35...am I on the right track? Feeling overwhelmed with options

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viii
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Joined: Thu Jan 10, 2019 12:12 pm

35...am I on the right track? Feeling overwhelmed with options

Post by viii » Thu Jan 10, 2019 1:02 pm

I'm making this post after days of seemingly endless boglehead reading. It's been wonderful to find so much straight-forward information but now I'm hoping to get some personalized advice from this awesome group because I'm feeling a bit overwhelmed...

I'm 35 and have prided myself on being (I think) in a good place of planning for the future: I have 30k in a Roth IRA with Edward Jones (more on that in a second), a 401k (with 30k) and a standard checking account at BofA (with 30k).

I live below my means...but I live in NYC (single, no kids) and have made less than 80k/year my entire career so there's a limit to how much I can do. Still though, I max out my roth every year and contribute to my 401k to get the full company match. Aside from about 2k in low interest (2.8%) student loan, I have zero debt.

Here's the core of my question: I'm about to start a new job which means I have to make a decision about my current 401k. As I started researching, with the idea of just moving it to a traditional IRA with Edward Jones, I came to realize I was paying quite a bit more in fees for my Roth than I think is necessary. I'd say I'm high-risk tolerance because of my age, but I'm also more of a buy and hold type. I don't think it makes sense for me to have/pay someone to "manage" my Roth for such a high fee rate.

Updated info: I have 10 funds in my Roth, I looked up all their ERs and it totals 6.4%. Unless I'm misunderstanding finance math, that totals (with my account management fee of 1.35%) about $2400 a year in fees for my Roth!! Definitely need to get out of Edward Jones asap. My 401k at the old employer has a bunch of target date funds (I'm 100% in the Morningstar 2050 fund) that all seem like they have ERs a bit high. At my new employer I don't qualify to participate in a 401k until I've been there for a year...so I don't really want to leave my old 401k where it is, and I can't really roll it to my new one.

So...I'm considering moving my 401k AND my Roth to another company. But who? Fidelity and Vanguard seem like good options. But I'm with BofA already for daily banking, is Merrill Edge a better choice for me then? Additional possible curveball is that BofA checking is like zero %, should I jump to an online bank like Marcus or Barclays? And what pitfalls should I look out for, a process like that seems ripe for me making a mistake and getting hit with fees and taxes.

I also feel like 20k in checking is good for my NYC-centric emergency fund so I have an additional 10k to do something with. PLUS, the new job will be a salary of 100k, which is great except since everything is in flux I don't know what I should plan to do with the extra $$ I'm going to see in my paycheck.
Do I make bigger 401k contributions at the new job? (I won't be vested for nearly 5 years) ... do I get into individual stocks?...pay off the student loan (it's only about $50/year in interest)...save in a separate account to maybe someday have enough to buy an apartment in nyc?...something else entirely???

I feel like I need an impartial financial planner just to give me their opinion and that was how I eventually stumbled into Bogleheads. I know mine is a loaded question, but if anyone has any thoughts, I would be so appreciative.
Last edited by viii on Sun Jan 27, 2019 1:57 pm, edited 1 time in total.

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Duckie
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Re: 35...am I on the right track? Feeling overwhelmed with options

Post by Duckie » Thu Jan 10, 2019 7:09 pm

viii welcome to the forum.
viii wrote:I'm considering moving my 401k AND my Roth to an online firm. But who? Fidelity and Vanguard seem like good options.
I recommend Vanguard, Fidelity or Schwab for your rollovers in that order.
Additional possible curveball is that BofA checking is like zero %, should I jump to an online bank like Marcus or Barclays? And what pitfalls should I look out for, a process like that seems ripe for me making a mistake and getting hit with fees and taxes.
Use high-yield savings or a money market for the emergency fund. Right now (VMMXX) Vanguard Prime Money Market is yielding 2.44% and Ally online savings is yielding 2.00%.
I also feel like 20k in checking is good for my NYC-centric emergency fund so I have an additional 10k to do something with.
Only keep enough in checking for necessities. Use part of the $10K to pay off the student loan and then use the leftover to pay bills while contributing more than the minimum to the new 401k.
PLUS, the new job will be a salary of 100k, which is great except since everything is in flux I don't know what I should plan to do with the extra $$ I'm going to see in my paycheck.
Bank it for three months to see how your budget changes. Then you could add some of the extra to higher 401k contributions and some into a taxable account for future planned expenses like a new car, vacation, or home down-payment.

Olemiss540
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Re: 35...am I on the right track? Feeling overwhelmed with options

Post by Olemiss540 » Thu Jan 10, 2019 7:23 pm

SLOW DOWN! You are not in a race, you are worried about the first 3 steps at the beginning of a marathon. Read, read, read, and read some more on this site as folks discussion questions, check out the wiki, continue your education.

As you get more and more comfortable, these seemingly BIG and complicated decisions will end up being minor and simple. This method of investing is the simplest form that I know of and will take all of 5 min a year of actual work once everything is automated.

I recommend you ditch BofA for Fido or Vanguard or Schwab. Slowly get things transferred away from those thief's at EJ and into a simple 3 fund portfolio or better yet a TARGET DATE fund. These are extremely cheap and simple ways to automate rebalancing and diversification (with costs and diversification being the ONLY free lunch in investing).

I highly recommend you increasing your 401k contributions to MAX with your latest raise (great job)! This money will come out of your check pre tax (easily saving you 6500 in combined taxes) and between a pretax 401k and a Roth IRA, will set you up for an extremely successful future.

Personally I am at Vanguard and invest everything in Vanguard Target Retirement 2055. We can help once your transfers are complete with any questions. Get it done at your place, as long as it GETS DONE.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

radiowave
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Re: 35...am I on the right track? Feeling overwhelmed with options

Post by radiowave » Thu Jan 10, 2019 7:37 pm

viii welcome!

I'm going to give 2 thumbs up on Duckies reply. All excellent recommendations. I would recommend keeping BoA but using it just for depositing your income check, and taking coins down there to get deposited. You need to watch BoA as they nickel and dime you with fees. If you have at least $600/mo deposited then you should be OK. Agree about Ally and moving most of your cash there. Ally has an excellent bill pay and regular savings is 2.0% (BoA is something like 0.04% or some ridiculous low number). Consider a CD ladder at Ally. Their 1 year CDs are currently 2.75% yield which is just about keeping up with inflation. Idea of cash and cash instruments is you want to keep from loosing money/value in the long run. So minimize cash in checking to as low as you feel is necessary from a cash flow standpoint the move the rest to high yield savings. BTW, BoA has an excellent rewards Master Card.

As for brokerage, I would recommend Vanguard first then either Fidelity or Schwab. All have excellent choices of highly diversified low cost index funds. (see the long running thread on the 3 fund portfolio). You will likely get unanimous feedback to move out of Edward Jones. its pretty easy, recommend you initiate the transfers on the Vanguard side (if that's who you choose) and avoid interacting with the EJ sales person.

You're off to a great start, feel free to ask additional questions as you move forward.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

02nz
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Re: 35...am I on the right track? Feeling overwhelmed with options

Post by 02nz » Thu Jan 10, 2019 8:47 pm

Another welcome to BH. Lots of good recommendations here already.

Take a deep breath. You're on the right path. If you live below your means, invest consistently, and use low-cost funds, you're 80% of the way there. The last 20% can be optimized in myriad ways, but doesn't matter as much. A lot of us are "into" that 20%, but you don't need to be to get to financial freedom.

My advice: Take the opportunity of the increase in income and max your 401k ($19K/year). The tax savings are considerable - you're probably paying 30%+ taxes at the top. By maxing your 401k contributions (traditional not Roth), you'll defer those taxes to retirement, when you're likely to be able to withdraw the money at much lower tax rates. In addition, you're a bit behind in your retirement savings. According to Fidelity (https://www.fidelity.com/viewpoints/ret ... -to-retire), you should have about 2x your salary saved at your age. That's a very rough guide, and I get that living costs are high in NYC so it's harder to save. But the bump in pay is the perfect opportunity to catch up and get ahead.

On your question about Merrill Edge: It works well, customer service is good, and some of us here really like it for the bonuses they offer when you move large sums over. Below $100K it's probably not worth the bother. Merrill Edge also doesn't have access to Vanguard Admiral funds, but they do of course have Vanguard ETFs. Bottom line, in your position I'd just go with Vanguard, Fidelity, or Schwab. You won't go wrong with any of the three, as long as you stay with low-cost funds. Until you reach $100K, I'd keep things simple and just use a target retirement date fund. (With Fidelity, stay away from the Freedom funds, which have much higher expenses than their similar-sounding Freedom Index funds.)

Yes you should use an online savings account instead of BoA - Ally is good, as are Discover, Capital One 360, and many others. Discover is running a $200 bonus when you deposit $25K.

Best of luck, keep learning and asking questions!

Funancials
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Re: 35...am I on the right track? Feeling overwhelmed with options

Post by Funancials » Thu Jan 10, 2019 9:07 pm

Here are a few options. You can weight the pros and cons.

1. Look into Bank of America Preferred Rewards
- You unlock decent benefits once you hit $100k with the bank. This is combined between checking, savings, Merrill Edge brokerage and IRAs. (Benefits start at $20k but max out at $100k)
- Free trades on Merrill Edge (up to 100/month)
- 75% rewards bonus on their Cash Rewards card which makes it 5.25%, 3.5%, 1.75% on gas, groceries and everything else (vs the normal 3,2,1).
- Unlimited no-fee ATMs
- Rolling over your investments gets you close to $100k and you can easily invest in Vanguard ETFs in your Merrill Edge account.

Pro: simplicity, convenience, rewards
Con: you'll have to manually place trades for Vanguard ETFs because automated plans are only available through select funds

2. Do everything above, but open a savings account with Ally or Amex (both paying 2-2.1%) and are good to do business with.

3. Rollover your investments to Vanguard directly and invest in their index funds.

Pro: can setup automatic investments

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dogagility
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Re: 35...am I on the right track? Feeling overwhelmed with options

Post by dogagility » Thu Jan 10, 2019 9:08 pm

You've received good advice, and here's my two cents.

If you want a one-stop shop for banking/investing, I suggest Fidelity. Their Cash Management Account will give you a debit card, checks, and bill pay. All free. Fidelity has low cost or no cost index funds for investing. Emergency money can be invested in a money market fund. If you want a credit card, Fidelity's no fee, 2% cash back card is good.
Taking "risk" since 1995.

NoLongerLurking
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Re: 35...am I on the right track? Feeling overwhelmed with options

Post by NoLongerLurking » Fri Jan 11, 2019 5:05 am

I strongly recommend switching to an online bank. I've used Capital 360 for over ten years now with no complaints. I recently had a complicated banking matter, but was able to get it done through express mail. Yes, that was kind of annoying, but not enough to justify keeping a brick-and-mortar account open just to be able to use a branch once every ten years.

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Tamarind
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Re: 35...am I on the right track? Feeling overwhelmed with options

Post by Tamarind » Fri Jan 11, 2019 8:29 am

Welcome!
viii wrote:
Thu Jan 10, 2019 1:02 pm
I max out my roth every year and contribute to my 401k to get the full company match. Aside from about 2k in very low interest student loan, I have zero debt.
Good for you! What's your interest rate and remaining time on the student loan? Unless it's below 2%, I'd probably suggest using part of your extra $10k to finish off the debt now just to be done with it.
viii wrote:
Thu Jan 10, 2019 1:02 pm
I don't think it makes sense for me to have/pay someone to "manage" my Roth for such a high fee rate.
I agree. There is no reason you should pay anything other than very low fund expense ratios. A good portfolio held in a Roth at a good custodian will be so automated you don't need to do anything at all after setup - automated funding from your bank account, automated purchases according to your asset allocation, done.
viii wrote:
Thu Jan 10, 2019 1:02 pm
I'm considering moving my 401k AND my Roth to an online firm. But who? Fidelity and Vanguard seem like good options. But I'm with BofA already for daily banking, is Merrill Edge a better choice for me then? Additional possible curveball is that BofA checking is like zero %, should I jump to an online bank like Marcus or Barclays? And what pitfalls should I look out for, a process like that seems ripe for me making a mistake and getting hit with fees and taxes.
Two parts to this: what account moves should you make and what companies should you make them with.

1) You should definitely move your Roth to an online firm. I use Vanguard but Fidelity is also very very good. As dogagility pointed out, Fidelity also offers solid banking features. I'd likely avoid Merrill Edge, because I dislike BoA banking products and fee structure, but you could make that work too. The main pitfall to avoid is spending too long out of the market (if you liquidate to cash to move) or paying commissions to sell Edward Jones funds (if you don't). If you go to Vanguard, f.ex., make sure you transfer cash. Other companies might give you free trades to make the switch. Make a plan, then have the company you're moving to initiate the transfer. No need to speak to Edward Jones, who btw will charge you a fee to close your account.

2) You should wait to make a decision about your 401k until you know more about the 401k at your new job. If it is a good one (good funds and low fees), you should rollover your old 401k into your new 401k! I just did this last spring. It takes a little time but it's worth it. If your old 401k was better, I would recommend leaving the money there. I don't suggest you roll to a traditional IRA, because it will get in the way later if you want to do backdoor Roth contributions as your income goes up.

3) I love Ally for banking products. They have, IMO, the best combination of convenience and good rates on savings/CDs. For example they have a no-penalty CD at 2.7% that I use for my emergency fund. Great app, stellar customer service. There are several other online banks that are less slick but will give slightly better rates. Don't keep your emergency fund in checking! Keep it in a savings account or CD.
viii wrote:
Thu Jan 10, 2019 1:02 pm
I don't know what I should plan to do with the extra $$ I'm going to see in my paycheck. Do I make bigger 401k contributions at the new job? (I won't be vested for nearly 5 years so I figured I'd do the minimum to get a match and hope for the best) ... do I get into individual stocks?...pay off the student loan (it's only about $15/year in interest)...save in a separate account to maybe someday have enough to buy an apartment in nyc?...something else entirely???
Your 401k contributions are yours no matter how long you stay at the new job. Only the match is subject to vesting! You should drastically increase your 401k contributions, ideally aim to max them out with the last paycheck of each year. That way you will save lots, reduce your taxes, and reduce the temptation to spend the extra. Just like you max your Roth without considering if you should each year, do the same with your 401k! The potential pitfall here is if you hit the contribution limit earlier in the year, you might lose out on match because many companies pay match on contributions per paycheck, not per year.

What else do you want or need for your future? I don't think I could stomach buying real estate in NYC, but saving for a down payment is a good use if you want that. If it were me I'd start a taxable investment account towards your retirement. If you do that, open it at the same place your Roth ends up, and don't mess with individual stocks. Keep investing like you do in Roth and 401k - low cost diversified mutual funds or ETFs.

Speaking of low cost diversified funds, there's one last pitfall you haven't asked about, and that's having a disorganized collection of investments that don't work for you. Since you've been reading here hopefully you have some ideas about what you want your asset allocation to be. Don't hesitate to post another thread about that once you get the info on your new 401k, as it's an important choice to make.

dharrythomas
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Re: 35...am I on the right track? Feeling overwhelmed with options

Post by dharrythomas » Fri Jan 11, 2019 9:37 am

Move the 401(K) to Vanguard and use the big pay raise as an opportunity to increase your 401(K) contributions. You are doing fine. Living below your means and saving money is critical. If you max the 401(K), you’ll probably still get a bump in disposable income from your raise, do do something you enjoy. If you stay on this basic course, you should be in good shape.

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ruralavalon
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Re: 35...am I on the right track? Feeling overwhelmed with options

Post by ruralavalon » Fri Jan 11, 2019 11:10 am

Welcome to the forum :) .

Congratulations on the new job with higher pay.


viii wrote:
Thu Jan 10, 2019 1:02 pm
I'm making this post after days of seemingly endless boglehead reading. It's been wonderful to find so much straight-forward information but now I'm hoping to get some personalized advice from this awesome group because I'm feeling a bit overwhelmed...

I'm 35 and have prided myself on being (I think) in a good place of planning for the future: I have 30k in a Roth IRA with Edward Jones (more on that in a second), a 401k (with 30k) and a standard checking account at BofA (with 30k).

I live below my means...but I live in NYC (single, no kids) and have made less than 80k/year my entire career so there's a limit to how much I can do. Still though, I max out my roth every year and contribute to my 401k to get the full company match. Aside from about 2k in very low interest student loan, I have zero debt.

Here's the core of my question: I'm about to start a new job which means I have to make a decision about my current 401k. As I started researching, with the idea of just moving it to a traditional IRA with Edward Jones, I came to realize I was paying quite a bit more in fees than I think is necessary.
I'd say I'm high-risk tolerance because of my age, but I'm also more of a buy and hold type. I don't think it makes sense for me to have/pay someone to "manage" my Roth for such a high fee rate.

SO...I'm considering moving my 401k AND my Roth to an online firm. But who? Fidelity and Vanguard seem like good options. But I'm with BofA already for daily banking, is Merrill Edge a better choice for me then? Additional possible curveball is that BofA checking is like zero %, should I jump to an online bank like Marcus or Barclays? And what pitfalls should I look out for, a process like that seems ripe for me making a mistake and getting hit with fees and taxes.

I also feel like 20k in checking is good for my NYC-centric emergency fund so I have an additional 10k to do something with. PLUS, the new job will be a salary of 100k, which is great except since everything is in flux I don't know what I should plan to do with the extra $$ I'm going to see in my paycheck.
Do I make bigger 401k contributions at the new job? (I won't be vested for nearly 5 years so I figured I'd do the minimum to get a match and hope for the best) ... do I get into individual stocks?...pay off the student loan (it's only about $15/year in interest)...save in a separate account to maybe someday have enough to buy an apartment in nyc?...something else entirely???

I feel like I need an impartial financial planner just to give me their opinion and that was how I eventually stumbled into Bogleheads. I know mine is a loaded question, but if anyone has any thoughts, I would be so appreciative.
I suggest rolling Roth IRA at Edward Jones over to a Roth IRA at a low cost provider like Vanguard, Fidelity or Schwab. My own personal preference is Vanguard.

Concerning what to do about your old 401k, a lot depends on the quality and expense of the funds offered in your old 401k and in your new employer's 401k. You can simply add this information to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

There are three basic possibilities:
1) If the old 401k offers good funds with low expense ratios, and does not charge an account maintenance fee or only a small fee, then it may be better to leave the old 401k where it is;
2) If the new employer's 401k offers better funds with lower expense ratios and will accept a rollover from the old 401k, then it may be better to rollover the old 401k into the new 401k;
3) If neither 401k offers good funds with low expense ratios, then it may be better to rollover the old 401k into an IRA at a low cost provider (like Vanguard, Fidelity or Schwab).

In my opinion it's better to use a bank (rather than an investing firm) for most banking functions such as checking account, credit card, and debit card. We have all of our investing accounts (a joint taxable account, 2 Roth IRAs, and my rollover IRA) at Vanguard and use a branch bank near our home for our free checking account, credit card, and debit card.

For a savings account you could use Vanguard Prime Money Market Fund(VMMXX) current SEC Yield = 2.44%, Vanguard Ultra Short-term Bond Fund (VUBFX) current SEC Yield = 2.71%, or depending on your tax rate Vanguard New York Muni Money Market Fund (VYFXX) current SEC Yield = 1.44%.

I don't have any idea how expensive living in New York City is, so I can't really comment on the $20k in your checking account. Keep an emergency fund large enough to cover 3-6 months of basic living expenses, $20k may be the right number (or not). The emergency fund could be in one of the three Vanguard funds I mentioned in.the previous paragraph, instead of a checking account.

Concerning the extra money in your paycheck at the new job, please see the wiki article "Prioritizing Investments". If there are good funds with low expense offered in your new employer's 401k, then it's likely better to increase your contributions to the new 401k plan. The new annual contribution limit starting this year is $19k.

Finally I suggest that you read one or two books on general investing. Please see the wiki article "Books: Recommendations and Reviews".
Last edited by ruralavalon on Fri Jan 11, 2019 11:57 am, edited 4 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

billfromct
Posts: 847
Joined: Tue Dec 03, 2013 9:05 am

Re: 35...am I on the right track? Feeling overwhelmed with options

Post by billfromct » Fri Jan 11, 2019 11:39 am

A comment on the advantages the Vanguard Prime MM Fund.
-as Duckie mentioned, it now pays 2.44% interest
-you can write checks if over $250
-I believe you can transfer money between your checking account & the Vanguard Prime MM in 1 business day (never actually checked whenever I did a transfer), the transfer is not instantaneous.

You can use the Vanguard Prime MM Fund as your emergency fund as well as for the avenue to fund your Roth IRA & other investments.

bill

transient_academic
Posts: 9
Joined: Thu Oct 04, 2018 10:06 am

Re: 35...am I on the right track? Feeling overwhelmed with options

Post by transient_academic » Fri Jan 11, 2019 11:45 am

viii wrote:
Thu Jan 10, 2019 1:02 pm
I'm making this post after days of seemingly endless boglehead reading. It's been wonderful to find so much straight-forward information but now I'm hoping to get some personalized advice from this awesome group because I'm feeling a bit overwhelmed...

I'm 35 and have prided myself on being (I think) in a good place of planning for the future: I have 30k in a Roth IRA with Edward Jones (more on that in a second), a 401k (with 30k) and a standard checking account at BofA (with 30k).

I live below my means...but I live in NYC (single, no kids) and have made less than 80k/year my entire career so there's a limit to how much I can do. Still though, I max out my roth every year and contribute to my 401k to get the full company match. Aside from about 2k in very low interest student loan, I have zero debt.

Here's the core of my question: I'm about to start a new job which means I have to make a decision about my current 401k. As I started researching, with the idea of just moving it to a traditional IRA with Edward Jones, I came to realize I was paying quite a bit more in fees than I think is necessary.
I'd say I'm high-risk tolerance because of my age, but I'm also more of a buy and hold type. I don't think it makes sense for me to have/pay someone to "manage" my Roth for such a high fee rate.

SO...I'm considering moving my 401k AND my Roth to an online firm. But who? Fidelity and Vanguard seem like good options. But I'm with BofA already for daily banking, is Merrill Edge a better choice for me then? Additional possible curveball is that BofA checking is like zero %, should I jump to an online bank like Marcus or Barclays? And what pitfalls should I look out for, a process like that seems ripe for me making a mistake and getting hit with fees and taxes.

I also feel like 20k in checking is good for my NYC-centric emergency fund so I have an additional 10k to do something with. PLUS, the new job will be a salary of 100k, which is great except since everything is in flux I don't know what I should plan to do with the extra $$ I'm going to see in my paycheck.
Do I make bigger 401k contributions at the new job? (I won't be vested for nearly 5 years so I figured I'd do the minimum to get a match and hope for the best) ... do I get into individual stocks?...pay off the student loan (it's only about $15/year in interest)...save in a separate account to maybe someday have enough to buy an apartment in nyc?...something else entirely???

I feel like I need an impartial financial planner just to give me their opinion and that was how I eventually stumbled into Bogleheads. I know mine is a loaded question, but if anyone has any thoughts, I would be so appreciative.
401k/IRA:

Edward Jones is famous for high fees, so it's a very good idea to move the money elsewhere once you've selected a new home for it.

Vanguard and Fidelity are the most popular around here, but if you like Merrill Edge then it's fine to stick with them. I'm personally not a fan of Bank of America but as long as you are vigilant about their fees you should be fine.

Vanguard is nice because they're structured in a way where the company has less incentive to gouge you. Every other company gouges you as much as they think they can get away with. For some people that's very important, so they pick Vanguard in spite of some of the downsides. Mostly the downsides come from Vanguard's cheapness - you're not paying a whole lot and you get what you pay for. Customer service is adequate and the website is adequate. Fidelity, on the other hand, tends to offer very good customer service and has nicer tools for you. Right now they compete with Vanguard in terms of costs, so they offer many products and services at similar prices.

Savings:

I use Ally. Seeing some other posts in here has me thinking I may shop around a little since Ally used to have the best rates but it doesn't look like they do anymore. Online banks are great for the rates they offer as long as you're comfortable not being able to go to a brick and mortar location. The only pitfalls are the legal requirements for savings accounts - mainly the limit on number of withdrawals. As long as you're keeping enough liquid cash in checking to cover expenses and using savings as an emergency fund you don't draw from regularly, then you shouldn't have any problems.

Prioritizing future money:

For many of your questions, the wiki has this article which lays it out nicely.
https://www.bogleheads.org/wiki/Priorit ... nvestments

Student loan:

It doesn't sound like the student loan bothers you much (at the amount you're paying, it shouldn't). For some people carrying any debt drives them crazy, so it would make sense to pay it off. If not, then the mathematically correct thing to do is to keep making payments on time and invest the money you would use to pay it off, since the expected return on your long term buy and hold strategy is significantly higher than the interest you're paying to borrow that money.

As other posts have said, you're doing fine as you are and there is no reason to be in a huge rush. Take your time, read more, get comfortable before you act. The most pressing thing is getting your Edward Jones accounts transferred.

Topic Author
viii
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Re: 35...am I on the right track? Feeling overwhelmed with options

Post by viii » Sun Jan 27, 2019 2:24 pm

You have all been so helpful. I've been reading so much and have reached a few decisions, but still have some more, that I'm hoping to get your opinions on...

I updated the original post a little, but basically learned:
- I was paying huge fees at Edward Jones for my Roth, so that needs to change asap
- my existing 401k is a generic target date fund with a slightly higher ER than I'd like (2050 fund with a .16% ER)
- I can't start a 401k at the new job for a year and even then will likely leave before I'm fully vested
- I absolutely should never have had my emergency fund in a BofA checking account (ugh!)

Decisions:
- Switch my Roth to Vanguard (seems like the Fidelity ZERO funds are appealing in concept, but they're new and that weirdly makes me nervous; also there's a value to me in using Vanguard because it's Bogleheads that have taught me where I should be course-correcting)
- Open a 3-fund portfolio Roth in VTSAX, VTIAX & VBTLX with a 60/20/20 split
- Continue to max out this Roth
- Start maxing out my 401k/IRA (how and where to do that is unclear, see below)
- pay off my student load just to have one less thing going on
– Open a high yield savings account at ally and move approx. 25k from my BofA checking into that to serve as my emergency and possible down-payment fund
- Keep only a necessary working balance in my BofA checking account (because that's where I also have credit cards with over 15 years of credit history that I don't want to lose)

Still undecided:
- Do I leave the 401k target fund where it is (the only other options available are other target funds with similar ERs)?
- Since I can't enroll in my employer's 401k for a year, do I start a traditional IRA now and then enroll in the employer plan in a year with just the minimum to get the max match (on the off-chance I do stay long enough to claim it)? If I do this, should I roll old 401k into this IRA so I can choose the 3-funds I like?
- Is having a traditional IRA (or 401k) and my Roth holding the same 3 funds a bad idea (does the 3-fund portfolio concept apply across all accounts)?
- What are wash sales and TLH? Am I doing (or not doing) something in all these decisions that is a mistake that will cost me?

yogesh
Posts: 149
Joined: Thu Oct 11, 2012 6:20 pm

Re: 35...am I on the right track? Feeling overwhelmed with options

Post by yogesh » Sun Jan 27, 2019 2:34 pm

I was in similar situation like yours; it took me a year to consolidate, simplify and reduce stress.

Here is option to setup one time and focus on contributions instead with yearly 1hr review.

Checking: Fidelity Cash Management
Credit: Fidelity 2% Cashback Credit Card
Emergency: Fidelity Money Market, CDs or Short Muni
Taxable: Fidelity Zero Total Market and International
401K/IRA: Fidelity Target Date Index
Taxable: VTMFX | Retirement: TR2040 | College: AgeIndex

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