Current 401k: 6K in TRRMX 2050 (half Traditional and half Roth)
Goal: Do the best I can in a goalless state while I wait for my goals to solidify. (Lame, I know, but that's all I've got so far)
Emergency Account: 4K in Barclays Dream Account with 1K max contribution added monthly from income until 15K total
Target Allocation: 45% domestic stocks, 40% international stocks, 15% bonds
Funds and Initial Investments:
VBMFX: 5.5K (that's this year's full contribution, and then I plan to upgrade to VBTLX in January with next years full contribution)
Initial Allocation (w/o 401k): 47% domestic stocks, 38% international stocks & 15% bonds (current 401K allocation is about 85/15 too, but with about 30% international stock)
Plan: Once the above is executed, keep adding as much money as I can as often as possible while preserving the target allocation/rebalancing. Direct deposit according to the allocation, and then tweak as needed every few months or so to preserve balance.
- I derived my target allocation like this: The general rule of thumb from Bogleheads' Guide 2nd Edition was to get your age in percentage of bonds. So 30 would be 30% (pg. 98 'Jack Bogle's rough guide is that bonds should be equal to our age'). So I had that in my head as a starter. But I do consider myself far more into risk/reward than average, so I knew I was going to undershoot that. Then, I spoke with a friend my age who has 95%/5% but factored into his allocation the fact that he is far more well-off than I am, both to start with, and in terms of his investments, so I shied away from that end too. That landed me at 90/10 which felt a little exciting to me. So I further backed off to 85/15 because that didn't feel exciting to me and I figured that the best emotion to start this off with, in hopes that it permeate the whole investing process ongoing, was sort of an average almost boring feeling that mirrors the Boglehead ethos in general, that it's not about winning through anything else other than being average, unemotional, and patient.
- I have my bond fund in my IRA according to the rule: Place your most tax-inefficient funds into your tax-deferred accounts, then put what's left into your taxable account.
- What do you think of my plan overall? What would you change? What have I missed or messed up?
- There are several funds available for my 401K. I'm only in TRRMX right now because this was the default chosen by my employer. I don't have a problem with its allocation but 0.74% ER seems a bit high to me. I'm not yet familiar with many of the others, which I've included in the list below. Does anyone have any opinions about this one or those, or advice about how to go about comparing them?
- Nestle SA is the top holding in VTIAX and VTSAX's eighth largest holding is Exxon. I don't like what these companies have been doing lately. I don't support it. Do you think that buying these funds is contrary to my objective of doing well in the world if I believe that these companies aren't? I don't want my portfolio to be hamstrung either. One thing I thought about was targeting another allocation of 10% to conscientious investing, perhaps such as VFTSX, and then increasing that initiative as I went on if I can afford it. On the one hand that feels like charity, since I'll be paying a higher ER for similar or worse returns, and that's cool with me. On the other, it feels hypocritical if the majority of my money is still with bad guys anyway. Then back to the first hand, divesting companies probably won't impact them as much as other forms of protest since it does seem futile to take measures that sink them (and this seems ridiculous anyway) rather than that steer them better. But then back to the other hand, the last thing I said sure sounds like a convenient rationalization that benefits my portfolio performance. I'm pretty conflicted here and would love to hear what people think this way.
- I work for a startup. I actually really do believe in the product and the team and a huge success potential for the company, but I'm essentially paying for stock options on the ground floor with being paid at the very low end of the spectrum for what I do and where I live. The first thought of course is, this is how people get rich. But based on Boglehead philosophy, I would never include a single company in my portfolio, and the alternative to this is investing in my portfolio outlined above at a much greater rate, maybe even 25% - 40%. What is your advice or ideas about how to factor stock options in terms of risk and allocation into my portfolio? How and what might you think about this?
- Lastly, I do know that this style of investing doesn't require a whole lot of knowhow and keeping up, but I still want to keep my financial learning going. So far, this has taken place online, with podcasts, and with my first investing book, Bogleheads' Guide to Investing 2nd Edition, which I read twice. Given that I'm already fully evangelized to the Boglehead style but that I'm still curious and want to keep reading, what do you think would be the good second investing book to read now.
- EDIT: Chart of plans and details here.
- I am going to call and double check but it seems that, from the links available to me through ADP, expense ratios available to me through the 401k for the funds below are the same as those listed in the links below/available for general retail investment.
- I'm not able to track down any information yet on the State Street funds, and their classes aren't listed on State Street's website, but I did find this Bogleheads' thread pertaining to one of them.
Putnam U.S. Government Income Trust - Class A - PGSIX
BlackRock Total Return Fund - Investor A Class - MDHQX
PIMCO Total Return Fund - Class A - PTTAX
State Street U.S. Bond Index Securities Lending Series Fund - Class VIII - Details
T. Rowe Price New Income Fund - Advisor Class - PANIX
Voya Intermediate Bond Fund - Class A - IIBAX
PIMCO Investment Grade Corporate Bond Fund - Class A - PBDAX
Deutsche Global High Income Fund - Class S - SGHSX
Prudential High Yield Fund - Class A - PBHAX
PIMCO Real Return Fund - Class A - PRTNX
State Street U.S. Inflation Protected Bond Index Non-Lending Series Fund - Class G - Details
T. Rowe Price Retirement 2010 Fund - Class R - RRTAX
T. Rowe Price Retirement 2015 Fund - Class R - RRTMX
T. Rowe Price Retirement 2020 Fund - Class R - RRTBX
T. Rowe Price Retirement 2025 Fund - Class R - RRTNX
T. Rowe Price Retirement 2030 Fund - Class R - RRTCX
T. Rowe Price Retirement 2035 Fund - Class R - RRTPX
T. Rowe Price Retirement 2040 Fund - Class R - RRTDX
T. Rowe Price Retirement 2045 Fund - Class R - RRTRX
T. Rowe Price Retirement 2055 Fund - Class R - RRTVX
Invesco Equity and Income Fund - Class A - ACEIX
MFS Total Return Fund - Class R3 - MSFHX
Putnam Dynamic Asset Allocation Balanced Fund - Class A - PABAX
State Street Conservative Strategic Balanced Securities Lending Series Fund - Class VII - Details
T. Rowe Price Retirement Balanced Fund - Class R - RRTIX
Invesco Comstock Fund - Class A - ACSTX
MFS Value Fund - Class R3 - MEIHX
Pioneer Equity Income Fund - Class A - PEQIX
Franklin Rising Dividends Fund - Class A - FRDPX
State Street S&P 500 Index Securities Lending Series Fund - Class IX - Details
Wells Fargo Disciplined U.S. Core Fund - Class A - EVSAX
Franklin Growth Fund - Class A - FKGRX
Goldman Sachs Mid Cap Value Fund - Class A - GCMAX
State Street S&P MidCap Index Non-Lending Series Fund - Class J - Details
Principal MidCap Fund - Class R3 - PMBMX
Delaware Small Cap Value Fund - Class A - DEVLX
State Street Russell Small Cap Index Securities Lending Series Fund - Class VIII - Details
BlackRock Advantage Small Cap Growth Fund - Investor A Class - CSGEX
Janus Henderson Triton Fund - Class S - JGMIX
AllianzGI NFJ International Value Fund - Class A - AFJAX
MFS International Value fund - Class R3 - MINGX
Parametric International Equity Fund - Investor Class - EAISX
State Street International Index Securities Lending Series Fund - Class VIII - Details
Oppenheimer International Growth Fund - Class A - OIGAX
Oppenheimer Global Fund - Class A - OPPAX
Oppenheimer Global Opportunities Fund - Class A - OPGIX
Goldman Sachs Emerging Markets Equity Insights Fund - Class A -
Invesco Developing Markets Fund - Class A - GTDDX
Ivy Emerging Markets Equity Fund - Class A - IPOAX
Deutsche Real Estate Securities Fund - Class A - RRRAX
Fidelity Advisor Real Estate Fund - Class A - FHEAX
State Street REIT Index Non-Lending Series Fund - Class G - Details
Franklin Utilities Fund - Class A - FKUTX
Please ask any and all questions! Everyones' feedback is hugely appreciated! Thank you!