Investiment advice

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Topic Author
suqin2010
Posts: 2
Joined: Thu Jul 11, 2019 1:59 pm

Investiment advice

Post by suqin2010 » Thu Jul 11, 2019 5:23 pm

Hi,

I am a new member here. Have some investment questions and would like to seek some advice.

I am married with two kids, 15 years and 10 years old. I am a chase private client and recently was approached by a Chase financial advisor. He was trying to persuade me to setup an investment account in Chase.

Below is some of my basic information.
=============================================
Emergency funds: around 100k in MMA in another bank
Debt: no debt
Tax Filing Status: Married filling jointly
Tax Rate: 24%? (no really sure, as my wife handled the tax return. Household income before tax around 300k annually)
State of Residence: TX
Age:45
Retirement account: ~700k (both my wife's and my 401K, and roth IRA, all in funds such as targeted retirement 2040 or 2045 )
Cash: around 400k in various chase saving and checking account
======================================
The chase financial advisor suggested some stable growth income portfolio (we are very conservative in investment), but the funds he recommended are all with >1% expense ratio. I am thinking to leave around 250k in CD ladders in chase (to maintain a CPC status,not sure if it is worthwhile to keep it though), and to open an account in Vanguard with around 150k for the following 2 funds.

Vanguard Total Stock Market Index Fund (VTSAX)-50%
Vanguard Total International Stock Index Fund (VTIAX)-50%

Each year we probably can add around 50k to the vanguard fund.

Does this sound like a good plan to start? any advice is highly appreciated!

-Suqin2010

vipertom1970
Posts: 17
Joined: Fri Jun 21, 2019 7:06 pm

Re: Investiment advice

Post by vipertom1970 » Thu Jul 11, 2019 6:30 pm

not a pro to give advice but I think 50% in international is very very aggressive.

DarkHelmetII
Posts: 322
Joined: Mon Jul 24, 2017 12:25 pm

Re: Investiment advice

Post by DarkHelmetII » Thu Jul 11, 2019 6:38 pm

vipertom1970 wrote:
Thu Jul 11, 2019 6:30 pm
not a pro to give advice but I think 50% in international is very very aggressive.
I agree

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vineviz
Posts: 4371
Joined: Tue May 15, 2018 1:55 pm

Re: Investiment advice

Post by vineviz » Thu Jul 11, 2019 6:41 pm

suqin2010 wrote:
Thu Jul 11, 2019 5:23 pm
I am thinking to leave around 250k in CD ladders in chase (to maintain a CPC status,not sure if it is worthwhile to keep it though),
That seems like an awful lot of cash to keep around, especially on top of $100k in emergency funds held elsewhere.

Why not use this $250k as your "emergency" fund and put the other $100k to work for you?


suqin2010 wrote:
Thu Jul 11, 2019 5:23 pm
and to open an account in Vanguard with around 150k for the following 2 funds.

Vanguard Total Stock Market Index Fund (VTSAX)-50%
Vanguard Total International Stock Index Fund (VTIAX)-50%
Totally reasonable, but don't overlook Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) as one fund you can use instead of those two funds (some people will say that 50% is too much international, but it's not).

Also, if your tax bracket is high and you realize that keeping all that cash at Chase is silly then check out Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX).
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

jyoung
Posts: 67
Joined: Mon Jan 21, 2019 1:26 pm
Location: Houston, TX

Re: Investiment advice

Post by jyoung » Thu Jul 11, 2019 6:48 pm

That's close to global weighting, if that's what you want you could just buy VTWAX (Vanguard Total World Stock Index Fund) and be done with it. Many people do that. I don't use it personally, but the simplicity is definitely appealing.

Sounds like you have a lot of cash. I like to keep the majority of my money beyond my EF invested, but I know that may not be right for everyone.

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vineviz
Posts: 4371
Joined: Tue May 15, 2018 1:55 pm

Re: Investiment advice

Post by vineviz » Thu Jul 11, 2019 7:07 pm

suqin2010 wrote:
Thu Jul 11, 2019 5:23 pm
Emergency funds: around 100k in MMA in another bank
One other thought on the emergency fund: by design, most true "emergency funds" sit untouched for years on end earning next-to-nothing (and possibly losing purchasing power to inflation).

A better strategy might be to slightly overfund the emergency fund and invest it in a very conservative balanced fund (e.g. a fund that is 20% to 30% stocks). The biggest drawdown an 20/80 combination of stocks and bonds - such as you'd find in Vanguard LifeStrategy Income Fund (VASIX) - since the Great Depression has been less than 10%.

So if you'd normally want an emergency fund to cover 6 months of expenses, bump it to seven or eight months and put it in VASIX. You'd still have roughly the 6 months available even in the event of a horrendous market crash like the Great Depression, but meanwhile the whole fund is earning enough to outpace inflation. Some people use Vanguard Target Retirement Income Fund (VTINX) instead because it holds both a slightly higher stock allocation and an explicit allocation to TIPS.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

Miriam2
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Joined: Fri Nov 14, 2014 11:51 am

Re: Investiment advice

Post by Miriam2 » Thu Jul 11, 2019 9:42 pm

vineviz wrote: One other thought on the emergency fund: by design, most true "emergency funds" sit untouched for years on end earning next-to-nothing (and possibly losing purchasing power to inflation).

A better strategy might be to slightly overfund the emergency fund and invest it in a very conservative balanced fund (e.g. a fund that is 20% to 30% stocks). The biggest drawdown an 20/80 combination of stocks and bonds - such as you'd find in Vanguard LifeStrategy Income Fund (VASIX) - since the Great Depression has been less than 10%.

So if you'd normally want an emergency fund to cover 6 months of expenses, bump it to seven or eight months and put it in VASIX. You'd still have roughly the 6 months available even in the event of a horrendous market crash like the Great Depression, but meanwhile the whole fund is earning enough to outpace inflation. Some people use Vanguard Target Retirement Income Fund (VTINX) instead because it holds both a slightly higher stock allocation and an explicit allocation to TIPS.
Interesting plan, thank you. What type of account would you hold this "over-funded EF" in, a taxable account at Vanguard, for example? Or a retirement account if we're over 59.5?

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vineviz
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Re: Investiment advice

Post by vineviz » Thu Jul 11, 2019 11:04 pm

Miriam2 wrote:
Thu Jul 11, 2019 9:42 pm
Interesting plan, thank you. What type of account would you hold this "over-funded EF" in, a taxable account at Vanguard, for example? Or a retirement account if we're over 59.5?
I'd probably use a taxable account, but I suppose if you were still working but were over the age of 59.5 an IRA could be a reasonable choice (so long as it didn't crowd out other investments in that tax-advantaged space).
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

billfromct
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Joined: Tue Dec 03, 2013 9:05 am

Re: Investiment advice

Post by billfromct » Fri Jul 12, 2019 6:27 am

You don't mention anything about college savings for your children.

The 10 year old has 12 years before finished with college expenses & the 15 year old has 7 years before finished with college expenses.

With that time frame, you may want to open an allocation appropriate 529 college savings program to take advantage of some tax free growth & tax free distributions for college expenses (tuition, required fees, books, room & board, etc.).

bill

onourway
Posts: 1938
Joined: Thu Dec 08, 2016 3:39 pm

Re: Investiment advice

Post by onourway » Fri Jul 12, 2019 6:47 am

Welcome to the forum!

Can you clarify the point of having so much cash on hand? Is it based on your conservative investing behavior? Or simply because you haven’t really figured out what to do with it? Sometimes the way to make yourself more comfortable with investing a lump sum of cash is to assign that money specific responsibilities. So if that money is for a near-term down payment on a home, then it makes sense to be in cash. But if it’s considered part of your retirement portfolio, not to be used for 20 years or more, keeping it in cash is simply losing purchasing power to inflation. Being specific with what this money is for will help guide you to the appropriate location for it.

I’m only generally familiar with the Chase Private Client program, so I’d ask you what you feel like you are getting out of it? Paying someone else to manage your money is, in the opinion of this board, almost always a losing proposition. All the more so if you are effectively paying them to invest it as cash. I would strongly consider, once you’ve decided exactly what this money is for, moving it all to Vanguard or another low-cost provider where you are not subject to high expense ratios and management fees.

I also have the same question about college funding. Where is that going to come from?

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Sandtrap
Posts: 7446
Joined: Sat Nov 26, 2016 6:32 pm

Re: Investiment advice

Post by Sandtrap » Fri Jul 12, 2019 7:30 am

suqin2010 wrote:
Thu Jul 11, 2019 5:23 pm
Hi,

I am a new member here. Have some investment questions and would like to seek some advice.

I am married with two kids, 15 years and 10 years old. I am a chase private client and recently was approached by a Chase financial advisor. He was trying to persuade me to setup an investment account in Chase.

Below is some of my basic information.
=============================================
Emergency funds: around 100k in MMA in another bank
Debt: no debt
Tax Filing Status: Married filling jointly
Tax Rate: 24%? (no really sure, as my wife handled the tax return. Household income before tax around 300k annually)
State of Residence: TX
Age:45
Retirement account: ~700k (both my wife's and my 401K, and roth IRA, all in funds such as targeted retirement 2040 or 2045 )
Cash: around 400k in various chase saving and checking account
======================================
The chase financial advisor suggested some stable growth income portfolio (we are very conservative in investment), but the funds he recommended are all with >1% expense ratio. I am thinking to leave around 250k in CD ladders in chase (to maintain a CPC status,not sure if it is worthwhile to keep it though), and to open an account in Vanguard with around 150k for the following 2 funds.

Vanguard Total Stock Market Index Fund (VTSAX)-50%
Vanguard Total International Stock Index Fund (VTIAX)-50%

Each year we probably can add around 50k to the vanguard fund.

Does this sound like a good plan to start? any advice is highly appreciated!

-Suqin2010
1. You don't need the FA.
2. Avoid funds with high expense ratio's. Lowest. . . is best.
3. You might be better off with CD ladders at Vanguard, Fidelity, Schwab, etc?
4. Your plan is outstanding and few would argue with it. Except for the percentage of International.(high)
5. What is a "CPC" status? (yes, it's likely not worth keeping that in Chase as you could be earning more at Vanguard with it.
6. With your 250k CD Ladder money in a brokerage, you'll have more options in "fixed", also funds, IE: Treasury Funds, etc.
For example:
Current Fixed Rate chart at Fidelity:
https://fixedincome.fidelity.com/ftgw/fi/FILanding

I also have dealings with Chase and accounts there, and met with their FA. Banks all have this "private client" type of deal with extra benefits. They tie up your money. Don't care for it.
j
Wiki Bogleheads Wiki: Everything You Need to Know

Topic Author
suqin2010
Posts: 2
Joined: Thu Jul 11, 2019 1:59 pm

Re: Investiment advice

Post by suqin2010 » Fri Jul 12, 2019 11:20 am

Thanks a lot of all the replies and suggestions.
onourway wrote:
Fri Jul 12, 2019 6:47 am
Welcome to the forum!

Can you clarify the point of having so much cash on hand? Is it based on your conservative investing behavior? Or simply because you haven’t really figured out what to do with it? Sometimes the way to make yourself more comfortable with investing a lump sum of cash is to assign that money specific responsibilities. So if that money is for a near-term down payment on a home, then it makes sense to be in cash. But if it’s considered part of your retirement portfolio, not to be used for 20 years or more, keeping it in cash is simply losing purchasing power to inflation. Being specific with what this money is for will help guide you to the appropriate location for it.


I’m only generally familiar with the Chase Private Client program, so I’d ask you what you feel like you are getting out of it? Paying someone else to manage your money is, in the opinion of this board, almost always a losing proposition. All the more so if you are effectively paying them to invest it as cash. I would strongly consider, once you’ve decided exactly what this money is for, moving it all to Vanguard or another low-cost provider where you are not subject to high expense ratios and management fees.

I also have the same question about college funding. Where is that going to come from?

My wife and I really had no sense of investment, especially after we lost more than half value in our ESPP account. So for a certain time, we just let the cash accumulating in the bank. Now with my big one almost in college, we think we at least need to set aside sufficient money for her college expense. That is partial reason we have it in cash. After familiar myself with this forum, I really feel it is silly to keep it in cash format.

I have just setup 529 account (NV) for my kids early this year, but with only 5000 dollars initial fund. Maybe I should put more money in these account as well. Is there a contribution limit for 529?

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