Portfolio help

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divyasri
Posts: 2
Joined: Tue Jan 16, 2018 3:07 pm

Portfolio help

Post by divyasri » Tue Jan 16, 2018 3:17 pm

Hello all,
I am detailing our situation here hoping to get some help streamlining our portfolio. Married filing jointly, Two kids (4 and 2 year old). I had streamlined my finances to be a 5 fund portfolio when I was single but my husband is a “more, more” guy which landed us in this situation that is going several different directions. Now that I have convinced him to at least simplify, I am hoping to get some help here.

I have provided our current income and retirement account options. In addition we also have 529 plans for both kids (about 30k and 20k for each child). Hoping that this community can provide some input to streamline our portfolio.

Emergency Fund: Currently a year’s worth of living expenses
Debt: None
Mortgage: Currently owe 270k on a 30 year mortgage. Interest rate is fixed at 3.8%.
Personal Loan: None
College Loans: None
Car Loans: None
Credit Card: Paid in Full each month

Tax Filing Status:
Married filing jointly. 2 dependents
Tax Rate:
Federal: 35% in 2018
State: 3.75%

State of Residence: IL
Age:
Him: 42 ; Her: 40
Desired Asset Allocation:
70% stocks/30% bonds
Desired international allocation: 20%
Our current portfolio is low 7 figures and very cash heavy. Looking to rebalance and reallocate.

Current Assets
His – for simplicity I have calculated his and hers separately since mine is at least less unwieldy.

Taxable:
Individual stocks 48.5%
Cash 19.5%

Retirement
Rollover 401k: 29% needs to be reinvested.
Current 401k : Fidelity freedom 2035 FFTHX :1.5%
Roth IRA: VTSMX : 1.5%
Contributions:
$18000 with no company match (maxed out)

Hers:
Taxable:
Individual stocks 16.5%
Retirement : 83.5%
The breakdown for the retirement accounts is as follows:
(1) Rollover 401k 23%
Fidelity US Bond Index FSITX 6%
Fidelity 500 Index Inst FXSIX 37%
Vanguard Inflation Protection ADM VAIPX 6%
Vanguard REIT Index ADM VGSLX 9%
Vanguard institutional Index VINIX 25%
Vanguard International Value VTRIX 17%
(2) Rollover 403B 29%
Fidelity US Bond Index FSITX 10%
Fidelity 500 Index Inst FXSIX 36%
Vanguard Inflation Protection ADM VAIPX 9%
Vanguard REIT Index ADM VGSLX 9%
Vanguard institutional Index VINIX 18%
Vanguard International Value VTRIX 18%
(3) Roth IRA VTSMX 14.5%

(4) Current 401k :
Vanguard target retirement 2045 VTIVX 17%
Contributions:
$18,000 plus 3% company match (maxed out)
$5,500 through backdoor Roth IRA annually (maxed out)

Questions/Comments:
Currently his rollover IRA has to be reinvested to make our allocations correct plus we have cash that we would like to invest in our taxable accounts. Can we start a backdoor Roth for him? We had to close the last one we had in his name when he rolled over his 401k to an IRA with fidelity to make the math simple.

We currently have no debts. We want to continue paying the minimum on our mortgage. We will be moving this year and renegotiating the mortgage down does not make much sense at this point since the costs will outweigh any savings. We already have the money that is required to buy another home from our current home’s equity as well as other cash not accounted for in this analysis.

So far we have just eliminated debt and focused on getting low expense ratios. This has led to a large amount of overlap with investment choices as well as current allocation possibly being out of balance. We simply configured it as 70% stocks/30% other as approximate numbers since we still consider ourselves as having a long way to go in our investing career. I realize that some funds are better to invest in through a company 401k while others may be better suited being invested in through an IRA. I chose my current index funds simply based on the advice to the members of the forums I frequent as well as the books and articles (many being referenced on this site) that I have read. Again, any advice/comments you have here will be appreciated.

As of now, our short term goals are to settle on an asset allocation with the appropriate funds that will allow us to reach our long term goals.
Our long term goal is to have a paid off home and have the ability to retire and maintain a comfortable lifestyle. Another secondary goal is to provide for our kids education. I have mentioned that we have 529s started for them. I do know they will count against them for financial aid eligibility. Are there other vehicles we can use to save for their education? Our plan was to liquidate our taxable assets if we have to provided we have enough money for retirement by the time they reach college.

I would like to thank the many members/owners/moderators of this board for the wealth of information that it provides. Any advice, thoughts, criticisms, and or concerns on my current situation would be helpful.

User avatar
Tyler Aspect
Posts: 847
Joined: Mon Mar 20, 2017 10:27 pm
Location: California
Contact:

Re: Portfolio help

Post by Tyler Aspect » Wed Jan 17, 2018 8:56 pm

divyasri wrote:
Tue Jan 16, 2018 3:17 pm
Hello all,
I am detailing our situation here hoping to get some help streamlining our portfolio. Married filing jointly, Two kids (4 and 2 year old). I had streamlined my finances to be a 5 fund portfolio when I was single but my husband is a “more, more” guy which landed us in this situation that is going several different directions. Now that I have convinced him to at least simplify, I am hoping to get some help here.
Welcome to Bogleheads.

I have provided our current income and retirement account options. In addition we also have 529 plans for both kids (about 30k and 20k for each child). Hoping that this community can provide some input to streamline our portfolio.

Emergency Fund: Currently a year’s worth of living expenses
Debt: None
Mortgage: Currently owe 270k on a 30 year mortgage. Interest rate is fixed at 3.8%.
Personal Loan: None
College Loans: None
Car Loans: None
Credit Card: Paid in Full each month

Tax Filing Status:
Married filing jointly. 2 dependents
Tax Rate:
Federal: 35% in 2018
State: 3.75%

State of Residence: IL
Age:
Him: 42 ; Her: 40
Desired Asset Allocation:
70% stocks/30% bonds
Desired international allocation: 20%
Our current portfolio is low 7 figures and very cash heavy. Looking to rebalance and reallocate.

Current Assets
His – for simplicity I have calculated his and hers separately since mine is at least less unwieldy.

Taxable:
Individual stocks 48.5%
Cash 19.5%
40% US stock (VTSAX)
18% International stock (VTIAX)
I am not sure if the 19.5% cash includes emergency cash; obviously you still need emergency cash.


Retirement
Rollover 401k: 29% needs to be reinvested.
29% Total Bond Market (VBTLX)

Current 401k : Fidelity freedom 2035 FFTHX :1.5%
Roth IRA: VTSMX : 1.5%
Contributions:
$18000 with no company match (maxed out)

Hers:
Taxable:
Individual stocks 16.5%
Exchange to 16.5% total international stock market (VTIAX).

Retirement : 83.5%
The breakdown for the retirement accounts is as follows:
(1) Rollover 401k 23%
Exchange to a S&P 500 index fund.

(2) Rollover 403B 29%
29% Fidelity US Bond Index FSITX

(3) Roth IRA VTSMX 14.5%

(4) Current 401k :
Vanguard target retirement 2045 VTIVX 17%
Contributions:
$18,000 plus 3% company match (maxed out)
$5,500 through backdoor Roth IRA annually (maxed out)

Questions/Comments:
Currently his rollover IRA has to be reinvested to make our allocations correct plus we have cash that we would like to invest in our taxable accounts. Can we start a backdoor Roth for him? We had to close the last one we had in his name when he rolled over his 401k to an IRA with fidelity to make the math simple.
Are all these Rollover 401k accounts and Rollover 403B accounts actually Rollover IRA accounts? If true, then backdoor Roth is probably not a good idea.

We currently have no debts. We want to continue paying the minimum on our mortgage. We will be moving this year and renegotiating the mortgage down does not make much sense at this point since the costs will outweigh any savings. We already have the money that is required to buy another home from our current home’s equity as well as other cash not accounted for in this analysis.
Selling off all individual stocks within a two year period should simplify the portfolio. If any stocks have short term gain, wait until the short term gain transition to long term gain, then you can sell them off.
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

divyasri
Posts: 2
Joined: Tue Jan 16, 2018 3:07 pm

Re: Portfolio help

Post by divyasri » Thu Jan 18, 2018 11:50 am

<t>Thank you Tyler Aspect,<br/>
<br/>
I really appreciate your suggestions and will get started simplifying our portfolio. One thing that I forgot to clarify is that I don't have rollover 401k and 403b. I kept the accounts as is with fidelity when I resigned from my last job. The funds were good, costs were low and I did not want to deal with too many companies. My current job's 401k is with ADP. So there has been no crossover. My husband however did rollover his 401k into a fidelity IRA account which is why I had to stop the IRA/back door Roth that I had been doing in the past to ensure my math at tax time doesn't get messed up. <br/>
<br/>
Thanks again</t>

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