Moving from Edward Jones to Vanguard

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Topic Author
CDay5326
Posts: 9
Joined: Mon Mar 09, 2015 3:29 pm

Moving from Edward Jones to Vanguard

Post by CDay5326 » Thu May 09, 2019 2:36 pm

New to this form and Vanguard but looking forward to the simple investing and excellent advice. Just left Edward Jones most of our money is still transferring. Just want to get some advice on what would be the best strategy going forward. I'm retired Military and that with social security should come in at about $90,000 a year. We are going to try and max out our employer tax deferred accounts programs yearly until retirement ( for me 3 to 5 years and her around 8 years) and invest anything left. Here is our background information:

Emergency funds: 6 month
Debt: Home Mortgage interest rate 3%
Rental House interest rate 4.24%
Auto Loan interest rate 1.75%
State of Residence: Alabama
Tax Filing Status: Married
Tax Rate: 22% Federal, 5% State
Age: 64 and 58
Desired Asset allocation: 60% stocks / 40% bonds
Desired International allocation: xx% of stocks

Size of your current total portfolio: approx. low 6 digits

Current retirement assets

Taxable
10% cash

His TSP Government Retirement program
39% Broken down as follows:
Holding Contribution
G Fund (Gov Sec) 27.19% 30%
F Fund (Fixed Inc) 23.20% 0%
C Fund (Com Stock) 33.58% 50%
S Fund (Small Cap) 6% 10%
I Fund (Int Stock) 9.48% 10%

Company match: Yes The first 3% is matched dollar-for-dollar, the next 2% is matched at 50 cents on the dollar.

His IRA at Vanguard
15.89% cash waiting to buy funds

Her RSA1 City Gov. Retirement program
3.91% Broken down as follows:
Holding Contribution
Stocks SMP 500Index 60% 60%
Bonds 40% 40%
Short Term Bonds 0% 0%

Company match: Not Sure

Her Traditional IRA at Vanguard
29.66% cash waiting to buy funds

Total of All Accounts Together (not each account individually) should equal 100%.

Contributions

New annual Contributions
Try to max out my TSP $18700.00 TSP
Trying to max out her $25000.00 RSA1
If possible max out my IRA/Roth IRA
If possible max out her IRA/Roth IRA
Not sure of amount taxable (for retirement, not short term goals)


Questions:
1. I was think of using the Lifestyle Funds the 60/40 (VSCGV) for tax deferred accounts and the 80/20 (VASGX) for taxable just to keep it simple. I would appreciate you inputs

2. I'm not sure how to use Roth accounts or the back door Roth method to my advantage any advice?

Thanks in advance

mhalley
Posts: 7104
Joined: Tue Nov 20, 2007 6:02 am

Re: Moving from Edward Jones to Vanguard

Post by mhalley » Thu May 09, 2019 9:28 pm

Welcome to the forum. A ls fund in tax advantaged accounts is fine, but I prefer individual funds in taxable accounts to allow for tax loss harvesting.
2. The backdoor Roth is for when you make to much money to be able to directly contribute to a Roth.
https://www.rothira.com/roth-ira-limits

272 Sheep
Posts: 151
Joined: Thu Mar 26, 2009 4:14 pm
Location: Hooksett, NH

Re: Moving from Edward Jones to Vanguard

Post by 272 Sheep » Fri May 10, 2019 10:01 pm

Welcome and congratulations moving from E.J.
You are fortunate that you and spouse have TSPs.
Others will provide better input but will throw in my 2 cents.
Treat entire accumulation of assets as one portfolio. Determine what your overall asset allocation (AA) will be.
1. Percent in stocks. Large-Cap, Small-Cap, International.
2. Percent in Bonds, Intermediate, short-term
3. Percent in Cash, Money Market, Bank CDs, High-Yield Bank acct, etc.

Favor putting stocks in Roth and Taxable (if turnover is very low)
Favor putting bonds in Tax-deferred, TSP, IRA

Would not use Life Style fund in taxable although you could use it in tax-deferred.
I would first determine AA before anything else.
Hope others chime in!
Carl W.

mespap
Posts: 19
Joined: Sun Nov 16, 2014 6:44 pm

Re: Moving from Edward Jones to Vanguard

Post by mespap » Sat May 11, 2019 6:23 am

Welcome to the forum!

1. Yes, LS fund in tax-deferred account would be just fine.
No, I would not recommend adding LS to a taxable account. VGTSX and VTSMX (Total International and Total Stock Market) would be more appropriate.
Vanguard has few tax-managed accounts as well. They would be more suitable for a taxable account. Look into them. While you wait for response, some have gone through similar situation as you. You can search for 'life strategy in taxable' or [name of LS fund] in taxable. Take your time and work out the overall allocation first. Don't rush into it.

2. I am not familiar with ROTH back-door method. They are more experienced users about this topic. I would do a search to see their feedback.

Tdubs
Posts: 601
Joined: Tue Apr 24, 2018 7:50 pm

Re: Moving from Edward Jones to Vanguard

Post by Tdubs » Sat May 11, 2019 6:53 am

You mention that you are maxing out your TSP with $18,700 in contributions. Why isn't it $25,000 ($19,000 regular limit and $6,000 catch-up)?

You don't explain what your expenses will be in retirement. Given your fairly high guaranteed income ($90k), why not go with a more aggressive investment AA?

Given your tax bracket, I'm guessing you don't need a backdoor, but others could comment on that. I assume you are married filing jointly and will make less than the Roth phase-out limit of $193k MAGI for 2019? If so, you can just contribute to a Roth IRA outright.

See:

https://www.bogleheads.org/wiki/Backdoor_Roth

And

https://www.irs.gov/publications/p590a# ... k100074297

272 Sheep
Posts: 151
Joined: Thu Mar 26, 2009 4:14 pm
Location: Hooksett, NH

Re: Moving from Edward Jones to Vanguard

Post by 272 Sheep » Sat May 11, 2019 7:17 am

Place to start to determine AA.
https://www.investor.gov/additional-res ... uide-asset
I would get from Vanguard, Fidelity and T.Rowe Price their "Asset-Allocation questionnaire" so you and spouse can determine what your
own personal AA is. There is no perfect science here but a good beginning place. If not disposed to want to do this, you could pay a
fee-only planner to help get you started.

Topic Author
CDay5326
Posts: 9
Joined: Mon Mar 09, 2015 3:29 pm

Re: Moving from Edward Jones to Vanguard

Post by CDay5326 » Mon May 13, 2019 8:27 am

272 Sheep wrote:
Fri May 10, 2019 10:01 pm
Welcome and congratulations moving from E.J.
You are fortunate that you and spouse have TSPs.
Others will provide better input but will throw in my 2 cents.
Treat entire accumulation of assets as one portfolio. Determine what your overall asset allocation (AA) will be.
1. Percent in stocks. Large-Cap, Small-Cap, International.
2. Percent in Bonds, Intermediate, short-term
3. Percent in Cash, Money Market, Bank CDs, High-Yield Bank acct, etc.

Favor putting stocks in Roth and Taxable (if turnover is very low)
Favor putting bonds in Tax-deferred, TSP, IRA

Would not use Life Style fund in taxable although you could use it in tax-deferred.
I would first determine AA before anything else.
Hope others chime in!
Carl W.
I like the idea of treating the entire amount as one large asset. I will go back and re figure my AA based on that concept. Thanks

Topic Author
CDay5326
Posts: 9
Joined: Mon Mar 09, 2015 3:29 pm

Re: Moving from Edward Jones to Vanguard

Post by CDay5326 » Mon May 13, 2019 8:31 am

Tdubs wrote:
Sat May 11, 2019 6:53 am
You mention that you are maxing out your TSP with $18,700 in contributions. Why isn't it $25,000 ($19,000 regular limit and $6,000 catch-up)?

You don't explain what your expenses will be in retirement. Given your fairly high guaranteed income ($90k), why not go with a more aggressive investment AA?

Given your tax bracket, I'm guessing you don't need a backdoor, but others could comment on that. I assume you are married filing jointly and will make less than the Roth phase-out limit of $193k MAGI for 2019? If so, you can just contribute to a Roth IRA outright.

See:

https://www.bogleheads.org/wiki/Backdoor_Roth

And

https://www.irs.gov/publications/p590a# ... k100074297
To be honest I never put 2&2 together about the catch up. I will check into it and start it as soon as possible

Topic Author
CDay5326
Posts: 9
Joined: Mon Mar 09, 2015 3:29 pm

Re: Moving from Edward Jones to Vanguard

Post by CDay5326 » Mon May 13, 2019 8:34 am

272 Sheep wrote:
Sat May 11, 2019 7:17 am
Place to start to determine AA.
https://www.investor.gov/additional-res ... uide-asset
I would get from Vanguard, Fidelity and T.Rowe Price their "Asset-Allocation questionnaire" so you and spouse can determine what your
own personal AA is. There is no perfect science here but a good beginning place. If not disposed to want to do this, you could pay a
fee-only planner to help get you started.
I have done several of those sites and I usually come out with a 60/40 split. I tend to think I'm more aggressive than that but when I answer the question truthfully 60/40 is the result.

Topic Author
CDay5326
Posts: 9
Joined: Mon Mar 09, 2015 3:29 pm

Re: Moving from Edward Jones to Vanguard

Post by CDay5326 » Mon May 13, 2019 8:36 am

mespap wrote:
Sat May 11, 2019 6:23 am
Welcome to the forum!

1. Yes, LS fund in tax-deferred account would be just fine.
No, I would not recommend adding LS to a taxable account. VGTSX and VTSMX (Total International and Total Stock Market) would be more appropriate.
Vanguard has few tax-managed accounts as well. They would be more suitable for a taxable account. Look into them. While you wait for response, some have gone through similar situation as you. You can search for 'life strategy in taxable' or [name of LS fund] in taxable. Take your time and work out the overall allocation first. Don't rush into it.

2. I am not familiar with ROTH back-door method. They are more experienced users about this topic. I would do a search to see their feedback.
I will check into the tax-managed account. Thanks for you advice

Topic Author
CDay5326
Posts: 9
Joined: Mon Mar 09, 2015 3:29 pm

Re: Moving from Edward Jones to Vanguard

Post by CDay5326 » Mon May 13, 2019 8:40 am

mhalley wrote:
Thu May 09, 2019 9:28 pm
Welcome to the forum. A ls fund in tax advantaged accounts is fine, but I prefer individual funds in taxable accounts to allow for tax loss harvesting.
2. The backdoor Roth is for when you make to much money to be able to directly contribute to a Roth.
https://www.rothira.com/roth-ira-limits
I'm reading up on the tax harvesting and look forward to trying it in the future. Thank

User avatar
mhadden1
Posts: 695
Joined: Tue Mar 25, 2014 8:14 pm
Location: North Alabama

Re: Moving from Edward Jones to Vanguard

Post by mhadden1 » Mon May 13, 2019 8:52 am

CDay5326 wrote:
Mon May 13, 2019 8:34 am
272 Sheep wrote:
Sat May 11, 2019 7:17 am
Place to start to determine AA.
https://www.investor.gov/additional-res ... uide-asset
I would get from Vanguard, Fidelity and T.Rowe Price their "Asset-Allocation questionnaire" so you and spouse can determine what your
own personal AA is. There is no perfect science here but a good beginning place. If not disposed to want to do this, you could pay a
fee-only planner to help get you started.
I have done several of those sites and I usually come out with a 60/40 split. I tend to think I'm more aggressive than that but when I answer the question truthfully 60/40 is the result.
AA of 60/40 puts you around age -20 in bonds, which is actually pretty salty.
Oh I can't, can I? That's what they said to Thomas Edison, mighty inventor, Thomas Lindberg, mighty flyer,and Thomas Shefsky, mighty like a rose.

272 Sheep
Posts: 151
Joined: Thu Mar 26, 2009 4:14 pm
Location: Hooksett, NH

Re: Moving from Edward Jones to Vanguard

Post by 272 Sheep » Mon May 13, 2019 10:31 am

mhadden1 wrote:
Mon May 13, 2019 8:52 am
CDay5326 wrote:
Mon May 13, 2019 8:34 am
272 Sheep wrote:
Sat May 11, 2019 7:17 am
Place to start to determine AA.
https://www.investor.gov/additional-res ... uide-asset
I would get from Vanguard, Fidelity and T.Rowe Price their "Asset-Allocation questionnaire" so you and spouse can determine what your
own personal AA is. There is no perfect science here but a good beginning place. If not disposed to want to do this, you could pay a
fee-only planner to help get you started.
I have done several of those sites and I usually come out with a 60/40 split. I tend to think I'm more aggressive than that but when I answer the question truthfully 60/40 is the result.
AA of 60/40 puts you around age -20 in bonds, which is actually pretty salty.
Agree, not an exact science. But a beginning place. Don't believe many get their own comfort level right off the bat.

Topic Author
CDay5326
Posts: 9
Joined: Mon Mar 09, 2015 3:29 pm

Re: Moving from Edward Jones to Vanguard

Post by CDay5326 » Tue May 14, 2019 7:42 am

CDay5326 wrote:
Mon May 13, 2019 8:27 am
272 Sheep wrote:
Fri May 10, 2019 10:01 pm
Welcome and congratulations moving from E.J.
You are fortunate that you and spouse have TSPs.
Others will provide better input but will throw in my 2 cents.
Treat entire accumulation of assets as one portfolio. Determine what your overall asset allocation (AA) will be.
1. Percent in stocks. Large-Cap, Small-Cap, International.
2. Percent in Bonds, Intermediate, short-term
3. Percent in Cash, Money Market, Bank CDs, High-Yield Bank acct, etc.

Favor putting stocks in Roth and Taxable (if turnover is very low)
Favor putting bonds in Tax-deferred, TSP, IRA

Would not use Life Style fund in taxable although you could use it in tax-deferred.
I would first determine AA before anything else.
Hope others chime in!
Carl W.
I like the idea of treating the entire amount as one large asset. I will go back and re figure my AA based on that concept. Thanks
I went back and checked my AA as a whole asset group and here is what I found:
Cash 11.38%
Stocks 45.39%
Bonds 39.52%
Int 3.71%
I may do a little adjustments after all the funds are transferred from Edward Jones. I plan on putting all Tax deferred in to Lifestyle Fund with a 60/40 split

Thanks again

Topic Author
CDay5326
Posts: 9
Joined: Mon Mar 09, 2015 3:29 pm

Re: Moving from Edward Jones to Vanguard

Post by CDay5326 » Tue May 14, 2019 7:45 am

CDay5326 wrote:
Mon May 13, 2019 8:31 am
Tdubs wrote:
Sat May 11, 2019 6:53 am
You mention that you are maxing out your TSP with $18,700 in contributions. Why isn't it $25,000 ($19,000 regular limit and $6,000 catch-up)?

You don't explain what your expenses will be in retirement. Given your fairly high guaranteed income ($90k), why not go with a more aggressive investment AA?

Given your tax bracket, I'm guessing you don't need a backdoor, but others could comment on that. I assume you are married filing jointly and will make less than the Roth phase-out limit of $193k MAGI for 2019? If so, you can just contribute to a Roth IRA outright.

See:

https://www.bogleheads.org/wiki/Backdoor_Roth

And

https://www.irs.gov/publications/p590a# ... k100074297
To be honest I never put 2&2 together about the catch up. I will check into it and start it as soon as possible
I did check into the Catch up program and have started contributing to it also. Thanks for the advice

Topic Author
CDay5326
Posts: 9
Joined: Mon Mar 09, 2015 3:29 pm

Re: Moving from Edward Jones to Vanguard

Post by CDay5326 » Tue May 14, 2019 9:13 am

mhadden1 wrote:
Mon May 13, 2019 8:52 am
CDay5326 wrote:
Mon May 13, 2019 8:34 am
272 Sheep wrote:
Sat May 11, 2019 7:17 am
Place to start to determine AA.
https://www.investor.gov/additional-res ... uide-asset
I would get from Vanguard, Fidelity and T.Rowe Price their "Asset-Allocation questionnaire" so you and spouse can determine what your
own personal AA is. There is no perfect science here but a good beginning place. If not disposed to want to do this, you could pay a
fee-only planner to help get you started.
I have done several of those sites and I usually come out with a 60/40 split. I tend to think I'm more aggressive than that but when I answer the question truthfully 60/40 is the result.
AA of 60/40 puts you around age -20 in bonds, which is actually pretty salty.
Not really sure what that means, I'm retired from the Navy and Salty may mean something different

RadAudit
Posts: 3421
Joined: Mon May 26, 2008 10:20 am
Location: Second star on the right and straight on 'til morning

Re: Moving from Edward Jones to Vanguard

Post by RadAudit » Tue May 14, 2019 10:35 am

CDay5326 wrote:
Tue May 14, 2019 9:13 am
AA of 60/40 puts you around age -20 in bonds, which is actually pretty salty.
Not really sure what that means, I'm retired from the Navy and Salty may mean something different
Not sure I know, either. But, it could mean that it is too aggressive for an average investor of your age. Of course, you aren't the average investor.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

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