Help improving our minimal portfolio - 36/31

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Topic Author
ybdam
Posts: 23
Joined: Mon Dec 25, 2017 6:50 pm

Help improving our minimal portfolio - 36/31

Post by ybdam »

Hello Everyone,

I joined this site recently and still reading and learning from it. Have made a few changes to my contributions but would like to get suggestions. Thanks in advance for taking the time.

Non-citizen, Permanent Residents. DW and I have been in the country for 10 and 4 years respectively. No kids but planning for one in the next 2 years.

Emergency funds: Six months of expenses - 30K
Debt: Car Loan - 6.5K @ 2.54% (< 3 years remaining). DW student loan paid off.
Tax Filing Status: Married Filing Jointly
MAGI for 2017 - 195K
State of Residence: MA
Age: Him 36/ Her 31
Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation: Not sure (need help)


Cash - 45K (ready for investing) + 30K (Emergency) - Both sitting in a BOA savings account earning nothing. We have Preferred Rewards Platinum status but don't have a Merill Edge account.

His 401K - 54K
American Century Retirement Date 2045 CIT (0.70%)

Her 401K - 68K
Her firm's retirement and savings plan - Couldnt get much details but general information showed AA was 85/15

Her Old 401K
- 84K
T. Rowe Price Retirement 2050 (TRRMX) (0.74%)

Her ESPP - 4K (No more contributions)


No IRAs or taxable accounts except for the ESPP



New Annual Contributions

His 401k - 18K + 3K company match ( maxing out starting 2018)
His HSA - 2950 + 500 company match (starting 2018)
His ESPP - 2.7K ( was hesitant and avoided it for 3 years though I get a good discount. Finally opted in this year with minimal contribution).

Her 401k - 18K + 10K company match ( maxing out starting 2018)


Available funds

His 401(k):


Intermediate Term Bond
Prm Inf-Pro and Icm (Barings) (MIPSX ) (0.57%)
Janus Henderson Flexible Bond Fund (JAFIX) (0.70%)
Total Return Bd (Prudential) (PDBZX)(0.51)

Intl/Global Bond
Templeton Global Bond Fund (TGBAX) (0.68%)

Asset Allocation/Lifecycle
American Century Retirement Date 2045 CIT (0.70%)
other target funds with all having ER (0.70%)

Large Cap Value
Washington Mut Invs (American) (RWMFX)(0.35%)

Large Cap Core
BlackRock iShares S&P 500 Index Fund (WFSPX)(0.04%)

Large Cap Growth
Contrafund (Fidelity) (FCNTX)(0.68%)

Mid Cap Value
JHancock3 Disciplined Value Mid Cap Fund (JVMIX)(0.86%)

Mid Cap Growth
Sel Mid Cap Gr (TRP/Frontier) (MGRFX)( 0.83%)

Small Cap Value
Small Cap Val (Goldman Sachs) (GSSIX)( 0.95%)

Intl/Global Large Value
JHancock Disciplined Value International Fund (JDISX)(1.4%)

Intl/Global Large Growth
International Growth (Invesco) (AIIEX)( 1.32%)

Emerging Market Equity
Developing Markets (OFI) (ODVYX)(1.07%)


Questions:

I know we have the just done the bare minimum and behind the curve but we are happy to start now and keep it simple. We don't want to be aggressive and make bad decisions either. Maxed out 401Ks and HSA after I found this site recently and read the wiki but dont have a complete IPS yet.

1. What should be our immediate next steps?
2. We are thinking of moving our emergency fund to Ally savings + CDs. Is this good ? We don't care about the Platinum status unless there is a strong reason to stick with it.
3. We are planning to open a Vanguard taxable account and invest the 40K cash and 2K each month going forward in the 3 fund portfolio. Considering my current allocations is this good? Being a starter, I don't understand tax efficient AA much yet.
4. Any suggestions on my 401K. DW wants to stick with her target funds for now but I am open to change my allocation if it will be more beneficial.
mega317
Posts: 5705
Joined: Tue Apr 19, 2016 10:55 am

Re: Help improving our minimal portfolio - 36/31

Post by mega317 »

You are in good shape from the standpoint of future contributions and having a general plan. Most people will never reach that "bare minimum" level. So from there I do think your next step is the IPS.

Map out what assets go in which account. I usually recommend no bonds in your taxable account, but rather increase your bond holdings in tax-advantaged. However that might not be best for you since by far your best 401k fund is the S&P 500. What are the bond options in your wife's plans? "DW wants to stick with" doesn't make a lot of sense if you're considering one portfolio, but I realize some people are like that and I certainly don't want this to become a relationship thread. Maybe if she has a good bond fund you can discuss tax-efficient placement and see what she thinks.

Can you contribute to Roth IRAs? I might prioritize that over the 401k (once you get the match). https://www.bogleheads.org/wiki/Priorit ... nvestments

Ally is popular for emergency funds, I think most have had good experiences with them. But having some status at B of A gets you a boost in credit card rewards if that's relevant for you.

It's not that much of a difference but just pay the car off tomorrow.
Topic Author
ybdam
Posts: 23
Joined: Mon Dec 25, 2017 6:50 pm

Re: Help improving our minimal portfolio - 36/31

Post by ybdam »

mega317 wrote: Mon Jan 22, 2018 9:51 pm You are in good shape from the standpoint of future contributions and having a general plan. Most people will never reach that "bare minimum" level. So from there I do think your next step is the IPS.

Map out what assets go in which account. I usually recommend no bonds in your taxable account, but rather increase your bond holdings in tax-advantaged. However that might not be best for you since by far your best 401k fund is the S&P 500. What are the bond options in your wife's plans? "DW wants to stick with" doesn't make a lot of sense if you're considering one portfolio, but I realize some people are like that and I certainly don't want this to become a relationship thread. Maybe if she has a good bond fund you can discuss tax-efficient placement and see what she thinks.

Can you contribute to Roth IRAs? I might prioritize that over the 401k (once you get the match). https://www.bogleheads.org/wiki/Priorit ... nvestments

I am planning to do a backdoor roth as our 2017 MAGI was 195K.

Ally is popular for emergency funds, I think most have had good experiences with them. But having some status at B of A gets you a boost in credit card rewards if that's relevant for you.

This is a really good point but I guess moving out 40K for investing would take away the status. Else, I have to open a MerillEdge account and buy ETFs since there is a transaction fee for mutual funds (I may be wrong). Will look into this.

It's not that much of a difference but just pay the car off tomorrow.

I kept this to improve my credit score since I didn't have much of a credit history back then and just had 1 credit card. I know the number of credit accounts is a low level impact factor but don't know if paying off will affect my credit score.

Thank you for the advice.
billfromct
Posts: 2057
Joined: Tue Dec 03, 2013 8:05 am

Re: Help improving our minimal portfolio - 36/31

Post by billfromct »

Why not just put your emergency fund in the Vanguard Prime Money Market Fund?

It pays 1.44% & you can write checks from it or transfer money to your bank or credit union checking account when needed. I believe the minimum check size is $250.

I used to be with Bank of America but switched to DCU (Digital Credit Union). No fee checking & great online banking.

bill
Topic Author
ybdam
Posts: 23
Joined: Mon Dec 25, 2017 6:50 pm

Re: Help improving our minimal portfolio - 36/31

Post by ybdam »

billfromct wrote: Mon Jan 22, 2018 10:45 pm Why not just put your emergency fund in the Vanguard Prime Money Market Fund?

It pays 1.44% & you can write checks from it or transfer money to your bank or credit union checking account when needed. I believe the minimum check size is $250.

I used to be with Bank of America but switched to DCU (Digital Credit Union). No fee checking & great online banking.

bill
Thank you very much, I didn't know about this.
User avatar
badbreath
Posts: 987
Joined: Mon Jul 18, 2016 7:50 pm

Re: Help improving our minimal portfolio - 36/31

Post by badbreath »

I would take all of his 401k and put it in

Large Cap Core
BlackRock iShares S&P 500 Index Fund (WFSPX)(0.04%)
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx
Philly_fan
Posts: 29
Joined: Sun Oct 01, 2017 2:39 pm

Re: Help improving our minimal portfolio - 36/31

Post by Philly_fan »

I would move old 401k to vanguard ira. T Rowe price is too expensive. Although then you would lose opportunity for back door roth.
Topic Author
ybdam
Posts: 23
Joined: Mon Dec 25, 2017 6:50 pm

Re: Help improving our minimal portfolio - 36/31

Post by ybdam »

badbreath wrote: Mon Jan 22, 2018 10:51 pm I would take all of his 401k and put it in

Large Cap Core
BlackRock iShares S&P 500 Index Fund (WFSPX)(0.04%)
Thank you, I have thought about this. Considering that I should avoid bond funds in my taxable, having no ira and can't if i want to do a back door roth, wouldn't this be too aggressive?
Topic Author
ybdam
Posts: 23
Joined: Mon Dec 25, 2017 6:50 pm

Re: Help improving our minimal portfolio - 36/31

Post by ybdam »

I have another basic question. Are there tax efficient bond funds that I can buy for my taxable account? Is there a downside?
TwstdSista
Posts: 1408
Joined: Thu Nov 16, 2017 3:03 am

Re: Help improving our minimal portfolio - 36/31

Post by TwstdSista »

Massachusetts:
VMATX Vanguard Massachusetts Tax Exempt Fund (.15%)
Topic Author
ybdam
Posts: 23
Joined: Mon Dec 25, 2017 6:50 pm

Re: Help improving our minimal portfolio - 36/31

Post by ybdam »

TwstdSista wrote: Wed Jan 24, 2018 4:34 pm Massachusetts:
VMATX Vanguard Massachusetts Tax Exempt Fund (.15%)
Thank you. I will take a look.
Dottie57
Posts: 12379
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Help improving our minimal portfolio - 36/31

Post by Dottie57 »

The Blackrock S&p looks good and the ER is very good.
The rest of funds have high ER.
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