Portfolio Check Up, 33yo

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Topic Author
JimWI
Posts: 4
Joined: Thu Jul 04, 2019 2:37 pm

Portfolio Check Up, 33yo

Post by JimWI » Thu Jul 04, 2019 2:53 pm

Hi everyone, appreciate the wealth of knowledge here and thought I'd finally post. My financial situation is pretty straight forward at least right now, but I'd appreciate any comments!

Emergency funds: ~1 yr of expenses

Debt: None

Tax Filing Status: Single

Tax Rate: 22% Federal, 6.27% State

State of Residence: WI

Age: 33

Desired Asset allocation: ~80/~20 stock/bonds
Desired International allocation: ~15-20% of stocks

Current retirement assets: (Low to mid 6 figures)

Taxable
11% Vanguard Total Stock Market (VTSAX) (0.04)

I-bonds 18%

His TSP
32% C Fund (S&P 500 Index Fund) (0.04)
12% S Fund (DOW Jones US Completion TSM Index) (0.04)
15% I Fund (International stock fund) (0.04) (may rebalance this up at the end of the year)

His Roth IRA at Vanguard
12% Vanguard Small Cap Value (VSIAX) (0.07)

New annual Contributions
$18000 his TSP (5% match)
$6000 his ROTH IRA
$10000 I bonds
Additional savings into taxable

Questions:
1. Right now I've kept my international exposure completely in my TSP and have filled bond allocation using I-bonds. Some changes will be needed as portfolio grows.

2. Any glaring issues/suggestions? I currently rent but may consider buying a home within the next few years, although no time table planned.

retiredjg
Posts: 37150
Joined: Thu Jan 10, 2008 12:56 pm

Re: Portfolio Check Up, 33yo

Post by retiredjg » Thu Jul 04, 2019 3:40 pm

Your portfolio is fine.

Long term, consider using some F and G fund in the TSP. To accommodate that, you could put some international in the taxable account.

Welcome to the forum.

02nz
Posts: 2119
Joined: Wed Feb 21, 2018 3:17 pm

Re: Portfolio Check Up, 33yo

Post by 02nz » Thu Jul 04, 2019 3:53 pm

You don't currently have any emerging markets exposure. The TSP I fund will get EM exposure, but the change has been postponed until 2020. It's probably not worth buying an emerging markets fund only to sell again when the I fund shifts, though.

The TSP G Fund is a unique combination - it offers the returns of intermediate-term treasuries, but without any interest rate risk. It's a better deal than any bonds available to the public. I use it for my entire bond allocation, as do many others with access to it. I'd recommend shifting your bond allocation to the G fund going forward, as your I bonds mature. To keep the same allocation, you can put more into Total Stock Market or Total International in taxable. (Which one is more tax-efficient varies with your tax situation and also over time, but it's not a big difference.)

I would not especially recommend the F fund - nothing wrong with it, it's just much more like a regular bond fund, with a mix of treasuries and corporate bonds, all with the interest rate risk of a normal bond fund. If you really wanted to get exposure to corporate bonds (I don't bother), consider a mix of TSP G and a pure corporate bond fund elsewhere.

You didn't mention whether you were making traditional or Roth TSP contributions, or some mix of the two. If you expect to remain in federal service for a lifetime and collect a sizable pension, that may be an argument for at least some Roth TSP contributions.

Topic Author
JimWI
Posts: 4
Joined: Thu Jul 04, 2019 2:37 pm

Re: Portfolio Check Up, 33yo

Post by JimWI » Thu Jul 04, 2019 5:11 pm

Thanks for the replies retiredjg and 02nz.

I've heard about the unique aspects of the G fund and will consider using it for a portion of my bond allocation going forward. I've been trying to max out tax advantaged space, which is why I've been using I-bonds for bond allocation (and to maintain some liquidity, at least after a year of holding them, since they would be used as a 2nd tier emergency fund).

02nz - I had thought about adding a total international fund in taxable or my roth to get emerging markets, but with the change coming to the TSP I fund in the next year or so, I wasn't too concerned about making a change. I have made traditional and Roth contributions in my TSP as a hedge, not knowing what the future holds, but my traditional component is much larger. Honestly, I've gone back and forth on the merits of Roth vs. traditional in my TSP.

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Wiggums
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Joined: Thu Jan 31, 2019 8:02 am

Re: Portfolio Check Up, 33yo

Post by Wiggums » Thu Jul 04, 2019 5:32 pm

Your fund choices look good to me and you got some good feedback above. I don’t have strong feelings on the International and emerging markets.

Good luck to you...

retiredjg
Posts: 37150
Joined: Thu Jan 10, 2008 12:56 pm

Re: Portfolio Check Up, 33yo

Post by retiredjg » Thu Jul 04, 2019 5:42 pm

JimWI wrote:
Thu Jul 04, 2019 5:11 pm
02nz - I had thought about adding a total international fund in taxable or my roth to get emerging markets, but with the change coming to the TSP I fund in the next year or so, I wasn't too concerned about making a change. I have made traditional and Roth contributions in my TSP as a hedge, not knowing what the future holds, but my traditional component is much larger. Honestly, I've gone back and forth on the merits of Roth vs. traditional in my TSP.
Here's an opinion to consider.

http://thefinancebuff.com/most-tsp-part ... h-tsp.html

Topic Author
JimWI
Posts: 4
Joined: Thu Jul 04, 2019 2:37 pm

Re: Portfolio Check Up, 33yo

Post by JimWI » Thu Jul 04, 2019 7:25 pm

Thanks for the link retiredjg. I can see why the Roth could be advantageous. I've been putting more in Roth lately, but do get some of both since the match is all traditional.

Old_Dollar
Posts: 79
Joined: Sun May 06, 2018 8:27 am

Re: Portfolio Check Up, 33yo

Post by Old_Dollar » Thu Jul 04, 2019 8:01 pm

JimWI wrote:
Thu Jul 04, 2019 2:53 pm
Hi everyone, appreciate the wealth of knowledge here and thought I'd finally post. My financial situation is pretty straight forward at least right now, but I'd appreciate any comments!

Emergency funds: ~1 yr of expenses

Debt: None

Tax Filing Status: Single

Tax Rate: 22% Federal, 6.27% State

State of Residence: WI

Age: 33

Desired Asset allocation: ~80/~20 stock/bonds
Desired International allocation: ~15-20% of stocks

Current retirement assets: (Low to mid 6 figures)

Taxable
11% Vanguard Total Stock Market (VTSAX) (0.04)

I-bonds 18%

His TSP
32% C Fund (S&P 500 Index Fund) (0.04)
12% S Fund (DOW Jones US Completion TSM Index) (0.04)
15% I Fund (International stock fund) (0.04) (may rebalance this up at the end of the year)

His Roth IRA at Vanguard
12% Vanguard Small Cap Value (VSIAX) (0.07)

New annual Contributions
$18000 his TSP (5% match)
$6000 his ROTH IRA
$10000 I bonds
Additional savings into taxable

Questions:
1. Right now I've kept my international exposure completely in my TSP and have filled bond allocation using I-bonds. Some changes will be needed as portfolio grows.

2. Any glaring issues/suggestions? I currently rent but may consider buying a home within the next few years, although no time table planned.
Hello fellow 33 year old!

Do you have access to a HSA (Health Savings Account)? If your Health Insurance plan is the appropriate type of HDHP you could be eligible for an HSA. It could allow you to either save an additional $3500 a year. It could allow you to add further tax-diversification to your account types.
I am here solely to learn about investing.

JDDS
Moderator
Posts: 998
Joined: Sun Mar 16, 2014 2:24 pm

Re: Portfolio Check Up, 33yo

Post by JDDS » Fri Jul 05, 2019 1:25 am

The 2019 401(k) is $19k, not $18k. Otherwise this sounds pretty sane, as others suggested you may wish to use the G fund.

If you decide to buy a home, where will your downpayment come from? Personally I kept that money separately invested.

Topic Author
JimWI
Posts: 4
Joined: Thu Jul 04, 2019 2:37 pm

Re: Portfolio Check Up, 33yo

Post by JimWI » Fri Jul 05, 2019 7:43 am

Old_Dollar - Right now I don't have a HDHP and HSA. It's been something I've thought about switching to over the past several years, though. Thanks for the suggestion.

JDDS - Oops, thanks for catching my error on the 401(k) limit. I may save a little more once I plan on getting a home. In general, though, I don't separate investment money for different purposes, outside of my TSP/IRA. I'd be willing to dip into some of my I-bonds for a home downpayment and then rebalance among other accounts (like allocating funds to the G fund in my TSP) or have a lower bond allocation for a while (at least over the next few years). That flexibility is one reason I wanted to have my fixed income portion easily accessible early on.

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