Help with Personal Investment

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purplemountain
Posts: 6
Joined: Sun Jun 24, 2018 2:42 pm

Help with Personal Investment

Post by purplemountain » Sun Jun 24, 2018 2:49 pm

I am a new member here. Please help ..



A)Married Couple from mid west : Early 40/Late 30 with 2 kids.
B)Both working HIS : 140K and HER : 100K income respectively before taxes and deductions. Never did Roth IRA (big mistake). NO Pension option at work.
B1) High 20's fed tax bracket.

C)401K balances at 500K and 350K respectively. Contributing Max allowed.

HIS 401k:
C1)500K in target retirement fund for 2040.
-Equity (80 %)
-Bonds & Cash 20%)

Her 401k:
C2)350K in funds as below.
-Bond 17%
-Large US Equity 44%
-Small/Mid U.S. Equity 8%
-International Equity 31%


D)529 balances at 20K ( Started in 2017)

E)Combined HSA at 10K ( Started in 2017)
F)CD's/MMA/Savings at roughly 450K
G)Mortgage paid. Both personal vehicles are paid.

H)Brokerage account 40K ( individual stocks.. some up some down..but net positive)

I)Vanguard : 3K in VFINX

J)Both have optional life insurance from work for 10x of base salary.

Been on sideline for so long and its high time we need some help.

Did a lot of reading on bogleheads over last few weeks. Please help with following.

We are thinking of 3 fund portfolio.
VTSAX, VBTLX , VTIAX : 60 , 20 , 20 percent respectively in taxable account.

Questions:

Is moving 3K from VFINX to VTSAX ok idea ? or leave it alone.
Is it ok with fund 10K in each of above vanguard index funds but slow increase VTSAX every month to keep assets allocation like above ?
How much is right amount to fund taxable account every month. We don't need monies for 10 years at least until first one hits collge or if we loose jobs :(
Is allocating 401K from target retirement fund to more desirable index funds a good idea ? Should re-allocation be done all on same day ?
Should we liquidate brokerage account or keep it as is ?
Is backdoor roth a good idea ?
Should we fund kids education in any other form than 529 ?
Should we get term life insurance ? 20 year term may be ? Is it worth the cost as we already have optional insurance at workplace. Workplace insurance is applicable
as long as we work with premium of ~ 100$ a month for each.

Sorry so many questions . Thank you for all the knowledge you share.




Here are 401K fund options for HIM. HER are very similar too.

Several Target Retirement Funds by age (ER 0.199%)
Stable Principal Fund (ER 0.304% )
MoneyMarket Fund (ER 0.079% )
Bond Fund (ER 0.151% )
Bond Index Fund 0.020%
U.S. Large Cap Equity Fund (ER 0.296% )
U.S. Large Cap Equity Index Fund (ER 0.010% )
Small Cap Equity Fund (ER 0.603% )
Small Cap Equity Index Fund (ER 0.059% )
International Equity Fund (ER 0.452% )
International Index Fund (ER 0.048% )

Thank You !!!

HandH

Here is what we did since the original posting.
Opened traditional IRA(2 X 5500) and converted to ROth IRA(vanguard) for him and her. This was easy following BH directions.
Added 10K to vanguard taxable account(VTSAX).
Read "The Bogleheads' guide to retirement planning " Trying to digest more and more of it.
Did all the math and here are the percentages of overall. These percentages don't include 100K emergency funds and 529 funds.

International Equity 23.73426158 %
Domestic Equity 36.03509749 %
Bond 9.224826254 %
Savings(CDs etc) 25.98595957 %
CompanyStock(401k) 1.457770919 %
Domestic(indivial stocks in ameritrade) 3.562084186 %

Total = 100 %

Specific questions we need help with ..

How much is right amount to fund taxable account every month. We don't need monies for 10 years at least until first one hits college.

Is allocating 401K from target retirement fund to more desirable index funds a good idea ? Should re-allocation be done all on same day ?

Should we liquidate brokerage account or keep it as is ?

Should we fund kids education in any other form than 529 ?

Should we get term life insurance ? 20 year term may be ? Is it worth the cost as we already have optional insurance at workplace. Workplace insurance is applicable as long as we work with premium of ~ 100$ a month for each.








Life Goals:

Retire by 63 and 60 respectively in good physical and financial health .
Lead simple life in retirement(down size) and do a little bit of traveling.
Fund kids education to the maximum possible. Hopefully no student debt.
Build modest wealth to pass on. We both started with nothing but good college education.
Last edited by purplemountain on Sun Jul 15, 2018 6:43 pm, edited 1 time in total.

Grt2bOutdoors
Posts: 19079
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Help with Personal Investment

Post by Grt2bOutdoors » Sun Jun 24, 2018 4:01 pm

Hello and welcome to the forum!

Group life insurance is more expensive than straight term purchased directly, usually because the insurance company will take on the risk of entire group who may or may not be in picture perfect health, hence the rates are not preferred. As you age, you'll see the rates you pay increase, a term life policy you own directly will not increase premiums over the life of policy and if you lose employment you still retain your life insurance so long as you continue to pay the premiums on time.

What is the purpose of the F) $450K? Will you be incorporating that into your proposed 80/20 split with 20 in international? If yes, you realize you will be incurring more risk for potentially more gains in the future? How stable is your employment?

Back door Roths - yes, by all means, you can start this year for 2018, open one each for both you and your wife.
A target date fund would work well, or any other fund you like.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

purplemountain
Posts: 6
Joined: Sun Jun 24, 2018 2:42 pm

Re: Help with Personal Investment

Post by purplemountain » Sun Jun 24, 2018 5:51 pm

Thanks for insight. I am not comfortable with cash heavy position ( wont protect against inflation) hence move some to index funds. May a fourth of it over time into indexing and rest in CDs/MMA. We do want contribute some from monthly income into taxable account (with index funds).
Employment is stable but you never know with company restructuring and letting mid-agers force retirements ( seems a common phenomenon ) with outsourcing etc.

I do agree with you on group life insurance rates.. any idea what would a good place to get quotes from ? Zanders ?

Thanks..

Cop51
Posts: 113
Joined: Sun Jul 09, 2017 12:42 am
Location: NJ

Re: Help with Personal Investment

Post by Cop51 » Sun Jun 24, 2018 6:07 pm

Check out term4sale.com for insurance quotes. It’s what I used and I contacted a random broker and got exactly what I was quoted from the site. I went with Banner Life. Best bond rating at the lowest price.

I’ll let the more experienced Bogleheads help with your portfolio but 450k is a lot of cash, but I always say you take risk if you need the reward. If you don’t need the reward you don’t need all the equity risk.

Grt2bOutdoors
Posts: 19079
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Help with Personal Investment

Post by Grt2bOutdoors » Sun Jun 24, 2018 7:43 pm

purplemountain wrote:
Sun Jun 24, 2018 5:51 pm
Thanks for insight. I am not comfortable with cash heavy position ( wont protect against inflation) hence move some to index funds. May a fourth of it over time into indexing and rest in CDs/MMA. We do want contribute some from monthly income into taxable account (with index funds).
Employment is stable but you never know with company restructuring and letting mid-agers force retirements ( seems a common phenomenon ) with outsourcing etc.

I do agree with you on group life insurance rates.. any idea what would a good place to get quotes from ? Zanders ?

Thanks..
I didn’t do the math, but your portfolio is the entirety of all assets. So, clearly your desired asset allocation is not 80/20, adding in $450k in cash dilutes the equity position and increases the fixed income portion. After you add the cash into the mix re-edit your post to show your current allocation, then think about what your desired asset allocation will be. If you reduce the portion of cash by 1/4, you still will have a portfolio with less than 80% equity.

You could consider investing portion of cash in either cds, money market funds, Treasury bills; whichever yields the most on after tax basis.

Term4sale.com.

Good on having no mortgage. You seem to be in good shape.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

purplemountain
Posts: 6
Joined: Sun Jun 24, 2018 2:42 pm

Re: Help with Personal Investment

Post by purplemountain » Sun Jul 15, 2018 6:43 pm

Updated original posting with additional information. Please help.

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