end of 2017 portfolio review/sanity check

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OnThePier
Posts: 9
Joined: Mon May 29, 2017 5:27 pm

end of 2017 portfolio review/sanity check

Post by OnThePier » Sat Dec 16, 2017 5:01 pm

Hi Bogleheads,

I am a few years long user who has benefitted greatly from all of your knowledge and completely adjusted how our family invests based on what I’ve learned. I have asked a question or two before — but wanted to try a full portfolio review/check as 2017 winds to a close. Would appreciate any advice or thinking — if there is anything I am missing or could be doing better here (there are a few specific q’s at the end below).

Thank you very much -- and happy holidays.

///

Basics:
- husband and wife, each 45 years old, with two teenagers

Emergency funds:
- 1 year of living expenses (in Vanguard MM)

Debt:
- mortgage of 850k at 3.125% (property is worth aprox 1.8M)
- we pay a couple hundred dollars extra principle each month

Tax Filing Status:
- Married Filing Jointly

Tax Rate:
35% Federal
9.3% State
State of Residence: CA

Desired Asset allocation:
- 80% stocks / 20% bonds

Desired International allocation:
- 30ish% of stocks

Target asset allocation:

Vanguard Total Stock Market Index 35%
Vanguard Total International Stock Index 25%
Vanguard Small-Cap Value Index Fund 10%
Vanguard REIT Index Fund 10%
Vanguard Total Bond Market Index Fund 15%
Vanguard Inflation-Protected Securities 4%

Current assets (separate from home)
- aprox 1MM
- aprox breakdown below:

His 401k (w/ company match) — 10% of assets
==========================
Vanguard Target Retirement 2040 Fund (VFORX / .07% exp) 100k

His rollover IRA — 22% of assets
==========================
Vanguard Total Bond Market Index Fund (VBTLX / .05% exp) 110k
Vanguard REIT Index Fund (VGSLX / .12% exp) 75k
Vanguard Inflation-Protected Securities Fund (VIPSX / .20%) 30k

His Roth IRA - 1% of assets
==========================
Vanguard Total Bond Market Index Fund (VBTLX / .05% exp) 10k
Vanguard Small-Cap Value Index Fund (VSIAX / .07% exp) 2k

Joint Taxable —60% of assets
=========================
Vanguard Prime Money Market Fund (VMMXX / .16% exp) 130k (emergency fund)
Vanguard Small-Cap Value Index Fund (VSIAX / .07% exp) 30k
Vanguard Total International Stock Index (VTIAX/.11% exp) 190k
Vanguard Total Stock Market Index Fund (VTSAX / .04% exp) 250k

Her IRA - 5% of assets
==========================
Vanguard Small-Cap Value Index Fund (VSIAX / .07% exp) 60k

Her Roth - 2% of assets
==========================
Vanguard Target Retirement 2035 Fund (VTTHX / .15% exp) 15k

Other assets:
- 529 account for child 1 - 60k (Vanguard Aggressive Age-Based Option:40% Stock/60% Bond Portfolio)
- 529 account for child 2 - 30k (Vanguard Aggressive Age-Based Option:60% Stock/40% Bond Portfolio)

New annual Contributions
- his 401k — max each year with matching
- his and her IRAs — max each year
- taxable: varies — can be 25k a year or in a stock vesting year between 300-400k to immediately save

Questions:

1. A basic sanity check would be great. Am I missing anything? Any holes or improvements you’d suggest?

2. Am I holding too much cash? sometimes I think of shifting from 1 year of emergency to 6 months — and investing the rest. Good idea?

3. When I shift jobs — should I roll previous 401k into new 401K? (choices are excellent in both places — Vanguard with very low exp). Alternative is I have a few diff 401k accounts with Fidelity (all are held there).

4. Every year I toy with adjusting to a simpler 3 fund per Taylor's mega post. Would be easier to juggle across multiple accounts and taxable/non. Any pitfalls to selling some to do that, if I decide to take the plunge -- or is there advantage to remaining more diverse with REIT/Small cap/TIPS?

///

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midareff
Posts: 5733
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: end of 2017 portfolio review/sanity check

Post by midareff » Sat Dec 16, 2017 5:12 pm

I'd like to get to the bottom line of equities vs. fixed income (bonds) without a bunch of calculations. Can you help me out?

OnThePier
Posts: 9
Joined: Mon May 29, 2017 5:27 pm

Re: end of 2017 portfolio review/sanity check

Post by OnThePier » Sat Dec 16, 2017 6:03 pm

Hi midareff -- for me 80% equites and 20% bonds. Is that what you are asking here? Thank you.

iasw
Posts: 166
Joined: Mon Dec 05, 2016 2:02 pm

Re: end of 2017 portfolio review/sanity check

Post by iasw » Sat Dec 16, 2017 6:05 pm

You're doing great, imo! I don't have much to add. Do you have a HSA available?

How much are you wanting to contribute for your kids' college,and are you on pace for that?

Don't forget, real estate is about 3.xx? Percent of VTSAX, so you are already holding it a little.

I am conservative and prefer a bigger emergency fund, so I say do what helps you sleep.

livesoft
Posts: 62709
Joined: Thu Mar 01, 2007 8:00 pm

Re: end of 2017 portfolio review/sanity check

Post by livesoft » Sat Dec 16, 2017 6:16 pm

In your tax bracket, I would avoid Small-cap Value in taxable, especially since it is such a small amount AND you have room elsewhere for it. If you don't think you have room elsewhere, then consider letting it go or replacing the REIT fund with a SCV fund. Basically, lose that $30K of SCV in taxable as soon as possible and before it pays out its distribution this year.
Wiki This signature message sponsored by sscritic: Learn to fish.

OnThePier
Posts: 9
Joined: Mon May 29, 2017 5:27 pm

Re: end of 2017 portfolio review/sanity check

Post by OnThePier » Sat Dec 16, 2017 7:19 pm

@iasw

Thanks for the note. To be honest, we’ve never put in the time to nail the HSA in a way that benefits us. (It has been available). That’s probably a miss. We look and say — hmm — now we have to manage and track — and just skip it. But we should probably look at these more closely. Thanks for the though there.

Your note on real estate is also a good reminder.

Lastly — yes, I am kind of the same way on emergency fund — which is why I haven’t reduced it yet. Sometimes, honestly, I think its worth holding so much in the event of some big market drop and THEN using a reduction from 12 mons to 6 months to fund buying more of my allocation. Still deciding whether to stay at 12 months, or go to six -- but those are my usual thoughts on it.

Thanks again and happy holiday!

OnThePier
Posts: 9
Joined: Mon May 29, 2017 5:27 pm

Re: end of 2017 portfolio review/sanity check

Post by OnThePier » Sat Dec 16, 2017 7:20 pm

@Livesoft — thank you very much for the thought here. I can re-check to see if I have room to own SCV in tax-advantaged. If not, and I had a choice between swapping REIT out for SCV in tax-advantaged OR just swapping out SCV in taxable for more of Total Stock — I’d probably do the later. What do you think there? Then I’d be one fund simpler — basically a 3 fund with the REIT addition and less SCV.

Thanks again for flagging this and happy holiday!

OnThePier
Posts: 9
Joined: Mon May 29, 2017 5:27 pm

Re: end of 2017 portfolio review/sanity check

Post by OnThePier » Sat Dec 16, 2017 7:24 pm

Sorry @iasw -- left this part out -- on college funding -- I feel like I am not on pace and actually want to be more aggressive upcoming -- so that is on the list. It would be great if kids choose public universities, but I'd like to fund to a level where they can go where they like (within reason). That said, I also view this as needing to get the early period funded -- vs all funded -- before the start of college. But either way -- am looking to have us fund more from where we are today. thanks again!

iasw
Posts: 166
Joined: Mon Dec 05, 2016 2:02 pm

Re: end of 2017 portfolio review/sanity check

Post by iasw » Sun Dec 17, 2017 4:41 pm

HSA even in a money market will still be a good tax benefit, yeah?

Good job with everything.

I suppose while you're in assessment mode, you can also look at your insurance coverage if you haven't done so lately.

Happy holidays!

johnra
Posts: 176
Joined: Sun Dec 28, 2014 12:07 pm

Re: end of 2017 portfolio review/sanity check

Post by johnra » Mon Dec 18, 2017 11:08 am

You have 60% of your assets in a taxable account. If you have access to after-tax contributions to Roth, you can do a mega-backdoor transfer up to the 415c limit of 55K total per year (counting pre-tax and post-tax contributions) from taxable space to Roth space without affecting your taxes--to offset the decrease of everyday income, spend the money from your taxable savings, while contributing to the after-tax retirement accounts. Make sure you can transfer it into the Roth, where you want the growth. This is a good place to have growth assets, and take some more risks, but remember you will not be able to get your hands on it until you are 59 1/2 (unlike the taxable accounts.)

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