Help With Sister's Portfolio & 403b Choices.

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bschlabs
Posts: 21
Joined: Mon Mar 05, 2018 10:11 pm

Help With Sister's Portfolio & 403b Choices.

Post by bschlabs » Sat May 26, 2018 11:31 pm

I am looking for some portfolio advice for my sister. I am steering her in the direction of the Bogleheads Philosophy. She is currently reading through the "start here" wiki and watching the videos. Her 403b is with Guidestone and the ER's are not very attractive. Our father has been diagnosed with a terminal cancer. He has asked me to help her learn how to manage her portfolio efficiently. She will be inheriting an estimated amount from my father's estate around 250-500k in the coming years.

Emergency funds: 2 Months
Debt: 1k
Tax Filing Status: Married
Tax Rate: 15% Federal
State of Residence: TX
Age: 29
Income: 72K

Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: Unsure due to cruddy 403b choices

Current retirement assets
21k 100%: Guidestone Balanced Allocation (GGIZX) (1.02%)



Taxable
Cash: $3000 (gifted from father intended for her)- Either EF boost or open up taxable account since more money coming soon
$2500 (gifted from father intended for daughter's education) Going to place into 529 at some point. Thinking Nevada or Utah.



Her 403b
100% Guidestone Balanced Allocation (GGIZX) (1.02%)
Company match: 8% - Investing up to match at the moment

Available funds

Low-Duration Bond (GLDZX) (0.63%)
Medium-Duration Bond (GMDZX) (0.69%)
Extended-Duration Bond (GEDZX) (0.86%)
Global Bond (GGBFX) (0.86%)

Select Funds: US Equity
Equity Index (GEQZX) (0.46%)
Value Equity (GVEZX) (0.84%)
Growth Equity (GGEZX) (1%)
Small Cap Equity (GSCZX) (1.3%)

Select Funds: Non-US Equity
International Equity (GIEZX) (1.13%)
Emerging Markets Equity (GEMZX) (1.59%)


Asset Allocation Funds
Conservative Allocation (GFIZX) (.95%)
Growth Allocation (GCOZX) (1.11%)
Aggressive Allocation (GGBZX) (1.19%)

Target Date Funds
MyDestination 2015 (GMTZX) (.95%)
MyDestination 2025 (GMWZX) (.97%)
MyDestination 2035 (GMHZX) (1.02%)
MyDestination 2045 (GMFZX) (1.05)
MyDestination 2055 (GMGZX)(1.07%)




Questions:
1. I think what I would do is place 100% in GEQZX up to my match. Any additional retirement investing would be placed in a Roth IRA at vanguard to complete desired AA. Do you agree with my advise? Any other Ideas?

2. When she receives her inheritance, how should she handle this money? Most of it will be in the form of taxable mutual funds at vanguard that will receive a step up tax basis. I have shown her the managing a windfall wiki and she knows to take her time and tell no one. My thoughts would be to finish out EF and set aside some for a downpayment on house and other short term goals. The rest I would put a into VTSAX & VTIAX and call it a day. What are your thought? If you need any other information on this I will be happy to provide.

Grt2bOutdoors
Posts: 18849
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Help With Sister's Portfolio & 403b Choices.

Post by Grt2bOutdoors » Sat May 26, 2018 11:54 pm

Sorry for your bad news.

1) use the equity index for 80%, use medium duration for 20%. The all-in expense ratio will be a respectable 0.508%. Much better than the fund she’s in now.

2). When windfall occurs, beef up E-fund. Then, take $5,500 and open up a Roth IRA. Continue doing that until income gets high enough to support these annual contributions. Use small cap value or small cap index or a target retirement fund. Use taxable account to hold total international stock index and total stock index - you can take foreign tax credit on your income tax return.

Yes, tell no one about inheritance including best friend. Tell one, before you know it, everyone knows. It happens.

Recommend reading some of the books on wiki.

Does she drive?, when windfall comes, consider an umbrella policy to protect assets in case of lawsuit. Cost is a few hundred or less per million of coverage.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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