Questioning our portfolio

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Topic Author
CancerZero
Posts: 30
Joined: Sun Jun 16, 2019 9:19 am

Questioning our portfolio

Post by CancerZero »

[Thread updated, see below (next page) --admin LadyGeek]

Edited again: We are posting details about each account as per the format and suggestions. We will gladly make any further changes.
More edits: We have posted details of funds available to us in our current 401(k) plans. We also corrected a few expense ratios because information in google was not correct for a few funds.

This is our first post ever and forgive our naivete or any details that we have still failed to add.

Background:
Both of us are 44 years old and been married for 10 years. We have two kids (8 years and 6 years old). We are in good health and try to work on maintaining it. We plan to work till we are 67 – 70 years old or longer if we remain in good health.
Till two years ago, both of us were cancer researchers at a university and our total HH income was approx. 100,000/year. We were in PhD programs and then post-doctoral researchers which does not pay much. Still, we saved aggressively and tried to live on 50,000/year or less.
Approx 1.5 years ago my husband (6 months ago for me), landed great jobs at a company and now our HH income has jumped to approx. 280,000/year (Total pay is 255,000 + 10% annual bonus and some RSU and stock options). We live in a low cost of living city and our annual expenses are about 100,000/year. We are content with quality and not materialistic things and quantity.

We have the following accounts:
Retirement accounts
Her accounts

Her 401(a) (TIAA) Old job (Total 98K)
3.3% TIAA-CREF Large-Cap Growth Index Fund - Institutional Class (TILIX) (0.05)
3.0% TIAA-CREF S&P 500 Index Fund - Institutional Class (TISPX) (0.05)
2.0% TIAA-CREF Equity Index Fund - Institutional Class (TIEIX) (0.05)
2.7% TIAA-CREF Lifecycle 2040 Fund - Institutional Class (TCOIX) (0.44)

Her 403(b) (Fidelity) Old job (Total 100K)
2.8% Fidelity International Capital Appreciation K6 (FAPCX) (0.66)
1.8% Fidelity Select Biotech (FBIOX) (0.72)
1.1% Fidelity Select Consumer Staples (FDFAX) (0.77)
3.4% Fidelity Contrafund K6 (FLCNX) (0.45)
3.0% Fidelity New Millenium (FMILX) (0.67)

Her 457(b) (Fidelity) Old job (Total 17K)
0.1% Fidelity Capital Appreciation K class (FCAKX) (0.41)
0.1% Fidelity Government Income (FGOVX) (0.45)
0.2% Fidelity Freedom 2045 K6 (FJTKX) (0.50)
0.8% Fidelity Contrafund K6 (FLCNX) (0.45)
0.1% Fidelity Small Cap Growth K6 (FOCSX) (0.60)
0.1% Fidelity Select Pharmaceuticals (FPHAX) (0.81)
0.1% Fidelity Select Banking (FSRBX) (0.77)
0.2% Fidelity Worldwide (FWWFX) (0.81)
0.4% Fidelity 500 Index (FXAIX) (0.02)
0.01%Fidelity Government Money Market Fund (SPAXX) (0.42)

The above accounts were from previous job at a state university. The following accounts are current

Her Roth IRA (Fidelity) Contributing through BackDoor (Total 180K) Will continue to contribute 6K or max allowed
0.7% Fidelity Blue Chip Growth (FBGRX) (0.72)
8.5% Fidelity Contrafund (FCNTX) (0.74)
2.1% Fidelity Capital Appreciation (FDCAX) (0.54)
1.6% Fidelity Growth Discovery Fund (FDSVX) (0.66)
0.6% Fidelity Government Income (FGOVX) (0.45)
1.3% Fidelity Growth & Income (FGRIX) (0.63)
1% Fidelity Canada (FICDX) (0.89)
1% Fidelity Intl Discovery (FIGRX) (0.88)
2.3% Fidelity low priced stock (FLPSX) (0.62)
0.7% Fidelity new markets income (FNMIX) (0.84)
1.2% Fidelity select health care services (FSHCX) (0.76)
0.8% Fidelity stock selector Large cap value (FSLVX) (0.73)

Traditional IRA: No balance (only used for backdoor conversion which we did for the first time last year)

Her 401(k) - Current Main Job (Fidelity) Total - 7K
0.1% American Century Retirement Date 2050 Trust I (02508D799) (0.38)
0.2% American Century Retirement Date 2045 Trust I (02508D815) (0.38)
0.1% Fidelity MidCap Index (FSMDX) (0.025)
0.1% Fidelity Small Cap Index (FSSNX) (0.025)
0.2% Fidelity 500 Index (FXAIX) (0.015)
0.04%Fidelity US Bond Index (FXNAX) (0.025)

Her 401(k) - Current Part time teaching job (Union bank) Total 1.5K
Not posting details due to small balance

His accounts

His 403(b) Fidelity Total-65K Old job
4.5% Fidelity Contrafund K6 (FLCNX) (0.45)
3.4% Fidelity Stock Select MidCap (FSSMX) (0.70)

Currently contributing to:

His Roth IRA (Vanguard) (Back door contributions) Total- 142K Will continue to contribute 6K or max allowed
5.7% Vanguard 500 Index Fund Admiral Shares (VFIAX) (0.04)
4.5% Vanguard Growth Index Fund Admiral Shares (VIGAX) (0.05)
3.3% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.04)
3.7% Vanguard US Growth Fund Investor Shares (VWUSX) (0.43

Traditional IRA: No balance (only used for backdoor conversion which we did for the first time last year)

His 401(k) - Current Main Job (Fidelity) Total - 39K
1% American Century Retirement Date 2055 Trust I (02508D781) (0.38)
2.3% American Century Retirement Date 2050 Trust I (02508D799) (0.38)
0.1% American Century Retirement Date 2040 Trust I (02508D823) (0.38)
1% Fidelity 500 Index (FXAIX) (0.015)
0.4% Invesco Oppenheimer Developing Markets Fund Class R6 (ODVIX) (0.85)

HSA: Total - 18,500
We wont touch this money till we retire when we may need it for our health issues. We plan to continue in HDP and contribute maximum till we are 47 years old). (Fidelity)
Not posting details because we are in the middle of trustee to trustee transfer.

Brokerage:

Her Taxable (Vanguard) Total - 60K
1.2% Vanguard 500 Index Fund Admiral Shares (VFIAX) (0.04)
0.5% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.04)
0.4% Vanguard International Dividend Appreciation ETF (VIGI)
0.4% Vanguard S&P 500 Growth ETF (VOOG)
0.7% Vanguard Mid Cap Growth ETF (VOT)
0.8% Vanguard Total Stock Market ETF (VTI)
0.5% Vanguard Growth ETF (VUG)
2.8% Apple stock (AAPL) Bought at $100/share

His taxable (Vanguard) Total - 5K
All in employer stock (RSUs and Options)

Joint Account Brokerage (Vanguard) Total - 119K
2.4% Vanguard Dividend Growth Fund (VDIGX) (0.26)
6.4% Vanguard 500 Index Fund Admiral Shares (VFIAX) (0.04)
5.6% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.04)

Emergency funds: Usually keep 5-8K balance in checking account. Also, we are blessed with a close-knit and generous family who will help in case of emergencies. There is absolutely no question about it.

Debt and other Items
1) We have no student loans or credit card debt
2) We have two cars – paid off and we do not plan to purchase a vehicle for another 5 years (at least)
3) Mortgage: 236,000 remaining (@ 4.5% - 29 years left of a 30 year mortgage). Our wish is to pay it off in 10 years. We bought the house for 310,000 – our only splurge in life so far.
4) 529 plans for kids – Current balance is 144,000. Will continue to contribute 18K total each year (till they turn 18 years)
It is our strong desire to fund our kids education. We do not want them to take on student loans. Our goal is to contribute till we reach a 300 - 350K balance and then let it grow. It is for them to attend a 4-year college and/or maybe some sort of professional school (engineering, pharmacy, medicine, dentistry…anything they want). We love the scientific quest and think our kids are academically able and hard working.
5) Our wish is to give back to our university some day. We have not yet decided on when and how much but our desire is to provide student scholarships of some sort. We want to support the next generation of scientists.

As requested, we are adding a list of all funds available in our current 401(k) plan. Both of us work for the same company and have the same funds available to us. Despite the request (to post list of funds with expense ratio of 0.25 or lower), we are posting the entire list. Since there were so few to choose from. Our apologies, we are not trying to annoy you!

Large Cap
Fidelity 500 Index Fund (0.015)
Pioneer Fundamental Growth Fund Class K Shares (0.66)
MidCap
Fidelity mid cap Index (0.025)
Janus Henderson Enterprise Fund Class N (0.66)
JPMorgan Mid Cap Value Fund Class R6 (0.74)
Small cap
Delaware Small Cap Core Fund Class R6 (0.74)
Fidelity® Small Cap Index Fund (0.025)
MFS International New Discovery Fund Class R6 (0.93)
International
Fidelity® Global ex U.S. Index Fund (0.055)
Invesco Oppenheimer Developing Markets Fund Class R6 (0.85)
Invesco Oppenheimer International Growth Fund Class R6 (0.67)
MFS International Intrinsic Value Fund Class R6 (0.63)
Speciality
AB Global Real Estate Investment Fund II Class I (0.7)
PIMCO Commodity RealReturn Strategy Fund Institutional Class (1.24)
Delaware Value® Fund Class R6 (0.58)
Blended Investment
American Century In Retirement Trust I (0.38)
American Century Retirement Date 2020 Trust I (0.38)
American Century Retirement Date 2025 Trust I (0.38)
American Century Retirement Date 2030 Trust I (0.38)
American Century Retirement Date 2035 Trust I (0.38)
American Century Retirement Date 2040 Trust I (0.38)
American Century Retirement Date 2045 Trust I (0.38)
American Century Retirement Date 2050 Trust I (0.38)
American Century Retirement Date 2055 Trust I (0.38)
American Century Retirement Date 2060 Trust I (0.38)
Bond Investments
Stable Value

Guaranteed Income Fund (GIF) (0.2)
Income
BNY Mellon Global Fixed Income Fund - Class Y (0.45)
Fidelity® U.S. Bond Index Fund (0.025)
Metropolitan West Total Return Bond Fund Plan Class (0.37)
PIMCO Real Return Fund Institutional Class (0.88)
PIMCO Income Fund Institutional Class (0.74)

We are grateful for your patience, if you have stayed with us so far. Our questions are:
1) What is wrong with this picture? We worry that we may be making mistakes that we do not realize. What are we doing wrong?

2) Upon reading this forum during the past month (did not know of its existence), we have realized that we did not pay attention to the fund types, number of funds in our accounts and expense ratio. We only went with morning star rating. If the fund was well rated, we invested in it. Also, we may be overdiversified. We will slowly work on rebalancing and can use any help/suggestions as to what to do considering our age.

3) What is the disadvantage of so many retirement accounts? We don’t know what to do with our previous retirement accounts and don’t know if we should just leave them as they are or rollover (and where?).

We know it is a lot of information and will be grateful for any insights or suggestions. We worry that we may be "compounding" our mistakes. We have talked to financial consultants but get such vague or conflicting advice that we don't know up from down anymore.

Thank you so much! We are overwhelmed by all your responses.
Last edited by CancerZero on Sun Jun 16, 2019 10:44 pm, edited 6 times in total.
inverter
Posts: 414
Joined: Mon Jul 27, 2015 1:40 pm

Re: Questioning our portfolio

Post by inverter »

I don't think you all have done anything wrong to answer point 1. To help with points 2 and 3, we need to specific fund breakdown of each account. Could you create a new post or edit your original one to do that? Thanks!
HomeStretch
Posts: 5179
Joined: Thu Dec 27, 2018 3:06 pm

Re: Questioning our portfolio

Post by HomeStretch »

Welcome!

To receive best advice, also edit original post to add:

1. Federal and state marginal tax rates

2. Per your post, you will annually save $180k = HH income $280k (excluding proceeds, if any, from vested RSUs/stock options) minus $100k annual living expenses. Please provide detail of $180k savings/contributions:
His 401k $19k
Her 401k $19k
His backdoor roth $?
Her backdoor roth $?
HSA $?
529 savings $?
Taxable savings $?

P.S. Great job with your first post! You might want to add some spacing in between paragraphs to make your post easier to read.
Last edited by HomeStretch on Sun Jun 16, 2019 10:49 am, edited 2 times in total.
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ruralavalon
Posts: 19726
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Questioning our portfolio

Post by ruralavalon »

Welcome to the forum :) .

You are doing a lot of things right. It is good to see that you are debt free other than the mortgage note, saving aggressively, living modestly, and using tax-advantaged accounts.
CancerZero wrote: Sun Jun 16, 2019 9:39 amWe are grateful for your patience, if you have stayed with us so far. Our questions are:
1) What is wrong with this picture? We worry that we may be making mistakes that we do not realize. What are we doing wrong?

2) Upon reading this forum during the past month (did not know of its existence), we have realized that we did not pay attention to the fund types, number of funds in our accounts and expense ratio. We only went with morning star rating. If the fund was well rated, we invested in it. We may be overdiversified. We will slowly work on rebalancing and can use any help/suggestions as to what to do considering our age.
As you said you "did not pay attention to the fund types, number of funds in our accounts and expense ratio." You have not paid attention to the asset allocation.


Fund selection, expense ratios.
If you would list the funds being used in each account, we could help you. Please also list the funds offered in each work-based account. Please give fund name. tickers if any, and expense ratios. Please see this for information needed and format: "Asking Portfolio Questions". You can simply add this 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.

In selecting funds strive for a combination of broad diversification (to reduce risk) and low expense ratios (to increase your net return).

Low expense ratios are critical to long-term investing performance. Low expense ratios are the best predictor of future performance. Morningstar, 8/9/10 . “If there's anything in the whole world of mutual funds that you can take to the bank, it's that expense ratios help you make a better decision. In every single time period and data point tested, low-cost funds beat high-cost funds.” “Investors should make expense ratios a primary test in fund selection. They are still the most dependable predictor of performance.”

"The expense ratio is the most proven predictor of future fund returns." "There are many other things to consider, but investors should make expense ratios their first or second screen." Morningstar, 5/5/18.


Asset allocation, diversification.
At age 44 I suggest about 30% in bonds or other fixed income investments (like CDs, savings accounts, money market fund). This is expected to substantially reduce portfolio volatility (risk), with only a relatively modest decrease in portfolio return. Graph, "An Efficient Frontier: the power of diversification". Please see:
1) Wiki article Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk"; and
2) Wiki article, "Asset allocation".

I suggest around 20 - 30% of stocks in international stocks. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities". Historically, allocating 20% of an equity portfolio to non-U.S. stocks would have captured about 84% of the maximum possible diversification benefit, and allocating 30% of an equity portfolio to non-U.S. stocks would have captured about 99% of the maximum possible diversification benefit (p. 6). (You can find lots of debate here on international allocation, opinions ranging all the way from 00% to 50% of stocks in international stocks. If you want more viewpoints on international stocks please try the Google search box, upper right, this page).

Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your own ability, willingness and need to take risk.


CancerZero wrote: Sun Jun 16, 2019 9:39 am3) What is the disadvantage of so many retirement accounts? We don’t know what to do with our previous retirement accounts and don’t know if we should just leave them as they are or rollover (and where?).
Here is the IRS Rollover chart which describes what rollovers are allowed.

There is no real disadvantage to consolidating accounts in my opinion. It depends almost entirely on expenses and funds offered, information not provided in your post. There are three basic choices.

1) If the funds offered in the old 401k, 403b or 457 plan are good with low expense ratios, and there is no account maintenance fee charged for keeping the account there or only a small fee, then it may be best to leave the old 401k, 403b or 457 account where it is.

2) If the new 401k offers similar or better funds with similar or lower expense ratios, and will accept a rollover from the old in the old 401k, 403b or 457 plan, then it may be best to roll the old accounts over into the new 401k.

3) If neither old nor new plans offer good funds with low expense ratios then it may be best to roll the old 401k over to an IRA at a low cost provider like Vanguard or Fidelity.

Wiki article, 401k, ”Rollover to IRA".

Additional considerations include:

1) the convenience of having fewer accounts to keep track and manage, if you move the old the old 401k, 403b or 457 plan into the new plan or an IRA;

2) depending on your state, a 401k plan may have greater protection from creditors than does an IRA;

3) a rollover to an IRA may impede ability to do a Backdoor Roth IRA for higher income individuals, and

4) a 401k allows distributions penalty free starting at age 55 if no longer employed, and has other provisions for withdrawals earlier than age 59.5. Wiki article, 401k, "Move to new 401k".


CancerZero wrote: Sun Jun 16, 2019 9:39 amWe know it is a lot of information and will be grateful for any insights or suggestions. We are scientists and can handle critique very well. So, please tell us what we are doing wrong. Because we are full of self-doubt these days and worry that we may be "compounding" our mistakes.
I suggest that you read one or two books on general investing. Wiki article, "Books: recommendations and reviews". When I first stated managing my own investments, I found this tutorial very helpful in learning investing terminology/jargon and some of the investing basics. Morningstar, "Investing Classroom". Also take a look at the Boglehead’s wiki, the "getting started" link I give below.
Last edited by ruralavalon on Sun Jun 16, 2019 11:06 am, edited 4 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
feehater
Posts: 221
Joined: Fri Jul 14, 2017 10:14 am

Re: Questioning our portfolio

Post by feehater »

For #3...
There is mostly no harm in having so many old retirement accounts, except that some might have annual fees in addition to expense ratios. If your new 401k allows transfers in, you could certainly roll all of them into that and cut down on the number of passwords to keep track of. What you absolutely don't want to do, since you do the backdoor Roth, is roll them over into traditional IRAs!
retiredjg
Posts: 42258
Joined: Thu Jan 10, 2008 12:56 pm

Re: Questioning our portfolio

Post by retiredjg »

CancerZero wrote: Sun Jun 16, 2019 9:39 am 1) What is wrong with this picture?
Nothing really. As already mentioned, you are doing a lot of things right.

However, your mistakes may not have been included in the picture and I suspect there are problems there to be fixed (based on how you picked your funds).

If you want help with your portfolio itself, you need to post everything in the format we use to help people with their portfolio questions. Links for that have already been given. Please be sure to post each holding as a percentage of the total portfolio.. Presenting it any other way does not make sense.

3) What is the disadvantage of so many retirement accounts? We don’t know what to do with our previous retirement accounts and don’t know if we should just leave them as they are or rollover (and where?).
The disadvantage is there are more accounts to manage. However, there can be ways to make that easier. The advantage is it leaves you able to use the back door to contribute to Roth IRA.
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Taylor Larimore
Advisory Board
Posts: 30039
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Re: Questioning our portfolio

Post by Taylor Larimore »

CancerZero:

Welcome to the Bogleheads Forum!

Please edit your opening post in a format similar to that shown in the link above by retiredjg.

Use the little box with a crayon that is on your initial screen.

Best wishes.
Taylor
Last edited by Taylor Larimore on Sun Jun 16, 2019 11:13 am, edited 1 time in total.
"Simplicity is the master key to financial success." -- Jack Bogle
livesoft
Posts: 73523
Joined: Thu Mar 01, 2007 8:00 pm

Re: Questioning our portfolio

Post by livesoft »

As mentioned in a previous response, you should probably reformat your list of investments and accounts and get rid of all the dollar amount and just use percentages of the Total Portfolio. The reason is because at least I don't like to do math in my head. Also put the percentages FIRST (leftmost) on the line, so that they sort of all line-up vertically. This is shown in the Asking Portfolio Questions thread, but many people don't catch on to that little detail:
viewtopic.php?f=1&t=6212

I'll also link this thread about taxes on a family to give you an idea of how to save on income taxes:

viewtopic.php?t=79510

It was posted 9 years ago, so tax laws have changed and inflation has done its work, but you are close to that demographic. It may give you some additional ideas.

And what to do with all your previous retirement accounts? If your "current" 401(k) or 403(b) are decent, then roll them all into the current 401(k) and 403(b) that each of you have. It is really that easy.
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Topic Author
CancerZero
Posts: 30
Joined: Sun Jun 16, 2019 9:19 am

Re: Questioning our portfolio

Post by CancerZero »

HomeStretch wrote: Sun Jun 16, 2019 10:43 am Welcome!

To receive best advice, also edit original post to add:

1. Federal and state marginal tax rates

2. Per your post, you will annually save $180k = HH income $280k (excluding proceeds, if any, from vested RSUs/stock options) minus $100k annual living expenses. Please provide detail of $180k savings/contributions:
His 401k $19k
Her 401k $19k
His backdoor roth $?
Her backdoor roth $?
HSA $?
529 savings $?
Taxable savings $?

P.S. Great job with your first post! You might want to add some spacing in between paragraphs to make your post easier to read.
Thank you for your reply. Our plan is

His 401k $19k
Her 401k $19k
His backdoor roth $6000
Her backdoor roth $6000
HSA $7000 (approx) (Employer contributes 1000 and we cannot go over max federal limits)
529 savings $18000/year (for both kids)
Taxable savings what ever we can. 280K is our gross income. We save what we can (after all the above) in taxable brokerage accounts
HomeStretch
Posts: 5179
Joined: Thu Dec 27, 2018 3:06 pm

Re: Questioning our portfolio

Post by HomeStretch »

CancerZero wrote: Sun Jun 16, 2019 12:20 pm
HomeStretch wrote: Sun Jun 16, 2019 10:43 am Welcome!

To receive best advice, also edit original post to add:

1. Federal and state marginal tax rates

2. Per your post, you will annually save $180k = HH income $280k (excluding proceeds, if any, from vested RSUs/stock options) minus $100k annual living expenses. Please provide detail of $180k savings/contributions:
His 401k $19k
Her 401k $19k
His backdoor roth $?
Her backdoor roth $?
HSA $?
529 savings $?
Taxable savings $?

P.S. Great job with your first post! You might want to add some spacing in between paragraphs to make your post easier to read.
Thank you for your reply. Our plan is

His 401k $19k
Her 401k $19k
His backdoor roth $6000
Her backdoor roth $6000
HSA $7000 (approx) (Employer contributes 1000 and we cannot go over max federal limits)
529 savings $18000/year (for both kids)
Taxable savings what ever we can. 280K is our gross income. We save what we can (after all the above) in taxable brokerage accounts
You are saving $75k in 401ks, Roth IRAs, HSA and 529. With $280k in HH income and $100k in annual expenses, your annual taxable savings should be $105k (= $280k - $100k - $75k). If you aren’t seeing $105k going into taxable savings, then your annual expenses > $100k.

The reason I emphasize this is that knowing your true annual expenses (including taxes, healthcare, etc.) is key to planning how much you will need to save for retirement. You were living on $50k/year two years ago and now your spending with better-paying jobs is $100k/year in a low cost of living area. Minimize spending creep in order to maximize savings and reach financial independence.

The savings above doesn’t take into account compensation from RSUs and options. When RSUs vest and vested options are “in the money”, I suggest you sell and invest the proceeds in taxable savings rather than holding stock in your employer especially if you are both employed at the same company which I inferred from your wording in original post.

Best of luck!
Topic Author
CancerZero
Posts: 30
Joined: Sun Jun 16, 2019 9:19 am

Re: Questioning our portfolio

Post by CancerZero »

inverter wrote: Sun Jun 16, 2019 10:16 am I don't think you all have done anything wrong to answer point 1. To help with points 2 and 3, we need to specific fund breakdown of each account. Could you create a new post or edit your original one to do that? Thanks!
Yes, we are working on it and will update today. THANK YOU!
Topic Author
CancerZero
Posts: 30
Joined: Sun Jun 16, 2019 9:19 am

Re: Questioning our portfolio

Post by CancerZero »

ruralavalon wrote: Sun Jun 16, 2019 10:43 am Welcome to the forum :) .

You are doing a lot of things right. It is good to see that you are debt free other than the mortgage note, saving aggressively, living modestly, and using tax-advantaged accounts.
Oh my God! We cannot believe the time you spent in writing this advice (though we had to truncate here). We will not let your efforts go to waste and will carefully read all your suggestions. You rock!
Topic Author
CancerZero
Posts: 30
Joined: Sun Jun 16, 2019 9:19 am

Re: Questioning our portfolio

Post by CancerZero »

HomeStretch wrote: Sun Jun 16, 2019 12:55 pm
CancerZero wrote: Sun Jun 16, 2019 12:20 pm
HomeStretch wrote: Sun Jun 16, 2019 10:43 am P.S. Great job with your first post! You might want to add some spacing in between paragraphs to make your post easier to read.
Thank you for your reply. Our plan is

His 401k $19k
Her 401k $19k
His backdoor roth $6000
Her backdoor roth $6000
HSA $7000 (approx) (Employer contributes 1000 and we cannot go over max federal limits)
529 savings $18000/year (for both kids)
Taxable savings what ever we can. 280K is our gross income. We save what we can (after all the above) in taxable brokerage accounts
You are saving $75k in 401ks, Roth IRAs, HSA and 529. With $280k in HH income and $100k in annual expenses, your annual taxable savings should be $105k (= $280k - $100k - $75k). If you aren’t seeing $105k going into taxable savings, then your annual expenses > $100k.

The reason I emphasize this is that knowing your true annual expenses (including taxes, healthcare, etc.) is key to planning how much you will need to save for retirement. You were living on $50k/year two years ago and now your spending with better-paying jobs is $100k/year in a low cost of living area. Minimize spending creep in order to maximize savings and reach financial independence.

The savings above doesn’t take into account compensation from RSUs and options. When RSUs vest and vested options are “in the money”, I suggest you sell and invest the proceeds in taxable savings rather than holding stock in your employer especially if you are both employed at the same company which I inferred from your wording in original post.

Best of luck!
Thank you for your post. Yes, you are right that we increased our spending. But we had to. 100K includes our mortage payments about 1800/month (earlier we had none). We may have bought a slightly expensive house but it is in a good school district and does not give us a headache of repairs.

We could not save 105K in our taxable accounts in the past 1.5 years because we saved our 20% (plus a bit more) in down payment. Also, we decided to 'invest' in our kids by enrolling in music lessons, swimming lessons, museum memberships etc. They are good kids and make us proud! Also, we helped out a family member when there was a sudden death. Besides that, we don't take expensive vacations, own luxury items or even branded clothes.

Moreover, 280K is our gross income. Embarrasingly, we are going through our tax returns now to see how much did we pay in taxes. Reading all these posts is making us realize that we saved well but we did not invest/manage well enough.
Topic Author
CancerZero
Posts: 30
Joined: Sun Jun 16, 2019 9:19 am

Re: Questioning our portfolio

Post by CancerZero »

livesoft wrote: Sun Jun 16, 2019 11:13 am As mentioned in a previous response, you should probably reformat your list of investments and accounts and get rid of all the dollar amount and just use percentages of the Total Portfolio. The reason is because at least I don't like to do math in my head. Also put the percentages FIRST (leftmost) on the line, so that they sort of all line-up vertically. This is shown in the Asking Portfolio Questions thread, but many people don't catch on to that little detail:
viewtopic.php?f=1&t=6212


I'll also link this thread about taxes on a family to give you an idea of how to save on income taxes:

viewtopic.php?t=79510

And what to do with all your previous retirement accounts? If your "current" 401(k) or 403(b) are decent, then roll them all into the current 401(k) and 403(b) that each of you have. It is really that easy.
THank you. We will follow this and post again. Sorry! Just making that list was emotionally overwhelming. It is our hard saved money and was surprisingly very difficult to put it all together. We will follow the format.

Thank you again. We have so much to read and catch up on. We will certainly read this carefully. [/quote]
It was posted 9 years ago, so tax laws have changed and inflation has done its work, but you are close to that demographic. It may give you some additional ideas.

Since we have no idea how good the fund offering is in our current plan, we have been scared. We will post the details and maybe get some suggestions about whether we should roll over or not.
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ruralavalon
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Re: Questioning our portfolio

Post by ruralavalon »

I noticed that you have $853k in total investments, about $446k in work-based accounts (401a, 401k, 403b, 457) accounts. Are the work-based accounts accounts all tax-deferred traditional accounts?

Do any or all of the current 401ks permit Roth contributions? Will either or both of you be eligible for a significant pension in addition to Social Security?
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Re: Questioning our portfolio

Post by CancerZero »

ruralavalon wrote: Sun Jun 16, 2019 2:16 pm I noticed that you have $853k in total investments, about $668k in tax-advantaged accounts. Are those tax-advantaged accounts all tax-deferred traditional accounts?

Do any or all of the current 401ks permit Roth contributions? Will either or both of you be eligible for a significant pension in addition to Social Security?
All accounts are tax deferred Except Roth. We do not have 401k Roth option through our current employer. At the University we had an option of 457 Roth or 403 Roth but we did not invest in it (or were not advised well). We chose the regular 457 and 403 options only.

No, we wont have any pension. State university moved to 401(a) a long time ago in order to avoid paying pensions. They contributed to this account (only for her because her position was higher than his)
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Re: Questioning our portfolio

Post by CancerZero »

feehater wrote: Sun Jun 16, 2019 10:49 am For #3...
There is mostly no harm in having so many old retirement accounts, except that some might have annual fees in addition to expense ratios. If your new 401k allows transfers in, you could certainly roll all of them into that and cut down on the number of passwords to keep track of. What you absolutely don't want to do, since you do the backdoor Roth, is roll them over into traditional IRAs!
Thank you for confirming. We almost did till we read on another forum (White Coat Investor) that this is not a good idea. Since then, we have been trying to read more and educate ourselves.
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Re: Questioning our portfolio

Post by CancerZero »

inverter wrote: Sun Jun 16, 2019 10:16 am I don't think you all have done anything wrong to answer point 1. To help with points 2 and 3, we need to specific fund breakdown of each account. Could you create a new post or edit your original one to do that? Thanks!
We have edited our post as per the suggested guidelines. Please let us know if we still made any mistakes. We have been at this the entire day and have learnt so much in the process. A couple of posts have mentioned low expense ratios. What is considered a low ratio? Is there is magic number? 1% or 0.75%?
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Re: Questioning our portfolio

Post by ExitStageLeft »

Welcome to the forum! You're doing an awesome job living well below your means. With a few tweaks you can put your portfolio on an excellent course.

If you can take the time, there's one more edit that will help the commentors as well as help you better see the overall picture. That's to update the percentages so that for each asset listed it is the percentage of the total portfolio, not just the percentage of that account.
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Re: Questioning our portfolio

Post by CancerZero »

ExitStageLeft wrote: Sun Jun 16, 2019 4:07 pm Welcome to the forum! You're doing an awesome job living well below your means. With a few tweaks you can put your portfolio on an excellent course.

If you can take the time, there's one more edit that will help the commentors as well as help you better see the overall picture. That's to update the percentages so that for each asset listed it is the percentage of the total portfolio, not just the percentage of that account.
Yes, of course we can do this. We can easily modify our excel sheet and make this change. Sorry about this!
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Re: Questioning our portfolio

Post by HomeStretch »

CancerZero wrote: Sun Jun 16, 2019 3:55 pm We have edited our post as per the suggested guidelines. Please let us know if we still made any mistakes. We have been at this the entire day and have learnt so much in the process. A couple of posts have mentioned low expense ratios. What is considered a low ratio? Is there is magic number? 1% or 0.75%?
Great job with the edits. The requested edit of %’s by ExitStageLeft will be very helpful to commenters.

I would consider an expense ratio (ER) of 1% or 0.75% to be high and an ER under 0.15% to be low. Your TIAA old 401k and some of your Fidelity/Vanguard account’s have excellent funds in them with ER’s under 0.04%. Your total portfolio is around $1 million. At a 1% ER, you would pay $10,000 in annual fees whereas at .04%, you would pay $400. That’s an annual savings of $9,600. After 20 years, that’s $192k more in your portfolio before compounding and new contributions!
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Re: Questioning our portfolio

Post by Taylor Larimore »

CancerZero:

It is VERY important for a proper understanding of a portfolio to list the percentage of each fund in your total portfolio--not the percentage in each account.

You are doing great!

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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CancerZero
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Re: Questioning our portfolio

Post by CancerZero »

Taylor Larimore wrote: Sun Jun 16, 2019 5:08 pm CancerZero:

It is VERY important for a proper understanding of a portfolio to list the percentage of each fund in your total portfolio--not the percentage in each account.

You are doing great!

Best wishes.
Taylor
We just recalculated as was suggested by you and another member!
We are learning so much today. We think half our worries evaporated when we calculated our entire portfolio. We kept socking money away but never realized how much we have saved. Today's exercise has made us look at our savings and portfolio in an entirely new light. Thank you!
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Re: Questioning our portfolio

Post by livesoft »

Now I see why you are questioning your portfolio. You have zillions of funds with less than 1% of your total assets in them. Here's what we try do:

Each account has a SINGLE fund in it EXCEPT for our largest tax-deferred account. That latter account has one fund from each asset class so that all rebalancing can be done in that one account without any tax consequence. For instance her 401(k) (both jobs) could each be 100% Bond index fund and nothing else in those accounts.

I think there still must be some typos in your edit because an account with $170K cannot have such low percentages in it.
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Re: Questioning our portfolio

Post by CancerZero »

livesoft wrote: Sun Jun 16, 2019 5:41 pm Now I see why you are questioning your portfolio. You have zillions of funds with less than 1% of your total assets in them. Here's what we try do:

Each account has a SINGLE fund in it EXCEPT for our largest tax-deferred account. That latter account has one fund from each asset class so that all rebalancing can be done in that one account without any tax consequence. For instance her 401(k) (both jobs) could each be 100% Bond index fund and nothing else in those accounts.

I think there still must be some typos in your edit because an account with $170K cannot have such low percentages in it.
Considering how tired we were just getting all this information, we agree. In fact, this is why we mustered enough courage to post today. We read about 3 fund portfolios on this forum and started to question our entire portfolio. The more we looked at our accounts, the more confused we got. In the end, we knew we needed to seek help! We did read books but they were general. Though we did learn quite a bit. Our family is clueless too and we need to educate them!

In our defense, we did not select all the funds. When we opened the accounts, they asked us whether we wanted aggressive or moderate or conservative portfolio. We would generally choose moderate and then make slight adjustments. As we said earlier, we never checked the ER. We checked ratings and used to tweak those suggestions a bit and then forget about it :annoyed
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Re: Questioning our portfolio

Post by ruralavalon »

CancerZero wrote: Sun Jun 16, 2019 3:55 pm
inverter wrote: Sun Jun 16, 2019 10:16 am I don't think you all have done anything wrong to answer point 1. To help with points 2 and 3, we need to specific fund breakdown of each account. Could you create a new post or edit your original one to do that? Thanks!
We have edited our post as per the suggested guidelines. Please let us know if we still made any mistakes. We have been at this the entire day and have learnt so much in the process. A couple of posts have mentioned low expense ratios. What is considered a low ratio? Is there is magic number? 1% or 0.75%?
.
An expense ratio of 1.00% is high. An expense ratio of 0.75% is also high, but is barely useable In a pinch in my opinion.

An international stock fund around 0.12% would be considered low expense. A U.S. Stock fund or U.S. Bond Fund around 0.05% would be considered low expense.


In her current 401k these funds currently being used qualify as low expense:
Fidelity MidCap Index (FSMDX) (0.04)
Fidelity Small Cap Index (FSSNX) (0.04)
Fidelity 500 Index (FXAIX) (0.02)
Fidelity US Bond Index (FXNAX) (0.03)

In his current 401k this fund currently being used qualifies as low expense:
Fidelity 500 Index (FXAIX) (0.01)

It will help if you also list the other funds offered in the current 401k plans, not just the funds being used. Please give fund names, tickers any, and expense ratios. Again please simply add this to your original post using the edit button.

Edited for typos.
Last edited by ruralavalon on Sun Jun 16, 2019 6:10 pm, edited 2 times in total.
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Re: Questioning our portfolio

Post by livesoft »

ruralavalon wrote: Sun Jun 16, 2019 6:04 pmIt will help if you also list the other funds offered in the current 401k plans, not just the funds being used. Please give fund names, ticketed any, and expense ratios. Again please simply add this to your original post using the edit button.
I would suggest not listing ALL the funds offered, but only those with expense ratios less than 0.25% if available or the two funds offered in each with the lowest expense ratios if the expense ratios are above 0.25%. This may help increase the signal-to-noise ratio.
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Re: Questioning our portfolio

Post by ruralavalon »

livesoft wrote: Sun Jun 16, 2019 6:07 pm
ruralavalon wrote: Sun Jun 16, 2019 6:04 pmIt will help if you also list the other funds offered in the current 401k plans, not just the funds being used. Please give fund names, ticketed any, and expense ratios. Again please simply add this to your original post using the edit button.
I would suggest not listing ALL the funds offered, but only those with expense ratios less than 0.25% if available or the two funds offered in each with the lowest expense ratios if the expense ratios are above 0.25%. This may help increase the signal-to-noise ratio.
Yes, I agree.
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Re: Questioning our portfolio

Post by CancerZero »

ruralavalon wrote: Sun Jun 16, 2019 6:09 pm
livesoft wrote: Sun Jun 16, 2019 6:07 pm
ruralavalon wrote: Sun Jun 16, 2019 6:04 pmIt will help if you also list the other funds offered in the current 401k plans, not just the funds being used. Please give fund names, ticketed any, and expense ratios. Again please simply add this to your original post using the edit button.
I would suggest not listing ALL the funds offered, but only those with expense ratios less than 0.25% if available or the two funds offered in each with the lowest expense ratios if the expense ratios are above 0.25%. This may help increase the signal-to-noise ratio.
Yes, I agree.
Yes, we can do it. We are working on this piece now. It is a bit easier because both of us work for the same company and have the same funds available to us.

Thank you
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Re: Questioning our portfolio

Post by Taylor Larimore »

CancerZero:

Thank you for posting your fund's percentage as a total of your overall portfolio. I am sure this was helpful for you as it is for us.

Your most important portfolio decision is your overall stock/bond ratio. This ratio, determines your "expected" return and "expected" risk. It is even more important than than the funds you select. I don't see it specifically stated. Use this link for help:

Vanguard Investor Questionnaire

I counted 39 separate funds. This is a mistake. A large number of funds causes confusion, extra expense, and usually larger taxes. Any fund less than 5% is meaningless. Please read my "Simplicity" link below.

Best wishes.
Taylor
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Re: Questioning our portfolio

Post by CancerZero »

Taylor Larimore wrote: Sun Jun 16, 2019 8:10 pm CancerZero:

Thank you for posting your fund's percentage as a total of your overall portfolio. I am sure this was helpful for you as it is for us.

Your most important portfolio decision is your overall stock/bond ratio. This ratio, determines your "expected" return and "expected" risk. It is even more important than than the funds you select. I don't see it specifically stated. Use this link for help:

Vanguard Investor Questionnaire

I counted 39 separate funds. This is a mistake. A large number of funds causes confusion, extra expense, and usually larger taxes. Any fund less than 5% is meaningless. Please read my "Simplicity" link below.

Best wishes.
Taylor
Yes SIr. We hear you loud and clear. And yes, you are absolutely right. The exercise that we did today was extremely helpful. It was long overdue but it will help us sleep well at night. No doubt, we need to do more work, read more and need more help. But finally, we feel that we know what we need to do. We are reading/going to read all the links that were given to us and we will certainly work hard to correct all our mistakes.

All of you have no idea how grateful we are. We are in your debt. Thank you!
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Re: Questioning our portfolio

Post by HomeStretch »

My suggestion to fine-tune your portfolio is to take the steps one at a time in the following order:
1. Post your desired asset allocation (equity/bonds) and, within equity, your desired allocation between US and International
2. Change the funds held in your tax deferred (401a/403b/457b/401k) to reduce ERs, reduce # funds and get to your desired asset allocation.
3. Work on consolidating accounts to reduce #
4. Work on exchanging funds in Taxable accounts to lower cost funds. You will need to figure out the capital gain/loss for each holding and understand the tax ramifications before making changes.

I would suggest holding equity funds for growth/tax efficiency in Taxable/Roth/HSA and a mix of equity/bonds in your tax deferred accounts. You will probably end up owning 1 or 2 funds in each account max.
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Re: Questioning our portfolio

Post by ruralavalon »

Asset allocation.
Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your own ability, willingness and need to take risk.

Take a look at the resources mentioned or linked in prior posts to determine your desired asset allocation. Then let us know what you think as at least a tentative decision on asset allocation.


Funds in the current 401ks.
Your current 401k plan offers many excellent index funds, which are very diversified with very low expense ratios. You are fortunate. Even a couple of the actively managed funds are nice.

In my opinion the better funds to consider using in the current 401ks include:
1) Fidelity 500 Index Fund (81% of U.S. stock market, stocks of selected large-cap and mid-cap companies) (FXAIX) (0.015);
2) Fidelity® Small Cap Index Fund (tracks the Russell 2000 index) (FSSNX) (0.025):
3) Fidelity® Global ex U.S. Index Fund (both developed and emerging markets, no small-cap stocks) (FSGGX) (0.055); and
4) Fidelity® U.S. Bond Index fund (tracks the Bloomberg Barclays U.S. Aggregate Bond Index, a total bond market index) (FXNAX) (0.025).

These funds are as good as or better than any currently being using in his or her work-based accounts.


Rollovers to consolidate.
My suggestion is to rollover her old work-based accounts (401a, 403b, 457b) into her current 401k. "The above accounts were from previous job at a state university." She will apparently be able to rollover the 457b, since it is stated to be a governmental 457b. "IRS Rollover Chart".

My suggestion is to rollover his old 403b account into his current 401k.

The rollovers preserve the ability to do backdoor Roth IRAs, consolidation makes the portfolio simpler (4 fewer accounts) and easier to manage, and will reduce the weighted average expense ratio of the portfolio.
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Re: Questioning our portfolio

Post by retiredjg »

I suggest doing very much the same as ruralavalon except don't roll the 457b.

It's fine where it is and can function as a back up emergency fund or early retirement money since that money is available any time (but taxes would be due). Exchange all those funds into 1 fund - either the 500 index or a bond fund. It makes no sense to have $17k allocated to more than 1 fund.
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Re: Questioning our portfolio

Post by CancerZero »

ruralavalon wrote: Mon Jun 17, 2019 7:31 am Asset allocation.
Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your own ability, willingness and need to take risk.

Take a look at the resources mentioned or linked in prior posts to determine your desired asset allocation. Then let us know what you think as at least a tentative decision on asset allocation.


Funds in the current 401ks.
Your current 401k plan offers many excellent index funds, which are very diversified with very low expense ratios. You are fortunate. Even a couple of the actively managed funds are nice.

In my opinion the better funds to consider using in the current 401ks include:
1) Fidelity 500 Index Fund (81% of U.S. stock market, stocks of selected large-cap and mid-cap companies) (FXAIX) (0.015);
2) Fidelity® Small Cap Index Fund (tracks the Russell 2000 index) (FSSNX) (0.025):
3) Fidelity® Global ex U.S. Index Fund (both developed and emerging markets, no small-cap stocks) (FSGGX) (0.055); and
4) Fidelity® U.S. Bond Index fund (tracks the Bloomberg Barclays U.S. Aggregate Bond Index, a total bond market index) (FXNAX) (0.025).

These funds are as good as or better than any currently being using in his or her work-based accounts.


Rollovers to consolidate.
My suggestion is to rollover her old work-based accounts (401a, 403b, 457b) into her current 401k. "The above accounts were from previous job at a state university." She will apparently be able to rollover the 457b, since it is stated to be a governmental 457b. "IRS Rollover Chart".

My suggestion is to rollover his old 403b account into his current 401k.

The rollovers preserve the ability to do backdoor Roth IRAs, consolidation makes the portfolio simpler (4 fewer accounts) and easier to manage, and will reduce the weighted average expense ratio of the portfolio.
Thank you so much! This is the kind of specific advise that we have been looking for all these years. We are getting all our paperwork together and making a list of steps to act upon. Your suggestions would be very helpful in our planning process.
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Re: Questioning our portfolio

Post by CancerZero »

retiredjg wrote: Mon Jun 17, 2019 9:45 am I suggest doing very much the same as ruralavalon except don't roll the 457b.

It's fine where it is and can function as a back up emergency fund or early retirement money since that money is available any time (but taxes would be due). Exchange all those funds into 1 fund - either the 500 index or a bond fund. It makes no sense to have $17k allocated to more than 1 fund.
Thank you! We feel good that you agree because we had liked all of ruralavalon's suggestions.

We are keeping a running list of things to do/actions to take. We might push 457(b) rollover down our priority list for now. The allocation of 17K was already changed first thing in the morning. When we listed it out yesterday, the list seemed ridiculous to us too (but never realized it before). So, first thing this morning we submitted a request to put all the money in Fidelity 500 index fund (ER- 0.015)

Thank you!
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Re: Questioning our portfolio

Post by lakpr »

I am with retiredjg on the 457b plan. DO NOT roll that over to either 401k or an IRA. Since you are separated from that employer now, the amount in the 457b is available for you to withdraw without penalties (taxes will be due of course).

You can consider this as a self-insurance fund against an involuntary job loss and you need the income.

Edited to add: You listed a $1.5k balance in a 401k plan at her part time teaching position. Not sure what expense ratios there are in that Union Bank administered plan, but I suggest that she pick ONE fund with the LOWEST expense ratio from that plan and move all money into that fund. Also accelerate contributions so that the balance reaches at least $5k in that plan, at which time you can perhaps stop further contributions depending on whether there is a match or not from the employer for ongoing contributions.

The $5k figure allows the plan administrator to NOT forcibly liquidate the account if she leaves the employer. Small balance 401k accounts can be liquidated without consent from the participant, but after $5k, the IRS rules kick in and protect you from forcible liquidation. They can still make it painful for an ex-employee to remain in the plan by making the participant pick up the Record Keeping / Administration fees that are typically paid by the employers; but at least it is still the participant's choice, not the employer's. Forcible liquidation = 10% penalty + ordinary income taxes

Of course, between both employers, your wife should be careful not to exceed the $19k annual limit on 401k deferrals.
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Re: Questioning our portfolio

Post by retiredjg »

CancerZero wrote: Mon Jun 17, 2019 10:42 am When we listed it out yesterday, the list seemed ridiculous to us too (but never realized it before).
You are really seeing the benefit of looking at your portfolio in the format requested when we help people with their portfolios. Many people report that just doing that exercise gave them an entirely new perspective on what they have.

It also makes it much easier to help you because we can see...instantly...what you have. :happy
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Re: Questioning our portfolio

Post by livesoft »

retiredjg wrote: Mon Jun 17, 2019 10:59 amIt also makes it much easier to help you because we can see...instantly...what you have. :happy
Well almost instantly. There would need to be a lot fewer funds for "instantly" to apply. :beer
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Re: Questioning our portfolio

Post by retiredjg »

livesoft wrote: Mon Jun 17, 2019 11:00 am
retiredjg wrote: Mon Jun 17, 2019 10:59 amIt also makes it much easier to help you because we can see...instantly...what you have. :happy
Well almost instantly. There would need to be a lot fewer funds for "instantly" to apply. :beer
Of course. :wink:
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Re: Questioning our portfolio

Post by CancerZero »

livesoft wrote: Mon Jun 17, 2019 11:00 am
retiredjg wrote: Mon Jun 17, 2019 10:59 amIt also makes it much easier to help you because we can see...instantly...what you have. :happy
Well almost instantly. There would need to be a lot fewer funds for "instantly" to apply. :beer
Well said Sir, well said. :beer We were worn out after creating the list and but our errors were crystal clear to us in the end! This is our job for the next month now.

This is why we were uneasy with our portfolio because we did not understand it. Reading the forums during the past month made us realize that people are so 'aware' of their investments. We felt that we were not. But we could not figure out why? We knew we were invested but we did not know where and whether we had made good choices.
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Re: Questioning our portfolio

Post by livesoft »

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Re: Questioning our portfolio

Post by Katietsu »

I know it is a tiny piece, but what is the purpose of the 401K at Union Bank? Are you aware that your 401k limit of $19,000 is across all employers? So, you will need to monitor and adjust your contributions yourself is you are still actively contributing to both plans to make sure you do not exceed the limit. I would just contribute to the plan on the primary job. You might be able to speak with your primary employer and let them know the amount contributed in 2019 to the 401k from the teaching job. Sometimes, they can add that information and monitor your total contribution for you.
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Re: Questioning our portfolio

Post by lakpr »

Katietsu wrote: Mon Jun 17, 2019 11:25 am I know it is a tiny piece, but what is the purpose of the 401K at Union Bank? Are you aware that your 401k limit of $19,000 is across all employers? So, you will need to monitor and adjust your contributions yourself is you are still actively contributing to both plans to make sure you do not exceed the limit. I would just contribute to the plan on the primary job. You might be able to speak with your primary employer and let them know the amount contributed in 2019 to the 401k from the teaching job. Sometimes, they can add that information and monitor your total contribution for you.
I am not the OP, but the (edited) original post indicates that the OP's wife contributed only $7k to the primary job 401k, and $1.5k to the part time job 401k. She is not in any danger of overshooting the annual contribution limits, if this rate of contribution holds ... that would be just about maxing out the $19k limit across both jobs by December 31st.

The OP also indicated that their annual contributions would be $19k each to the 401k, so reading between the lines, I'd say they are indeed aware that they should not exceed that limit among both jobs.

In my previous post on this thread, I have also speculated the reason why the OP's wife is contributing to the part time job 401k -- possible employer match?
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Re: Questioning our portfolio

Post by CancerZero »

Katietsu wrote: Mon Jun 17, 2019 11:25 am I know it is a tiny piece, but what is the purpose of the 401K at Union Bank? Are you aware that your 401k limit of $19,000 is across all employers? So, you will need to monitor and adjust your contributions yourself is you are still actively contributing to both plans to make sure you do not exceed the limit. I would just contribute to the plan on the primary job. You might be able to speak with your primary employer and let them know the amount contributed in 2019 to the 401k from the teaching job. Sometimes, they can add that information and monitor your total contribution for you.
This 401(k) plan is through a part-time job. It is mandatory (it seems) because she was not asked if she wanted it. They just opened it and started putting some percentage of her income (and contributing too). It was so small that we never paid much attention to it. A few months ago we got a letter saying that the $25 admin fee every quarter was being reduced to $12.50.

For example, last year she contributed only $300. It is a small amount and we can easily adjust our contributions with our main employer so that we do not go over 19K
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Re: Questioning our portfolio

Post by CancerZero »

lakpr wrote: Mon Jun 17, 2019 11:35 am
Katietsu wrote: Mon Jun 17, 2019 11:25 am I know it is a tiny piece, but what is the purpose of the 401K at Union Bank? Are you aware that your 401k limit of $19,000 is across all employers? So, you will need to monitor and adjust your contributions yourself is you are still actively contributing to both plans to make sure you do not exceed the limit. I would just contribute to the plan on the primary job. You might be able to speak with your primary employer and let them know the amount contributed in 2019 to the 401k from the teaching job. Sometimes, they can add that information and monitor your total contribution for you.
I am not the OP, but the (edited) original post indicates that the OP's wife contributed only $7k to the primary job 401k, and $1.5k to the part time job 401k. She is not in any danger of overshooting the annual contribution limits, if this rate of contribution holds ... that would be just about maxing out the $19k limit across both jobs by December 31st.

The OP also indicated that their annual contributions would be $19k each to the 401k, so reading between the lines, I'd say they are indeed aware that they should not exceed that limit among both jobs.

In my previous post on this thread, I have also speculated the reason why the OP's wife is contributing to the part time job 401k -- possible employer match?
My wife has had this part-time job for 3 years (just enjoys it). Her current main job just started in Jan 2019 (I started 1.5 years ago) and hence the balance in her 401(k) is 7K only. We are planning to max out at 19K (taking into account that she has two 401(k) accounts).
Thank you!
lakpr
Posts: 6247
Joined: Fri Mar 18, 2011 9:59 am

Re: Questioning our portfolio

Post by lakpr »

CancerZero wrote: Mon Jun 17, 2019 11:46 am My wife has had this part-time job for 3 years (just enjoys it). Her current main job just started in Jan 2019 (I started 1.5 years ago) and hence the balance in her 401(k) is 7K only. We are planning to max out at 19K (taking into account that she has two 401(k) accounts).
Thank you!
Thanks for that additional clarity! Your slightly earlier post also indicates that your wife's employer have automatic enrolled and automatic match in that part time job 401k? Employer match is always good! ;)

Can you also take a look at my previous post than the one you were responding to, in this thread, and add your comment?

$12.50 on a $300 balance is an awful expense ratio!! Bring it up to at least $5k in that 401k, sooner than later, so that this sting of annual participant fee would be minimized, while also guaranteeing that it will not be forcibly liquidated.
HomeStretch
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Joined: Thu Dec 27, 2018 3:06 pm

Re: Questioning our portfolio

Post by HomeStretch »

CancerZero wrote: Mon Jun 17, 2019 11:42 am
Katietsu wrote: Mon Jun 17, 2019 11:25 am I know it is a tiny piece, but what is the purpose of the 401K at Union Bank? Are you aware that your 401k limit of $19,000 is across all employers? So, you will need to monitor and adjust your contributions yourself is you are still actively contributing to both plans to make sure you do not exceed the limit. I would just contribute to the plan on the primary job. You might be able to speak with your primary employer and let them know the amount contributed in 2019 to the 401k from the teaching job. Sometimes, they can add that information and monitor your total contribution for you.
This 401(k) plan is through a part-time job. It is mandatory (it seems) because she was not asked if she wanted it. They just opened it and started putting some percentage of her income (and contributing too). It was so small that we never paid much attention to it. A few months ago we got a letter saying that the $25 admin fee every quarter was being reduced to $12.50.

For example, last year she contributed only $300. It is a small amount and we can easily adjust our contributions with our main employer so that we do not go over 19K
Your wife should be able to opt out if she wants to. Some companies auto-enroll new employees in their 401k plan or require mandatory 401k withholdings. But employers are supposed to disclose this and allow employees to opt out.
Topic Author
CancerZero
Posts: 30
Joined: Sun Jun 16, 2019 9:19 am

Re: Questioning our portfolio

Post by CancerZero »

HomeStretch wrote: Mon Jun 17, 2019 11:54 am
CancerZero wrote: Mon Jun 17, 2019 11:42 am
Katietsu wrote: Mon Jun 17, 2019 11:25 am I know it is a tiny piece, but what is the purpose of the 401K at Union Bank? Are you aware that your 401k limit of $19,000 is across all employers? So, you will need to monitor and adjust your contributions yourself is you are still actively contributing to both plans to make sure you do not exceed the limit. I would just contribute to the plan on the primary job. You might be able to speak with your primary employer and let them know the amount contributed in 2019 to the 401k from the teaching job. Sometimes, they can add that information and monitor your total contribution for you.
This 401(k) plan is through a part-time job. It is mandatory (it seems) because she was not asked if she wanted it. They just opened it and started putting some percentage of her income (and contributing too). It was so small that we never paid much attention to it. A few months ago we got a letter saying that the $25 admin fee every quarter was being reduced to $12.50.

For example, last year she contributed only $300. It is a small amount and we can easily adjust our contributions with our main employer so that we do not go over 19K
Your wife should be able to opt out if she wants to. Some companies auto-enroll new employees in their 401k plan or require mandatory 401k withholdings. But employers are supposed to disclose this and allow employees to opt out.
Ok, we will find out. We never wanted this small account anyways. We will call and inquire before she starts teaching the courses in fall semester. Her summer course is already started, so she cannot do anything about it.
Topic Author
CancerZero
Posts: 30
Joined: Sun Jun 16, 2019 9:19 am

Re: Questioning our portfolio

Post by CancerZero »

lakpr wrote: Mon Jun 17, 2019 11:53 am
CancerZero wrote: Mon Jun 17, 2019 11:46 am My wife has had this part-time job for 3 years (just enjoys it). Her current main job just started in Jan 2019 (I started 1.5 years ago) and hence the balance in her 401(k) is 7K only. We are planning to max out at 19K (taking into account that she has two 401(k) accounts).
Thank you!
Thanks for that additional clarity! Your slightly earlier post also indicates that your wife's employer have automatic enrolled and automatic match in that part time job 401k? Employer match is always good! ;)

Can you also take a look at my previous post than the one you were responding to, in this thread, and add your comment?

$12.50 on a $300 balance is an awful expense ratio!! Bring it up to at least $5k in that 401k, sooner than later, so that this sting of annual participant fee would be minimized, while also guaranteeing that it will not be forcibly liquidated.
Yes, this is why we dont like it. It seemed excessive to us at the time. She earned 6K through teaching last year and contributed $300 (5%) of her pay. The employer contributed some too. Once she figures out her password today, she will check how much. I remember thinking at that time that we are paying the employer match in fees alone. Which did not seem worth it. But we did not know that we could opt out.

This year she is projected to earn 10K which is $500. Therefore, it is easy for us to adjust the contributions in her main 401(k) account.
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