Portfolio Checkup - for the first time

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nix4me
Posts: 50
Joined: Sat Oct 13, 2018 9:32 am

Portfolio Checkup - for the first time

Post by nix4me » Fri Nov 09, 2018 10:32 pm

Emergency Funds: $3000 – Goal is $40,000
Debt: Car, $18,000 – currently paying $3000 a month to pay it off (2.49%)
Debt: Home, $270,000 at 3.25% - hope is to pay off in next 10 years. Worth: $360,000
Tax Filing Status: (Married Filing Jointly)
Tax Rate: 24% Federal, 0% State
State of Residence: FL
Age: 46/46
Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: 5% of stocks
Size of total retirement assets (excludes $40K in ESA for daughter): $657K

Current retirement assets:
His Roth IRA at Fidelity
1.08% $7,127.66 FIDELITY ZERO TOTAL MARKET INDEX FZROX 0.00

His 401k – Fidelity 6% Company Match
30.38% $199,618.00 GROWTH FUND OBLF 0.43
41.38% $271,878.86 INDEX EQUITY FUND - (S&P 500) OBLM 0.03
17.64% $115,935.44 FIDELITY ZERO TOTAL MARKET INDEX FZROX 0.00
2.57% $16,872.71 STABLE VALUE FUND OBLG 0.30
2.38% $15,636.54 PASSIVE AGGREGATE OBLH 0.05

Her Roth IRA at USAA
1.52% $10,000.00 S&P 500 Index USAA ? 0.03

Her Pension/Savings (Teacher)
3.04% $20,000.00 S&P 500 Index ? 0.03


New annual Contributions
$6K his Roth IRA
$15K his 401k ($9K Employer Contribution Matching)
$6K her Roth IRA
$3K her Teacher Pension Savings


Available funds

Funds available in his Roth IRA:
Any Fidelity Fund – chose Zero Total Market

Funds available in his 401(k)
GROWTH FUND 0.43%
INDEX EQUITY FUND 0.03%
EQUITY INCOME FUND 0.37%
WILSHIRE 4500 INDEX 0.05%
SMALL CAP GROWTH 0.88%
SMALL CAP VALUE 0.86%
INTERNATIONAL FUND 0.52%
BTC STRAT COMPLETION 0.2%
PASSIVE AGGREGATE 0.05%
STABLE VALUE FUND 0.3%
BrokerageLink (any Fidelity Fund up to 20% of total restriction – I chose FZROX)
LIFECYCLE FUND 2020 0.09%
LIFECYCLE FUND 2025 0.09%
LIFECYCLE FUND 2030 0.09%
LIFECYCLE FUND 2035 0.09%
LIFECYCLE FUND 2040 0.09%
LIFECYCLE FUND 2045 0.09%
LIFECYCLE FUND 2050 0.09%
LIFECYCLE FUND 2055 0.09%
LIFECYCLE FUND 2060 0.09%
LIFECYCLE RETIREMENT 0.09%

Funds available in her School Plan:
All are terrible except S&P 500

Funds available in her Roth IRA with USAA:
Most are terrible except S&P 500 Index

Questions:
1. Are my choices in funds consistent with simple low cost Boglehead mentality?
2. Should I work to max out our Roth’s or my 401K?
3. I want to retire at 55 in 9 years – any hope? I hate my job! Our expenses are ~$55K a year.
Last edited by nix4me on Sat Nov 10, 2018 12:16 am, edited 2 times in total.

Flyer24
Posts: 449
Joined: Sun Apr 08, 2018 4:21 pm

Re: Portfolio Checkup - for the first time

Post by Flyer24 » Fri Nov 09, 2018 11:15 pm

Stop with the car payoff. First, you need to rapidly build up your emergency fund. Ideally you want 6 months of expenses. Then you need to max out your 401K and both Roth’s. The car should be your last concern. At your age, you need to have 20 percent bonds minimum. I would go with 30 percent. You have a nice amount in your portfolio.

nix4me
Posts: 50
Joined: Sat Oct 13, 2018 9:32 am

Re: Portfolio Checkup - for the first time

Post by nix4me » Sat Nov 10, 2018 11:11 am

Not sure I agree about debt but thanks for the reply.

I should also mention that my 401K investments every other week are now split 50% in Index Equity, 25% in Passive Aggregate Bonds, and 25% Stable Value. My plan is to increase non-equity position slowly over the next 9 years via yearly adjustments on my birthday.

Flyer24
Posts: 449
Joined: Sun Apr 08, 2018 4:21 pm

Re: Portfolio Checkup - for the first time

Post by Flyer24 » Sat Nov 10, 2018 3:36 pm

Well you are leaving tax advantaged space by not maximizing your 401K before paying the car. Generally the consensus on this site is to fill you retirement before paying extra on car and mortgage. You can’t get that space back. Student loans are a different story. If you want to retire early then you have to take advantage of every space you can. I like your idea of changing to more conservative every birthday. I do the same thing. I use an Age - 15 formula for my non-equity positions. I am not saying not to pay the car off. However you are leaving $3500 yearly off your 401K space (max 19K next year). Fill that space, get your emergency fund up to at least 3 months, and then pay the car off.

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ps56k
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Joined: Sat Mar 19, 2011 1:28 pm
Location: Chicago area

Re: Portfolio Checkup - for the first time

Post by ps56k » Sat Nov 10, 2018 3:55 pm

I would agree with some basic comments....
You can't go back and add to retirement plans after the year (April) has passed...
So - take advantage of them each and every year - forced savings -
Increase the emergency cash fund.
Any debt is just that - debt that can and should be paid off - but not to the exclusion of retirement funding.
Lastly - don't think I saw it - but personal monthly debt.... chews up cash - so pay off or down high % credit cards, if you carry a balance.

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Duckie
Posts: 6061
Joined: Thu Mar 08, 2007 2:55 pm

Re: Portfolio Checkup - for the first time

Post by Duckie » Sat Nov 10, 2018 5:49 pm

nix4me wrote:Age: 46/46
Desired Asset allocation: 90% stocks / 10% bonds
10% bonds is very aggressive for your ages. I'd be at least 30% bonds.
Desired International allocation: 5% of stocks
That's less than 5%. Why bother?
His 401k – Fidelity 6% Company Match
30.38% $199,618.00 GROWTH FUND OBLF 0.43
Dump this. 0.43% is unnecessarily high when you have better US options.
Her Roth IRA at USAA
1.52% $10,000.00 S&P 500 Index USAA ? 0.03
She should move this Roth IRA to Fidelity. She could hold international in it.
Funds available in his 401(k)
The best options are:
  • INDEX EQUITY FUND 0.03% -- Large caps, 80% of US stocks
  • WILSHIRE 4500 INDEX 0.05% -- Mid/small caps, 20% of US stocks
  • INTERNATIONAL FUND 0.52% -- High cost, but only international option. Probably just developed markets, 75% of international stocks
  • PASSIVE AGGREGATE 0.05% -- US bonds
  • or the LifeCycle fund that comes closest to your AA
What is the current interest rate for STABLE VALUE FUND?
Are my choices in funds consistent with simple low cost Boglehead mentality?
Mostly.
Should I work to max out our Roth’s or my 401K?
I would max the Roth IRAs and then try to max the employer plans.

Since she is a teacher does she have access to a 403b or 457b plan?
_________________________

The following examples have different AAs. The first has 90% stocks, 10% bonds, with 5% of stocks in international. That breaks down to 85% US stocks, 5% international stocks, and 10% bonds. The second has 70% stocks, 30% bonds, with 20% of stocks in international. That breaks down to 56% US stocks, 14% international stocks, and 30% bonds. You could have:

Portfolio #1 (85/5/10)

His 401k at Fidelity -- 94%
18% (FZROX) Fidelity Zero Total Market Index Fund (0.00%)
51% (N/A) Index Equity Fund (0.03%)
13% (N/A) Wilshire 4500 Index Fund (0.05%)
2% (N/A) International Fund (0.52%)
10% (N/A) Passive Aggregate Bond Fund (0.05%)

Her Pension -- 3%
3% (N/A) S&P 500 Index (0.03%)

His Roth IRA at Fidelity -- 1%
1% (FZILX) Fidelity Zero International Index Fund (0.00%)

Her Roth IRA at Fidelity -- 2%
2% (FZILX) Fidelity Zero International Index Fund (0.00%)

or

Portfolio #2 (56/14/30)

His 401k at Fidelity -- 94%
18% (FZROX) Fidelity Zero Total Market Index Fund (0.00%)
27% (N/A) Index Equity Fund (0.03%)
8% (N/A) Wilshire 4500 Index Fund (0.05%)
11% (N/A) International Fund (0.52%)
30% (N/A) Passive Aggregate Bond Fund (0.05%)

Her Teacher Pension -- 3%
3% (N/A) S&P 500 Index (0.03%)

His Roth IRA at Fidelity -- 1%
1% (FZILX) Fidelity Zero International Index Fund (0.00%)

Her Roth IRA at Fidelity -- 2%
2% (FZILX) Fidelity Zero International Index Fund (0.00%)

Just some possibilities.

nix4me
Posts: 50
Joined: Sat Oct 13, 2018 9:32 am

Re: Portfolio Checkup - for the first time

Post by nix4me » Sat Nov 10, 2018 8:07 pm

The Stable Value is 2.3% YTD.

I would have a hard time selling the Growth fund. It has out-performed the index since i've had the 401K -16 years.

Thanks for all of the suggestions - i will consider several.

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Bogle the Mind
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Joined: Thu Aug 09, 2018 11:21 am
Location: NYC Metro

Re: Portfolio Checkup - for the first time

Post by Bogle the Mind » Sun Nov 11, 2018 10:44 am

nix4me wrote:
Sat Nov 10, 2018 8:07 pm
I would have a hard time selling the Growth fund. It has out-performed the index since i've had the 401K -16 years.
I think most here would agree that making a buy/sell decision based on past performance is unwise (perhaps unless the reason is really about avoiding a capital gain, which is irrelevant in a 401k). Past performance does not indicate future performance.
- Bogle the Mind

delamer
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Joined: Tue Feb 08, 2011 6:13 pm

Re: Portfolio Checkup - for the first time

Post by delamer » Sun Nov 11, 2018 5:42 pm

If you want to retire in 9 years with $55K in expenses, what will you income sources be other than savings?

If your answer is none, then you need about $600K to get you to your Social Security FRA.

After FRA, then you need to withdraw from savings each year the difference between your SS benefits and your expenses. In that case, you need about 25X annual withdrawals saved to cover that. So if your SS is $40K, then you’ll need $15K times 25 or $375K.

That’s the basic math (adjusted for your actual SS benefits). The numbers change if, for instance, your wife will work after you retire or if you’ll have a pension in addition to Social Secuirty.

You can try this tool (extended) to get better estimates: https://www.i-orp.com/LumpSum/index.html

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