Questioning our portfolio

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Topic Author
CancerZero
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Re: Questioning our portfolio

Post by CancerZero »

livesoft wrote: Mon Jun 17, 2019 11:19 am I'll throw this into the mix to look at over the next month:
How to use free online tools to help with portfolio rebalancing and seeing one's asset allocation
Of course! We will enjoy reading this too. I have not seen my wife so happy and relieved in a while. She has been reading voraciously now.
Thank you.
lakpr
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Re: Questioning our portfolio

Post by lakpr »

CancerZero wrote: Mon Jun 17, 2019 12:12 pm
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.
I don't recommend opting out. Why turn down the employer match? As I said, that $12.50 fee is per participant, not a proportion of the account balance, so as the account balance increases, the sting will hurt lesser and lesser ... Rather than opting out, I'd see what I can do to maximize the employer match across both jobs. Also verify if either of the jobs would provide a Mega Backdoor Roth opportunity (contributing to after-tax 401k, then converting to Roth 401k or Roth IRA, very similar to the backdoor Roth IRA)
Topic Author
CancerZero
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Re: Questioning our portfolio

Post by CancerZero »

lakpr wrote: Mon Jun 17, 2019 12:17 pm
CancerZero wrote: Mon Jun 17, 2019 12:12 pm
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.
I don't recommend opting out. Why turn down the employer match? As I said, that $12.50 fee is per participant, not a proportion of the account balance, so as the account balance increases, the sting will hurt lesser and lesser ... Rather than opting out, I'd see what I can do to maximize the employer match across both jobs. Also verify if either of the jobs would provide a Mega Backdoor Roth opportunity (contributing to after-tax 401k, then converting to Roth 401k or Roth IRA, very similar to the backdoor Roth IRA)
Actually, it might be a moot point now. She just got off the phone and found that she cannot opt out now. Apparently the window to opt out was 1 month after she joined. We will just stick in this plan and make sure that we get just one low cost fund. Hopefully, with rising balance the fee wont hurt so much.
She does not see herself leave this job anyways. She enjoys it and it offers a non-competitive second job which our current employer does not mind that she takes on.

Thank you for your thoughtful consideration. Whether you advised us to opt in or out, we appreciate all of your comments. They are thoughtful and grounded in some logic. My wife has cried (twice) at the kindness shown by all of you. Since we cannot pay you back, we promise to pay it forward!
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Taylor Larimore
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Re: Questioning our portfolio

Post by Taylor Larimore »

CancerZero wrote: Mon Jun 17, 2019 12:16 pm
livesoft wrote: Mon Jun 17, 2019 11:19 am I'll throw this into the mix to look at over the next month:
How to use free online tools to help with portfolio rebalancing and seeing one's asset allocation
Of course! We will enjoy reading this too. I have not seen my wife so happy and relieved in a while. She has been reading voraciously now.
Thank you.
CancerZero:

I will warn you about reading much more. I know because I have read over 250 books about personal investing. I should have just stuck with Mr. Bogle's teachings.

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

Post by CancerZero »

Taylor Larimore wrote: Mon Jun 17, 2019 2:05 pm
CancerZero wrote: Mon Jun 17, 2019 12:16 pm
livesoft wrote: Mon Jun 17, 2019 11:19 am I'll throw this into the mix to look at over the next month:
How to use free online tools to help with portfolio rebalancing and seeing one's asset allocation
Of course! We will enjoy reading this too. I have not seen my wife so happy and relieved in a while. She has been reading voraciously now.
Thank you.
CancerZero:

I will warn you about reading much more. I know because I have read over 250 books about personal investing. I should have just stuck with Mr. Bogle's teachings.

Best wishes.
Taylor
Dear Mr. Larimore. We did not know anything about you. But now that I read the link, I stand humbled. Thank you for taking the time to respond to us. You and everyone in the forum who cared enough to write back, have been too kind and generous with your time and advise.

We are just a simple, quiet family who has received extraordinary treatment from strangers since yesterday. It has been life changing and at times overwhelming (esp for my wife). We dont question your experience at all. You offered us advise on Father's day which we think is sign for us. Reading is something that both of us enjoy doing (better than TV anyways).
Thank you!
Topic Author
CancerZero
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Re: Questioning our portfolio

Post by CancerZero »

Update for everyone who helped us.
During the past 4 days, we created a spreadsheet of each account and our holdings. It turned out to be HUGE spreadsheet. We had approximately 55 different funds. We also calculated the approximate fees we were paying based on the expense ratio alone (about 3K). Account maintenance may be extra
We know we need to rebalance, transfer/rollover some accounts etc. This is a big task for us. So, we are breaking it down into smaller steps. The first order of business was to exchange to "better" funds and consolidate smaller positions so that they are easier to work with.
We are down to about 35 funds now and cut our fee to 1.6K. This week, we plan to do more of this. After our planned conference trips we plan to rollover accounts in July.

Also, we are aiming for 60% stock/15% International/25% Bonds.


Thank you to all of you.
retiredjg
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Re: Questioning our portfolio

Post by retiredjg »

Great progress!
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ruralavalon
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Re: Questioning our portfolio

Post by ruralavalon »

CancerZero wrote: Wed Jun 19, 2019 9:34 am Update for everyone who helped us.
During the past 4 days, we created a spreadsheet of each account and our holdings. It turned out to be HUGE spreadsheet. We had approximately 55 different funds. We also calculated the approximate fees we were paying based on the expense ratio alone (about 3K). Account maintenance may be extra
We know we need to rebalance, transfer/rollover some accounts etc. This is a big task for us. So, we are breaking it down into smaller steps. The first order of business was to exchange to "better" funds and consolidate smaller positions so that they are easier to work with.
We are down to about 35 funds now and cut our fee to 1.6K. This week, we plan to do more of this. After our planned conference trips we plan to rollover accounts in July.

Also, we are aiming for 60% stock/15% International/25% Bonds.


Thank you to all of you.
Great.

It is a good idea to go slowly, and take it step by step. Take time to think things through, and ask more question, to avoid freshman mistskes.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Topic Author
CancerZero
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Re: Questioning our portfolio

Post by CancerZero »

ruralavalon wrote: Wed Jun 19, 2019 11:09 am
CancerZero wrote: Wed Jun 19, 2019 9:34 am Update for everyone who helped us.
During the past 4 days, we created a spreadsheet of each account and our holdings. It turned out to be HUGE spreadsheet. We had approximately 55 different funds. We also calculated the approximate fees we were paying based on the expense ratio alone (about 3K). Account maintenance may be extra
We know we need to rebalance, transfer/rollover some accounts etc. This is a big task for us. So, we are breaking it down into smaller steps. The first order of business was to exchange to "better" funds and consolidate smaller positions so that they are easier to work with.
We are down to about 35 funds now and cut our fee to 1.6K. This week, we plan to do more of this. After our planned conference trips we plan to rollover accounts in July.

Also, we are aiming for 60% stock/15% International/25% Bonds.


Thank you to all of you.
Great.

It is a good idea to go slowly, and take it step by step. Take time to think things through, and ask more question, to avoid freshman mistskes.

The first step was easier. Many funds with small balances and funds with big ERs were comparatively easier to just exchange. We think we can get down to 25-30 funds this week.
Then, we need to place calls/fill paperwork for rollovers and come up with a plan that will maintain our desired asset allocation. We need to tread carefully with our taxable accounts because selling short term holdings may trigger tax issues next year.

But the best part is that despite our huge spreadsheet we know where we are and what to do. We are not confused. We don't know everything but we at least know the right questions to ask. Finally, for the first time in our lives we KNOW where we stand. That has been empowering! :happy

Thank you and we will certainly update as we make further progress.
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Taylor Larimore
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Action and Appreciation

Post by Taylor Larimore »

CancerZero:

You are on the road to investment success!

I might add that it is a pleasure to work with intelligent investors who take action and are as appreciative as you are.

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

Post by CancerZero »

We were hoping to get some input about 529 plans for our kids (9 years and 6 years).
1) We have a plan from a state that we used to live in previously. Is it better to rollover that plan to our current state's plan or to Vanguard 529 plan? Would Vanguard give us more options esp with lower expense ratios?

2) The best funds available in our current state are
Vanguard 500 index (ER = 0.18)
Vanguard total bond market Index (ER = 0.2)
Would a 75/25 asset allocation be reasonable till the kid is 12 years old and then slowly changing to more moderate (50/50 till 16 years of age) and then conservative (10/90 by 18 years of age).
livesoft
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Re: Questioning our portfolio

Post by livesoft »

My feeling on 529 plans is that you can do anything you want including maintaining 100% equities until child enters college. After all, the account will not be withdrawn all at once and put into the coffers of the university. Plus you all are so wealthy that you can cash-flow college anyways. I suspect you may even use some of the money well past undergraduate degree for professional degrees.

So why worry, just put it in a age-based aggressive portfolio and away you go. As for states, almost every state has a low-expense-ratio self-directed option. If your new state offers tax breaks, then use it.
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HomeStretch
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Re: Questioning our portfolio

Post by HomeStretch »

Without knowing which state plans, it’s hard to say whether the state or vanguard plans are better. Agree with an aggressive allocation. If all options have good low-cost funds, you probably can’t make a bad choice!

Consider state tax implications, if any, as you decide which plan to use. Some states give tax breaks for contributions and inbound rollovers from another state’s plan. Some states recapture state tax deductions received on outbound rollovers. The IRS allows one tax-free rollover in a 12-month period that must be completed within 60 days.

The savingsforcollege website has a recap by state:
https://www.savingforcollege.com/articl ... ther-state
Topic Author
CancerZero
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Re: Questioning our portfolio

Post by CancerZero »

Thank you for quick replies. Especially the link had some information that we did not know.
We have 529 plans in MO, IN and OH. Since we have income from OH and IN, we contribute to both. But MO is an older account that we were hoping to just rollover.

Forgive any mistakes in the following line of thought. May be we are overlooking something simple and obvious but we need to better understand 529 plans. This is for our kids.

What is the advantage of a state 529 plan? Mostly it is for tax savings. The cheapest fund has total fee of 0.18%. Most are 0.3% or more. Our account balance currently stands close to 145K. This means we are paying more than $400 in fees each year. This is certainly more than the tax savings we get because of our contribution to the state 529 plan. We plan to grow this account to be close to 300K which means - even more fees.

Our question is- Can we just forget the state tax saving and invest in Vanguard 529 plan which may offer cheaper funds?

Again, please be brutal if we are wrong. We just want to learn.

Edited for typos
Last edited by CancerZero on Fri Jun 21, 2019 4:53 am, edited 1 time in total.
HomeStretch
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Re: Questioning our portfolio

Post by HomeStretch »

If the state plan has higher fees paid that exceed the state tax benefit received, then it makes sense to use the lower-cost Vanguard Plan.
retiredjg
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Re: Questioning our portfolio

Post by retiredjg »

CancerZero wrote: Thu Jun 20, 2019 9:40 pm Our question is- Can we just forget the state tax saving and invest in Vanguard 529 plan which may offer cheaper funds?
Are you sure that Vanguard offers a plan? I thought all plans were through one state or another, but could be wrong.

Many people have commented that you can use any other state plan you want (although you may not get the tax break). Utah apparently has a very good plan (through Vanguard) and I think Nevada does as well.
Topic Author
CancerZero
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Re: Questioning our portfolio

Post by CancerZero »

retiredjg wrote: Fri Jun 21, 2019 7:35 am
CancerZero wrote: Thu Jun 20, 2019 9:40 pm Our question is- Can we just forget the state tax saving and invest in Vanguard 529 plan which may offer cheaper funds?
Are you sure that Vanguard offers a plan? I thought all plans were through one state or another, but could be wrong.

Many people have commented that you can use any other state plan you want (although you may not get the tax break). Utah apparently has a very good plan (through Vanguard) and I think Nevada does as well.
My apologies! I meant the Vanguard plan through NV. Vanguard site just calls it the Vanguard 529
https://investor.vanguard.com/529-plan/ ... d-529-plan

Yeah, we are checking to see the savings in taxes in our state plans. Esp in OH the cheapest ER is 0.18. If we can find lower ER funds in other states that are equally good, then there may be no advantage in contributing to the state plan
retiredjg
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Re: Questioning our portfolio

Post by retiredjg »

I wonder if you can contribute to your state plan, get the deduction, and then roll it to a lower cost plan? Just a WAG - I've never used one.
Topic Author
CancerZero
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You helped us - 2 month update

Post by CancerZero »

[Thread merged into here, see below --admin LadyGeek]

We wanted to provide updates after our original post a couple of months ago. This is a mid-readjustment post and we plan to post again after we have finished all the changes. We were hoping that if even one person can find it helpful, it would be great. Also, we are thankful to everyone who provided great feedback and let them know that we followed their advice!

In no particular order we have done the following,

1) Reviewed our budget: Our said budget of 100K was not exactly correct. We revisited our calculations and saw that we added 18K per year for 529 plans and 12K per year for backdoor roth as expenses. At that time, we were not calculating our budget but “the cash we absolutely need in our bank”. Actually, our maximum expenses are approx. 65-70K per year (Daycare is big expense). We are looking for ways to trim expenses.

2) Reduce number of accounts: We are in the process of a rollover of three old retirement accounts for her and one for his. The process of rollover has not been pleasant because of the paperwork. Both the prior employer and current employer required signatures, notarized documents and paper copies. Fidelity (though helpful) sent the wrong paperwork and we wasted time. We believe that, if possible (and if good options available), rollover old retirement accounts. Since our recent separation from the previous employer we are still familiar with people and processes. It would be much harder as time passes. We are willing to go through this pain now rather than later.

3) Reduce number of funds: We had about 60 funds when we first posted. We listed them in an excel worksheet and calculated the expenses we were paying each year based on balances and ER of each fund – which was approx. $3000/year. That triggered us to identify our priorities. For example, we had funds with ER of 0.88 but lower balance vs. funds with ER of 0.56 but with 50K in it – leading us to work on the fund with 50K. We have now brought our fees down to $600 (about 24 low cost funds + 2 stocks). This is ongoing task which we cannot hasten because of tax implications.

4) Asset allocation: Due to the large number of funds and a slow process to get rid of bad ones, we found it hard to stay within our desired allocation. We are still stock heavy (we want stock/bonds – 80/20, are somewhere 85/15) but plan to rebalance when we make lumpsum contributions to roth IRA in January.

5) Refinanced our house: We had 236K mortgage @4.5% (28.5 years left of a 30 year loan). Now, we have a 225K mortgage @3.125% for 15 years. Reducing interest rate, mortgage amount and time helped us. We increased monthly payments by $325 only but feel much better.

6) Pay it forward: We believe in good karma. We ‘paid it forward’ by helping our family member organize her finances. She is thinking of leaving her financial advisor who seemed to following the BH philosophy. She has already stopped adding savings to her managed account. It is extremely important for us to continue to motivate people to visit this website and get educated (we are not experts who can educate them).

We plan to post our final portfolio in a couple of months. Thank you to everyone who have helped us. We are remain grateful for your kindness and generosity.
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Re: You helped us - 2 month update

Post by Silk McCue »

Congratulations on doing the hard work and implementing the advice that you received from others here! Glad to hear that you were able to educate your family member to make a move as well. That can be very difficult to do as too many are wedded to their advisor and actually believe that they are doing well with them.

Cheers
HomeStretch
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Re: You helped us - 2 month update

Post by HomeStretch »

Congratulations on your progress!
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TomatoTomahto
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Re: You helped us - 2 month update

Post by TomatoTomahto »

Thank you for the update, and I wish you continued forward progress.

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HMdocinPA
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Re: You helped us - 2 month update

Post by HMdocinPA »

I recently rolled over my old 403b and my wife’s old 403b as well. Went from 8 401k/403b accounts to 2, so much easier to manage now. The paperwork was a real hassle but thankfully didn’t require any medallion signatures or any signatures from old employers. The checks were sent directly to the new plans, but both the old 403b and current 401k companies required their own paperwork to be completed.

As an aside, I’m consolidating all of my investing and banking needs with fidelity, and they have been really easy to deal with. IRA transfer from Vanguard was easy and no paperwork, completely online. Big thumbs up there.
ThePrince
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Re: You helped us - 2 month update

Post by ThePrince »

Awesome work! Keep it up!
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LadyGeek
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Re: Questioning our portfolio

Post by LadyGeek »

CancerZero - In order to see what you've changed, it's best to keep all of the information in one spot. I merged your update back into the original thread.

Use this thread to provide your updates, as it's much easier to track your progress (and to provide further assistance, if needed).

You're doing fine, keep going. :beer
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ruralavalon
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Re: Questioning our portfolio

Post by ruralavalon »

Congratulations, you have made good progress.
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