Portfolio Re-balance... What's Next?

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time4life
Posts: 24
Joined: Sat May 06, 2017 8:24 pm

Portfolio Re-balance... What's Next?

Post by time4life » Thu Jan 11, 2018 7:39 am

I am still a fairly new investor. Would like to thank everyone who helped me get this far and looking to become a better, smarter investor.

My Status:
Emergency funds: 6 months of expenses (Pure Point Online Savings @ 1.40%)
Debt: No debt
Tax Filing Status: Single
Tax Rate: xx% Federal, xx% State (I don’t know how to find out or pull this information. I know/have my LES and W-2 statement)
State of Residence: New York
Age: 25
Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: 30% of stocks

Current retirement assets
Military 401K, TSP, 18500 (was 18000 for 2017)

G Fund 0% Balance: $3,672.09
F Fund 12% Balance: $2,784.28
C Fund 63% Balance: $24,878.92
S Fund 16% Balance: $6,184.99
I Fund 9 % Balance: $667.32

Total Balance: $38,187.60 (Jan 2018)
My 1st post that helped me get started: viewtopic.php?f=1&t=218338&p=3712034#p3712034

ROTH IRA at Vanguard, 5500
15% VANGUARD FTSE ALL WORLD EX US SMALL CAP ETF (VSS) ER .13% Balance: $850.01
85% VANGUARD TOTAL INTL STOCK INDEX FUND ETF (VXUS) ER .11% Balance: $5028.42

Total Balance: $5971.98 (Jan 2018)

Contributions

New annual Contributions
$18500 his TSP (ROTH), 401K (employer match, $2751.66 annual contribution from Military)
$5500 his Roth IRA, Vanguard

Available funds

Funds available in his 401(k) TSP
G Fund: a uniquely attractive bond fund that provides yields similar to an intermediate-term Treasury bond fund, but with the stability of principal of a money market fund, and no default risk.
F Fund: a fixed income index commingled trust that tracks the Barclays US Aggregate Bond Index.
C Fund: a large-to-mid cap stock index commingled trust that tracks the S&P 500 Stock Index.
S Fund: a mid-to-small cap stock index commingled trust that tracks the Dow Jones U.S. Completion Total Stock Market Index, commonly known as an Extended market index fund.
I Fund: an international stock index commingled trust that tracks the EAFE Stock Index. Note that the I Fund does not have any emerging market or small-cap holdings.

Funds available in his Roth IRA Vanguard
Vanguard Total Stock ETF (VTI)
Vanguard Total International Stock ETF (VXUS)
Vanguard Total Bond Market ETF (BND)

Questions:
1. Since my goal is to maximize TSP, thought the best was to put bond and domestic stocks with TSP and international with ROTH. I have tried to come close to the 3 fund portfolio. Is the best way to get rid of I fund completely and just invest in G, F, C, and S?
1a. If I do that, I run into the problem where I can only put 5500 in Roth and that’s only 23% of 24000 going into international vice 30%. Should i open a 3rd account on top of TSP and ROTH IRA? Or I just leave my TSP allocations and get rid of VSS. I am assuming my C and S is funded correctly at 4:1 ratio being that C is 63% and S is 16%.

2. I did do a interfund transfer within TSP when I decided to allocate money to each fund but I forgot to do that to G fund. Currently has a balance of about 3.5k. Should I leave it there or put it into a different fund?

3. I will be maxing the contribution of 18500 to TSP, 5500 to ROTH, and continuing to contribute 10% my monthly pay to savings. What should I open next for left over money?

Appreciate all the advice and wisdom. Semper Fi to Bogle Heads

Beensabu
Posts: 123
Joined: Sun Aug 14, 2016 3:22 pm

Re: Portfolio Re-balance... What's Next?

Post by Beensabu » Thu Jan 11, 2018 11:25 pm

Bump.

OP's whole portfolio current allocation:

401k TSP
G Fund (8.3%)
F Fund (6.3%)
C Fund (56.3%)
S Fund (14%)
I Fund (1.5%)

Roth IRA
VANGUARD FTSE ALL WORLD EX US SMALL CAP ETF (VSS) ER .13% (1.9%)
VANGUARD TOTAL INTL STOCK INDEX FUND ETF (VXUS) ER .11% (11.4%)

~ 85 stock / 15 bond
Equities ~ 83 US / 17 ex-US
I think. I do not know.

time4life
Posts: 24
Joined: Sat May 06, 2017 8:24 pm

Re: Portfolio Re-balance... What's Next?

Post by time4life » Sat Jan 13, 2018 4:42 am

Thank you Beensabu for that

User avatar
Watty
Posts: 12129
Joined: Wed Oct 10, 2007 3:55 pm

Re: Portfolio Re-balance... What's Next?

Post by Watty » Sat Jan 13, 2018 8:13 pm

time4life wrote:
Thu Jan 11, 2018 7:39 am
What should I open next for left over money?
A couple of things;

1) Start saving up a downpayment for a house. (There is no hurry!)
2) Save up to pay cash for your next car.
3) Consider if you have a good "Now vs Later" balance.

You are young, single, and presumably in good health and don't have kids. There are lots of things that you can do now that may be difficult or impossible to do in later phases of your life. Budgeting for something like a frugal trip to Europe could be worth considering.

time4life
Posts: 24
Joined: Sat May 06, 2017 8:24 pm

Re: Portfolio Re-balance... What's Next?

Post by time4life » Sat Jan 13, 2018 9:02 pm

Watty wrote:
Sat Jan 13, 2018 8:13 pm
time4life wrote:
Thu Jan 11, 2018 7:39 am
What should I open next for left over money?
A couple of things;

1) Start saving up a downpayment for a house. (There is no hurry!)
2) Save up to pay cash for your next car.
3) Consider if you have a good "Now vs Later" balance.

You are young, single, and presumably in good health and don't have kids. There are lots of things that you can do now that may be difficult or impossible to do in later phases of your life. Budgeting for something like a frugal trip to Europe could be worth considering.
Watty,

Thank you, offered some good points. I've realized that most of my investments and savings, have been for more long time purposes. The only short term access to money for 1-2 years I would say is my checking account. I might need a used car when I move within the next 3 years, what type of account/investment would work for short term for a purchase? As for as a down payment on a house, being in the military, I wouldn't have the worry about that in a while but your right, doesn't hurt to save for it now and be ready for the future. I would say that's more than 5-10 years away for a down payment/purchase. What type of account/investment would work for this one? As for as my travel expenditures, the only thing I do for that is budget how much i want to spend and it comes out of my checking account as this can happen quickly pretty quickly as I am usually not able to plan more than 3 months out.

Questions:
What type of accounts/investments (VG)for short term purchases like a car?
What type of accounts/investments (VG) for longer term purchases like a down payment on a house?
Utilizing the checking account for frugal trips within couple months to a year the best method?

time4life
Posts: 24
Joined: Sat May 06, 2017 8:24 pm

Re: Portfolio Re-balance... What's Next?

Post by time4life » Mon Jan 15, 2018 7:25 am

*bump*

CheeseFlip
Posts: 37
Joined: Sun Dec 11, 2016 9:15 am

Re: Portfolio Re-balance... What's Next?

Post by CheeseFlip » Mon Jan 15, 2018 12:38 pm

Okay Devil Dog, I'll bite on your portfolio.

Good job maxing tax-advantaged space at your age/grade. You're ahead already. Suggestions:

TSP:
10% F
48% C
12% S
15% I

Roth:
15% VXUS (or VTIAX when you have $10K)

Responses to your questions:
1. Yes, I'd put international in the Roth IRA. It's ~22% of your tax-advantaged space for 2018. for more international, the I Fund is good enough until your Roth IRA space expands. also, my vote is don't bother with VSS. It'll just complicate your portfolio with questionable benefit.
2. The TSP has the easiest rebalancing tool in existence. Just punch in the percentages, they move the money. Given your age, the F Fund is good. Keep the TSP and shift to G in the years before retiring.
3. You can use a short term bond to save in a taxable account, VBISX or other. A CD also works; NFCU often has good promo "add-on" CDs.

A couple of other thoughts -
1. You're likely at your lowest career tax rate. Favor the Roth TSP if you can swing it.
2. Don't think you have to buy a house straight out of the gate. Lots of service-families lose money on houses. People just don't talk about those as much.
3. As a young person, think about how to build your human capital first. Take the 'right' billets, or use the GI Bill if you get out.

Good luck!

time4life
Posts: 24
Joined: Sat May 06, 2017 8:24 pm

Re: Portfolio Re-balance... What's Next?

Post by time4life » Tue Jan 16, 2018 9:35 am

CheeseFlip wrote:
Mon Jan 15, 2018 12:38 pm
Okay Devil Dog, I'll bite on your portfolio.

Good job maxing tax-advantaged space at your age/grade. You're ahead already. Suggestions:

TSP:
10% F
48% C
12% S
15% I

Roth:
15% VXUS (or VTIAX when you have $10K)

Responses to your questions:
1. Yes, I'd put international in the Roth IRA. It's ~22% of your tax-advantaged space for 2018. for more international, the I Fund is good enough until your Roth IRA space expands. also, my vote is don't bother with VSS. It'll just complicate your portfolio with questionable benefit.
2. The TSP has the easiest rebalancing tool in existence. Just punch in the percentages, they move the money. Given your age, the F Fund is good. Keep the TSP and shift to G in the years before retiring.
3. You can use a short term bond to save in a taxable account, VBISX or other. A CD also works; NFCU often has good promo "add-on" CDs.

A couple of other thoughts -
1. You're likely at your lowest career tax rate. Favor the Roth TSP if you can swing it.
2. Don't think you have to buy a house straight out of the gate. Lots of service-families lose money on houses. People just don't talk about those as much.
3. As a young person, think about how to build your human capital first. Take the 'right' billets, or use the GI Bill if you get out.

Good luck!
Semper Fi CheeseFlip. Appreciate the help. If I go with the TSP and ROTH allocations, what do I do with the left over money for ROTH IRA? I am contributing 5500 to the ROTH IRA and if I'm only using 15% that leaves me with 1900 in VG to use. Also should I take the balance that I have in the G fund and move it?

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