. You won't have either problem if you buy index funds. Low costs and no managers to make errors results in market index funds beating about 80% of everything else over 20-25 year periods.

I believe State Street's funds are expensive. SS S&P500 has an ER of 0.51% TRPrice S%P500 fund is about that same cost.

My current company is private and under BlackRock; therefore they offer iShares - what is the risk of this?
I-shares are good. I-shares S&P500 has an ER of 0.04%
Same thing with my Roth. Hers Roth is in TRowe Price, mine is in Vanguard. Are you saying that I can essentially buy TRowe Price Funds under Vanguard brokerage account?
I don't know why you would want to buy TRP funds at Vanguard. What you should be working toward is a portfolio (all accounts as one portfolio) very similar to this one.

viewtopic.php?f=10&t=88005

Wiki on Behavior

https://www.bogleheads.org/wiki/Behavioral_pitfalls

Tax-efficient fund placement

https://www.bogleheads.org/wiki/Tax-eff ... _placement

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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celia
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Location: SoCal

Re: Help on simplifying my portfolio

Post by celia »

29er wrote: Sat Oct 14, 2017 9:13 pm I don't think I can merge my old 401k to my new one without selling it. They are both at Fidelity, however the fund selections are different. For example my old 401k has fund a, b and c. My new one doesn't have that option. So when I roll over, essentially they need to liquidate to cash or some kind and i need to select new fund. Is my assumption correct?
You're right, since 401Ks can have limitations on what is offered in their plan. I was thinking of self-managed IRAs.
Same thing with my Roth. Hers Roth is in TRowe Price, mine is in Vanguard. Are you saying that I can essentially buy TRowe Price Funds under Vanguard brokerage account? Might be some fees I suppose - I need to research this option then.
I signed into Vanguard and started to buy $3,000 of each of your funds to see what it said.

PRNHX is closed to new investors, so I couldn't buy it but you should be able to transfer existing shares that you own.

TRREX has a 1% Fund family redemption fee if held < 90 days and an additional Vanguard Brokerage redemption fee of $50 for sales within 60 calendar days of the most recent purchase trade date. Note: Dividends and capital gains for my new fund will be set to transfer to my settlement fund.

FFNOX had a $8 brokerage fee, but no other restrictions. Note: Dividends and capital gains for my new fund will be set to transfer to my settlement fund.

There are no tax consequences if you sell IRA assets at one place, do a trustee-to-transfer transfer to a new custodian and buy similar funds at the new custodian. However, the similar funds may not fit in with your overall Asset Allocation and Asset Location. So don't make any moves until you first figure out the final funds and placement. It could be as simple as 6 accounts with each one holding one (or two) assets:
Her 401K
His 401K
His Roth
Her Roth?
HSA
joint taxable?
Topic Author
29er
Posts: 39
Joined: Fri Oct 13, 2017 2:59 pm

Re: Help on simplifying my portfolio

Post by 29er »

pkcrafter wrote: Sun Oct 15, 2017 4:26 pm 29er, I think I'm seeing some behavioral errors in your posts, and that can be a problem. It may be one reason why your portfolio is out of control, and definitely why you want to continue to hold company stock.
I could roll my old ones to Fidelity. But I like the stock fund from my previous employer;
Do you like it or are you holding because it's down?
Yes, I can rollover my old one to my current 401k; but the one thing that holding me back is the company stock fund that is available there. Its been a bad year, and would like to wait a little bit to re-balance before roiling over.
Your stock is worth X and it will be worth X if you transfer it, or sell it. If you are waiting for it to go up (anchoring) what will you do if the market falls and your stock falls even further? A single stock also carries specific stock risk, which you can diversify away by holding a fund with lots of stocks. If you keep thinking like that it may take a very long time before you get things simplified.
How do you evaluate funds option? Does rating important or expenses is #1 criteria? How about brand name (like State Street - I ignored them because i just know the bigger name like Vanguard
Cost is always important, ratings on all funds will change over time, so you really can't use them as buying guides. You won't have either problem if you buy index funds. Low costs and no managers to make errors results in market index funds beating about 80% of everything else over 20-25 year periods.

I believe State Street's funds are expensive. SS S&P500 has an ER of 0.51% TRPrice S%P500 fund is about that same cost.

My current company is private and under BlackRock; therefore they offer iShares - what is the risk of this?
I-shares are good. I-shares S&P500 has an ER of 0.04%
Same thing with my Roth. Hers Roth is in TRowe Price, mine is in Vanguard. Are you saying that I can essentially buy TRowe Price Funds under Vanguard brokerage account?
I don't know why you would want to buy TRP funds at Vanguard. What you should be working toward is a portfolio (all accounts as one portfolio) very similar to this one.

viewtopic.php?f=10&t=88005

Wiki on Behavior

https://www.bogleheads.org/wiki/Behavioral_pitfalls

Tax-efficient fund placement

https://www.bogleheads.org/wiki/Tax-eff ... _placement

Paul
Hi Paul, yes I think you are spot on with my behavioral issues :) I am in health care IT; thus i have bias with the industry. I think i really need to sit down and start consolidating my IRA and 401k first. I started with TRowePrice years ago because they have lower entry requirement and I set up automatic investment.

The url links are very helpful, thanks so much.
Topic Author
29er
Posts: 39
Joined: Fri Oct 13, 2017 2:59 pm

Re: Help on simplifying my portfolio

Post by 29er »

ruralavalon wrote: Sun Oct 15, 2017 10:04 am It is important to know who owns each account.

Who owns each of the three Roth IRAs? You said yours is Vanguard, and hers is T. Rowe Price. Who owns the Fidelity Roth IRA? Also what percentage of the portfolio is in each of the Roth IRAs?

I assume that all taxable accounts are joint accounts. Is that assumption correct?

You can simply add this to your original post using the edit button, so that all of your information is in one place.

. . . . . .

I suggest that you ask Fidelity where you have your current 401k (# 2) if the company stock from your old 401k (#3) can be "transferred in kind" to the Fidelity 401k and held there. I notice you have a BrokerageLink in your current 401k (# 2) .

. . . . . .

I think you are imagining difficulties which don't exist in combining accounts. You can simplify by combining 401k accounts you own even if the funds in the accounts are currently different. You sell the funds in the account being transferred, and use the cash to buy funds offered in the account receiving the transfer. You wind up with fewer accounts, and fewer funds because you just use the funds offered in the accounts receiving the transfers.

If she owns (or you own) two Roth IRAs, they can still be combined even if they currently use different funds. You can sell the funds in the account being transferred, and use the cash to buy funds in the account receiving the transfer. In the case of an IRA you might be able to keep the funds from the transferred account.

It's not possible to combine her Roth IRA with your Roth IRA.
I have edited my original post. The Fidelity IRA is mine as well. I think at the end, I just want to keep Fidelity and Vanguard. Also move my brokerage to Fidelity since it is cheaper.

Thanks!
Topic Author
29er
Posts: 39
Joined: Fri Oct 13, 2017 2:59 pm

Re: Help on simplifying my portfolio

Post by 29er »

celia wrote: Sun Oct 15, 2017 11:35 pm
29er wrote: Sat Oct 14, 2017 9:13 pm I don't think I can merge my old 401k to my new one without selling it. They are both at Fidelity, however the fund selections are different. For example my old 401k has fund a, b and c. My new one doesn't have that option. So when I roll over, essentially they need to liquidate to cash or some kind and i need to select new fund. Is my assumption correct?
You're right, since 401Ks can have limitations on what is offered in their plan. I was thinking of self-managed IRAs.
Same thing with my Roth. Hers Roth is in TRowe Price, mine is in Vanguard. Are you saying that I can essentially buy TRowe Price Funds under Vanguard brokerage account? Might be some fees I suppose - I need to research this option then.
I signed into Vanguard and started to buy $3,000 of each of your funds to see what it said.

PRNHX is closed to new investors, so I couldn't buy it but you should be able to transfer existing shares that you own.

TRREX has a 1% Fund family redemption fee if held < 90 days and an additional Vanguard Brokerage redemption fee of $50 for sales within 60 calendar days of the most recent purchase trade date. Note: Dividends and capital gains for my new fund will be set to transfer to my settlement fund.

FFNOX had a $8 brokerage fee, but no other restrictions. Note: Dividends and capital gains for my new fund will be set to transfer to my settlement fund.

There are no tax consequences if you sell IRA assets at one place, do a trustee-to-transfer transfer to a new custodian and buy similar funds at the new custodian. However, the similar funds may not fit in with your overall Asset Allocation and Asset Location. So don't make any moves until you first figure out the final funds and placement. It could be as simple as 6 accounts with each one holding one (or two) assets:
Her 401K
His 401K
His Roth
Her Roth?
HSA
joint taxable?
Yes, the problem with too many options is my tendency to leverage them all :( Need to start consolidating now.

Thanks again for reading my post.
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ruralavalon
Posts: 26351
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: Help on simplifying my portfolio

Post by ruralavalon »

Asset allocation.
29er wrote:Age: 41/41
Desired AA: 90 Stocks/10 Bonds (maybe to aggressive)
Desired International: 20% of Stocks (not sure the right amount)
Desired REIT: 10% o stocks
In my opinion as asset allocation around 25-30% bonds would be more reasonable. In my opinion 20% of stocks in international stocks is within the range of what is reasonable. In my opinion 10% of stocks in REIT is within the range of what is reasonable.

That works out to about 30% bonds, 15% international stocks, 05% REIT, and 50% other domestic stocks. Asset allocation is a very personal decision which you must make, based on your own ability, willingness and need to take risk.


Accounts.
29er wrote:Need to start consolidating now.
To achieve any significant simplification it's necessary to combine accounts wherever that's possible. His current 401k, the HSA, and 3 other accounts are already at Fidelity, and Fidelity now offers the very low expense ratio core index funds used in a three-fund portfolio. Even though I am a huge Vanguard fan, I think it makes sense to consolidate at Fidelity.

The example portfolio I give below is much simpler. The example portfolio reduces your 11 accounts down to 6 accounts, reduces your 21 mutual funds down to just 6 mutual funds, and is more diversified with lower expense ratios.

I suggest transferring the Vanguard and TRPrice joint taxable accounts to Fidelity and consolidating the three taxable accounts together at Fidelity. Call Fidelity to arrange the transfers.
29er" wrote:My intermediate goal (about 5 years) is to pay off my mortgage (from my stocks)
When you transfer the taxable accounts ask for an "in-kind" transfer of those stocks, to avoid unnecessary income tax liability. Also ask for a "transfer in kind" of Vanguard 500 (VTIAX) and Vanguard Total International (VTIAX) in order to avoid any unnecessary tax liability, you will want to keep using those two funds. They are both very tax-efficient. Please see the wiki article "tax-efficient fund placement".

In transferring the Vanguard taxable account sell Vanguard REIT ETF (VNQ), it's very INefficient in a taxable account. Please see the wiki article "tax-efficient fund placement".

I suggest rolling over her TRPrice Roth IRA to a Roth IRA at Fidelity. Call Fidelity and they will help with the transfer. Ask for a "trustee to trustee" transfer. If she wants to keep the TRPrice real estate or New Horizon funds ask for an "in-kind" transfer. There is a Fidelity REIT fund she could use after transfer.

I suggest rolling over his Vanguard Roth IRA to Fidelity and combining with his Roth IRA at Fidelity. Call Fidelity and they will help with the transfer. Ask for a "trustee to trustee" transfer.

I suggest rolling over his old 401ks (##3 & 4) into his current 401k (# 2)


Stocks.
You currently have 42% your portfolio in individual stocks. That's not very diversified, and fairly risky. That is:
10% company stock fund in his old 401k # 3;
24% C, BAC, BrkB, AAPL in joint taxable Vanguard
8% GILD, MCK in joint taxable Fidelity

In my opinion it's necessary to shrink that 42% so that your investments are not so concentrated. I think it's important to get your individual stock positions down to 10% or less of your portfolio.

I suggest that you sell the 10% in company stock fund in his old 401k # 3. Trying to hold on until the stock recovers is a common behavioral pitfall called "anchoring". The present or future worth of the stock does not depend at all on it's past value. The past value is simply irrelevant. In a 401k you can sell without any tax liability.

The other stocks are in taxable accounts. You stated "my intermediate goal (about 5 years) is to pay of me mortgage (from my stocks)". What is the capital gain/loss status of each of those other stocks? It might be wiser to pay off some of the mortgage sooner, if it can be done with minimal tax liability from the stock sales, which would also solve the problem of concentration in individual stocks.


Fund selection and placement.
The Fidelity funds to use for a three-fund portfolio are:
1) Fidelity Total Market Index Fund Premium Class FSTVX) ER 0.035%;
2) Fidelity Total International Index Fund Premium Class (FTIPX) ER 0.10%; and
3) Fidelity U.S. Bond Market Index Fund Premium Class (FSITX) ER 0.045%.

For a REIT fund at Fidelity there is Fidelity Real Estate Index Fund Premium Class (FSRVX) ER 0.06%.

Domestic stocks. In a 401k which doesn't offer a total stock market index fund a S&P 500 index fund (like the State Street fund in her 401k) is good enough for the domestic stock component of a three-fund portfolio. A S&P 500 index fund covers 81% of the U.S. stock market, and 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.

International stocks. The State Street Global fund in her 401k and the iShares Total International fund in his 401k are both total international stock index funds, investing in both developed and emerging markets.

Bonds. The State Street U.S. Bond Fund in her 401k and the iShares U.S. Aggregate fund in his 401k are total bond market funds. Both track the Barclays U.S. Aggregate Bond Index, the most diversified index of domestic bonds.

For easy portfolio management is good to have one or more large accounts which contain all three basic fund types bonds, international stocks, and domestic stocks). . In your case that could be your 401ks. When a need arises to rebalance, you can do so by exchange between funds inside of his 401k or inside her 401k.

In general bonds should be in tax-advantaged accounts, preferably tax-deferred accounts like your 401ks. Please see the wiki article "tax-efficient fund placement".

Large-cap and total market type stock index funds are very tax-efficient and are suitable for any type of account.



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, 5% REIT, and 50% other domestic stocks. The idea is to switch both existing balances and new contributions to the funds indicated. The percentages given are percentages of the total portfolio, not percentages of any particular account. All percentages are rounded off so may not add up exactly.


Joint taxable account @ Fidelity, includes ex-Vanguard and ex-TRPrice accounts (19% of total; adds $5.3k/yr)
04% Vanguard 500 Index Fund Admiral Shares (VFIAX) ER 0.04%
02%, Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11%
02%, C, BAC, BrkB, AAPL
08%, GILD, MCK
03%, T. Rowe Price Health Sciences Fund (PRHSX) ER 0.77%

Her current 401k (18% of total; adds $18k/yr).
05%, State Street S&P 500 Index Fund ER 0.14%
03%, State Street Global Equity Index Fund ER 0.18%
10%, State Street U.S. Bond Index Fund ER 0.15%

His current 401k @ Fidelity, including his old 401ks (45% of total; adds $18k + $6k employer match = $24k/yr + $30k post tax)
15%, iShares Total U.S. Stock Market Index Fund Class K (BKTSX) ER 0.04
10%, iShares MSCI Total International Index Fund Class K (BDOKX) ER 0.11%
20%, iShares U.S. Aggregate Bond Index Fund Class K (WFBIX) ER 0.05%

His Roth IRA @ Fidelity, includes his Vanguard Roth IRA (10% of total; adds $5.5k/yr)
05%, Fidelity Total Market Index Fund Premium Class (FSTVX) ER 0.035%
05%, Fidelity Real Estate Fund (FSRVX) ER 0.06%

Her Roth IRA @ Fidelity, ex-TRPrice IRA (06% of total; adds $5.5k/yr)
06%, Fidelity Total Market Index Fund Premium Class (FSTVX) ER 0.035%

HSA @ Fidelity (03% of total)
03%, Fidelity Total Market Index Fund Premium Class (FSTVX) ER 0.035%


Rebalancing.
The funds will grow at different and unpredictable rates, so every year or two it will be necessary to rebalance to bring your portfolio back to your desired asset allocation. Please see the wiki article "Rebalancing". You can rebalance simply by exchanging between funds inside his 401k, or inside her 401k.

Avoid rebalancing by exchanging between funds inside the joint taxable account, that would create unnecessary income tax liability.

. . . . . .

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.

I hope that this helps.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Topic Author
29er
Posts: 39
Joined: Fri Oct 13, 2017 2:59 pm

Re: Help on simplifying my portfolio

Post by 29er »

Hi ruralavalon,

Thank you so much for the detail recommendation, I really appreciate it. It gives me a real good base to start the consolidation. I checked my brokerage account and all the gains are long term gains. I do have some minor loss but not enough to off set the gain. I am thinking to sell gradually and plan with our company bonus (sell more when bonus is low) - because my bonus is sometime unpredictable.

Again, we really appreciate your time helping me with this.

This forum rocks!
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