38 and Beyond - Allocation Guidance

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Topic Author
overcast
Posts: 3
Joined: Tue Dec 18, 2018 1:50 pm

38 and Beyond - Allocation Guidance

Post by overcast »

Hey everyone, looking for some guidance in future allocation of funds. I realize I'm late getting started in investments, so let's focus on right now and beyond. I wanted all major debt outside of the mortgage to be gone, as well as fully updating the house, before dumping into the markets.

- Financial Status -

38 years old. Single. No kids. $80-90k+ income
Home is 60% paid off.
100k school loans paid off.
Car is paid off.
No credit card debt.
Emergency fund is taken care of.

- Current Investments -

Roth IRA with a few years worth of max deposit into Vanguard 2045 Target Retirement fund.
Significant pension that is being frozen from future accrual at the end of this year.
Company is switching to offering Roth and Traditional 401k matching for first 5% of salary.

I plan on dumping a minimum of 15% of salary into the Traditional 401k allocated 100% to Vanguard 500 at .04% expense ratio. It's the only reasonable fund I see in there that isn't charging outrageous 1.5-2.0%+ fees. Also continuing to max out the Roth IRA.

Since this overtime will be more and more weighted towards stocks, would the best course be to also allocate to VBTLX? Either in the existing Roth IRA or open an additional traditional IRA?

Thanks everyone! You've been more than valuable already. Just need a bit of additional guidance.
Flyer24
Posts: 5233
Joined: Sun Apr 08, 2018 4:21 pm

Re: 38 and Beyond - Allocation Guidance

Post by Flyer24 »

You don’t need to open up an additional Traditional IRA. If you are already maximizing your Roth IRA then you are done. It is one limit.
Topic Author
overcast
Posts: 3
Joined: Tue Dec 18, 2018 1:50 pm

Re: 38 and Beyond - Allocation Guidance

Post by overcast »

Flyer24 wrote: Tue Dec 18, 2018 3:45 pm You don’t need to open up an additional Traditional IRA. If you are already maximizing your Roth IRA then you are done. It is one limit.
Hey thanks for the response, I understand the limit. Just wondering if I should split it to Traditional to diversify, or purchase more bonds through the Roth side.
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Taco Knight
Posts: 197
Joined: Mon Apr 06, 2015 11:02 am

Re: 38 and Beyond - Allocation Guidance

Post by Taco Knight »

In my understanding you shouldn't purchase bonds in a Roth IRA, because that's the place to reap the most potential rewards from long-term equities gains, and you only can put a (low-ish) fixed amount of cash in per year, so it would be folly to use that cash on bonds rather than equities. Maybe tilt your 401k with a little more bonds? Or use a taxable account if you can max the other two fully in your current saving strategies.
Topic Author
overcast
Posts: 3
Joined: Tue Dec 18, 2018 1:50 pm

Re: 38 and Beyond - Allocation Guidance

Post by overcast »

Taco Knight wrote: Tue Dec 18, 2018 3:58 pm In my understanding you shouldn't purchase bonds in a Roth IRA, because that's the place to reap the most potential rewards from long-term equities gains, and you only can put a (low-ish) fixed amount of cash in per year, so it would be folly to use that cash on bonds rather than equities. Maybe tilt your 401k with a little more bonds? Or use a taxable account if you can max the other two fully in your current saving strategies.
Unfortunately the funds in my 401k are complete garbage from what I can ascertain. Beyond VFIAX, everything else has an incredibly high expense ratio that I'm not comfortable wasting money on. 90% are targeted retirement funds with 1.5%+, the rest are even higher individual funds, even the one bond offering is .75%! Taxable sounds like the proper route then for bonds. Thanks for your help!
ExitStageLeft
Posts: 1984
Joined: Sat Jan 20, 2018 3:02 pm

Re: 38 and Beyond - Allocation Guidance

Post by ExitStageLeft »

If putting bonds in taxable then you might look into I Series US Savings Bonds.

https://www.treasurydirect.gov/indiv/re ... nsider.htm
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