Newbie portfolio overhaul

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Msdoolittle
Posts: 3
Joined: Sat Sep 22, 2018 11:39 am

Newbie portfolio overhaul

Post by Msdoolittle » Sat Sep 22, 2018 2:08 pm

Hi all! I’ve been reading here for the last three months and have learned so much! Thank you for the education! I realize my portfolio is a mess and will welcome any help on how to improve. Thank you in advance for your comments and advice.

Emergency fund: 3 months
Debt: HELOC $7000 6.5%
Car loan $5000 1.9%
Car loan $11000 1.9%
Mortgage: $168,750. 4.25%
House value $400,000
Tax Filing Status: MFJ 22% Florida
Age: him 60, her (me) 57
Desired asset allocation: 60/40
His retirement age 68, I’m not working due to helping elderly relatives
Take Social Security: him 70y $36,100, me 62y? $15,300
My pension $17,000 starting at age 65

Total Portfolio $770,000

Taxable $101,500 WF Advisors
16% Janus Henderson Growth and Income JGICX
18% JP Morgan income Builder JNBCX
17% Principal Global Div Income PGDCX
18% WF Div Income Builder EKSCX
31% Allianz Short Duration High Income ASHCX

His 401a $339,000 Contributes 7%, gets 9% match (not adjustable)
55% T Rowe Price 2025 Fund TRRHX
5% Vanguard Total Int Stock PRITX
6% Vanguard Small Cap Index NAESX
22% Vanguard Index 500 VFIAX. (No total stock fund available)
12% City of xxxxx Stable Value Fund
Funds available


Baron Growth Instl 1.04%
Dodge & Cox Income Fund 0.43%
MFS International Value R4 0.76%
MainStay Large Cap Growth I 0.75%
Great-West SecureFoundation Bal Inst 0.28%
American Funds EuroPacific Gr R5 0.53%
American Funds American Balanced R5 0.33%
American Funds Washington Mutual R5 0.34%
Virtus Ceredex Small-Cap Value Equity I 1.18%
Templeton Global Bond Adv 0.78%
TIAA-CREF Social Choice Eq Instl 0.18%
T. Rowe Price 2015 Fund 0.59%
T. Rowe Price 2025 Fund 0.67%
T. Rowe Price Balanced Fund 0.56%
T. Rowe Price 2035 Fund 0.72%
T. Rowe Price 2045 Fund 0.74%
T. Rowe Price 2055 Fund 0.74%
Vanguard Total Bond Market Index Adm 0.05%
Vanguard 500 Index Admiral 0.04%
Vanguard Mid Cap Index Admiral 0.05%
Vanguard Small Cap Index Adm 0.05%
Vanguard Total Intl Stock Index Admiral 0.11%
The City of xxxxx Custom Stable Value Fund 0.50%

Her tIRAs $122,400
Dodge and Cox Stock Fund $78,400
WF Advisors $44,000
36% Franklin Income Fund FCISX
30% WF Diversified Income Builder EKSCX
34% WF Div Cap Builder EKBCX

Her inherited IRA $112,600- will be taking distributions as required $3500 this year
(Non spousal) -these funds were selected by person I inherited IRA from 2 years
ago
34% Vanguard Dividend and Growth VDIGX
22% Vanguard Wellington VWELX
23% Vanguard Vanguard 500 Index VFIAX
21% Vanguard Growth & Income VQNPX

Her Inherited IRA $94,000 also non spousal, funds selected by WF Advisors, distributions @$3000 this year
24% WF Dividend Income Builder EKSCX
24% Franklin Income Fund FCISX
25% JPMorgan Equity Index OEICX
27% WF Diversified Capital Builder EKBCX

1. How do we begin to simply? We plan to change Vanguard inherited IRA to 3 fund portfolio and change Dodge and Cox to a separate Vanguard IRA account as well. Unfortunately I went with WF Advisors before I found this forum. I’ve never seen any fees charged on my statements. Should I leave alone or transfer to Vanguard?
2. We spend all of his income and my distributions. Should we use Allianz taxable bond fund to pay off HELOC and car loans? HELOC is high as adult child needed a car and is paying us back $600+/mo. Also we will be incurring $22,000 in dental bills in the next 3 months which will deplete emergency fund.
3. We are planning on moving to a lower cost of living area and buying a less expensive house when he retires. We will use inherited IRAs for make up the difference in income until he claims Social Security. Are we on track for retirement if we keep our expenses low?
Last edited by Msdoolittle on Mon Sep 24, 2018 6:36 am, edited 1 time in total.

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Duckie
Posts: 5959
Joined: Thu Mar 08, 2007 2:55 pm

Re: Newbie portfolio overhaul

Post by Duckie » Sat Sep 22, 2018 6:40 pm

Msdoolittle, welcome to the forum.
Msdoolittle wrote:Taxable $101,500 WF Advisors
Wow, these funds have high expense ratios and back-end loads. Do any of these funds have a loss? You can transfer all of these funds to Vanguard "in kind".
His 401a $339,000
What are all the options in this plan? Don't forget to add the expense ratios.
How do we begin to simply?
Are her two inherited IRAs from the same person? If so they can be combined into one inherited IRA. Either way I would liquidate the WF Advisors inherited IRA and roll to Vanguard. (I assume her other inherited IRA is already at Vanguard. If not, roll it over also.) Also roll her TIRA to Vanguard.

Transfer the taxable account to Vanguard "in kind". Make sure you have all the past transaction information before leaving WF Advisors.
Should we use Allianz taxable bond fund to pay off HELOC and car loans?
Based on interest rates HELOC definitely, car loans maybe. Do you know what the capital gains would be when selling that fund? In fact, figure the capital gains on all funds in the taxable account. And turn off any automatic reinvestment of dividends/distributions there. Don't buy any more of those taxable funds.

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David Jay
Posts: 5633
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Newbie portfolio overhaul

Post by David Jay » Sat Sep 22, 2018 6:59 pm

Let me be the first to welcome you to the forum. I am just a year or so ahead of your husband, so we have been going over this stuff for a couple of years (plan is to retire in 2019)
Msdoolittle wrote:
Sat Sep 22, 2018 2:08 pm
Debt: HELOC $7000 6.5%
Car loan $5000 1.9%
Car loan $11000 1.9%
I am concerned that at your stage of life you have consumer debt. Getting on a budget and understanding your expenses is important to answer some of the questions below.
Take Social Security: him 70y $36,100, me 62y? $15,300
In my research, a married couple is usually best served by having the spouse with the lower benefit file early (as early as 62) and the higher earner delays to age 70. The reason is that the surviving spouse will receive the larger of the two benefits, so deferring the higher earner’s benefit is a way of assuring the largest possible benefit for the surviving spouse.

A nice tool for looking at SS is The calculator at opensocialsecurity.com which was developed by someone who is active here on BH.
1. How do we begin to simply? We plan to change Vanguard inherited IRA to 3 fund portfolio and change Dodge and Cox to a separate Vanguard IRA account as well. Unfortunately I went with WF Advisors before I found this forum. I’ve never seen any fees charged on my statements. Should I leave alone or transfer to Vanguard?
Because there is no tax consequence, I would immediately transfer “her” IRA to Vanguard and get the money into low cost funds.

The WF specific funds likely will not transfer (the funds will have to be sold before transfer), so you need to consider the tax consequences of transferring your taxable account.

In any transfer, work with the company receiving the funds because they have the incentive to be helpful.
2. We spend all of his income and my distributions. Should we use Allianz taxable bond fund to pay off HELOC and car loans? HELOC is high as adult child needed a car and is paying us back $600+/mo.
Understanding this will be paid off in 10 months, I don’t have a problem with keeping the HELOC if there is a capital gain associated with selling the taxable funds.
3. We are planning on moving to a lower cost of living area and buying a less expensive house when he retires. We will use inherited IRAs for make up the difference in income until he claims Social Security. Are we on track for retirement if we keep our expenses low?
It is all about expenses. If you can develop a good idea of your expenses in retirement, you can then evaluate the value of your portfolio and see if you are “covered”. Without a reasonable projection of expenses you don’t know if you need a $500,000 portfolio or a $1,000,000 portfolio.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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David Jay
Posts: 5633
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Newbie portfolio overhaul

Post by David Jay » Sat Sep 22, 2018 7:01 pm

Duckie wrote:
Sat Sep 22, 2018 6:40 pm
And turn off any automatic reinvestment of dividends/distributions there. Don't buy any more of those taxable funds.
This is a great recommendation!
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Duckie
Posts: 5959
Joined: Thu Mar 08, 2007 2:55 pm

Re: Newbie portfolio overhaul

Post by Duckie » Sat Sep 22, 2018 7:42 pm

David Jay wrote:The WF specific funds likely will not transfer (the funds will have to be sold before transfer), so you need to consider the tax consequences of transferring your taxable account.
All five funds in the taxable account can be transferred to Vanguard, but no further purchases can be made.

Msdoolittle
Posts: 3
Joined: Sat Sep 22, 2018 11:39 am

Re: Newbie portfolio overhaul

Post by Msdoolittle » Mon Sep 24, 2018 6:46 am

Thank you for your advice and guidance. I have edited to include fund choices for his 403a. My advisor claims I pay no fees for my accounts at WF due to my relationship with the bank (mortgage and additional accounts I manage for relatives) and I have not found any fees on my statements. He says there are no fees when I close these accounts as long as they have been in existence for more than one year as is the case. Guess I’ll find out when I start the transfers to Vanguard as recommended. Thanks again!

ExitStageLeft
Posts: 923
Joined: Sat Jan 20, 2018 4:02 pm

Re: Newbie portfolio overhaul

Post by ExitStageLeft » Mon Sep 24, 2018 12:25 pm

Msdoolittle wrote:
Sat Sep 22, 2018 2:08 pm

3. We are planning on moving to a lower cost of living area and buying a less expensive house when he retires. We will use inherited IRAs for make up the difference in income until he claims Social Security. Are we on track for retirement if we keep our expenses low?
Welcome to the forum!

You can get a reasonable assessment of your retirement plan by using the online calculator at http://www.cfiresim.com/ or https://www.firecalc.com/

The method used in these two compares your assets against historic market returns and inflation in the US since 1870. It's a useful way to gauge your financial outcomes as long as the future is no worse than the past. Using your portfolio and incomes I ran a scenario on CFIRESim and it resulted in 95% successful outcomes based on a 30-year retirement with an initial spending level of $96k per year. That does not consider the potential revenue from sale of the house.

Msdoolittle
Posts: 3
Joined: Sat Sep 22, 2018 11:39 am

Re: Newbie portfolio overhaul

Post by Msdoolittle » Mon Sep 24, 2018 2:27 pm

Thanks for sharing the link and running my figures. Very helpful! I am so glad I found this forum.

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