Portolio and Approach Feedback

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tony_roach
Posts: 5
Joined: Sun Nov 19, 2017 2:05 pm

Portolio and Approach Feedback

Post by tony_roach » Wed Dec 06, 2017 12:31 am

Forum members hoping I get your feedback on my current progress, approach and allocation (wondering if I should increase bonds a bit more). Recently found the board and already got some good advice about converting my non-deductible Trad. IRA contributions to Roth IRA's (both his and hers). We've been fortunate to manage on a single salary but wife has recently re-started part time work.

Emergency fund: 3 months
No Credit Card or Car debt
Mortgage: 3.625% ~$323K (~$544K home value)
Tax Filing Status: MFJ
Marginal Tax Bracket: 28% Federal
State of Residence: PA
Age: 41

Total Portfolio: $590K + $35K in two PA529 Plans
Overall Asset Allocation (not counting PA529 plans): 67% US, 15.5% International, 12% Bonds, 5.5% Cash

401K: $443K (I'm maxing my annual contribution and I also get 100% employer match up to 4.5%)
FXAIX FID 500 Index (0.015%) 41% of portfolio
VSCPX Vanguard Small Cap (0.04%) 6% of portfolio
FSGGX FID Global XUS Index (0.06%) 16% of portfolio
Mellon Aggregate Bond Fund (0.0213%) 12% of portfolio

Only other low cost fund is Vanguard Target 2035 or 2040 (0.05%) but those were added recently and I'm comfortable with my 4 fund approach.

Taxable Account: $114K 19% of portfolio
Stocks and ITOT @0.03%

His IRA: $27,500 (will continue to max contribution) 5% of portfolio
Cash until I backdoor into Roth. Planning to go with ITOT and IXUS

Her IRA: $5,500 (began contributing and will be able to max this one as well moving forward) 1% of portfolio
Cash until I backdoor into Roth. Planning to go with ITOT and IXUS
Last edited by tony_roach on Wed Dec 06, 2017 9:08 am, edited 1 time in total.

mhalley
Posts: 5199
Joined: Tue Nov 20, 2007 6:02 am

Re: Portolio and Approach Feedback

Post by mhalley » Wed Dec 06, 2017 2:14 am

At 41, yo are definitely very aggressive, but a target date fund would probably only have you at 10% bonds. AA is a very personal choice, depending on multiple factors. It would certainly not be unreasonable to increase bonds to at least 25- 30%.

tony_roach
Posts: 5
Joined: Sun Nov 19, 2017 2:05 pm

Re: Portolio and Approach Feedback

Post by tony_roach » Wed Dec 06, 2017 9:22 am

Thanks for the feedback. If you assume 2040 target date I'm not too far off from the bond allocation. When you look at the two Vanguard target date funds they have the following bond mix:

2035--21.2%
2040--13.7%

I would prefer to include equities in both Roth's (for growth) so I have a couple of options:

1. Direct all or most of my 401K contributions to bonds this year
2. Re-balance from 401K equities into bonds to up the overall allocation.

Any concerns if I move all of small cap into bonds or should I pull some from my S&P or a bit of both?

mega317
Posts: 1258
Joined: Tue Apr 19, 2016 10:55 am

Re: Portolio and Approach Feedback

Post by mega317 » Wed Dec 06, 2017 1:21 pm

Overall I think you're doing great. My own plan is to be 30% bonds when I'm your age, and I prefer at least 6 months emergency fund.

I would find it easier to rebalance now into what you want, and then direct future contributions at the desired ratio. But either way works.

Can you further explain your strategy of cash in the IRA? Why aren't you converting to Roth today?

And what are the stocks in taxable?

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