Portfolio guidance 2020!

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Topic Author
Unbrokenspark
Posts: 15
Joined: Thu Nov 21, 2019 5:29 pm

Portfolio guidance 2020!

Post by Unbrokenspark » Tue Jan 07, 2020 10:36 am

Emergency Fund: 3-6 months of expenses.
Debt: 8K on mortgage
Filing Status: married filing jointly
Tax Rate: 12% Fedral 9% state
State: Iowa
Age: 25 wife 26 (Wife is a sahm)
Desired AA: 90/10
Desired International AA: 18%
Right now we have roughly 65K invested between 401k's and Roth's

Current retirement assets


His Roth 401k (44K)
6.8% New Horizons I-CL (PRJIX) (0.65)
7.9% Trowe Price Growth Stock (PRUFX) (0.52)
7.8% Trowe Price Mid Cap Growth (RPTIX) (0.62)
29.5% Vanguard info tech index adm (Vitax) (0.10)
47.7% Fidelity 500 index (FXAIX) (0.02)
0% Vanguard TTL INTL STK IND ADM (VTIAX) (0.11)
0% Vanguard Total Bond Index ADM (VBTLX) (0.05)

Option: FIDELITY EXT MKT INDEX FUND
FSMAX

Company match 5%

His Roth IRA at Voya (12k)
Currently Rolling over to vanguard Roth IRA from active manager.

TOTAL Stock market index fund admiral shares (VTSAX)(0.04)


HSA: 1000$ saved. Currently saving up 3K mutual fund requirement. (VTSAX) (0.04)

Her 401k
Going to transfer to Roth Next year 2020. Aprx (10K) (VTSAX) (0.04)

QUESTION:
Okay so going forward in 2020 in my 401k im going to get out of PRUFX, RPTIX, PRJIX, and was questioning VITAX. I would only be in FXAIX,VTIAX,VBTLX I can add FSMAX (10%)? to capture some small cap exposure any thoughts on this?? I kinda think VITAX would be to big of a tilt and 500 index would be better. Whats your thoughts?


This is my other bond option I think the vanguard one is better but not sure with bonds.
MET WEST TOTAL RETURN BOND PLN
MWTSX (0.37%)

So to recap desired AA across 4 accounts is 90/10 anyone appose and think its to young to buy 6,500$ worth of bonds???

I have decided to match 401k 5% then Max his Roth IRA and Her Roth IRA (once house is paid off this year) and contribute 2300 yr to HSA employer puts in 2000 yr.

I decided to not max hsa first because i dont want to think of that as retirement acc but only a medical distribution account in retirement or sooner. Also if i wanted to retire earlier i could use IRA's
Were pushing 40% of gross income being invested and being young i want to hammer putting money in now and maybe slow up in my thirties.

Let me know your thoughts on my 401k option and %'s AA being 25 and my ira's before hsa. its hard to put 18% in international knowing my returns wont be as high as the 500 index, any guidance on this would be appreciated.

snailderby
Posts: 693
Joined: Thu Jul 26, 2018 11:30 am

Re: Portfolio guidance 2020!

Post by snailderby » Tue Jan 07, 2020 11:07 am

Unbrokenspark wrote:
Tue Jan 07, 2020 10:36 am
Okay so going forward in 2020 in my 401k im going to get out of PRUFX, RPTIX, PRJIX, and was questioning VITAX. I would only be in FXAIX,VTIAX,VBTLX I can add FSMAX (10%)? to capture some small cap exposure any thoughts on this?? I kinda think VITAX would be to big of a tilt and 500 index would be better. Whats your thoughts?
I agree with getting rid of PRUFX, RPTIX, PRJIX, and VITAX. PRUFX, RPTIX, and PRJIX have higher ERs. And VITAX is a sector fund. In addition, info tech is already pretty heavily represented in the S&P 500. If you look at the top names in the S&P 500, many of them are info tech companies. If you want to add a little bit of FSMAX, you can, but historically, the S&P 500 on its own has performed pretty similarly to the total stock market.
Unbrokenspark wrote:
Tue Jan 07, 2020 10:36 am
This is my other bond option I think the vanguard one is better but not sure with bonds.
MET WEST TOTAL RETURN BOND PLN
MWTSX (0.37%)
I agree with using VBTLX instead of MWTSX. VBTLX has a lower expense ratio.
So to recap desired AA across 4 accounts is 90/10 anyone appose and think its to young to buy 6,500$ worth of bonds???
90/10 is a reasonable asset allocation at your age. But you should choose a stock-bond ratio based on your tolerance for risk. How would you feel about a 20% drop in your portfolio's value in one year? How about a 40% drop?

Image
its hard to put 18% in international knowing my returns wont be as high as the 500 index
The thing is, you don't know that. No one knows whether international stocks will do better or worse than U.S. stocks going forward.

Topic Author
Unbrokenspark
Posts: 15
Joined: Thu Nov 21, 2019 5:29 pm

Re: Portfolio guidance 2020!

Post by Unbrokenspark » Tue Jan 07, 2020 4:10 pm

Thank you for your response!

Topic Author
Unbrokenspark
Posts: 15
Joined: Thu Nov 21, 2019 5:29 pm

Re: Portfolio guidance 2020!

Post by Unbrokenspark » Tue Jan 14, 2020 2:33 pm

I switched all my mutual funds over and was wondering there was some capital gains from those funds going into the other funds. I would not pay any taxes since i did not withdraw is that correct?

snailderby
Posts: 693
Joined: Thu Jul 26, 2018 11:30 am

Re: Portfolio guidance 2020!

Post by snailderby » Tue Jan 14, 2020 7:34 pm

Unbrokenspark wrote:
Tue Jan 14, 2020 2:33 pm
I switched all my mutual funds over and was wondering there was some capital gains from those funds going into the other funds. I would not pay any taxes since i did not withdraw is that correct?
If you made these changes inside your Roth 401(k), you should be fine.

Topic Author
Unbrokenspark
Posts: 15
Joined: Thu Nov 21, 2019 5:29 pm

Re: Portfolio guidance 2020!

Post by Unbrokenspark » Wed Jan 15, 2020 8:26 am

Alright Thanks,

I now have only three funds in my Roth 401k :D

26K Fidelity 500 index (FXAIX) (0.02)
12K Vanguard TTL INTL STK IND ADM (VTIAX) (0.11)
6.5k Vanguard Total Bond Index ADM (VBTLX) (0.05)

Roth IRA
12K in Vanguard Total Stock Market Index Fund (VTSAX) (0.04)

Wifes 401k

10K Rolling over to VTSAX when she quits soon.

TOTAL AA is now 72/18/10

I feel good about this now! ill be honest it was hard to sell my tech fund going into international fund but I know it was the right move.

snailderby
Posts: 693
Joined: Thu Jul 26, 2018 11:30 am

Re: Portfolio guidance 2020!

Post by snailderby » Wed Jan 15, 2020 8:50 am

Nice work! If your wife has a traditional 401k, consider putting the $6.5K in bonds there, if she has access to a good bond fund. That'll let you save the Roth accounts for assets with the highest expected growth (stocks). See https://www.bogleheads.org/wiki/Tax-eff ... _placement.

Topic Author
Unbrokenspark
Posts: 15
Joined: Thu Nov 21, 2019 5:29 pm

Re: Portfolio guidance 2020!

Post by Unbrokenspark » Wed Jan 15, 2020 9:28 am

Thanks, it is a traditional 401k. We could rollover to vanguard traditional Ira and leave 6500$ in Bonds there and the rest in Roth Ira. My roth ira i just elected future contributions be roth last year. Whatever employer puts in is pre tax but i understand what your saying. What bond fund would you recommend? (VBTLX)?

I dont really want to leave it in her old employers 401k since we will be adding to it.

or i could just go back to traditonal 401k..thoughts?

snailderby
Posts: 693
Joined: Thu Jul 26, 2018 11:30 am

Re: Portfolio guidance 2020!

Post by snailderby » Wed Jan 15, 2020 12:10 pm

The wiki has an article on traditional vs Roth accounts: https://www.bogleheads.org/wiki/Traditional_versus_Roth. There are other posters here that are much more knowledgeable on this topic. But if you have access to a traditional account, it would be a great place for bonds.

P.S. Great job starting so early! :beer

Topic Author
Unbrokenspark
Posts: 15
Joined: Thu Nov 21, 2019 5:29 pm

Re: Portfolio guidance 2020!

Post by Unbrokenspark » Wed Jan 15, 2020 5:24 pm

Thank you, I'm probably over thinking this but i should clarify less than 5k is Roth contribution in 401k and out of the 6500$ in bonds 1900 is Roth dollars.

I'm thinking of doing traditional instead of roth dollars for rebalancing purposes. Not sure how i would rebalance if i moved bonds to different account without funding with new cash. (which would take awhile)

Thanks still doing research on Roth vs traditional in my situation

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