Portfolio Review

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Portfolio Review

Post by Exafchick » Tue Nov 14, 2017 3:36 pm

Hello, All! I have been reading these boards for a little while and was hoping to have my current portfolio reviewed and critiqued:

Almost 49 y/o single female (will be 49 in Dec)
Emergency fund: $20k in Barclay's online account
Debt: Mortgage $177,000 (appraised at $210k). I add $500 extra each month toward principle. If i stay here, it will be paid off in 15 years.
401k: $75k in Vanguard Extended Market Index fund admiral shares through Nationwide
Roth IRA: $76k in Vanguard Total Stock Market Index Fund Admiral Shares (50%), Vanguard Total International Stock Index Fund Admiral Shares (30%), and Vanguard Total Bond Market Index Fund Admiral Shares (20%)

I max out annual IRA contributions ($5500). Will be able to increase that to $6500 when I turn 50.
401k contributions is 10% pre-tax income
I also add a few hundred each month to emergency fund (plan to purchase a new car next year so want to put down a large down payment and finance the least I have to at a low rate).

Income:
Military pension $2025/month
Civilian job $1059/bi-weekly after taxes, 401k and disability insurance

I am hoping to be able to retire around age 65 (won't collect social security until age 67). Is this an attainable goal?

Any suggestions/comments/ideas are welcome! Let me know if any additional information is needed.

Thank you!

Grt2bOutdoors
Posts: 17138
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Portfolio Review

Post by Grt2bOutdoors » Tue Nov 14, 2017 6:56 pm

What is your target annual retirement income you are aiming to attain at age 65?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

User avatar
Duckie
Posts: 5082
Joined: Thu Mar 08, 2007 2:55 pm

Re: Portfolio Review

Post by Duckie » Tue Nov 14, 2017 7:48 pm

Exafchick wrote:401k: $75k in Vanguard Extended Market Index fund admiral shares through Nationwide
Roth IRA: $76k in Vanguard Total Stock Market Index Fund Admiral Shares (50%), Vanguard Total International Stock Index Fund Admiral Shares (30%), and Vanguard Total Bond Market Index Fund Admiral Shares (20%)
Extended Market is mid/small caps and covers 20% of the US stock market. Half of your assets are in this fund so you are massively overweighting mid/small caps. Does your 401k have a 500 Index fund? Roughly 80% 500 Index plus 20% Extended Market makes up the total US stock market.
401k contributions is 10% pre-tax income
Does this mean you are putting 10% of your income into a pre-tax 401k or does it mean 10% of your 401k is pre-tax and 90% is Roth?
Any suggestions/comments/ideas are welcome!
Does your 401k have a US bond index fund? Generally it's better to put assets with lower expected growth (bonds) in pre-tax accounts and assets with higher expected growth (stocks) in Roth accounts. Right now you have your bonds in a Roth account.

Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Re: Portfolio Review

Post by Exafchick » Wed Nov 15, 2017 9:08 am

My estimated target retirement income is $2000-$2500. Combined with pension and whatever SS I get should cover expenses plus leave a bit for fun!

I will check my 401k options to see if there is an S&P 500 and bond option.

Thank you for the replies!

Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Re: Portfolio Review

Post by Exafchick » Wed Nov 15, 2017 9:21 am

My 401k does allow me to invest in Vanguard 500 Index Fund Admiral Shares (VFIAX) and Vanguard Total Bond Index Admiral Shares (VBTLX). If I update my 401k allocations to these two funds would I also change my Roth IRA to just the Total Stock Market and Total International Stock Market funds since bonds will be taken care of through 401k?

Also, how much overlap would there be between the S&P 500 fund and the Total Stock Market fund?

Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Re: Portfolio Review

Post by Exafchick » Wed Nov 15, 2017 9:23 am

Duckie: to answer your question regarding the 10% 401k contributions. I meant to write that is 10% of my income going into pre-tax 401k.

Grt2bOutdoors
Posts: 17138
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Portfolio Review

Post by Grt2bOutdoors » Wed Nov 15, 2017 12:48 pm

Exafchick wrote:
Wed Nov 15, 2017 9:08 am
My estimated target retirement income is $2000-$2500. Combined with pension and whatever SS I get should cover expenses plus leave a bit for fun!

I will check my 401k options to see if there is an S&P 500 and bond option.

Thank you for the replies!
Thank you for your service!

If that is your estimated retirement income in 16 years - you are there now! You currently have a pension of $2,025 per month.
I estimate your current salary is around $40K, you are saving 10% of that in a 401K pre-tax. You are also funding a tax-free ROTH IRA with $5,500 per year. You have 16 years of employment left.

Current assets - $75,000 in a ROTH IRA
$76,000 in a tax deferred 401K

With current contributions, estimate the ROTH will be worth approximately $262K with a 5% average annual nominal return, using a real rate of return of 3%, it's worth $202K in today's dollars.

The 401(k) will be worth about 296K nominally, or $234K in today's dollars. A 4% annual withdrawal rate is roughly $8,500-$9,000 for each of the two accounts - Roth and 401K plans. That is somewhere between $17K-$19K in today's dollars. I estimate your Social Security will be $1,400 per month (could be more, could be less - sure way for you to know is to sign on to SSA.Gov and see what Social Security estimates it will be at age 67). - that is an additional $16,800 per year.

I assume you receive military retiree health benefits so that is taken care of.

Total projected income is $2,025 + $1,400 + $750 + $750 = $4,925 per month. Taxable income will be less since ROTH is tax free. Could be more, could be less (but not by half!).

Good job, stay the course, keep saving! :beer
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Grt2bOutdoors
Posts: 17138
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Portfolio Review

Post by Grt2bOutdoors » Wed Nov 15, 2017 12:57 pm

Exafchick wrote:
Wed Nov 15, 2017 9:21 am
My 401k does allow me to invest in Vanguard 500 Index Fund Admiral Shares (VFIAX) and Vanguard Total Bond Index Admiral Shares (VBTLX). If I update my 401k allocations to these two funds would I also change my Roth IRA to just the Total Stock Market and Total International Stock Market funds since bonds will be taken care of through 401k?

Also, how much overlap would there be between the S&P 500 fund and the Total Stock Market fund?
Total Stock Market Index is: 71.6% Large Cap, 19.1% Mid-cap 9.2% Small Cap
Vanguard 500 Index is: 86.8% Large Cap, 13.1% Mid-cap (higher end of market cap range).
Correlation is 99.17% for Vanguard 500 Fund, whereas Total Stock Market is exactly 100% of total exposure. You can own the S&P 500 and earn nearly all of the return of Total Stock Market over time.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

User avatar
Skinut
Posts: 74
Joined: Fri Mar 30, 2012 9:37 am

Re: Portfolio Review

Post by Skinut » Wed Nov 15, 2017 1:01 pm

Grt2bOutdoors wrote:
Wed Nov 15, 2017 12:48 pm
Exafchick wrote:
Wed Nov 15, 2017 9:08 am
My estimated target retirement income is $2000-$2500. Combined with pension and whatever SS I get should cover expenses plus leave a bit for fun!

I will check my 401k options to see if there is an S&P 500 and bond option.

Thank you for the replies!
Thank you for your service!

If that is your estimated retirement income in 16 years - you are there now! You currently have a pension of $2,025 per month.
I estimate your current salary is around $40K, you are saving 10% of that in a 401K pre-tax. You are also funding a tax-free ROTH IRA with $5,500 per year. You have 16 years of employment left.

Current assets - $75,000 in a ROTH IRA
$76,000 in a tax deferred 401K

With current contributions, estimate the ROTH will be worth approximately $262K with a 5% average annual nominal return, using a real rate of return of 3%, it's worth $202K in today's dollars.

The 401(k) will be worth about 296K nominally, or $234K in today's dollars. A 4% annual withdrawal rate is roughly $8,500-$9,000 for each of the two accounts - Roth and 401K plans. That is somewhere between $17K-$19K in today's dollars. I estimate your Social Security will be $1,400 per month (could be more, could be less - sure way for you to know is to sign on to SSA.Gov and see what Social Security estimates it will be at age 67). - that is an additional $16,800 per year.

I assume you receive military retiree health benefits so that is taken care of.

Total projected income is $2,025 + $1,400 + $750 + $750 = $4,925 per month. Taxable income will be less since ROTH is tax free. Could be more, could be less (but not by half!).

Good job, stay the course, keep saving! :beer
What a great post! Thank you to the OP for your service and thank you Grt2bOutdoors for all the time and knowledge you share with us!

Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Re: Portfolio Review

Post by Exafchick » Wed Nov 15, 2017 2:45 pm

Thank you all for the thoughtful and thorough replies! I am extremely grateful for the pension so civilian contributions just have to supplement. I realize I am already ahead of the game in that area but still wish I had begun investing earlier than I did. Also glad to have the health insurance.

It is good to know I am on the right track. If I understood correctly, since I already have Total Stock Market fund in Roth, not much difference if I swap it out for the S&P 500 index fund. I will keep an eye on it and reassess and readjust if necessary.

As far as the bonds, someone mentioned that it is better to have that fund in 401k instead of Roth. Does that sound right?

Again, I appreciate you all taking the time to provide me feedback!

Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Re: Portfolio Review

Post by Exafchick » Wed Nov 15, 2017 3:03 pm

Just to clarify, I meant that I hoped to get $2000-$2500 a month from investment accounts to add to pension and SS. I am hoping to leave my current job in 5 years or less, sell my house (hopefully at a profit!) and move to the pacific northwest and rent. Not sure if I'll be able to find a job with a 401k so used savings calculator from bankrate to see how my totals would look if I just maxed out Roth IRA for the last 10 years. Still seems like I should be ok.

As I mentioned, I currently have $20k in online savings and will keep adding to that until I have $50k. That should allow me to get the new car and still have enough to set up a new apartment when I move. I will then add to the savings until I can reach and maintain $50k. Not sure why that is my safety number, but it is!

I don't have children or a spouse so I also have long term care insurance in case I need nursing home or such care to avoid being a burden to my sisters or nephews. I've tried to think of everything to be a self-sufficient adult but still be able to enjoy traveling and not have to work unless I want to!

User avatar
Duckie
Posts: 5082
Joined: Thu Mar 08, 2007 2:55 pm

Re: Portfolio Review

Post by Duckie » Wed Nov 15, 2017 3:09 pm

Exafchick wrote:My 401k does allow me to invest in Vanguard 500 Index Fund Admiral Shares (VFIAX) and Vanguard Total Bond Index Admiral Shares (VBTLX). If I update my 401k allocations to these two funds would I also change my Roth IRA to just the Total Stock Market and Total International Stock Market funds since bonds will be taken care of through 401k?
Yes. See below.
Also, how much overlap would there be between the S&P 500 fund and the Total Stock Market fund?
Total Stock Market is roughly 80% 500 Index.
regarding the 10% 401k contributions. I meant to write that is 10% of my income going into pre-tax 401k.
What is that in dollars? Does the plan match your contributions?

The following example has an AA of 65% US stocks and 35% bonds, with 30% of stocks in international. That breaks down to 45% US stocks, 20% international stocks, and 35% bonds. Right now you could have:

401k at Nationwide -- $75K -- 50%
12% (VFIAX) Vanguard 500 Index Fund Admiral Shares (0.04% ??)
3% (VEXAX) Vanguard Extended Market Index Fund Admiral Shares (0.08% ??)
35% (VBTLX) Vanguard Total Bond Market Index Fund Admiral Shares (0.05% ??)

Roth IRA at Vanguard -- $76K -- 50%
30% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)
20% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)

My comments:
  • In the 401k I don't know your plan expense ratios so I used the retail rates. Your plan costs may be different.
  • In the 401k you could skip Extended Market and just use 15% 500 Index. It's not a big deal.
Something to think about.

Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Re: Portfolio Review

Post by Exafchick » Wed Nov 15, 2017 3:14 pm

Duckie: The actual amount I contribute to my 401k is $332.80/month. I think there is a match like 5-10% or what I contribute.

One question on your allocations for the 401k and Roth, don't the Total Stock Market and S&P 500 funds duplicate each other?

soccerrules
Posts: 166
Joined: Mon Nov 14, 2016 4:01 pm

Re: Portfolio Review

Post by soccerrules » Wed Nov 15, 2017 3:36 pm

Exafchick wrote:
Wed Nov 15, 2017 3:03 pm
Just to clarify, I meant that I hoped to get $2000-$2500 a month from investment accounts to add to pension and SS.
If you have read any other posts similar to yours you will see reference to a safe withdrawal rate (SWR). There is a general belief that a SWR of 3-4% of your financial/investment monies is sustainable for a 30-35 year retirement, without running out of money. With your need for $24,000 to $30,000/year you would need a minimum of $600K ($24K at 4%) to a possible high end $1M ($30K at 3%). Others suggest 2.5% SWR would survive much longer than 40 years.
do you know what your projected SS benefit will be ?

I would start at your basic living expenses and income (including income tax) you will need per year in retirement. Then subtract your pension, SS and other income streams. That will leave you your "gap". If the gap is $2000-$2500 a month as indicated, you might consider the above numbers and/or reduce your expected spending. Can you get to $600K-$1M by retirement ? or work a little longer ?
Don't let your outflow exceed your income or your upkeep will be your downfall.

Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Re: Portfolio Review

Post by Exafchick » Wed Nov 15, 2017 3:42 pm

Soccerrules: I believe my projected SS income at age 67 would be around $1500/month. Ideally I'd love to be in a position with my investments to not have to count on SS and it will just be a "bonus". Currently, my pension covers my mortgage plus an extra $500/mo towards principle. My civilian job only needs to cover $1500 a month for the rest of my living expenses (including funding Roth IRA) with the "extra" going towards savings.

I plan to move to the pacific NW in a few years and rent. Hoping sale of house will also help pad my savings account. I'm currently living in upstate NY so hoping my living expenses will be less but I'm planning like it will be the same to ensure I have enough.

Thank you!

Grt2bOutdoors
Posts: 17138
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Portfolio Review

Post by Grt2bOutdoors » Wed Nov 15, 2017 4:08 pm

Could be a tall order to obtain $2,500 in investment income. Using a 4% withdrawal rate, would need approximately $750,000 in assets. My projections earlier suggest you could reach $500-600K by 65 at current contribution rates and conservative growth rates. Growth rates are the real wildcard here, no one knows what the returns are going to be over the long haul. Many "experts" are suggesting lower returns going forward, if that holds true, you accumulation may be less than projected, if the opposite happens you may wind up with more.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Re: Portfolio Review

Post by Exafchick » Wed Nov 15, 2017 4:16 pm

Grt2boutdoors: rate of return is definitely the wild card! even if my investments can provide $1500/month to supplement pension and SS, I think I will still be fine. I do not have expensive hobbies or tastes so will definitely live within my means. I grew up with a waitress mother who raised 3 daughters by herself so I am absolutely prepared to do whatever I need to do (work longer, live on less, etc.). I think just having the pension and guaranteed healthcare already puts me in a good position. My 401k and Roth IRA investments will help ensure I'm not forced to keep working until my heart gives out! Would I like to be able to take some trips? Sure! I will also definitely be flying back east to visit sisters and nephews. but champagne and ski european holidays? Not my style!

User avatar
Duckie
Posts: 5082
Joined: Thu Mar 08, 2007 2:55 pm

Re: Portfolio Review

Post by Duckie » Wed Nov 15, 2017 5:20 pm

Exafchick wrote:The actual amount I contribute to my 401k is $332.80/month. I think there is a match like 5-10% or what I contribute.
Are you getting the entire match? You don't want to ignore free money. Find out exactly how it's matched.
One question on your allocations for the 401k and Roth, don't the Total Stock Market and S&P 500 funds duplicate each other?
They're very similar funds when it comes to the return. In your case you don't have a Total Stock option in your 401k (unless you do and didn't mention it) so you have to use 500 Index in the 401k. In the Roth IRA you have more options and can choose Total Stock.

Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Re: Portfolio Review

Post by Exafchick » Thu Nov 16, 2017 8:52 am

One question on your allocations for the 401k and Roth, don't the Total Stock Market and S&P 500 funds duplicate each other?
They're very similar funds when it comes to the return. In your case you don't have a Total Stock option in your 401k (unless you do and didn't mention it) so you have to use 500 Index in the 401k. In the Roth IRA you have more options and can choose Total Stock.
[/quote]

So would it be better to have Total Stock Market in 401k or Roth IRA? Here's what I was considering for each:

Roth IRA:
35% Total Bond Index (VBTLX)
65% Total S&P 500 Index (VFIAX)

401k:
20% Total International Stock Market (VTIAX)
80% Total Stock Market (VTSAX)

If I only need one of the Stock Market funds, any suggestions for a replacement? REIT? Any rule of thumb for which funds are better in which vehicle (pre-tax vs after tax)?

Thank you again for sharing your opinion!

Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Re: Portfolio Review

Post by Exafchick » Thu Nov 16, 2017 9:50 am

Here is my final allocations:

Roth IRA:
80% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
20% Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)

401k w/ Nationwide:
65% Vanguard STAR Fund (VGSTX)--I had initially had this as my Roth IRA but decided it was better to put stocks in the IRA
35% Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX)

Not sure how many more years I will stay at this job so if I move before I am ready to retire and cannot roll 401k over into another employer's plan, I will either leave it where it is (even though I wouldn't be able to contribute more funds) or roll it over into a Traditional IRA and just split the $6500 annual contribution between the two IRAs.

This is my first real allocation adjustment since opening my Roth over 15 years ago! I mainly wanted to be more diversified to hopefully be able to supplement my pension and SS income in 16-20 years with a modest monthly withdrawal ($1500 or so).

I really appreciate all who responded and provided their opinions and wisdom! If there are any other points I should consider, please share. Thank you!

User avatar
Duckie
Posts: 5082
Joined: Thu Mar 08, 2007 2:55 pm

Re: Portfolio Review

Post by Duckie » Thu Nov 16, 2017 3:32 pm

Exafchick wrote:Here is my final allocations:

Roth IRA:
80% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
20% Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)

401k w/ Nationwide:
65% Vanguard STAR Fund (VGSTX)--I had initially had this as my Roth IRA but decided it was better to put stocks in the IRA
35% Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX)
There are two problems with this portfolio:
  • First, both accounts should total 100%, not each account. So it should be 50% in the Roth IRA with a 30/20 breakdown and 50% in the 401k with a 15/35 breakdown. (Unless you want a different AA.)
  • Second, VGSTX is a balanced fund with 44% US stocks, 19% international stocks, and 37% bonds/cash. Holding a balanced fund while holding individual funds makes figuring your AA and rebalancing difficult. It's also more expensive (0.32%) than VFIAX (0.04%). VGSTX seriously complicates your portfolio.

Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Re: Portfolio Review

Post by Exafchick » Thu Nov 16, 2017 3:42 pm

Duckie wrote:
Thu Nov 16, 2017 3:32 pm
Exafchick wrote:Here is my final allocations:

Roth IRA:
80% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
20% Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)

401k w/ Nationwide:
65% Vanguard STAR Fund (VGSTX)--I had initially had this as my Roth IRA but decided it was better to put stocks in the IRA
35% Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX)
There are two problems with this portfolio:
  • First, both accounts should total 100%, not each account. So it should be 50% in the Roth IRA with a 30/20 breakdown and 50% in the 401k with a 15/35 breakdown. (Unless you want a different AA.)
  • Second, VGSTX is a balanced fund with 44% US stocks, 19% international stocks, and 37% bonds/cash. Holding a balanced fund while holding individual funds makes figuring your AA and rebalancing difficult. It's also more expensive (0.32%) than VFIAX (0.04%). VGSTX seriously complicates your portfolio.
Duckie: Unfortunately I'm not sure how to set up the allocations to conform to your suggestion in #1. IRA is with Vanguard directly and 401k is through Nationwide. Separate sites each asking for a percentage to split funds.

I wasn't sure what else to use in my IRA since I was so stock-heavy in my 401k. I am definitely open to suggestions and I will see if they (or similar) are available through 401k.

Thank you!

soccerrules
Posts: 166
Joined: Mon Nov 14, 2016 4:01 pm

Re: Portfolio Review

Post by soccerrules » Thu Nov 16, 2017 4:06 pm

Exafchick wrote:
Thu Nov 16, 2017 3:42 pm
Duckie wrote:
Thu Nov 16, 2017 3:32 pm
Exafchick wrote:Here is my final allocations:

Roth IRA:
80% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
20% Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)

401k w/ Nationwide:
65% Vanguard STAR Fund (VGSTX)--I had initially had this as my Roth IRA but decided it was better to put stocks in the IRA
35% Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX)
There are two problems with this portfolio:
  • First, both accounts should total 100%, not each account. So it should be 50% in the Roth IRA with a 30/20 breakdown and 50% in the 401k with a 15/35 breakdown. (Unless you want a different AA.)
  • Second, VGSTX is a balanced fund with 44% US stocks, 19% international stocks, and 37% bonds/cash. Holding a balanced fund while holding individual funds makes figuring your AA and rebalancing difficult. It's also more expensive (0.32%) than VFIAX (0.04%). VGSTX seriously complicates your portfolio.
Duckie: Unfortunately I'm not sure how to set up the allocations to conform to your suggestion in #1. IRA is with Vanguard directly and 401k is through Nationwide. Separate sites each asking for a percentage to split funds.

I wasn't sure what else to use in my IRA since I was so stock-heavy in my 401k. I am definitely open to suggestions and I will see if they (or similar) are available through 401k.

Thank you!
I think Duckie is referencing looking at all of your assets in the Roth and 401K together as 1 bucket/dollar amount. So your VTSAX is x% of all your invested assets (total $ of Roth and 401K), same for VTIAX, VGSTX and VBTLX should = 100%.
Don't let your outflow exceed your income or your upkeep will be your downfall.

Nyc10036
Posts: 228
Joined: Wed Oct 05, 2016 6:29 pm

Re: Portfolio Review

Post by Nyc10036 » Thu Nov 16, 2017 4:14 pm

Roth IRA

Code: Select all

$45000 (VTSAX)
$30000 (VTIAX)
401k

Code: Select all

$22800 (VGSTX)
$53200 (VBTLX)

Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Re: Portfolio Review

Post by Exafchick » Thu Nov 16, 2017 4:19 pm

Nyc10036 wrote:
Thu Nov 16, 2017 4:14 pm
Roth IRA

Code: Select all

$45000 (VTSAX)
$30000 (VTIAX)
401k

Code: Select all

$22800 (VGSTX)
$53200 (VBTLX)
So, if I am reading your portfolio correctly, I should consider having more bonds than STAR fund? I did put all four funds in the Morningstar X-ray and it came up with the following:
Cash 2%
US Stocks 52%
Foreign Stocks 16%
Bonds 29%
Other 1%

At my age (will be 49 next month) i would think 68% stocks/29% bonds would be acceptable.

Nyc10036
Posts: 228
Joined: Wed Oct 05, 2016 6:29 pm

Re: Portfolio Review

Post by Nyc10036 » Thu Nov 16, 2017 4:49 pm

Exafchick wrote:
Thu Nov 16, 2017 4:19 pm
Nyc10036 wrote:
Thu Nov 16, 2017 4:14 pm
Roth IRA

Code: Select all

$45000 (VTSAX)
$30000 (VTIAX)
401k

Code: Select all

$22800 (VGSTX)
$53200 (VBTLX)
So, if I am reading your portfolio correctly, I should consider having more bonds than STAR fund? I did put all four funds in the Morningstar X-ray and it came up with the following:
Cash 2%
US Stocks 52%
Foreign Stocks 16%
Bonds 29%
Other 1%

At my age (will be 49 next month) i would think 68% stocks/29% bonds would be acceptable.
Since you were having problems understanding Duckie's post, I am putting in numbers for you to understand.

Please see the edit below. It matches Duckie's fund selection for your 401k.
I eliminated VEXAX. It's just 3%. Made VFIAX 15% to make up the difference.

Code: Select all

$22800 (VFIAX)
$53200 (VBTLX)

User avatar
Duckie
Posts: 5082
Joined: Thu Mar 08, 2007 2:55 pm

Re: Portfolio Review

Post by Duckie » Thu Nov 16, 2017 5:12 pm

Exafchick wrote:I did put all four funds in the Morningstar X-ray and it came up with the following:
Cash 2%
US Stocks 52%
Foreign Stocks 16%
Bonds 29%
Other 1%
I'm not sure what numbers you used to get the above percentages. I recommend 30% VTSAX, 20% VTIAX, 15% VFIAX, and 35% VBTLX which gets a Morningstar AA of 44% US stocks, 20% international stocks, and 36% bonds/cash.

Set up the 401k so that 30% goes to VFIAX and 70% goes to VBTLX. Set up the Roth IRA so that 60% goes to VTSAX and 40% goes to VTIAX. (If you insist on VGSTX change the 401k to 40% VGSTX and 60% VBTLX to account for the bonds in VGSTX.)
At my age (will be 49 next month) i would think 68% stocks/29% bonds would be acceptable.
At age 49 I recommend 35% to 40% bonds.

Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Re: Portfolio Review

Post by Exafchick » Fri Nov 17, 2017 9:42 am

Thank you for the clarification! I am pretty dense when it comes to splitting funds up in separate accounts to get the correct AA. I really appreciate all your assistance. I'm ready to plug in these percentages and then just review totals monthly and (fingers crossed) I will have enough when I eventually retire.

Thanks again!

KlangFool
Posts: 6960
Joined: Sat Oct 11, 2008 12:35 pm

Re: Portfolio Review

Post by KlangFool » Fri Nov 17, 2017 9:59 am

OP,

If you do not need your current income for your living expense, you could contribute more of your income to the pre-tax 401K account. You may do that in order to qualify for saver's credit.

https://www.bogleheads.org/wiki/Saver%27s_credit

You should do a tax forecast with a tax software to check this out.

KlangFool

Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Re: Portfolio Review

Post by Exafchick » Fri Nov 17, 2017 12:03 pm

KlangFool wrote:
Fri Nov 17, 2017 9:59 am
OP,

If you do not need your current income for your living expense, you could contribute more of your income to the pre-tax 401K account. You may do that in order to qualify for saver's credit.

https://www.bogleheads.org/wiki/Saver%27s_credit

You should do a tax forecast with a tax software to check this out.

KlangFool
Unfortunately I do need income from civilian job to pay for all expenses except mortgage (which is covered by pension). wouldn't that be nice to not need income!

KlangFool
Posts: 6960
Joined: Sat Oct 11, 2008 12:35 pm

Re: Portfolio Review

Post by KlangFool » Fri Nov 17, 2017 12:19 pm

Exafchick wrote:
Fri Nov 17, 2017 12:03 pm
KlangFool wrote:
Fri Nov 17, 2017 9:59 am
OP,

If you do not need your current income for your living expense, you could contribute more of your income to the pre-tax 401K account. You may do that in order to qualify for saver's credit.

https://www.bogleheads.org/wiki/Saver%27s_credit

You should do a tax forecast with a tax software to check this out.

KlangFool
Unfortunately I do need income from civilian job to pay for all expenses except mortgage (which is covered by pension). wouldn't that be nice to not need income!
Exafchick,

<< Debt: Mortgage $177,000 (appraised at $210k). I add $500 extra each month toward principle. If i stay here, it will be paid off in 15 years.>>

But, you do not need all of the income. If that is true, you do not have $500 extra each month to pre-pay the mortgage. You should calculate the tax savings and tax credits that you could get if you contribute this amount to Trad. 401K instead.

And, you are contributing 5.5K per year to Roth IRA. They could be contributed to Trad. 401K or Trad. IRA instead.

You could lower your taxable income by about 12K. You might qualify for the tax credits. You should check this out.

KlangFool

Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Re: Portfolio Review

Post by Exafchick » Fri Nov 17, 2017 12:23 pm

KlangFool wrote:
Fri Nov 17, 2017 12:19 pm
Exafchick wrote:
Fri Nov 17, 2017 12:03 pm
KlangFool wrote:
Fri Nov 17, 2017 9:59 am
OP,

If you do not need your current income for your living expense, you could contribute more of your income to the pre-tax 401K account. You may do that in order to qualify for saver's credit.

https://www.bogleheads.org/wiki/Saver%27s_credit

You should do a tax forecast with a tax software to check this out.

KlangFool
Unfortunately I do need income from civilian job to pay for all expenses except mortgage (which is covered by pension). wouldn't that be nice to not need income!
Exafchick,

<< Debt: Mortgage $177,000 (appraised at $210k). I add $500 extra each month toward principle. If i stay here, it will be paid off in 15 years.>>

But, you do not need all of the income. If that is true, you do not have $500 extra each month to pre-pay the mortgage. You should calculate the tax savings and tax credits that you could get if you contribute this amount to Trad. 401K instead.

And, you are contributing 5.5K per year to Roth IRA. They could be contributed to Trad. 401K or Trad. IRA instead.

You could lower your taxable income by about 12K. You might qualify for the tax credits. You should check this out.

KlangFool
Wow, that is significant! I will definitely do some research. Thank you!

KlangFool
Posts: 6960
Joined: Sat Oct 11, 2008 12:35 pm

Re: Portfolio Review

Post by KlangFool » Fri Nov 17, 2017 1:19 pm

Exafchick wrote:
Fri Nov 17, 2017 12:23 pm
KlangFool wrote:
Fri Nov 17, 2017 12:19 pm
Exafchick wrote:
Fri Nov 17, 2017 12:03 pm
KlangFool wrote:
Fri Nov 17, 2017 9:59 am
OP,

If you do not need your current income for your living expense, you could contribute more of your income to the pre-tax 401K account. You may do that in order to qualify for saver's credit.

https://www.bogleheads.org/wiki/Saver%27s_credit

You should do a tax forecast with a tax software to check this out.

KlangFool
Unfortunately I do need income from civilian job to pay for all expenses except mortgage (which is covered by pension). wouldn't that be nice to not need income!
Exafchick,

<< Debt: Mortgage $177,000 (appraised at $210k). I add $500 extra each month toward principle. If i stay here, it will be paid off in 15 years.>>

But, you do not need all of the income. If that is true, you do not have $500 extra each month to pre-pay the mortgage. You should calculate the tax savings and tax credits that you could get if you contribute this amount to Trad. 401K instead.

And, you are contributing 5.5K per year to Roth IRA. They could be contributed to Trad. 401K or Trad. IRA instead.

You could lower your taxable income by about 12K. You might qualify for the tax credits. You should check this out.

KlangFool
Wow, that is significant! I will definitely do some research. Thank you!
Exafchick,

There are smarter folks than me at this forum. If you start a new topic and provide more complete details regarding your income and so on, they could probably do the calculation and tell you.

KlangFool

Exafchick
Posts: 21
Joined: Thu Nov 09, 2017 10:40 am

Re: Portfolio Review

Post by Exafchick » Fri Nov 17, 2017 1:45 pm

Just looked up the saver's credit and unfortunately between pension and civilian job, my annual household income is not less than $50k.

KlangFool
Posts: 6960
Joined: Sat Oct 11, 2008 12:35 pm

Re: Portfolio Review

Post by KlangFool » Fri Nov 17, 2017 1:48 pm

Exafchick wrote:
Fri Nov 17, 2017 1:45 pm
Just looked up the saver's credit and unfortunately between pension and civilian job, my annual household income is not less than $50k.
Exafchick,

<< Note that the credit is based on Adjusted Gross Income; if you contribute to a deductible IRA or 401(k), this will lower your AGI and may make you eligible for a larger credit. You can even contribute to a deductible IRA for the previous year through April 15 of the current year in order to move to a different credit category.>>

The income limit is based on AGI. It is not based on gross income. You could contribute up to 24.5K to Trad. 401K and 6.5K to Trad. IRA.

KlangFool

Post Reply