Retirement Portfolio Review Request - 5 years later

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investme
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Joined: Mon Jul 15, 2013 9:37 pm

Retirement Portfolio Review Request - 5 years later

Post by investme » Thu Oct 04, 2018 12:15 pm

Hi everyone, it's been about 5 years since my last post where I got some incredible guidance and advice on what to do with my portfolio (much still intact as you will see), I am posting again 5 years later for another evaluation or review if possible - hopefully I got all the details correct!

EDIT: Expense Ratios added

Emergency funds: Yes
Debt: Mortgage $92,694.35 3.125% 15 year
$52,050.55 3.625% 2nd property mortgage

Tax Filing Status:Single
Tax Rate: 25% marginal Federal, 4.63% State (may need help to get these right again)
State of Residence: CO
Age: 35
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 20% of stocks

Current Retirement Assets:

Old 403B with Fidelity:

Vanguard Total Bond Mkt Index Inst - VBTIX - $26,976.06 - 8.70% of portfolio - 0.04% expense
Vanguard Inst Index Fund Inst Plus - VIIIX - $77,434.67 - 24.90% of portfolio - 0.02% expense ratio
Vanguard Ext Mkt Index Inst Plus (94%) - VEMPX - $18.79 - 0.00% of portfolio - 0.05% expense

33.6% of portfolio

This old 403B is connected to a Fidelity Brokerage Link account with the following:
FIDELITY CASH RESERVES MMF - FDRXX - $99.37 - 0.00% of portfolio - .37% expense
Fidelity® Extended Market Index Fund Pre - FSEVX - $19,683.77 - 6.30% of portfolio - 0.045% expense
Fidelity® Global ex U.S. Index Fund Prem - FSGDX - $25,879.86 - 8.30% of portfolio - 0.06% expense

14.6% of portfolio

Old 401K with Fidelity:

Vanguard Total Bond Mkt Index Inst - VBTIX - $10,125.24 - 3.20% of portfolio - 0.04% expense
Vanguard Ext Mkt Index Inst Plus (94%) - VEMPX - $4,454.28 - 1.40% of portfolio - 0.05% expense
Vanguard Inst Index Fund Inst Plus - VIIIX - $36,561.56 - 11.70% of portfolio -0.02% expense

16.3% of portfolio

Current 401k w/Fidelity(Contribution, Max allowed (18.5k?) Company provides 33% up to the first 6% match in company stock, I am 100% vested):

Company stock: $14,216.30 - 4.60% of portfolio -
Fidelity® Extended Market Index Fund Pre - FSEVX - $6,786.80 - 2.20% of portfolio - 0.045% expense
Fidelity® 500 Index Fund Institutional C - FXSIX - $49,072.98 - 15.80% of portfolio - 0.015 expense
Western Asset Core Bond Fund Class I - WATFX - $16,179.9 - 5.20% of portfolio - .56% expense

23.2% of portfolio

Vanguard ROTH IRA:
Vanguard Tot Intl Stock Ix Admiral - VTIAX - $23,649.63 - 7.6% of portfolio - .11% expense ratio

7.60% of portfolio

Total: $311,568.98 / 100%

Allocation is as follows:
17.10% Bonds
57.10% Large U.S. stocks
9.90% Mid/Small U.S. stocks
15.90% International stocks

Or:
Short-term reserves 0.0%

Bonds 17.1%
Stocks 82.9%
Other 0.0%

Here's another view if easier to view:

Bonds and bond funds
Vanguard Total Bond Mkt Index Inst $10,125.24 3.20%
Vanguard Total Bond Mkt Index Inst $26,976.06 8.70%
Western Asset Core Bond Fund Class I $16,179.91 5.20%
Subtotal $53,281.21 17.10%

Large domestic stocks & stock funds
Company Stock $14,360.53 4.60%
Fidelity® 500 Index Fund Institutional C $49,072.98 15.80%
Vanguard Inst Index Fund Inst Plus $77,434.67 24.90%
Vanguard Inst Index Fund Inst Plus $36,561.56 11.70%
Subtotal $177,715.25 57.10%

Mid/small domestic stocks & stock funds
Fidelity® Extended Market Index Fund Pre $19,683.77 6.30%
Fidelity® Extended Market Index Fund Pre $6,786.80 2.20%
Vanguard Ext Mkt Index Inst Plus (94%) $18.79 0.00%
Vanguard Ext Mkt Index Inst Plus (94%) $4,454.28 1.40%
Subtotal $30,943.64 9.90%

International stocks & stock funds
Vanguard Tot Intl Stock Ix Admiral $23,649.63 7.60%
Fidelity® Global ex U.S. Index Fund Prem $25,879.87 8.30%
Subtotal $49,529.50 15.90%

Other investments

FIDELITY CASH RESERVES MMF $99.37 0.00%
Subtotal $99.37 0.00%
Total $311,568.98 100.00%

Accounts available from current 401k (Brokerage link does appear to be an option if needed):
TRP RETIREMENT 2010
TRP RETIREMENT 2015
TRP RETIREMENT 2020
TRP RETIREMENT 2025
TRP RETIREMENT 2030
TRP RETIREMENT 2035
TRP RETIREMENT 2040
TRP RETIREMENT 2045
TRP RETIREMENT 2050
TRP RETIREMENT 2055
TRP RETIREMENT 2060 - TRRLX - .74% expense ratio
AM CENT GOVT BOND R5 - TRRLX .27 expense
WA CORE BOND I - TRRLX - .46% expense
ABF LG CAP VAL INST - AADEX - .6% expense
AM CENTURY ULTRA I - TWUIX - .78% expense
FID 500 INDEX INST - FXSIX - .015 % expense
FID EXT MKT IDX PR - FSEVX - 0.045% expense
AM CENT SM CAP VAL - 0.85% expense
VANG SM CAP IDX ADM - VSMAX - 0.05% expense
FID INTL SM CAP OPP FSCOX - 1.13% expense
TRP OVERSEAS STOCK I 
view restriction(s) - TROIX - .67 - When redeeming shares of TRP OVERSEAS STOCK I, a short term fee of 2.00% will be assessed on any fee eligible shares you have owned 90 days or less.

I feel like my allocation is ok, but always looking for feedback - my main questions are as follows:
1) Should I do anything with any of these older retirement accounts from my previous company?
2) Any feedback on allocations in current retirement account?
3) With the above, there is a lot of company stock that I feel I should divide up - any thoughts on this?
4) I just noticed the management fees when looking at these investments, is that on top of the expense ratio? I'm calling to find out - if so I need to do something ASAP, I've been losing out apparently if so
5) I also just found out that the older work accounts are now charging a $7.50 maintenance fee per quarter

I know I should continue to max out my Roth were I can, but currently I have been putting extra principal on my mortgage, however I can try budget for it.

Anything else I am not thinking about?

Thank you!!
Last edited by investme on Tue Oct 09, 2018 4:43 pm, edited 2 times in total.

investme
Posts: 42
Joined: Mon Jul 15, 2013 9:37 pm

Re: Retirement Portfolio Review Request - 5 years later

Post by investme » Mon Oct 08, 2018 5:36 pm

Bump, any feedback?

Looking again I see my format is a little off so I can definitely fix it =)

Thanks,

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onthecusp
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Re: Retirement Portfolio Review Request - 5 years later

Post by onthecusp » Mon Oct 08, 2018 9:32 pm

Just a few high level comments. It looks like you have done well in 5 years. Between saving and investing you have grown your account by about 2.5X, over 20% per year. You also got rid of car debt and have a moderate amount of reasonable rate mortgage.

I would not prioritize mortgage pay off versus tax advantaged savings. Your higher rate is probably break even to pay off vs taxable investment, but mortgages are a minor inflation hedge. I remind myself of that every few days when I think of how nice it would be to just pay off mine.

On expenses plus management fees, the Western Asset Core Bond fund adds up to about 1%. That's quite a bite. I might attack that one first. If there are no good bond funds in that 401k you could buy more bonds in your other bond funds.

LeeMKE
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Re: Retirement Portfolio Review Request - 5 years later

Post by LeeMKE » Tue Oct 09, 2018 9:31 am

TRUE STORY

One of my previous employers was unhappy that he was paying a fee for the accounts of former employees, so he sent us all a letter informing us of a new quarterly fee on our holdings. Everyone I know, including myself, rolled our accounts out to IRAs. A few months later I hear that we reduced the total balance of the firm's accounts so much, that they lost their favoured management rate, and after the rise, they were paying more than ever before and no longer qualified for some nice executive perks they'd had before. I heard about this when the employer was complaining about how we former employees were jerks for moving our money out. Glad I was a "former"

I made a practice of leaving my 401K only until a) They charged a fee for holding my money or b) I no longer liked their offerings and could do better elsewhere. Eventually I moved them all to my own IRA where I could more easily keep track of them. I've learned here that 401Ks have some better protections than IRAs, but having control of my funds has made me happier, so I do that.
The mightiest Oak is just a nut who stayed the course.

investme
Posts: 42
Joined: Mon Jul 15, 2013 9:37 pm

Re: Retirement Portfolio Review Request - 5 years later

Post by investme » Tue Oct 09, 2018 9:37 am

onthecusp wrote:
Mon Oct 08, 2018 9:32 pm
Just a few high level comments. It looks like you have done well in 5 years. Between saving and investing you have grown your account by about 2.5X, over 20% per year. You also got rid of car debt and have a moderate amount of reasonable rate mortgage.

I would not prioritize mortgage pay off versus tax advantaged savings. Your higher rate is probably break even to pay off vs taxable investment, but mortgages are a minor inflation hedge. I remind myself of that every few days when I think of how nice it would be to just pay off mine.

On expenses plus management fees, the Western Asset Core Bond fund adds up to about 1%. That's quite a bite. I might attack that one first. If there are no good bond funds in that 401k you could buy more bonds in your other bond funds.
Thank you for your response! I think today I'm going to call and get the scoop on Brokerage Link for my current Fidelity 401k and maybe look to move some of that to a different fund - any suggestions? There did not seem to be any decent bond funds without the Brokerage Link, but I will look again.

The other thing I just realized from this post is that I could look and make sure the original recommendations I got match in the new 401k because it's still Fidelity/Brokerage Link.

Thanks!!

investme
Posts: 42
Joined: Mon Jul 15, 2013 9:37 pm

Re: Retirement Portfolio Review Request - 5 years later

Post by investme » Tue Oct 09, 2018 9:40 am

LeeMKE wrote:
Tue Oct 09, 2018 9:31 am
TRUE STORY

One of my previous employers was unhappy that he was paying a fee for the accounts of former employees, so he sent us all a letter informing us of a new quarterly fee on our holdings. Everyone I know, including myself, rolled our accounts out to IRAs. A few months later I hear that we reduced the total balance of the firm's accounts so much, that they lost their favoured management rate, and after the rise, they were paying more than ever before and no longer qualified for some nice executive perks they'd had before. I heard about this when the employer was complaining about how we former employees were jerks for moving our money out. Glad I was a "former"

I made a practice of leaving my 401K only until a) They charged a fee for holding my money or b) I no longer liked their offerings and could do better elsewhere. Eventually I moved them all to my own IRA where I could more easily keep track of them. I've learned here that 401Ks have some better protections than IRAs, but having control of my funds has made me happier, so I do that.
That's something I do need to keep an eye on, for example, I wasn't aware of the management fees and now maintenance fee(s) of my old account - even though it's only $7.50 per quarter - I had thought about moving everything to an IRA, what would be the consideration in doing that versus keeping it in these old accounts, or moving to my new retirement account?

Thank you!

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David Jay
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Location: Michigan

Re: Retirement Portfolio Review Request - 5 years later

Post by David Jay » Tue Oct 09, 2018 10:45 am

investme wrote:
Tue Oct 09, 2018 9:40 am
I had thought about moving everything to an IRA, what would be the consideration in doing that versus keeping it in these old accounts, or moving to my new retirement account?
Rolling over pre-tax 401K money would be done to a traditional IRA (BH commonly: tIRA). This will give one complete control of one's money (which a control freak like me prefers...).

The one downside is that it effectively prevents you from doing backdoor Roth contributions (see BH WIKI, search for "back door Roth"). This is a very nice feature for individuals who earn more than $135K per year and plan to save more than the maximum allowed in their 401K account (18,000 a year or greater, depending on plan).

In this case, one would be better served by either leaving the money in the old 401K or moving it to your current 401K.


[edit] As an aside, 25% is not a tax bracket for 2018. Most likely that is 22%, depending on deductions.
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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dratkinson
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Location: Centennial CO

Re: Retirement Portfolio Review Request - 5 years later

Post by dratkinson » Tue Oct 09, 2018 11:55 am

BH Retirement Portfolio Review Request - 5 years later


Old 403b/401k.

If former employers are charging you more to hold your money, may have option to...
--Roll them into IRA(s). (More control.)
--Roll them into current employer's 401k. (Have read this has more protection than IRA. Research this.)

Retirement plan rollovers.
Rollover general information: https://www.irs.gov/pub/irs-utl/oc-reti ... lovers.pdf
Wiki article: https://www.bogleheads.org/wiki/IRA_rol ... _transfers
Allowed rollovers: https://www.irs.gov/pub/irs-tege/rollover_chart.pdf
More information search: http://www.google.com/search?q=retirement+plan+rollover

Will your current employer allow you to rollover old employers’ accounts?



Company stock.

Believe it's generally recommended that this be part of our play money account---5% of total investments.
--For gains in owned shares, sell after long-term. (Watch tax implications.)
--For unpurchased shares in ESPP, recall recommendation is to buy/sell immediately---biggest/safest bang for the buck.

Search: http://www.google.com/search?q=ESPP+sit ... rg%2Fforum



Roth.

If in future (and higher tax bracket) you use the backdoor Roth IRA concept, then any traditional IRA (created from old employer 403b/401k rollover) will cause a problem. This would be a good reason to rollover your old employers' 403b/401k into your current employer's 401k. No tIRA = No backdoor Roth IRA problem.



Simplicity.

I favor fewer investments/accounts just to keep things simple. Suggest.
--Roth. 3-fund portfolio.
--Current 401k. 3-fund portfolio. (Do you have a better bond fund? FBIDX/FSIDX, perhaps?)
--Old 403b and 401k. Roll into current 401k.



Taxable investing (investing outside of tax-advantaged accounts).

Didn't see. Have your begun taxable investing?

When you do begin, will want to ensure those investments are unique (not duplicated in your TA accounts), so you don't need to worry about the "replacement shares --> wash sale” issue, if you later plan to reduce your taxes by TLHing (tax-loss harvesting).

This is handled simply by owing funds in taxable that track different indexes from your TA choices.

Given that your current 401k choices are (assumes you roll your 403b and 401k into this):
--Fidelity® 500 Index Fund Institutional C - FXSIX
--Fidelity® Extended Market Index Fund Pre - FSEVX
--Western Asset Core Bond Fund Class I - WATFX (can your replace this with something cheaper?)

Given that your Roth IRA choice is:
--Vanguard Tot Intl Stock Ix Admiral - VTIAX

Then these would probably work in a Vanguard taxable account as being "unique" and avoid TLHing issues.
--VTSMX, Total US stock market index fund
--VFWIX, FTSE All-World ex-US index fund
--VBIIX, Intermediate-term bond index fund (removes deprecated mortgage-backed securities)*

* Or maybe a treasury fund (VFITX, IT treasury) for the state-tax advantage.
Or maybe LT national or single-state muni fund. (Win against TBM in 25% fed tax bracket, but more risk.)
Or maybe have no bonds in taxable.

I put bonds in taxable only if they produce more after-tax income than TBM. These bond funds will be more risky than TBM, but I’ve learned that I can handle the extra risk.

Your choice.
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

investme
Posts: 42
Joined: Mon Jul 15, 2013 9:37 pm

Re: Retirement Portfolio Review Request - 5 years later

Post by investme » Tue Oct 09, 2018 4:40 pm

Couple additional points I found out:

1) No charges or fees for brokerage link on current retirement plan - and it's a full trading capability brokerage account up to 100%, all available mutual funds, stocks, ETF's, etc.

No issue with rolling over the old accounts - it appears I could roll over directly to the brokerage link funds if I open the account first (2500 minimum). The only thing is I would need to liquidate the old 401k, 403b, and brokerage link - sell everything for cash and then roll that cash into my current 401k to investments of my choosing (if using brokerage link) - any downsides/concerns with this?

2) I found out the management fees I have listed are included in the expense ratio, not in addition, I will go back and edit the post
3) As far as a better bond fund, with brokerage link I could pick any fund - any suggestions?
4) To clarify, the Roth IRA I have with Vanguard is in a separate but full trading brokerage account with Vanguard - it's just only in that one stock in a Brokerage Roth account
5) I am contributing at least $450 extra per month to my mortgage (s) - it sounds like that would be better off in this Roth IRA? I don't make enough for the backdoor Roth, but make too much for a traditional IRA contribution
6) I do have a separate 'taxable' account that I excluded - I know that goes against the philosophy here but wanted to focus specifically on retirement funds
7) I will review the other feedback and links, thank you!
8) It seems now my decisions are what funds to put everything combined in now and into the future - feedback would be greatly appreciated

Thank you!!

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dratkinson
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Location: Centennial CO

Re: Retirement Portfolio Review Request - 5 years later

Post by dratkinson » Wed Oct 10, 2018 4:38 am

investme wrote:
Tue Oct 09, 2018 4:40 pm
Couple additional points I found out:

1) No charges or fees for brokerage link on current retirement plan - and it's a full trading capability brokerage account up to 100%, all available mutual funds, stocks, ETF's, etc.

No issue with rolling over the old accounts - it appears I could roll over directly to the brokerage link funds if I open the account first (2500 minimum). The only thing is I would need to liquidate the old 401k, 403b, and brokerage link - sell everything for cash and then roll that cash into my current 401k to investments of my choosing (if using brokerage link) - any downsides/concerns with this?

See if your current employer can pull your old investments "in kind" from your old accounts and into your new account. Why? Recall if you take cash, and there any are problems (old employer lost check before mailing, check lost in mail, check stolen from your mailbox, new employer lost check,...), then 60 days later, if the cash is not in your new account, IRS considers it to be an early distribution and penalty applies.

Much safer/simpler to do a trustee-to-trustee transfer than to have the money go through your hand. Then when the old assets are added "in kind" to your new account, you only need to fix the bonds. Much less work for you.



3) As far as a better bond fund, with brokerage link I could pick any fund - any suggestions?

Since you are using Fidelity funds, then cheapest Fidelity total US bond market index fund to round out your 3-fund portfolio.

Recall Fidelity recently announced the creation of some 0% fee funds. See if it has a 0% fee total bond market index fund.



4) To clarify, the Roth IRA I have with Vanguard is in a separate but full trading brokerage account with Vanguard - it's just only in that one stock in a Brokerage Roth account

Understood and acceptable. Whatever works for you.

Only minor gotcha is you are losing the FTC (foreign tax credit) with a TISM fund in a tax-advantaged account.

To get FTC, TISM needs to be in a taxable account. Seem to recall FTC equals ~10% of distributions, so total return is 100% in TA, ~110% in taxable. No, I don't know the difference this would make in taxes and after-tax income.

Fed tax return. Can use Excel1040.com to wag it and see what you get. Enter last tax return as known baseline. Then assume your TISM is in taxable.

CO tax return. CO uses a flat tax system and it's easy to implement in Excel. (Again, create a known baseline from your last tax return.)

What is your difference in after-tax income by keeping TISM in TA and losing FTC, and putting it in taxable and getting FTC?

Idea. Add a new sheet to Excel1040.com after Sch B. Do your work there (implement CO tax return,...).
--TISM in Roth baseline: total income -Fed tax -CO tax =after-tax income.
--TISM in taxable: total income -Fed tax -CO tax =after-tax income.

It'll give you something to do, keep you off the street, and out of trouble for a day or so.



6) I do have a separate 'taxable' account that I excluded - I know that goes against the philosophy here but wanted to focus specifically on retirement funds

Everything affects everything.

Example: if you planned to make use of the TLH technique to lower your taxes, then your investments in taxable should be set up so they don't conflict/duplicate your TA investments.
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

investme
Posts: 42
Joined: Mon Jul 15, 2013 9:37 pm

Re: Retirement Portfolio Review Request - 5 years later

Post by investme » Wed Oct 10, 2018 12:21 pm

Thank you for your response! Comments below.
dratkinson wrote:
Wed Oct 10, 2018 4:38 am
investme wrote:
Tue Oct 09, 2018 4:40 pm
Couple additional points I found out:

1) No charges or fees for brokerage link on current retirement plan - and it's a full trading capability brokerage account up to 100%, all available mutual funds, stocks, ETF's, etc.

No issue with rolling over the old accounts - it appears I could roll over directly to the brokerage link funds if I open the account first (2500 minimum). The only thing is I would need to liquidate the old 401k, 403b, and brokerage link - sell everything for cash and then roll that cash into my current 401k to investments of my choosing (if using brokerage link) - any downsides/concerns with this?

See if your current employer can pull your old investments "in kind" from your old accounts and into your new account. Why? Recall if you take cash, and there any are problems (old employer lost check before mailing, check lost in mail, check stolen from your mailbox, new employer lost check,...), then 60 days later, if the cash is not in your new account, IRS considers it to be an early distribution and penalty applies.

Much safer/simpler to do a trustee-to-trustee transfer than to have the money go through your hand. Then when the old assets are added "in kind" to your new account, you only need to fix the bonds. Much less work for you.


I asked but unfortunately not - they can however do it all 'digitally' now days without mailing the check and me having to mail it back

3) As far as a better bond fund, with brokerage link I could pick any fund - any suggestions?

Since you are using Fidelity funds, then cheapest Fidelity total US bond market index fund to round out your 3-fund portfolio.

Recall Fidelity recently announced the creation of some 0% fee funds. See if it has a 0% fee total bond market index fund.


Good idea, will investigate

4) To clarify, the Roth IRA I have with Vanguard is in a separate but full trading brokerage account with Vanguard - it's just only in that one stock in a Brokerage Roth account

Understood and acceptable. Whatever works for you.

Only minor gotcha is you are losing the FTC (foreign tax credit) with a TISM fund in a tax-advantaged account.

To get FTC, TISM needs to be in a taxable account. Seem to recall FTC equals ~10% of distributions, so total return is 100% in TA, ~110% in taxable. No, I don't know the difference this would make in taxes and after-tax income.

Fed tax return. Can use Excel1040.com to wag it and see what you get. Enter last tax return as known baseline. Then assume your TISM is in taxable.

CO tax return. CO uses a flat tax system and it's easy to implement in Excel. (Again, create a known baseline from your last tax return.)

What is your difference in after-tax income by keeping TISM in TA and losing FTC, and putting it in taxable and getting FTC?

Idea. Add a new sheet to Excel1040.com after Sch B. Do your work there (implement CO tax return,...).
--TISM in Roth baseline: total income -Fed tax -CO tax =after-tax income.
--TISM in taxable: total income -Fed tax -CO tax =after-tax income.

It'll give you something to do, keep you off the street, and out of trouble for a day or so.


This is an interesting concept, something I never thought was available - utilizing the foreign tax credit, I will need to do more research on this, I am not sure how to answer some of those questions, but hopefully I can figure it out or at least learn more about it

6) I do have a separate 'taxable' account that I excluded - I know that goes against the philosophy here but wanted to focus specifically on retirement funds

Everything affects everything.

Example: if you planned to make use of the TLH technique to lower your taxes, then your investments in taxable should be set up so they don't conflict/duplicate your TA investments.


Agreed, will keep this in mind!

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