First post - Help maintaining my target allocation across Vanguard/Fidelity/TIAA

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nywest42
Posts: 2
Joined: Wed Dec 06, 2017 9:57 pm

First post - Help maintaining my target allocation across Vanguard/Fidelity/TIAA

Post by nywest42 » Thu Dec 07, 2017 11:24 am

Hello, all. First post. Thank you for changing my investing life. Down to business...

Emergency funds: Yes
Debt: 70k mortgage, 15 year fixed @ 3.25% (home purchased in 2012)
Tax Filing Status: Married Filing Jointly
Tax Rate: 25% Federal
State of Residence: MI
Age: 34
Desired Asset allocation: 72% stocks / 28% bonds
Desired International allocation: 25% of stocks

Current Retirement Assets (~200k total)

Roth IRA (Vanguard)
14% - VTSAX-Vanguard Total Stock Market Index Fund Admiral Shares (ER 0.04)
6% - VTIAX-Vanguard Total International Stock Index Fund Admiral Shares (ER 0.11)
8% - VBTLX-Vanguard Total Bond Market Index Fund Admiral Shares (ER 0.05)

403b (Fidelity)
11% - FSTVX-Fidelity Total Market Index Fund - Premium Class (ER 0.035)
4% - FSIVX-Fidelity International Index Fund - Premium Class (ER 0.06)
6% - FSITX-Fidelity U.S. Bond Index Fund - Premium Class (ER 0.045)

403a Optional Retirement Plan Employer Contribution (TIAA)
29% - TIEIX-TIAA Access Equity Index Fund T2 (ER 0.35)
13% - TCIEX-TIAA Access International Equity Index Fund T2 (ER 0.36)
9% - TIBFX-TIAA Access Bond Plus Fund T2 (ER 0.61)

All of these are my accounts. Wife is a stay at home mom with our two kiddos both less than 3 years old. We have a 529 plan I just started with a couple thousand in there, but let's ignore that. I max out my Roth IRA and get about $6000 in each year to the 403b. My institution contributes an extra 10% of my paycheck into the TIAA 403a every paycheck (if my check is $1000, they contribute $100 to TIAA regardless of what I contribute).

Obviously I'm a fan of the 3 fund portfolio. I also love the low expense ratios I get at Vanguard and Fidelity. However, the majority of my portfolio is at TIAA and my employer offers me no other choice. On top of that, those TIAA funds above have the lowest expense ratios available to me. I'm especially concerned about the bond fund (TIBFX) both because of its price and holdings. Here is a list of the funds available to me through my TIAA 403a:

Equities
CREF Equity Index R1
CREF Global Equities R1
CREF Growth R1
CREF Stock R1
TIAA Access Equity Index Fund T2
TIAA Access Growth & Income Fund T2
TIAA Access International Equity Fund T2
TIAA Access International Equity Index Fund T2
TIAA Access Large-Cap Growth Index Fund T2
TIAA Access Large-Cap Value Fund T2
TIAA Access Large-Cap Value Index Fund T2
TIAA Access Mid-Cap Growth Fund T2
TIAA Access Mid-Cap Value Fund T2
TIAA Access Real Estate Securities Fund T2
TIAA Access S&P 500 Index Fund T2
TIAA Access Small-Cap Blend Index Fund T2
TIAA Access Small-Cap Equity Fund T2
TIAA Access Social Choice Equity Fund T2
TIAA Access-T. Rowe Price Institutional Large Cap Growth T2

Fixed Income
CREF Bond Market R1
CREF Inflation-Linked Bond R1
TIAA Access Bond Plus Fund T2
TIAA Access High-Yield Fund T2
TIAA Access Short-Term Bond Fund T2
TIAA Access-Western Asset Management Core Plus Bond T2

Other
TIAA Traditional (Guaranteed 3% currently offering 4%, you can only withdraw over 9 years and 1 day)
TIAA Real Estate
A bunch of lifecycle funds that are just too expensive with ER ~0.8

Questions

1) What's the best way to maintain my desired 54/18/28 stock/international/bond allocation across my three brokerages? I was thinking I would keep NO bonds at TIAA and simply keep a larger percentage of bonds at vanguard or fidelity to avoid TIBFX (because of its holdings and ER). Is this a good idea? How should I distribute this across the 3 brokerages?

2) TIAA traditional intrigues me. A guaranteed 3% currently at 4% seems nice. Would it be wise to use the TIAA traditional as a substitute for bonds solely at TIAA? It would give me the security I'm looking for there while eliminating the ER. It would also make rebalancing yearly simpler since I can rebalance to 72/28 stock/bond within each brokerage and don't have to keep extra bonds at vanguard or fidelity.

3) In about 1 year I'll be able to pay off the rest of our mortgage. Should I? Or should I work on maxing out the 403b?

4) Any other general advice? I'm still new to this.

Thanks for your time! Sincere apologies if I've not asked the right questions. They're hard to ask sometimes.
Last edited by nywest42 on Sat Dec 09, 2017 7:59 am, edited 2 times in total.

rkhusky
Posts: 4473
Joined: Thu Aug 18, 2011 8:09 pm

Re: First post - Help maintaining my target allocation across Vanguard/Fidelity/TIAA

Post by rkhusky » Thu Dec 07, 2017 2:23 pm

Keeping similar AA's at each institution is fine and does make it easy to maintain. If that is important, I see no reason to change. You could make things slightly more efficient by choosing different AA's, but it does require a bit more work.

Replacing the TIAA bond fund with the Traditional is also fine, if you are looking to make your bond holding more conservative.

You can also contribute to your wife's Roth IRA, which should be more of a priority than the 529. Max your and your wife's tax advantaged retirement accounts before contributing to a 529.

mega317
Posts: 1206
Joined: Tue Apr 19, 2016 10:55 am

Re: First post - Help maintaining my target allocation across Vanguard/Fidelity/TIAA

Post by mega317 » Thu Dec 07, 2017 5:32 pm

I'd get out of TIBFX. You can make the 403b entirely bonds which gets you most of the way to your desired AA, and it seems that account will be getting more new contributions so it will be 28% of your portfolio soon. I would definitely also consider TIAA traditional. I know nothing about it but there are many posters here who like it. Do a search of the forum.

I suppose it could be simpler to have the same AA in each account, but you can build a simple spreadsheet in 5 minutes to track your holdings, and then you can have 1-2 funds in each account instead of 3, and be able to choose the least expensive ones when there are limited options.

Start a Roth for your wife.

Your mortgage rate is good but I'm guessing you don't itemize or are on the borderline, so the tax benefit isn't as great as it is for some people. It does feel a little weird to hold a bond fund that guarantees 3% while paying 3.25% on a mortgage you could pay off, doesn't it? But that isn't the only consideration. It would be reasonable to put every taxable dollar (except emergency fund) into the mortgage. It would also be reasonable to keep the liquidity.

BTW 34 years old, paid off home, plus 200k in retirement accounts--very nice.

nywest42
Posts: 2
Joined: Wed Dec 06, 2017 9:57 pm

Re: First post - Help maintaining my target allocation across Vanguard/Fidelity/TIAA

Post by nywest42 » Fri Dec 08, 2017 12:31 pm

After researching TIAA traditional GRA it seems like it's not a bad deal. I'm leaning heavily that way at this point. I'm alright with the limited liquidity in exchange for guaranteed growth in that portion of my portfolio.

I will start a roth IRA for my wife.

livesoft
Posts: 57156
Joined: Thu Mar 01, 2007 8:00 pm

Re: First post - Help maintaining my target allocation across Vanguard/Fidelity/TIAA

Post by livesoft » Fri Dec 08, 2017 12:54 pm

Here is a thread where I show how I maintain my target allocation across Vanguard/Fidelity/TIAA/WellsFargo/TDAmeritrade. It applies to you as well:
viewtopic.php?t=150267
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