I’m 30 and recently debt free and new to investing

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Topic Author
ScottR
Posts: 8
Joined: Sat Jan 12, 2019 2:42 pm

I’m 30 and recently debt free and new to investing

Post by ScottR » Sun Jan 13, 2019 12:16 am

Emergency funds: 3 months worth, now saving for down payment on home and then afterwards will continue increasing EF to 6 months.
Debt: none, I rent an apartment, but own my car. No credit cards.
Tax Filing Status: Single (1)
Tax Rate: 22% Federal, 7.25% State
State of Residence: California
Age: 30
Salary: 100k
Desired Asset allocation: 80% stocks / 20% bonds (I’m leaning this way because I don’t think I know enough about bonds)

Current retirement assets:
t401k - 100% - JH Multi-Index 2050 Preserv (JRIOX - ER 0.79)

Contributions:
9% JH t401k (employer matches 50% up to 2%) - my logic in the 9% has been for every year I’ve been with my company I contribute +1%.

Other available funds:
JH Multi-Index 2060 Preserv (JCHOX - ER 0.78)
JH Multi-Index 2055 Preserv (JRIYX - ER 0.79)
JH Multi-Index 2045 Preserv (JRVOX - ER 0.78)
JH Multi-Index 2040 Preserv (JRROX - ER 0.77)
JH Multi-Index 2035 Preserv (JRYOX - ER 0.77)
JH Multi-Index 2030 Preserv (JRHOX - ER 0.77)
JH Multi-Index 2025 Preserv (JREOX - ER 0.76)
JH Multi-Index 2020 Preserv (JRWOX - ER 0.76)
JH Multi-Index Income Preserv (JRFOX - ER 0.79)

JH Select AA Growth (JELGX - ER 0.92)
JH Select AA Balanced (JELBX - ER 0.90)
JH Select AA Moderate (JELMX - ER 0.89)
JH Select AA Conservative (JELCX - ER 0.88)

DFA U.S. Small Cap Fund (DFSTX - ER 0.97)
Franklin Small-Mid Growth (FRSGX - ER 1.03)
iShares MSCI EAFE Value ETF (EFV - ER 1.04)
JPMorgan MidCap Value Fund (FLMVX - 1.25)
JH Mid-Cap Index Fund (JECIX - ER 0.67)
Deutsche Real Est. Securities Fund (JIREX - ER 0.90)
Vanguard Mid-Cap Value ETF (VOE - ER 0.73)
Vanguard Small Cap Grow Index (VSGAX - ER 0.67)
Vanguard Small Cap Value Index (VSIAX - ER 0.67)

JH 500 Index Fund (JFIVX - ER 0.64)
American Funds Capital Income Builder (RIREX - ER 0.89)
Fidelity Adv New Insights (FINSX - ER 1.03)
Robeco John Hancock Disciplined Value (JDVWX - ER 0.87)
Oppenheimer Global (OGLYX - ER 1.22)

Federated High-Yield Bond (FIHBX - ER 1.05)
Franklin Templeton Global Bond Fund (TPINX - ER 1.06)

DFA Inflation-Protected Sec (DIPSX - ER 0.72)
JH Bond Fund (JHBSX - ER 0.75)
T. Rowe Price Spectrum Inc (RPSIX - ER 1.10)
JH Total Bond Market Fund (JTBMX - ER 0.68)

JH Stable Val (N/A - ER 1.05)

——

Hello everyone! I'm new to Bogleheads and really investing in general, in fact since signing up with my 401K at age 21 I have never looked at it until now. I figured I’m recently debt free and ready to build wealth. The philosophy and teachings I have discovered from this forum are in line with my simplistic ideaology and I recognize the importance of diversification.

The advice I am seeking from you experts is what funds and %s can I allocate in a “set it and forget it” approach? How often would I go over my portfolio to make changes? Is there any rule of thumbs on this? I’m looking to take full advantage of compound interest, but at the same time i am very patient and less of a risk taker than most. I’d rather just change it now and not change it again.

Also would it make sense to hire a financial advisor in my case?

Thank you all very much! Happy New Years! :sharebeer
Last edited by ScottR on Sun Jan 13, 2019 3:09 am, edited 2 times in total.
The American dream is alive and well.

Flyer24
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Re: I’m 30 and recently debt free and new to investing

Post by Flyer24 » Sun Jan 13, 2019 1:16 am

You do not have good expense ratios in your 401K. You should only contribute enough to get the match then start on a Roth IRA. After you max out the Roth IRA then you can contribute more to the 401K.

Topic Author
ScottR
Posts: 8
Joined: Sat Jan 12, 2019 2:42 pm

Re: I’m 30 and recently debt free and new to investing

Post by ScottR » Sun Jan 13, 2019 1:51 am

Flyer24 wrote:
Sun Jan 13, 2019 1:16 am
You do not have good expense ratios in your 401K. You should only contribute enough to get the match then start on a Roth IRA. After you max out the Roth IRA then you can contribute more to the 401K.
Thank you for the quick response. So you are saying decrease my contribution down to the 4% for the full match on the t401k? I don’t believe my plan has an IRA, they do show a Roth 401K which must be new because I don’t remember that being an option when I signed up almost 10 years ago.
The American dream is alive and well.

Flyer24
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Re: I’m 30 and recently debt free and new to investing

Post by Flyer24 » Sun Jan 13, 2019 2:21 am

ScottR wrote:
Sun Jan 13, 2019 1:51 am
Flyer24 wrote:
Sun Jan 13, 2019 1:16 am
You do not have good expense ratios in your 401K. You should only contribute enough to get the match then start on a Roth IRA. After you max out the Roth IRA then you can contribute more to the 401K.
Thank you for the quick response. So you are saying decrease my contribution down to the 4% for the full match on the t401k? I don’t believe my plan has an IRA, they do show a Roth 401K which must be new because I don’t remember that being an option when I signed up almost 10 years ago.
Your IRA is not part of a work plan. You can start one with any company, preferably Vanguard or Fidelity. I would suggest spending some time on the Wiki pages of this site so you have a better understanding of investments. There are also many good books such as “Bogleheads Guide to Investing”.

Flyer24
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Re: I’m 30 and recently debt free and new to investing

Post by Flyer24 » Sun Jan 13, 2019 2:25 am

There are income limits for a Roth IRA so you will have to check. By the way, your original post says 25% federal bracket. There is not a 25% bracket.

Topic Author
ScottR
Posts: 8
Joined: Sat Jan 12, 2019 2:42 pm

Re: I’m 30 and recently debt free and new to investing

Post by ScottR » Sun Jan 13, 2019 2:36 am

Flyer24 wrote:
Sun Jan 13, 2019 2:25 am
There are income limits for a Roth IRA so you will have to check. By the way, your original post says 25% federal bracket. There is not a 25% bracket.
Thanks again. I have been reading all the wiki pages. I will begin looking into the Roth IRA.

Typo, should read 24% for the federal tax rate. I corrected it.
Edit #2: Corrected to 22%
Last edited by ScottR on Sun Jan 13, 2019 3:13 am, edited 1 time in total.
The American dream is alive and well.

lakpr
Posts: 2487
Joined: Fri Mar 18, 2011 9:59 am

Re: I’m 30 and recently debt free and new to investing

Post by lakpr » Sun Jan 13, 2019 3:06 am

You are in the 22% tax bracket, not 24%, just FYI. You would be in the 24% bracket though, if you dial down or eliminate your 401k contributions. The 22% bracket ends at $84,200 for single filers in 2019, and if you add the standard deduction of $12,200 to it, that implies an income of $96,400. You are just about there, with a 4% contribution required to capture employer match.

If I were you, I would contribute the max $19,000 to the 500 index fund with 0.64 expense ratio. Then I would utilize the IRA space to contribute $6000 to a conservative growth fund, to a Roth IRA. I suggest Vanguard Life Strategy Conservative Growth fund, which is a 40/60 blend. Together, it gives you $3600 in bonds on a $25000 contribution, so about 15% in bonds. Slightly more aggressive than your desired 80/20 allocation. But it meets your other criterion of "set it and forget it", one fund for 401k and one fund for Roth IRA.

Topic Author
ScottR
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Joined: Sat Jan 12, 2019 2:42 pm

Re: I’m 30 and recently debt free and new to investing

Post by ScottR » Sun Jan 13, 2019 3:54 am

Do I have funds available that would allow for a conservative three-fund portfolio?
The American dream is alive and well.

lakpr
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Re: I’m 30 and recently debt free and new to investing

Post by lakpr » Sun Jan 13, 2019 7:54 am

You have the JH 500 index fund for large caps, Vanguard Small Cap index fund for small caps, JH Total Bond Market Index fund for bonds.

Don't see a fund that is exclusively International, but then I am not convinced of needing International in one's portfolio either.

lakpr
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Re: I’m 30 and recently debt free and new to investing

Post by lakpr » Sun Jan 13, 2019 7:58 am

Sorry. Did not notice the iShares ETF previously. This can be used as a proxy for your International allocation

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grabiner
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Re: I’m 30 and recently debt free and new to investing

Post by grabiner » Sun Jan 13, 2019 9:27 am

lakpr wrote:
Sun Jan 13, 2019 7:58 am
Sorry. Did not notice the iShares ETF previously. This can be used as a proxy for your International allocation
However, it is more expensive than the other options, so you might want to instead hold your international funds in your Roth IRA. (With the expenses on this 401(k), you want to max out an IRA in preference to unmatched 401(k) contributions, since you have lower-cost IRA options.)

If you haven't already contributed for 2018, you have until April 15, 2019 to contribute $5500 for 2018, and you can also contribute $6000 for 2019.
Wiki David Grabiner

Topic Author
ScottR
Posts: 8
Joined: Sat Jan 12, 2019 2:42 pm

Re: I’m 30 and recently debt free and new to investing

Post by ScottR » Sun Jan 13, 2019 1:20 pm

Thank you for the helpful responses. With your advice I have wittled down to 2 portfolio options that seem to be diversified that I am feeling comfortable with. I’m leaning toward portfolio 2 as I feel like it encompasses the whole pie with less risk assessed that I’ll have no urge to mess with it once it’s set.

Portfolio 1:
80% - JH 500 Index Fund (JFIVX - ER 0.64)
20% - JH Total Bond Market Fund (JTBMX - ER 0.68)

Portfolio 2:
33%- Vanguard Small Cap Value Index (VSIAX - ER 0.67)
33% - JH 500 Index Fund (JFIVX - ER 0.64)
14% - iShares MSCI EAFE Value ETF (EFV - ER 1.04)
20% - JH Total Bond Market Fund (JTBMX - ER 0.68)

What do you all think?
The American dream is alive and well.

TheHouse7
Posts: 512
Joined: Fri Jan 13, 2017 2:40 am
Location: Washington State

Re: I’m 30 and recently debt free and new to investing

Post by TheHouse7 » Sun Jan 13, 2019 1:31 pm

ScottR wrote:
Sun Jan 13, 2019 1:20 pm
Thank you for the helpful responses. With your advice I have wittled down to 2 portfolio options that seem to be diversified that I am feeling comfortable with. I’m leaning toward portfolio 2 as I feel like it encompasses the whole pie with less risk assessed that I’ll have no urge to mess with it once it’s set.

Portfolio 1:
80% - JH 500 Index Fund (JFIVX - ER 0.64)
20% - JH Total Bond Market Fund (JTBMX - ER 0.68)

Portfolio 2:
33%- Vanguard Small Cap Value Index (VSIAX - ER 0.67)
33% - JH 500 Index Fund (JFIVX - ER 0.64)
14% - iShares MSCI EAFE Value ETF (EFV - ER 1.04)
20% - JH Total Bond Market Fund (JTBMX - ER 0.68)

What do you all think?
I (31) tried to pick something I can stick to for the long term (20+ years).

I would go with Portfolio 1.

I am 60 us/ 20 exus/ 20 TBM. Consider counterbalancing your allocation of index 500 in your 401k and bonds, value, international, small cap in a Roth IRA, HSA, outside brokerage accounts where you have more options with less fees.

I read this when ever I think I should be 100% stock.

https://portfoliocharts.com/2016/07/25/ ... tion-plan/
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

Topic Author
ScottR
Posts: 8
Joined: Sat Jan 12, 2019 2:42 pm

Re: I’m 30 and recently debt free and new to investing

Post by ScottR » Sun Jan 13, 2019 2:34 pm

TheHouse7 wrote:
Sun Jan 13, 2019 1:31 pm
ScottR wrote:
Sun Jan 13, 2019 1:20 pm
Thank you for the helpful responses. With your advice I have wittled down to 2 portfolio options that seem to be diversified that I am feeling comfortable with. I’m leaning toward portfolio 2 as I feel like it encompasses the whole pie with less risk assessed that I’ll have no urge to mess with it once it’s set.

Portfolio 1:
80% - JH 500 Index Fund (JFIVX - ER 0.64)
20% - JH Total Bond Market Fund (JTBMX - ER 0.68)

Portfolio 2:
33%- Vanguard Small Cap Value Index (VSIAX - ER 0.67)
33% - JH 500 Index Fund (JFIVX - ER 0.64)
14% - iShares MSCI EAFE Value ETF (EFV - ER 1.04)
20% - JH Total Bond Market Fund (JTBMX - ER 0.68)

What do you all think?
I (31) tried to pick something I can stick to for the long term (20+ years).

I would go with Portfolio 1.

I am 60 us/ 20 exus/ 20 TBM. Consider counterbalancing your allocation of index 500 in your 401k and bonds, value, international, small cap in a Roth IRA, HSA, outside brokerage accounts where you have more options with less fees.

I read this when ever I think I should be 100% stock.

https://portfoliocharts.com/2016/07/25/ ... tion-plan/
Thank you for the additional insight. I think that is a rational way of looking at it and the ERs being some of the lowest available to me make sense. Portfolio #1 it is for the t401k and then I’ll counter balance with a spread on my Roth IRA.

Follow-up question, since I do not own a home yet would you advise just doing the company match and maxing out the Roth IRA before dipping more % to max out the t401k until that is complete?

My career is very stable and I foresee retiring with the company I am with, if all goes well, so this plan makes sense to me, but never hurts to get expert opinion.

Thank you all for the warm welcome! :sharebeer
The American dream is alive and well.

lakpr
Posts: 2487
Joined: Fri Mar 18, 2011 9:59 am

Re: I’m 30 and recently debt free and new to investing

Post by lakpr » Sun Jan 13, 2019 4:56 pm

Now we are veering into the territory of personal finance rather than help with investments (different forum), but to answer your question: I would never not max out the 401(k) + IRA. The tax advantaged space is offered only once per year, and you can never get it back.

Assuming you have money left to save beyond maxing out 401(k) and IRA, I would beef up the emergency fund up to 6 months of reserves. This can double up as House Fund if needed. Begin search for house only when you have this fund set up without compromising on 401k and IRA. Once the house purchase goes through, you can use a 401k loan or dip into Roth contributions in case of a true emergency. If everything goes well, rebuild your emergency fund.

nordsteve
Posts: 718
Joined: Sun Oct 05, 2008 9:23 am

Re: I’m 30 and recently debt free and new to investing

Post by nordsteve » Sun Jan 13, 2019 4:59 pm

Does your employer's 401k have a brokerage option with reasonable trades? That would be a route out of the high ERs.

SheReadsHere719
Posts: 104
Joined: Fri Jan 06, 2017 7:28 pm

Re: I’m 30 and recently debt free and new to investing

Post by SheReadsHere719 » Mon Jan 14, 2019 3:24 pm

Welcome! As you are working to beef up your Emergency Fund from 3 months' expenses to 6 months', consider opening a Roth IRA and contributing the funds there: https://www.bogleheads.org/wiki/Roth_IR ... gency_fund

You can specify the contribution towards the 2018 tax year prior to 4/15/19 to use up that tax-advantaged space.

Topic Author
ScottR
Posts: 8
Joined: Sat Jan 12, 2019 2:42 pm

Re: I’m 30 and recently debt free and new to investing

Post by ScottR » Tue Jan 15, 2019 1:16 am

nordsteve wrote:
Sun Jan 13, 2019 4:59 pm
Does your employer's 401k have a brokerage option with reasonable trades? That would be a route out of the high ERs.
Yes I do have an option for a PBA and it would be through US Bank.
The American dream is alive and well.

TheHouse7
Posts: 512
Joined: Fri Jan 13, 2017 2:40 am
Location: Washington State

Re: I’m 30 and recently debt free and new to investing

Post by TheHouse7 » Wed Jan 16, 2019 4:18 am

ScottR wrote:
Sun Jan 13, 2019 2:34 pm
TheHouse7 wrote:
Sun Jan 13, 2019 1:31 pm
ScottR wrote:
Sun Jan 13, 2019 1:20 pm
Thank you for the helpful responses. With your advice I have wittled down to 2 portfolio options that seem to be diversified that I am feeling comfortable with. I’m leaning toward portfolio 2 as I feel like it encompasses the whole pie with less risk assessed that I’ll have no urge to mess with it once it’s set.

Portfolio 1:
80% - JH 500 Index Fund (JFIVX - ER 0.64)
20% - JH Total Bond Market Fund (JTBMX - ER 0.68)

Portfolio 2:
33%- Vanguard Small Cap Value Index (VSIAX - ER 0.67)
33% - JH 500 Index Fund (JFIVX - ER 0.64)
14% - iShares MSCI EAFE Value ETF (EFV - ER 1.04)
20% - JH Total Bond Market Fund (JTBMX - ER 0.68)

What do you all think?
I (31) tried to pick something I can stick to for the long term (20+ years).

I would go with Portfolio 1.

I am 60 us/ 20 exus/ 20 TBM. Consider counterbalancing your allocation of index 500 in your 401k and bonds, value, international, small cap in a Roth IRA, HSA, outside brokerage accounts where you have more options with less fees.

I read this when ever I think I should be 100% stock.

https://portfoliocharts.com/2016/07/25/ ... tion-plan/
Thank you for the additional insight. I think that is a rational way of looking at it and the ERs being some of the lowest available to me make sense. Portfolio #1 it is for the t401k and then I’ll counter balance with a spread on my Roth IRA.

Follow-up question, since I do not own a home yet would you advise just doing the company match and maxing out the Roth IRA before dipping more % to max out the t401k until that is complete?

My career is very stable and I foresee retiring with the company I am with, if all goes well, so this plan makes sense to me, but never hurts to get expert opinion.

Thank you all for the warm welcome! :sharebeer
Yep, full 401k match, then Roth Max, then t401k.

I strongly recommend not buying a house without a significant other's opinion. (Then it's OUR house, not YOUR house.)
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

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