Noob needs help

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Topic Author
Heelz
Posts: 15
Joined: Fri Jan 18, 2019 2:37 pm
Location: NC

Noob needs help

Post by Heelz »

Hi. I’m in my early 30s and I feel like I’m drowning in retirement accounts. I’ve had four jobs over the past decade and I participated in all their programs at least a little bit. I also have a wealthfront account I opened a year ago and a random Roth I opened back in college.

On top of that, I’m expecting ~$100,000 inheritance from a grandparent, I’m considering starting a masters program in the next year, and I'll be proposing soon.

I've been thinking about getting a financial advisor, but wanted to see what I could do for myself first. I’ve already rolled over one of my old 401ks with my current employer, and I’m in the process of opening a Roth at Vanguard to fund for 2018 and 2019, plus rolling over the Roth from college.

Those are just baby steps, though. I need help. What do you think?

BASIC INFO

Emergency funds: Funded for 6 mos (it’s been overfunded for awhile)
Debt: 30 year fixed @ 3.625 (approx three years in); 60 mo car loan @ .9% (12 mo remaining); personal loan for engagement ring! (12 mo no interest starting now)
Tax Filing Status: Single, but not for long
Tax Rate: 22% Federal, 5.499% State
State of Residence: NC
Age: 32
Desired Asset allocation: ?? stocks / ?? bonds
Desired International allocation: ?? of stocks

CURRENT RETIREMENT ASSETS
(Total assets in the mid five figure range)

401k (current employer)
26.21% of total assets
1.5% expense ratio
I use a robo-advisor for fund selection. Approx mix:
Stocks 88.00%
Bonds 12.00%

401k (previous employer)
16.56% of total assets
0.50% expense ratio
I’m in the “aggressive portfolio.” Approx mix:
Stocks 91.50%
Bonds 8.50%

TSERS Defined Benefit (another old employer)
9.24% of total assets
?? expense ratio
Approx 4% return (yearly?)

Vanguard Roth IRA (funding right now)
26.73% of total assets
?? expense ratio
Stock ??
Bonds ??

Taxable / Wealthfront
21.26% of total assets
0.00% expense ratio (below the "you're rich enough to pay" threshold)
Can’t control individual investments; My approximate mix:
Stocks 92.00%
Bonds 8.00%


CONTRIBUTIONS

10% into current employer 401k
4.5% employer match
Max Roth contributions

QUESTIONS

1. Am I doing ok? Given my current financial situation, what should my stock-to-bond ratio be (How risky should I be)?
2. In the 401ks, should I be using their advisor/pre-built portfolios or picking funds myself? Which funds?
3. Other than being annoying to check two 401ks, is there any reason I should roll them into one?
4. In my Vanguard Roth, where should I put the money? I guess it depends on question 1.
5. Idk what to do with the defined benefit plan. Should I roll it over or treat it like a bond?
6. Anyone use wealthfront? What do you think? I’ve been in the red ever since I put money in. I might close it out for a regular day trader account.


Thanks for your time!
mbres60
Posts: 1303
Joined: Tue Jul 03, 2007 1:47 pm

Re: Noob needs help

Post by mbres60 »

Hopefully one of the more experienced posters will pop in and advise. I do see that your current employer has a HIGH expense ratio of 1.5% :( I would not roll any more 401k's into it. Instead you can roll it into a Vanguard tIRA. One of your previous employer 401k is only .50% ER (expense ratio) which is good but it can become hard to follow so many different accounts. I would just roll it to Vanguard into a tIRA.

I don't think you need a financial adviser. They will put you into funds with high ER as they make commission on them. You don't have that much money.... yet! Go to the wiki and read. Also, read some books that are recommended. That will help you understand investing (it is not hard) and help you with your asset allocation choice (stocks to bonds ratio).

Your current employer 401k... check to see what funds they offer and the ERs. Usually index funds have lower fees so maybe you are just in the wrong funds. Otherwise... contribute up to the company match (assuming there is one) and then contribute to Roth. After that, if you have more $$ to contribute then possibly into low fee taxable accounts or the 401k. Not sure on that so hopefully more experienced minds will tell you their thoughts.

Once you start doing some reading, I believe you will be able to answer some of your questions. You are young so have a long time to invest. If stocks do lousy for ten years you have plenty of time to recover. As you get older you lower your exposure to stocks because you don't have the time.

I think you need to check your 401k's to see what funds are offered and their expense ratios. It is hard for us to comment on what you should pick without knowing that info. Robo Advisor may or may not pick the best ones for you. Also, look at your portfolio as a whole. You might find that bond funds are better in your 401k and that your Roth should hold stocks or vice versa. It all depends on what is available to you.Once married then look at your wife's AND your portfolio as a whole when considering your asset allocation.

Congrats on your upcoming engagement.
User avatar
Watty
Posts: 28859
Joined: Wed Oct 10, 2007 3:55 pm

Re: Noob needs help

Post by Watty »

mbres60 wrote: Fri Jan 18, 2019 4:12 pm Your current employer 401k... check to see what funds they offer and the ERs. Usually index funds have lower fees so maybe you are just in the wrong funds.
+1

If you can find one good fund in that you can build a three fund portfolio to work around the high expenses in the other funds.

https://www.bogleheads.org/wiki/Three-fund_portfolio

Heelz wrote: Fri Jan 18, 2019 3:07 pm personal loan for engagement ring! (12 mo no interest starting now)
There are lots of threads on diamond rings and lots of strong opinions. You can find these by searching on "diamond" in the search box in the top right corner of most web pages.
Heelz wrote: Fri Jan 18, 2019 3:07 pm 6. Anyone use wealthfront? What do you think? I’ve been in the red ever since I put money in. I might close it out for a regular day trader account.
A few simple mutual funds would be better and you could incorporate that into a three fund portfolio. Day trading is basically just gambling and the people that you will be playing against are for the most part the Wall street professionals that have super computers, lower trading costs, get new information faster, years of experience, work full time(and then some) stock trading, and usually graduate degrees from the top schools in the country. They even have a hard time beating a comparable index especially after subtracting the costs. Other than just getting lucky the odds of doing well are slim.

One huge problem is that some people will try day trading and get excited because they are up some, but they do not realize that they would have been better off using an index fund. If you do decide to do this then be sure to plan on how you will track your performance and compare it to a stock index to see if you are really coming out ahead. The math to do this get real complex.
Topic Author
Heelz
Posts: 15
Joined: Fri Jan 18, 2019 2:37 pm
Location: NC

Re: Noob needs help

Post by Heelz »

Wow, yeah that robo-advisor is screwing me. My employer has plenty of low-cost funds...

Current Employer 401k
Vanguard Developed Markets Index Fund Institutional Shares, VTMNX, 0.06%
Vanguard Growth Index Fund Admiral Class, VIGAX, 0.05%
Vanguard Institutional Index Fund Institutional Class, VINIX, 0.03%
Vanguard Mid-Cap Index Fund Institutional Class, VMCPX, 0.04%
Vanguard Real Estate Index Fund Admiral Class, VGSLX, 0.12%
Vanguard Small-Cap Index Fund Institutional Class, VSCIX, 0.04%
Vanguard Value Index Fund Admiral Class, VVIAX, 0.05%
Vanguard Inflation-Protected Securities Fund Admiral Class, VAIPX, 0.10%
Vanguard Intermediate-Term Treasury Index Fund Admiral Class, VFIUX, 0.07%
Vanguard Long-Term Bond Index Fund Class Investor, VBLTX, 0.15%
Vanguard Short Term Bond Index Fund Admiral Class, VBIRX, 0.07%
Vanguard Total Bond Market Index Fund Admiral Class, VBTLX, 0.05%
(Everything else is 0.5% and up)

Previous Employer 401k:
American Growth Fund of America R-6, RGAGX, 0.32%
Vanguard Admiral 500 Index Fund, VFIAX, 0.04%
Vanguard Admiral Total Bond Market Index, VBTLX, 0.05%
Vanguard Mid Cap Index Admiral Fund, VIMAX, 0.05%
Vanguard Small Cap Index Adm, VSMAX, 0.05%
(Everything else is 0.5% and up)

Any suggestions?
Topic Author
Heelz
Posts: 15
Joined: Fri Jan 18, 2019 2:37 pm
Location: NC

Re: Noob needs help

Post by Heelz »

There are lots of threads on diamond rings and lots of strong opinions. You can find these by searching on "diamond" in the search box in the top right corner of most web pages.
Oh yeah, I played the diamond game. I went to an estate jeweler and bought a diamond that they're setting to match this tiffany ring my girlfriend loves (she's in on it). I think I did well.
Flyer24
Posts: 5233
Joined: Sun Apr 08, 2018 4:21 pm

Re: Noob needs help

Post by Flyer24 »

You actually have some great funds in your current 401K. Get rid of the robo advisor. You can do it yourself with a simple 3 fun portfolio. You don’t need a financial advisor.
User avatar
Duckie
Posts: 9777
Joined: Thu Mar 08, 2007 1:55 pm

Re: Noob needs help

Post by Duckie »

Heelz wrote:Current Employer 401k
Consider:
  • Vanguard Institutional Index VINIX 0.03% -- Large caps, 80% of US stocks
  • Vanguard Small-Cap Index VSCIX 0.04% -- Small caps, 14% of US stocks
  • Vanguard Developed Markets Index VTMNX 0.06% -- Developed markets + Canada, 80% of international stocks
  • Vanguard Total Bond Market Index VBTLX 0.05% -- US bonds
Previous Employer 401k:
If you can, roll to your current plan. If not, consider:
  • Vanguard 500 Index VFIAX 0.04% -- Large caps, 80% of US stocks
  • Vanguard Total Bond Market Index VBTLX 0.05% -- US bonds
mbres60
Posts: 1303
Joined: Tue Jul 03, 2007 1:47 pm

Re: Noob needs help

Post by mbres60 »

Duckie wrote: Fri Jan 18, 2019 8:40 pm
Heelz wrote:Current Employer 401k
Consider:
  • Vanguard Institutional Index VINIX 0.03% -- Large caps, 80% of US stocks
  • Vanguard Small-Cap Index VSCIX 0.04% -- Small caps, 14% of US stocks
  • Vanguard Developed Markets Index VTMNX 0.06% -- Developed markets + Canada, 80% of international stocks
  • Vanguard Total Bond Market Index VBTLX 0.05% -- US bonds
Previous Employer 401k:
If you can, roll to your current plan. If not, consider:
  • Vanguard 500 Index VFIAX 0.04% -- Large caps, 80% of US stocks
  • Vanguard Total Bond Market Index VBTLX 0.05% -- US bonds
Good advice. Now just study up on asset allocation. At your age you can afford to take risk. Some people might do 80/20 (80 % stocks/20% bonds) while some others might go as low as 60/40. Figure out what your risk tolerance is but remember you have lots of time to make up any losses if the market keeps going south. Figure out a portfolio and hang tight during the ups and downs.

Suggestion - a lot of people like total stock market which I believe is 75% large cap with 25% small/mid cap. You can try to replicate it by using the Institutional Index as your 75% large cap and then 25% Small cap. Developed Markets would be for International. Many people have a little International while others dedicate as much as 50%. Find out what you are comfortable with (but read up on it first). Then just put a small amount in Total Bond Market and you will have replicated the 3 fund portfolio. No overlap and it covers most of the market.

One question - does your company charge any administrative fees or is it just the expense ratios you listed?
Are those all the funds or are there more? If more, and they offer Extended Market, what is the ER? That would be better than just using the small cap as it also includes some mid cap. Do they offer Total International?
Topic Author
Heelz
Posts: 15
Joined: Fri Jan 18, 2019 2:37 pm
Location: NC

Re: Noob needs help

Post by Heelz »

Thanks for all the help!
  • Mbres60: I’m going try 80/20 for now with 30% International. As far as fees, my current 401k only charged 0.01% last year (or close to it). I hope that doesn’t change when I ditch the robot for self-directed.
  • Watty: I’m postponing the new brokerage account idea (indefinitely). Good call.
  • Flyer24: Yeah, some decent funds from what I can tell. I’m having trouble approximating total market, though.
  • Duckie: Thanks for the fund recommendations. I’m using them.
So, yeah. What do you all think? Approximating total market is tough across all the accounts. Should I include one of the mid-cap funds? To simplify the math, I’ve rounded total assets, and I’m not including wealthfront, which I’m not funding as much as I was planning. Gonna up my 401k contributions first.

PORTFOLIO
80/20 with 30% of stocks in international.

Current 401k (40% of total assets w/ monthly contributions)
FOCUS: Domestic stocks

80% acct / 32% total assets VINIX
Vanguard Institutional Index Fund Institutional Class, VINIX, 0.03%

20% acct / 08% total assets VSCIX
Vanguard Small-Cap Index Fund Institutional Class, VSCIX 0.04%

ALSO AVAILABLE:
Vanguard Growth Index Fund Admiral Class, VIGAX, 0.05%
Vanguard Mid-Cap Index Fund Institutional Class, VMCPX, 0.04%
Vanguard Real Estate Index Fund Admiral Class, VGSLX, 0.12%
Vanguard Value Index Fund Admiral Class, VVIAX, 0.05%

Old 401k (20% of total assets; can’t roll over into current 401k until Aug)
FOCUS: Use to balance bonds and stock allocations

50% acct / 10% total assets
Vanguard Admiral 500 Index Fund, VFIAX, 0.04%

50% acct / 10% total assets
Vanguard Admiral Total Bond Market Index, VBTLX, 0.05%

ALSO AVAILABLE:
Vanguard Mid Cap Index Admiral Fund, VIMAX, 0.05%
Vanguard Small Cap Index Adm, VSMAX, 0.05%

Vanguard Roth IRA (30% of total assets; maxed for the year)
FOCUS: Heavy international with some US stocks

20% acct / 6% total assets
Vanguard Total Stock Market Index Fund Admiral Shares, VTSAX, 0.04%

80% acct / 24% total assets
Vanguard Total International Stock Index Fund Admiral Shares, VTIAX, 0.11%

401a defined benefit (10% of total assets; receives ~4% annually)
FOCUS: Treating as a bond
100% acct / 10 % total assets
User avatar
Duckie
Posts: 9777
Joined: Thu Mar 08, 2007 1:55 pm

Re: Noob needs help

Post by Duckie »

Heelz wrote:What do you all think?
It looks good.
Approximating total market is tough across all the accounts.
Not once you learn how. For example, you have 50% of the portfolio in separate US large/small-cap funds. 40% in the current 401k and 10% in the old 401k. If you want to make your small caps 20% of US stocks then 20% of 50% is 10%. So 10% should be small caps and the other 40% in large caps. If you want small caps 15% of US stocks then 15% of 50% is ~8%. So 8% should be small caps and the other 42% in large caps. Or to make it easier you could skip small-caps altogether.
Should I include one of the mid-cap funds?
I wouldn't bother.
I’m not including wealthfront, which I’m not funding as much as I was planning.
That account is 20% of your assets. Why are you not including it? Is it not for retirement?
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Nate79
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Location: Delaware

Re: Noob needs help

Post by Nate79 »

That you have a Vanguard Roth IRA and a Wealthfront account is a red flag to me concerning potential wash sales. Are you aware of this issue and your responsibility to track wash sales?
Topic Author
Heelz
Posts: 15
Joined: Fri Jan 18, 2019 2:37 pm
Location: NC

Re: Noob needs help

Post by Heelz »

Nate79 wrote: Sun Jan 20, 2019 6:09 pm That you have a Vanguard Roth IRA and a Wealthfront account is a red flag to me concerning potential wash sales. Are you aware of this issue and your responsibility to track wash sales?
Whoops. No I wasn't paying attention, and I was just reading another thread about that.

Goods new is I haven’t bought the funds in the IRA yet (money is still moving). My wealthfront acct has sold three funds in the past thirty days. I’ll turn TLH off now and turn it back on 30 days after my IRA purchases.

That leaves one question to answer. Am I in danger of wash sales? It depends on the definition of “substantially identical”.

WEALTHFRONT SOLD FOR TLH
Vanguard FTSE Developed Markets ETF / VEA / Sold 1-14
Vanguard Energy ETF / VDE / Sold 12-27
Schwab U.S. Broad Market ETF / SCHB / Sold 12-27

FUTURE IRA TRANSACTIONS
Vanguard Total Stock Market Index | VTSAX | Buy ??
Vanguard Total Intl Stock Index | VTIAX | Buy ??

WASH SELL CONTENDERS
VEA => VTIAX
BUT: VTIAX is 20% heavier in emerging markets

SCHB => VTSAX
BUT: SCHB tracks DJ returns; VTSAX tracks the CRSP U.S. Total market

So I think these are NOT “substantially identical”, based on other threads I’ve read. I’ve still turned TLH off and won’t turn it back on until 30 days after my IRA purchases, to be safe. I guess I have to do that every time I rebalance, or until I ditch wealthfront.

QUESTION: 401ks don't count for wash sales, do they?

Sorry for being so long-winded. I’m explaining my thought process so that if my thinking is flawed, hopefully someone will call me on it.
Topic Author
Heelz
Posts: 15
Joined: Fri Jan 18, 2019 2:37 pm
Location: NC

Re: Noob needs help

Post by Heelz »

Duckie wrote: Sun Jan 20, 2019 5:18 pm
I’m not including wealthfront, which I’m not funding as much as I was planning.
That account is 20% of your assets. Why are you not including it? Is it not for retirement?
I mainly left it out to help with the learning curve. I knew it would make everything more complicated. And it has. I’ve added it in and updated the total asset percentages (they got messy).

Thanks for pointing out the tilt toward large/institutional over small cap. I tried to fix that, but with the new wealthfront funds, I bet there’s some other weird tilt...

PORTFOLIO
Target: 80/20 with 30% of stocks in international (56/24/20)
Plan: 77/23 with 32% of stocks in international (52/25/23)
Note: All new contributions go to domestic stocks until I rollover old 401k in Aug. I'll have to rebalance.

Current 401k (26% of total assets w/ monthly contributions)
FOCUS: Domestic stocks

75% acct / 20% total assets / Vanguard Institutional Index Fund Institutional Class / VINIX / 0.03%
25% acct / 07% total assets / Vanguard Small-Cap Index Fund Institutional Class / VSCIX / 0.04%

Old 401k (17% of total assets)
FOCUS: Use to balance bonds and stock allocations

30 % acct / 5% total assets / Vanguard Vanguard Admiral 500 Index Fund / VFIAF /0.04%
70% acct / 12% total assets / Vanguard Admiral Total Bond Market Index / VBTLX / 0.05%

Vanguard Roth IRA (27% of total assets)
FOCUS: Heavy international with US stocks

40% acct / 11% total assets / Vanguard Total Stock Market Index Fund Admiral Shares / VTSAX / 0.04%
60% acct / 16% total assets / Vanguard Total International Stock Index Fund Admiral Shares / VTIAX / 0.11%

401a defined benefit (09% of total assets; receives ~4% annually)
FOCUS: Treating as a bond
100% acct / 09% total assets

Wealthfront taxable (20% total assets)
FOCUS: I told it to be pretty aggressive

US Stock
33% acct / 7% total assets / Vanguard Total Stock Market ETF / VTI
9% acct / 2% total assets / Vanguard Dividend Appreciation ETF / VIG
6% acct / 1% total assets / Energy Select Sector SPDR ETF / XLE

INTL Stock
23% acct / 5% total assets / Schwab International Equity ETF / SCHF
18% acct / 4% total assets / Vanguard FTSE Emerging Markets ETF / VWO

Bond
10% acct / 2% total assets / Vanguard Tax-Exempt Bond ETF / VTEB

Cash
1% acct
Last edited by Heelz on Mon Jan 21, 2019 2:02 pm, edited 3 times in total.
cherijoh
Posts: 6591
Joined: Tue Feb 20, 2007 3:49 pm
Location: Charlotte NC

Re: Noob needs help

Post by cherijoh »

Heelz wrote: Fri Jan 18, 2019 5:30 pm Wow, yeah that robo-advisor is screwing me. My employer has plenty of low-cost funds...

Current Employer 401k
Vanguard Developed Markets Index Fund Institutional Shares, VTMNX, 0.06% <--- This is best choice for international
Vanguard Growth Index Fund Admiral Class, VIGAX, 0.05%
Vanguard Institutional Index Fund Institutional Class, VINIX, 0.03% <-- This is an S&P 500 Index; combine with small- & mid cap to get total stock market
Vanguard Mid-Cap Index Fund Institutional Class, VMCPX, 0.04% *****
Vanguard Real Estate Index Fund Admiral Class, VGSLX, 0.12%
Vanguard Small-Cap Index Fund Institutional Class, VSCIX, 0.04% *****
Vanguard Value Index Fund Admiral Class, VVIAX, 0.05%
Vanguard Inflation-Protected Securities Fund Admiral Class, VAIPX, 0.10%
Vanguard Intermediate-Term Treasury Index Fund Admiral Class, VFIUX, 0.07% <--- alternate choice for bonds if you don't want mortgage backed securities
Vanguard Long-Term Bond Index Fund Class Investor, VBLTX, 0.15%
Vanguard Short Term Bond Index Fund Admiral Class, VBIRX, 0.07%
Vanguard Total Bond Market Index Fund Admiral Class, VBTLX, 0.05% <--- good choice for the bond part of portfolio
(Everything else is 0.5% and up)

Previous Employer 401k:
American Growth Fund of America R-6, RGAGX, 0.32%
Vanguard Admiral 500 Index Fund, VFIAX, 0.04%
Vanguard Admiral Total Bond Market Index, VBTLX, 0.05%
Vanguard Mid Cap Index Admiral Fund, VIMAX, 0.05%
Vanguard Small Cap Index Adm, VSMAX, 0.05%
(Everything else is 0.5% and up)

Any suggestions?
In light of the better choices in your current 401k than your current choice of the theRobo-advisor, I would roll all your prior 401ks into your current plan and go with the best match for a 3 fund portfolio - although in your case it would take 5 funds to get there. See this wiki article on approximating a total stock market index in your 401k. Note: the international fund in your plan lacks emerging markets, so if you wanted to truly match the 3-fund portfolio you could invest in an emerging market fund in your Roth.

Now what about AA? Some people your age may go 100% stock. But I think that would be a mistake, especially in the current volatile market since you were too young to have had large losses in the Great Recession. I usually recommend somewhere between age in bonds to (age in bonds - 20). So that would be in rough numbers between a 70/30 stock/bond ratio to 90/10. Next you have to decide on how much of the stock allocation should be domestic vs. international. I always stayed in the 20 - 30% range, but some people go as high as 50% international. Keep in mind that the is the % of the stock allocation (NOT total allocation) so if you are 80/20 stock to bonds and want to do 25% international that is 60/20/20 for domestic/international/bonds.
User avatar
Nate79
Posts: 9372
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Location: Delaware

Re: Noob needs help

Post by Nate79 »

Heelz wrote: Mon Jan 21, 2019 9:36 am
Nate79 wrote: Sun Jan 20, 2019 6:09 pm That you have a Vanguard Roth IRA and a Wealthfront account is a red flag to me concerning potential wash sales. Are you aware of this issue and your responsibility to track wash sales?
Whoops. No I wasn't paying attention, and I was just reading another thread about that.

Goods new is I haven’t bought the funds in the IRA yet (money is still moving). My wealthfront acct has sold three funds in the past thirty days. I’ll turn TLH off now and turn it back on 30 days after my IRA purchases.

That leaves one question to answer. Am I in danger of wash sales? It depends on the definition of “substantially identical”.

WEALTHFRONT SOLD FOR TLH
Vanguard FTSE Developed Markets ETF / VEA / Sold 1-14
Vanguard Energy ETF / VDE / Sold 12-27
Schwab U.S. Broad Market ETF / SCHB / Sold 12-27

FUTURE IRA TRANSACTIONS
Vanguard Total Stock Market Index | VTSAX | Buy ??
Vanguard Total Intl Stock Index | VTIAX | Buy ??

WASH SELL CONTENDERS
VEA => VTIAX
BUT: VTIAX is 20% heavier in emerging markets

SCHB => VTSAX
BUT: SCHB tracks DJ returns; VTSAX tracks the CRSP U.S. Total market

So I think these are NOT “substantially identical”, based on other threads I’ve read. I’ve still turned TLH off and won’t turn it back on until 30 days after my IRA purchases, to be safe. I guess I have to do that every time I rebalance, or until I ditch wealthfront.

QUESTION: 401ks don't count for wash sales, do they?

Sorry for being so long-winded. I’m explaining my thought process so that if my thinking is flawed, hopefully someone will call me on it.
The general consensus is that funds that track different indexes are not substantially identical and that 401k's are not included in wash sales. These points are a little contentious around here so be comfortable with your decision. But considering that these are consensus opinions and that there is not a single case of any documented case where this opinion has been challenged it is safe to go with these opinions. Let's just say that if there does end up being a case where these are found to not be true it will be a huge deal.
cherijoh
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Joined: Tue Feb 20, 2007 3:49 pm
Location: Charlotte NC

Re: Noob needs help

Post by cherijoh »

mbres60 wrote: Fri Jan 18, 2019 9:25 pm Good advice. Now just study up on asset allocation. At your age you can afford to take risk. Some people might do 80/20 (80 % stocks/20% bonds) while some others might go as low as 60/40. Figure out what your risk tolerance is but remember you have lots of time to make up any losses if the market keeps going south. Figure out a portfolio and hang tight during the ups and downs.

Suggestion - a lot of people like total stock market which I believe is 75% large cap with 25% small/mid cap. You can try to replicate it by using the Institutional Index as your 75% large cap and then 25% Small cap. Developed Markets would be for International. Many people have a little International while others dedicate as much as 50%. Find out what you are comfortable with (but read up on it first). Then just put a small amount in Total Bond Market and you will have replicated the 3 fund portfolio. No overlap and it covers most of the market.

One question - does your company charge any administrative fees or is it just the expense ratios you listed?
Are those all the funds or are there more? If more, and they offer Extended Market, what is the ER? That would be better than just using the small cap as it also includes some mid cap. Do they offer Total International?
Most big plans offer either Extended Market or have both mid-cap and small-cap like the OP's plan. I referenced the article in the Boglehead Wiki on how to reconstitute the TSM depending on the funds that are available in my other post. And they usually only offer 1 cheap international index.
2pedals
Posts: 1988
Joined: Wed Dec 31, 2014 11:31 am

Re: Noob needs help

Post by 2pedals »

Can you invest after-tax in your 401(k) and does your plan allow for in service distributions? If you can you may able to contribute to a Mega Backdoor Roth IRA as well. These plans will allow you to open up a higher contribution limits to your Roth accounts.

https://www.bogleheads.org/wiki/After-tax_401(k)
Topic Author
Heelz
Posts: 15
Joined: Fri Jan 18, 2019 2:37 pm
Location: NC

Re: Noob needs help

Post by Heelz »

2pedals wrote: Mon Jan 21, 2019 11:22 am Can you invest after-tax in your 401(k) and does your plan allow for in service distributions? If you can you may able to contribute to a Mega Backdoor Roth IRA as well. These plans will allow you to open up a higher contribution limits to your Roth accounts.

https://www.bogleheads.org/wiki/After-tax_401(k)
I don't think so. All the plan documentation mentions is pre-tax and Roth contributions. There's no mention of "after-tax contributions" outside of Roth.
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