Portfolio Review

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le_rndm
Posts: 2
Joined: Thu Sep 13, 2018 10:17 pm

Portfolio Review

Post by le_rndm » Thu Sep 13, 2018 11:07 pm

Hi folks!

I’ve been reading this forum for about a year now, thank you for making my financial education! Most of my portfolio is tied to a company I work for. I want to get out of this position in a tax-efficient manner and diversify. I’m looking for a review of my current assets and help on deciding the best way to match my desired allocation.

General
Debt: none
Emergency fund: 4 months
Tax Rate: 24% Federal, 6.65%% State
Tax Filing Status: Married Filing Jointly
State of Residence: NY
Age: 28
Annual income: $155k
Desired asset allocation: 92% stocks / 8% bonds
Desired international allocation: 40% of stocks

Current assets - total is about ~$400k
Taxable at Schwab - 79%
4% - Cash (for investing)
72% - US individual stock (vested from RSUs, still at the company, large cap)
3% - US individual stock (large cap)

Roth IRA at Schwab - 5%
Cash (for investing) 5%

401(k) at Vanguard - 16%
16% - T. Rowe Price Retirement 2060 (TRPLX) (0.60% expense ratio)

Annual contributions
  • $18,500 to 401(k) (+$1,500 employer match)
  • $5,500 to Roth IRA
Available funds
Funds available in 401(k) at Vanguard below 0.6% ER

Balanced Funds (Stocks and Bonds)
T. Rowe Price Retirement I 2005 Fund I Class (TRPFX) (0.43%)
...
T. Rowe Price Retirement I 2060 Fund I Class (TRPLX) (0.60%)

Bond Funds
PIMCO Income Fund Institutional Class (PIMIX) (0.74%)
PIMCO Total Return Fund Institutional Class (PTTRX) (0.55%)
Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) (0.05%)

Domestic Stock Funds
Fidelity® Contrafund® K6 (FLCNX) (0.45%)
Vanguard Equity Income Fund Admiral Shares (VEIRX) (0.17%)
Vanguard Extended Market Index Fund Institutional Shares (VIEIX) (0.06%)
Vanguard Institutional Index Fund Institutional Shares (VINIX) (0.04%)

International Stock Funds
DFA International Core Equity Portfolio Institutional Class (DFIEX) (0.3%)
Vanguard Total International Stock Index Fund Institutional Shares (VTSNX) (0.09%)

Short-Term Reserves
Vanguard Federal Money Market Fund (VMFXX) (0.11%)

Notes
  • US resident (green card) but not a US citizen.
  • No planned major financial expenditures.
  • No idea about long-term retirement country.
  • Due to its size, I cannot aggressively get out of my largest taxable position immediately without facing moving to a higher tax bracket.
Questions
  1. My current 401(k) fund expense ratio is high, any recommendation?
  2. Any recommendation for a 3/4-fund portfolio with funds available at Charles Schwab?
  3. When I move out of the US, any issue I should be aware of regarding owning US-based funds shares?
Thanks folks!

User avatar
car733
Posts: 100
Joined: Sun Feb 25, 2018 10:07 am
Location: Chicago, IL

Re: Portfolio Review

Post by car733 » Fri Sep 14, 2018 7:48 am

Welcome to the forum!

1) I would get rid of TRPLX and use a mixture of VBTLX, VIEIX+VINIX, VTSNX.
2) Read https://www.bogleheads.org/wiki/Three-f ... head-style
3) I don't think so. You can open a broker account from outside the USA and buy us based funds. You would need to figure out taxes.

I would start selling your vested RSUs and diversify. I like the idea of having a portfolio across different accounts. Place dividend funds at 401k and roth and the others at your taxable. Read https://www.bogleheads.org/wiki/Tax-eff ... _placement

Enjoy the journey!

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ruralavalon
Posts: 13745
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Portfolio Review

Post by ruralavalon » Fri Sep 14, 2018 4:28 pm

Welcome to the forum :) .

You have some excellent funds offered in your 401k, you are fortunate.

In my opinion in your 401k the funds to consider using are:
1) Vanguard Institutional Index Fund Institutional Shares (VINIX) ER 0.04%;
2) Vanguard Total International Stock Index Fund Institutional Shares (VTSNX) ER 0.09%; and
3) Vanguard Total Bond Market Index Fund Admiral (VBTLX) ER 0.05%.

It's often better to coordinate investments among all accounts, rather than try to have all components of your portfolio in each account.

In your Roth IRA at Schwab you could use:
1) Schwab Total Stock Market Index Fund (SWSTX) ER 0.03%; and
2) Schwab U.S. Aggregate Bond Index Fund (SWABX) ER 0.04%.

Schwab does not offer a total international stock index fund. Schwab International Index Fund (SWISX) covers only larger companies in developed markets except Canada. In my opinion the omissions of emerging markets and Canada are both important omissions. You could put your international stock allocation in your 401k or taxable account instead.

Seventy five percent of your portfolio in two individual stocks is not well diversified. Are you allowed to sell the company stocks in your taxable account? If so wait until any capital gains are long-term, and sell in order buy mutual funds to be more diversified.

In your taxable account invest in very tax-efficient stock index funds. Please see the wiki article "Tax-efficient Fund Placement". Examples of very tax-efficient stock index funds include Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04% and Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11%.

I don't know if there is any complication in owning U.S. mutual funds when you move outside the U.S.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

le_rndm
Posts: 2
Joined: Thu Sep 13, 2018 10:17 pm

Re: Portfolio Review

Post by le_rndm » Tue Sep 18, 2018 2:43 pm

Awesome! Thank you both so much for taking the time, I have all the info I needed and will make the necessary adjustments starting today :happy

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