Late to the party, looking for some advice

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fpawn74
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Joined: Mon Jun 11, 2018 9:35 pm

Late to the party, looking for some advice

Post by fpawn74 » Tue Jun 12, 2018 4:56 pm

Hello everyone. New to the board here. I have the misfortune to begin investing late in life. I don’t believe in “too late”, but I know I am very far behind the curve. I am 44 years old and we have been a one income family for some time now, while my wife left her teaching position to raise our two boys at home. It was a sacrifice we have made, but one that cost us.

After paying off all of our debt, except home and car, and getting substantial pay raises, I am two months from having 6 months of emergency funds in a high yield savings and ready to start investing once I hit that goal. I have been reading everything I can lately, and have a basic understanding of basic investing, lol.

Here are some details:
US Navy Medical Retirement: $9k/yr before taxes
Regular Pay: $97k/yr before taxes
Married Filing Jointly
Wife’s salary is zero, but when she goes back to work next year, we will devote as much of it as possible to investing.
I can invest about $1300/month currently, until the wife returns to work.
Retirement planned income: $4500/month starting at 65.
Medical Expenses at Retirement: Retired military gives me almost no-cost medical coverage for my family, for life.

I have a 401k question, and an asset allocation question. As far as asset allocation goes, should I be following age based allocation where due to my age, I am more evenly weighted, or should I start with a higher weight towards stocks to make up for lost time? In other words, higher risk for say the next 10 years while I look to maximize my portfolio before pulling back to a more conservative allocation (if I can ever afford to do that!). I was thinking 70/30 stocks/bonds (with the 70% divided 50/20 US/International).

My company 401k is a discretionary match of 50 cents on the dollar up to $1.5k, so matching is not guaranteed. So for this purpose, I play it safe and call it unmatched. They use Principal financial, so here are my choices along with Expense Ratios (tickers included when I could find them easily):

Short-Term Fixed Income
Morley Capital Management - Principal Stable Value Z Fund 0.41%

Fixed Income Fixed Income
BlackRock Advisors, LLC - BlackRock High Yield Bond K Fund (BRHYX) 0.53%
Mellon Capital Mgmt - Bond Market Index Separate Account 0.17%
PGIM Investments, LLC - PGIM Total Return Bond R6 Fund (PTRQX) 0.41%
Principal Real Estate Inv - U.S. Property Sep Acct 0.79%
Western Asset MgmtCo. - Western Asset Core+ Bond IS Fund (WAPSX) 0.43%

Balanced/Asset Allocation
Multiple Sub-Advisors Principal LifeTime Hybrid Income CIT 0.30%
Multiple Sub-Advisors Principal LifeTime Hybrid 2010 CIT 0.30%
Multiple Sub-Advisors Principal LifeTime Hybrid 2015 CIT 0.30%
Multiple Sub-Advisors Principal LifeTime Hybrid 2020 CIT 0.30%
Multiple Sub-Advisors Principal LifeTime Hybrid 2025 CIT 0.30%
Multiple Sub-Advisors Principal LifeTime Hybrid 2030 CIT 0.30%
Multiple Sub-Advisors Principal LifeTime Hybrid 2035 CIT 0.30%
Multiple Sub-Advisors Principal LifeTime Hybrid 2040 CIT 0.30%
Multiple Sub-Advisors Principal LifeTime Hybrid 2045 CIT 0.30%
Multiple Sub-Advisors Principal LifeTime Hybrid 2050 CIT 0.30%
Multiple Sub-Advisors Principal LifeTime Hybrid 2055 CIT 0.30%
Multiple Sub-Advisors Principal LifeTime Hybrid 2060 CIT 0.30%
Multiple Sub-Advisors Principal LifeTime Hybrid 2065 CIT 0.30%

Large U.S. Equity
Capital Research and Mgmt Co - American Funds Washington Mutual Investors R6 Fund (RWMGX) 0.30%
Massachusetts Financial Svc Co - MFS Growth R6 Fund (MFEKX ) 0.60%
Massachusetts Financial Svc Co - MFS Value R6 Fund (MEIKX) 0.49%
Principal Global Investors - LargeCap S&P 500 Index Separate Account 0.05%
T. Rowe Price/Brown Advisory - LargeCap Growth I Separate Account 0.39%

Small/Mid U.S. Equity
Delaware Management Company - Delaware Small Cap Value R6 Fund (DVZRX) 0.75%
Franklin Templeton Investments - Franklin Small Cap Growth R6 Fund (FSMLX) 0.63%
Janus Henderson - Janus Henderson Enterprise N Fund (JDMNX) 0.67%
Principal Global Investors - MidCap S&P 400 Index Separate Account 0.05%
Principal Global Investors - SmallCap S&P 600 Index Separate Account 0.05%
Wells Fargo Fund Management - Wells Fargo Special Mid Cap Value R6 Fund (WFPRX) 0.75%

International Equity
Capital Research and Mgmt Co - American Funds New Perspective R6 Fund (RNPGX) 0.45%
Capital Research and Mgmt Co - American Funds New World R6 Fund (RNWGX) 0.64%
Principal Global Investors - International Equity Index Separate Account 0.20%


No Vanguard options here, which I know is what most here love. I see a lot of people recommending Bonds to be placed in 401k accounts. Should I focus on maxing out my unmatched 401k with these plans? Or put some in 401k, some in Roth, and some in taxable? I am not looking for someone to tell me exactly what to do with my money, just some guidance and helpful advice. Suggestions welcome. I continue to learn more each day, but a lot of this is overwhelming in the beginning!

Thanks for any and all advice. I'll even welcome the "you should have started when you were 25, not 45" comments! If I left out any detail, just ask! I have several weeks before my emergency fund is complete, so I am trying to get ahead of this.

A sincere thanks,
Jim

Grt2bOutdoors
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Re: Late to the party, looking for some advice

Post by Grt2bOutdoors » Tue Jun 12, 2018 6:08 pm

Hi Jim, welcome to the forum.
Late? Nonsense. A 70/30 allocation is just fine.
You have a great selection of funds in your 401k plan, the key Jim is to use broad based low expense ratio funds that are indexed if you can. Your plan offers that and for all the right asset classes too! A 70/30 allocation might look like this:

39% S&P 500 Index
9% MidCap Index
8% Small Cap Index
14% International Index
30% Total Bond Market Index

That is 70/30 with a 20% International.

P.S. Thank you for your service.
Last edited by Grt2bOutdoors on Tue Jun 12, 2018 8:26 pm, edited 1 time in total.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

ExitStageLeft
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Re: Late to the party, looking for some advice

Post by ExitStageLeft » Tue Jun 12, 2018 6:58 pm

Grt2bOutdoors wrote:
Tue Jun 12, 2018 6:08 pm
Hi Jim, welcome to the forum.
Late? Nonsense. A 70/30 allocation is just fine.
You have a great selection of funds in your 401k plan, the key Jim is to use broad based low expense ratio funds that are indexed if you can. Your plan offers that and for all the right asset classes too! A 70/30 allocation might look like this:

39% S&P 500 Index
9% MidCap Index
8% Small Cap Index
14% International Index
30% Total Bond Market Index

That is 70/30 with a 20% International.
:thumbsup Looks great!

I agree, don't start investing rashly. Figure out an allocation ratio that allows you to sleep at night, then write it down in an Investment Policy Statement. 70/30 is slightly on the "risky" side for many folks your age.

Your Principal funds look like an awesome replacement for Vanguard. It's hard to complain about a 0.05% expense ratio.

As soon as you have that debt knocked out, start saving to the max in every tax-advantaged means at your disposal. It is summarized nicely in the Wiki page on Prioritizing Investments. If your wife finds employment that has a 401k plan, that would allow you to save up to $48k every year into tax-deferred accounts. $11k of that would be in individual retirement accounts that could be traditional or Roth, as well each of you can contribute $18.5k into your respective retirement plans. That is on top of whatever youir employer contributes.

If you can contribute that every year for fifteen years, with a 6% return you would have a nest egg of over $1.1M. The more you contribute each year, the bigger that egg will be. Once you've filled up the tax-advantaged space then it's time to start saving in a taxable account. If you end up saving $60k per year that nest egg becomes $1.4M in fifteen years.

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Tyler Aspect
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Re: Late to the party, looking for some advice

Post by Tyler Aspect » Tue Jun 12, 2018 6:59 pm

One thing to consider is to see if you have vested pension. Any vested pension amount can be considered as bond-like before your retirement. If you already have substantial pension, then your 401k account can be all stock.

An investor at your age could have an over-all asset allocation around 65% stock / 35% bond.
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billfromct
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Re: Late to the party, looking for some advice

Post by billfromct » Tue Jun 12, 2018 7:36 pm

You may also want to consider starting a 529 college savings account for your 2 boys.

Many states give tax deductions for contributing to your state's 529 plan. The 529 plan grows tax free & is state & Federal tax free when used to pay for college expenses.

Vanguard has a low cost 529 plan (Nevada) & the NY plan has also been mentioned as having low cost 529 options.

Something to think about.

Others will say to save for your retirement first, but a little put into a 529 college savings plan will go a long way especially if you can start early.

bill

Grt2bOutdoors
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Re: Late to the party, looking for some advice

Post by Grt2bOutdoors » Tue Jun 12, 2018 8:25 pm

billfromct wrote:
Tue Jun 12, 2018 7:36 pm
You may also want to consider starting a 529 college savings account for your 2 boys.

Many states give tax deductions for contributing to your state's 529 plan. The 529 plan grows tax free & is state & Federal tax free when used to pay for college expenses.

Vanguard has a low cost 529 plan (Nevada) & the NY plan has also been mentioned as having low cost 529 options.

Something to think about.

Others will say to save for your retirement first, but a little put into a 529 college savings plan will go a long way especially if you can start early.

bill
The OP served in the Navy, he may have the GI bill to assist in that regard.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

fpawn74
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Re: Late to the party, looking for some advice

Post by fpawn74 » Tue Jun 12, 2018 9:43 pm

First, thank you to everyone who replied. You all are doing a great service by helping us newbie out.
Grt2bOutdoors wrote:
Tue Jun 12, 2018 8:25 pm
The OP served in the Navy, he may have the GI bill to assist in that regard.
Alas, I used all of my GI Bill on myself!
billfromct wrote:
Tue Jun 12, 2018 7:36 pm
You may also want to consider starting a 529 college savings account for your 2 boys.
I forgot to mention that. I do have have a 529 setup for both my boys. Not much, but a couple hundred a month.


Again, I appreciate the words of confidence and advice. Thank you!

Jim

Maverick3320
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Re: Late to the party, looking for some advice

Post by Maverick3320 » Wed Jun 13, 2018 9:14 am

Jim,

Welcome to the forums. For military-specific advice, have you double checked to make sure that you have no further military benefits? Did you use the old GI bill, or the post 9/11 one? Some states also have benefits for vets - no taxes on retirement/medical pay, etc.

It's never too late to start the investing game, but the later in the game you start, the more the focus shifts from asset allocation to simply accumulating as many assets as possible. To do that, the simplest course is to either cut expenses or raise income. Your wife going back to work will help a lot. Does she also have access to a defined benefit pension, or some other retirement plan? That may go a long way in helping you guys out.

Re: 529s. Most people will say to secure your retirement first, then to help out your kids. It's heartless advice, but the truth is that your kids can borrow for education, and you can't borrow for retirement.

All in all, with a relatively modest planned retirement income/spending level, you should be on the right path. Good luck!

invst65
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Re: Late to the party, looking for some advice

Post by invst65 » Wed Jun 13, 2018 9:37 am

You're not as late as I was. I had a small amount invested at age 50 but all hell broke loose when my first wife died of cancer. Got remarried about 5 years later with practically nothing left in the portfolio. Retired two years ago at age 67 with a 1 million dollar portfolio. My final salary was only slightly higher than yours is now.

It definitely helped that my second wife was able to work after she got her green card and passed the certification test for her specialty. Together we put away about half of our earnings until I retired. She's still working, which also helps, of course.

So take heart. I think you'll be just fine starting at 44 if you come up with a good plan and stick to it. You're almost a decade ahead of where I was.

fpawn74
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Re: Late to the party, looking for some advice

Post by fpawn74 » Thu Jun 14, 2018 9:55 am

Maverick3320 wrote:
Wed Jun 13, 2018 9:14 am
For military-specific advice, have you double checked to make sure that you have no further military benefits? Did you use the old GI bill, or the post 9/11 one?
I used the old GI Bill, and it was very helpful I might add. I have also recently opened a claim with the VA after 20 years. I was retired at 40% disability, but I have since gotten a bit worse. If I get a 50% rating through the VA, I will get to keep both my DoD Pension and VA Compensation. The VA portion is of course, tax-free.


I have a quick question regarding two of the Bond funds above.

Mellon Capital Mgmt - Bond Market Index Separate Account 0.17%
PGIM Investments, LLC - PGIM Total Return Bond R6 Fund (PTRQX) 0.41%

They both appear to track the same Index (Bloomberg Barclays Aggregate Bond Index), but Prudential has higher ratings and rankings, and slightly better performance, but at more than twice the ER. Is the Prudential Fund preferable? Mellon is almost exclusively long term, and Prudential is about 10% short, the rest long with some International in the mix as well. I want to learn to identify the best fund, not just the cheaped. Stocks and stock indexes are a far easier grasp for me than bonds, so excuse my ignorance.

Thanks again for all the help. This site has been a wonderful resource.

Jim

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Re: Late to the party, looking for some advice

Post by Grt2bOutdoors » Thu Jun 14, 2018 10:07 am

fpawn74 wrote:
Thu Jun 14, 2018 9:55 am
Maverick3320 wrote:
Wed Jun 13, 2018 9:14 am
For military-specific advice, have you double checked to make sure that you have no further military benefits? Did you use the old GI bill, or the post 9/11 one?
I used the old GI Bill, and it was very helpful I might add. I have also recently opened a claim with the VA after 20 years. I was retired at 40% disability, but I have since gotten a bit worse. If I get a 50% rating through the VA, I will get to keep both my DoD Pension and VA Compensation. The VA portion is of course, tax-free.


I have a quick question regarding two of the Bond funds above.

Mellon Capital Mgmt - Bond Market Index Separate Account 0.17%
PGIM Investments, LLC - PGIM Total Return Bond R6 Fund (PTRQX) 0.41%

They both appear to track the same Index (Bloomberg Barclays Aggregate Bond Index), but Prudential has higher ratings and rankings, and slightly better performance, but at more than twice the ER. Is the Prudential Fund preferable? Mellon is almost exclusively long term, and Prudential is about 10% short, the rest long with some International in the mix as well. I want to learn to identify the best fund, not just the cheaped. Stocks and stock indexes are a far easier grasp for me than bonds, so excuse my ignorance.

Thanks again for all the help. This site has been a wonderful resource.

Jim
They are not tracking the same benchmark, if they are it's because the Pru fund is a "go anywhere" fund where there isn't a comparable benchmark, instead they should be using a composite benchmark composed of the various bond sectors they are investing in. The Mellon Cap fund is invested in US only domestic issued US dollar denominated fixed income securities of US Treasuries, Corporates, Agency Backed MBS. The Pru fund as you say is 10% short, long and hold international fixed income. I personally don't like holding my dollars in international fixed income markets, but that's just me, subjecting my dollars to currency, political, economic risks of some overseas country where I'm not being compensated for the risk. If I want risk, I'll hold more equities and likely be well compensated for doing so. While they are likely not holding Argentina bonds, just look up the history of that country repudiating on its debts to understand why I don't like it, not saying the Euro sovereigns are anything like this, but things in Europe don't look so rosy either.

https://www.retirement.prudential.com/R ... /PTRQX.pdf

^^Reading the above, the fund can hold up to 30% international fixed income and hold securities with a rating of CCC and above. Sorry, that's not investment grade - anything below BBB+ is not investment grade, they are low graded securities with all of the risks you can imagine, the lower on the ratings the worse the bonds are in terms of actually being able to repay the coupons and the principal.

OP - There is no free lunch with the Pru fund.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

fpawn74
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Re: Late to the party, looking for some advice

Post by fpawn74 » Thu Jun 14, 2018 10:48 am

Understood. Thank you for the clarification. I just assumed they were tracking the same, as the Principal fund options booklet list both as "Benchmark: Bloomberg Barclays Aggregate Bond Index". I misused/misunderstood the term tracking. I guess a better word is replicate? They are looking to replicate the performance of that index, but use a different mix to try and achieve it?

As always, thanks!
Jim

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CyclingDuo
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Re: Late to the party, looking for some advice

Post by CyclingDuo » Thu Jun 14, 2018 11:04 am

fpawn74 wrote:
Tue Jun 12, 2018 4:56 pm
Hello everyone. New to the board here. I have the misfortune to begin investing late in life. I don’t believe in “too late”, but I know I am very far behind the curve. I am 44 years old and we have been a one income family for some time now, while my wife left her teaching position to raise our two boys at home. It was a sacrifice we have made, but one that cost us.

After paying off all of our debt, except home and car, and getting substantial pay raises, I am two months from having 6 months of emergency funds in a high yield savings and ready to start investing once I hit that goal. I have been reading everything I can lately, and have a basic understanding of basic investing, lol.

Here are some details:
US Navy Medical Retirement: $9k/yr before taxes
Regular Pay: $97k/yr before taxes
Married Filing Jointly
Wife’s salary is zero, but when she goes back to work next year, we will devote as much of it as possible to investing.
I can invest about $1300/month currently, until the wife returns to work.
Retirement planned income: $4500/month starting at 65.
Medical Expenses at Retirement: Retired military gives me almost no-cost medical coverage for my family, for life.
Did your wife contribute to her 403b or 457b plan before when she was working? Did she have a defined benefit plan/pension that she was vested in before leaving work, or is that now gone fo her? I assume she will be going back to teaching when she begins work again, correct? If so, certainly scout out the benefits plan at the various jobs where she will be applying. Some are much better than others and if she has the luxury of choosing between employers - I would put some weight into that. Quality of the defined benefit/pension plan, choice of 403b and 457b providers, amount the employer matches for the DB plan, etc... . Also explore if she would be able to opt out of the health care and receive an annual sum for that if she is on your health insurance.

It's pretty powerful what you can contribute in a dual income household with both of you having separate employer plans to contribute to. In her case, if she is going back to teaching, she will probably have a DB/Pension plan, plus a voluntary 403b, plus a voluntary 457b - or some combination that opens up a lot of room for pre-tax deductions between the two of you. You will want to max out the lowest cost plan first between the two of you, then move on from there as you play some catch up. We were in the same situation at your age when my spouse went back to work after taking some years off of full-time work as our children were being raised.
fpawn74 wrote:
Tue Jun 12, 2018 4:56 pm
My company 401k is a discretionary match of 50 cents on the dollar up to $1.5k, so matching is not guaranteed. So for this purpose, I play it safe and call it unmatched. They use Principal financial, so here are my choices along with Expense Ratios (tickers included when I could find them easily):

Fixed Income Fixed Income
Mellon Capital Mgmt - Bond Market Index Separate Account 0.17%

Large U.S. Equity
Principal Global Investors - LargeCap S&P 500 Index Separate Account 0.05%

Small/Mid U.S. Equity
Principal Global Investors - MidCap S&P 400 Index Separate Account 0.05%
Principal Global Investors - SmallCap S&P 600 Index Separate Account 0.05%

International Equity
Principal Global Investors - International Equity Index Separate Account 0.20%
Easy to get the Three Fund Portfolio at a low cost with those options. :moneybag

I would approximate the Total Stock Market for your US Domestic portion of your equity by following the approximation rules at the link below, the S&P 500, the mid-cap, and the small-cap in combination will accomplish this for you.

https://www.bogleheads.org/wiki/Approxi ... ock_market
fpawn74 wrote:
Tue Jun 12, 2018 4:56 pm
Thanks for any and all advice. I'll even welcome the "you should have started when you were 25, not 45" comments! If I left out any detail, just ask! I have several weeks before my emergency fund is complete, so I am trying to get ahead of this.
Not worth talking about the past. Your situation is very normal for dual income couples having children and living on a single income for those early child raising years. You have plenty of time to still reach your goals - especially if your wife will be working again next year and being able to funnel salary into retirement plans.

Is the $4500 planned retirement income at age 65 you mention what your current expected income stream will be from the Navy? You will also get Social Security, correct? Have you created an account at Social Security to check what your projected benefit will be? Or is that $4500 the Navy + the SS projections?

How do your current expenses (minus the children) look to be on an annual/monthly basis so you can make some projections for expenses (needs, wants, variables) at age 65?

Knowing all of that will help you make plans on a goal to shoot for in terms of retirement savings. Your income stream(s), your expenses, and the gap between what is coming in via the income streams to meet your expenses is the nest egg size you need to figure out so you are saving on target to hit that amount.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

jalbert
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Re: Late to the party, looking for some advice

Post by jalbert » Thu Jun 14, 2018 11:49 am

fpawn74 wrote:
Thu Jun 14, 2018 10:48 am
Understood. Thank you for the clarification. I just assumed they were tracking the same, as the Principal fund options booklet list both as "Benchmark: Bloomberg Barclays Aggregate Bond Index". I misused/misunderstood the term tracking. I guess a better word is replicate? They are looking to replicate the performance of that index, but use a different mix to try and achieve it?

As always, thanks!
Jim
The total return bond fund takes a bit more risk hoping to get a little more return. As a bond fund, the bond index is being used as a benchmark in performance reports, but they are not trying to track the index. In fact their goal is to beat the index. The bond index fund is only trying to replicate the return of the index.

Being 70% stocks is moderately aggressive. You want your 30% allocation to bonds to be conservative to serve as a ballast at times when things don’t go well in the stock market. The bond index fund is more suited to that role.

You could for instance use an allocation of 65% stock and 35% bonds with the total return bond fund. This dials back the stock allocation a little because you would be taking more risk with the bond fund. This would be a perfectly fine portfolio choice actually.

Many people, though, believe it is better to hope to be rewarded for taking risks with stocks and to use bonds for safety, and also to go with the lowest fee portfolio. Using index funds also adds transparency to the portfolio. You know what is going on in the portfolio. Hence, I would prefer the portfolio that is 30% bonds with the bond index fund.

One caveat is that the bond index fund is not a mutual fund with ticker symbol we can look up on-line. A due diligence task would be to get information on it from your 401K administrator to be sure it is tracking either a total US bond index or an intermediate term US bond index.
Index fund investor since 1987.

skierrex
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Re: Late to the party, looking for some advice

Post by skierrex » Thu Jun 14, 2018 9:01 pm

Jim,

I view bonds as protection for my portfolio.

You have no portfolio to protect.

You don't need any bonds.

You also can't afford the low return from bonds with a shorter time frame.

The S&P 500 fund has great diversification and very low fees.

I would invest 100% in the S&P 100 fund until you have a portfolio to protect.

Pick what is a large number for you (100k or 500k or 1M) and then add some bonds.

Good luck and welcome!

fpawn74
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Re: Late to the party, looking for some advice

Post by fpawn74 » Fri Jun 15, 2018 10:02 am

CyclingDuo wrote:
Thu Jun 14, 2018 11:04 am
Did your wife contribute to her 403b
Yes, but it is not too much and we are in the process of getting that rolled.
skierrex wrote:
Thu Jun 14, 2018 9:01 pm
You don't need any bonds
I wondered whether or not to include bonds, since my portfolio is, as you say ZERO. Its just most things I've read (at least for planning at an earlier age than myself) so some kind of conservative/aggressive asset allocation based of risk tolerance. Using it to smooth out the dips instead of pure portfolio protection. But your point is valid and something to consider.

Thanks again everyone!!
Jim

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CyclingDuo
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Re: Late to the party, looking for some advice

Post by CyclingDuo » Fri Jun 15, 2018 2:45 pm

fpawn74 wrote:
Fri Jun 15, 2018 10:02 am
CyclingDuo wrote:
Thu Jun 14, 2018 11:04 am
Did your wife contribute to her 403b
Yes, but it is not too much and we are in the process of getting that rolled.
That's good. No matter the size, have it working for you in the best possible allocation.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

Beehave
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Re: Late to the party, looking for some advice

Post by Beehave » Fri Jun 15, 2018 5:00 pm

I was in similar circumstances. Things will work out fine for you. Here are my comments/suggestions.

1. First thank you for your service

2. The financial "sacrifice" you and your spouse made by having one parent at home and one working is not so much a sacrifice as an investment in your childrens' future well-being. The financial pressure you experience now will be counterbalanced by the future benefits they will experience because of that sacrifice.

3. Your investment allocations being tweaked "to perfection" matter, but not nearly as much as your steady 401k contributions which in turn rely on your steady employment. Do all you can in the context of your work to keep up with changing technology and optimized procedures and do what you can to both actually be and be known as a positive agent of change when change is needed or occurring in your company. Maintaining steady employment, hopefully with pay increase and if possible promotions, cures the "late start." Steady employment is Job 1 here.

4. When your spouse returns to work your finances will jet forward. If you want, give the family a special vacation or treat, but then save, save, save. I'll leave most of the details about allocations to others posting, except for #5 right below.

5. I veer away from most bogleheads in this, but hear me out. I'd mix the money market fund into the allocation. Say between 5 and 10 percent (so overall maybe 5% money mkt, 25% bond, 70 stocks.) The purpose of the cash (money market) is this. If the market tanks, as it is going down (say 5% or 10% as a trigger point, you move some cash from money market into the stock funds. The primary intent here is NOT market timing. It is purely psychological and intended to keep you from selling your stocks when the market is low. If you are viewing and acting on the downturn as a "buy-low" opportunity, you will have a relatively positive reaction to the market's steep downturn and will not either panic and sell or be despondent. You can do this buying on downturn with bonds, but I suggest using a money market component instead because if stocks and bonds BOTH go down together, selling one thing you "lost money on" to buy another will not be as emotionally satisfying. Again, the main purpose here is not to market time buys, but, rather, to help prevent panicked market-timing selling by replacing it with the emotions associated with getting a bargain price.

Hope this is helpful, and best wishes to you and family.

jalbert
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Re: Late to the party, looking for some advice

Post by jalbert » Fri Jun 15, 2018 7:26 pm

wondered whether or not to include bonds, since my portfolio is, as you say ZERO. Its just most things I've read (at least for planning at an earlier age than myself) so some kind of conservative/aggressive asset allocation based of risk tolerance. Using it to smooth out the dips instead of pure portfolio protection. But your point is valid and something to consider.
You want at least some fixed income to capture a rebalancing premium as you rebalance to reset your allocation when volatile assets move up and down, maybe a minimum of 9% fixed income. It is fine to start more aggressively since each contribution is a substantial fraction of the balance. The problem is, when do you switch to a less aggressive portfolio?
Index fund investor since 1987.

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