Am I saving enough?

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Topic Author
Target30
Posts: 6
Joined: Mon Jan 13, 2020 12:10 am

Am I saving enough?

Post by Target30 » Mon Jan 13, 2020 12:20 am

Hoping to be debt free and retire by 2030. I think I am saving aggressively enough, but not very financially savvy. I like to keep it simple but I have a fear I am not being smart in my Asset Allocation and could get higher returns \ growth Here are my details

Emergency funds: Have 6 months of emergency funds
Debt: 605k USD mortgage, credit cards paid in full every month.
Tax Filing Status: Married Filing Jointly
Tax Rate: 32% Federal, 10.3% State
State of Residence: California
Age: 49

Current assets

Taxable
Cash : 100k + 60k for college tuition
Stocks
• Individual: AAPL, NFLX, GOOG, AMZN, TSLA, MSFT, CRM total 165k (planning to hold these till retirement and beyond)
• India Mutual Finds 117k. Planning to liquidate and bring it back to US taxable account over the next few years
• VT 92k
• Employer vested RSU + ESPP 286k + unvested 124k = 410k

HSA: Money Market 33k

Retirement Assets
401k
• Vanguard Target 2035 233k
• VEMPX 68k
• VIIIX 141k
• VFWPX 118k
• VBTIX 69k
• Total 629k
Company match: Yes, 6k annually

Roth IRA at Vanguard
• VTTHX 2035 41k
• Money Market 23k

New annual Contributions
401k 47k; could increase to 55k in a couple of years
HSA 6k (maxing it out)

Available funds

Funds available in his 401(k): All Vanguard funds

Other info
Making additional payments towards mortgage (+3k) to pay off in full by 2031
Annual after-tax expenses including mortgage average at 125k
Home equity 1.1M. Planning to stay in the same house (in California) after retirement
Estimating ~36k annually through Social Security at age 70

Questions:
1. Can I retire at 60 or earlier if I continue at the same pace
2. Is my asset allocation diversified enough, if not what adjustments should I make?
3. Is my asset allocation tax efficient, if not what adjustments should I make?

ExitStageLeft
Posts: 1798
Joined: Sat Jan 20, 2018 4:02 pm

Re: Am I saving enough?

Post by ExitStageLeft » Mon Jan 13, 2020 3:27 pm

Welcome to the forum!

If I have added right, your present nest egg for retirement is about S1.5M and you are saving $53k per year.

If you continue saving at this rate for ten more years your nest egg will likely grow to over $3M in 2019 dollars. A safe withdrawal rate for a long retirement is about 3% to 3.5%, so you should be able to safely spend around $100k per year with no worry of running out of money.

I would keep working and keep saving. And also do the following:
1) Check out Portfolio Visualizer's backtest option and enter your complete portfolio. Then look at the Exposures tab to see what your total asset allocation is. https://www.portfoliovisualizer.com/backtest-portfolio

2) Choose an appropriate asset allocation that gives you some ability to ride out a market downturn. That means upping your bond allocation from its presently low proportion.

3) Check out sites like FIRECalc and CFIRESim to get a sense of how your portfolio would fare against different time slices of historical market conditions.

4) Stay the course. Keep investing in low cost indexed funds and living below your means.

Jack FFR1846
Posts: 10814
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Am I saving enough?

Post by Jack FFR1846 » Mon Jan 13, 2020 3:35 pm

I would be quite worried about all the RSU/Options you're holding. If it were me, I'd be online right now, selling them all.

I get RSUs and sell them at vest.
Bogle: Smart Beta is stupid

Topic Author
Target30
Posts: 6
Joined: Mon Jan 13, 2020 12:10 am

Re: Am I saving enough?

Post by Target30 » Tue Jan 14, 2020 12:52 am

ExitStageLeft wrote:
Mon Jan 13, 2020 3:27 pm
Welcome to the forum!

If I have added right, your present nest egg for retirement is about S1.5M and you are saving $53k per year.

If you continue saving at this rate for ten more years your nest egg will likely grow to over $3M in 2019 dollars. A safe withdrawal rate for a long retirement is about 3% to 3.5%, so you should be able to safely spend around $100k per year with no worry of running out of money.

I would keep working and keep saving. And also do the following:
1) Check out Portfolio Visualizer's backtest option and enter your complete portfolio. Then look at the Exposures tab to see what your total asset allocation is. https://www.portfoliovisualizer.com/backtest-portfolio

2) Choose an appropriate asset allocation that gives you some ability to ride out a market downturn. That means upping your bond allocation from its presently low proportion.

3) Check out sites like FIRECalc and CFIRESim to get a sense of how your portfolio would fare against different time slices of historical market conditions.

4) Stay the course. Keep investing in low cost indexed funds and living below your means.
@ExitStageLeft - really appreciate your validation and inputs. Will check out PortfolioVisualizer, FireCalc. Thanks

User avatar
AerialWombat
Posts: 1024
Joined: Tue May 29, 2018 1:07 pm

Re: Am I saving enough?

Post by AerialWombat » Tue Jan 14, 2020 12:59 am

Target30 wrote:
Mon Jan 13, 2020 12:20 am
• Individual: AAPL, NFLX, GOOG, AMZN, TSLA, MSFT, CRM total 165k (planning to hold these till retirement and beyond)
Somebody here will inevitably question you on these, since this is Bogleheads, so I'll do it first. :)

These individual stocks are over 10% of your portfolio. Not only is it riskier to hold individual stocks, you're also heavy in a bunch of stocks that already make up a lopsided proportion of the total stock market (which you hold a lot of in those target date funds). These are also all tech, and since you're in California with a boat load of RSU's, I'm going to go out on a limb and assume you might also work in tech. That's a massive sector tilt toward tech that you may wish to reconsider.
“Life doesn’t come with a warranty.” -Michael LeBoeuf

Topic Author
Target30
Posts: 6
Joined: Mon Jan 13, 2020 12:10 am

Re: Am I saving enough?

Post by Target30 » Tue Jan 14, 2020 1:09 am

Jack FFR1846 wrote:
Mon Jan 13, 2020 3:35 pm
I would be quite worried about all the RSU/Options you're holding. If it were me, I'd be online right now, selling them all.

I get RSUs and sell them at vest.
I am worried about the over-exposure and I have been selling it 1 year after vesting to get to long term cap gains. However in retrospect if I hadn't sold as regularly I could be retired already. Our CFO in our last all hands said another 50% growth over the next few years if we continue to execute well, so its tempting hold on. Guess I have to bite bullet and stay the course. Thanks

User avatar
RedJunglefowl
Posts: 35
Joined: Sun May 26, 2013 4:28 pm

Re: Am I saving enough?

Post by RedJunglefowl » Tue Jan 14, 2020 2:27 am

Target30 wrote:
Tue Jan 14, 2020 1:09 am
Jack FFR1846 wrote:
Mon Jan 13, 2020 3:35 pm
I would be quite worried about all the RSU/Options you're holding. If it were me, I'd be online right now, selling them all.

I get RSUs and sell them at vest.
I am worried about the over-exposure and I have been selling it 1 year after vesting to get to long term cap gains. However in retrospect if I hadn't sold as regularly I could be retired already. Our CFO in our last all hands said another 50% growth over the next few years if we continue to execute well, so its tempting hold on. Guess I have to bite bullet and stay the course. Thanks

I don't understand this. When they vest, aren't you taxed on the FMV at vesting as ordinary income? Then you hold them for a year, maybe they go up, maybe they go down and you sell them realizing a small gain or loss. Why not just sell them at vest with a 0 capital gain?

Furthermore, who cares what the CFO says? Does the CFO control the whole stock market? Most of the gains or losses of your employer's stock are based on the movement of the overall market. If the CFO is badly wrong that might correlate with your RSUs losing value and you losing your job. Also, will the CFO ever be anything but a cheerleader for the stock? If the CFO thought it was not doing well, I don't think they would tell everyone they thought the stock was going to plummet. But regardless, If you had 286k in cash right now, would you spend it all to buy your employer's stock?

sailaway
Posts: 948
Joined: Fri May 12, 2017 1:11 pm

Re: Am I saving enough?

Post by sailaway » Tue Jan 14, 2020 2:32 am

Target30 wrote:
Tue Jan 14, 2020 1:09 am
Jack FFR1846 wrote:
Mon Jan 13, 2020 3:35 pm
I would be quite worried about all the RSU/Options you're holding. If it were me, I'd be online right now, selling them all.

I get RSUs and sell them at vest.
I am worried about the over-exposure and I have been selling it 1 year after vesting to get to long term cap gains. However in retrospect if I hadn't sold as regularly I could be retired already. Our CFO in our last all hands said another 50% growth over the next few years if we continue to execute well, so its tempting hold on. Guess I have to bite bullet and stay the course. Thanks
For RSUs, you pay income tax in the vesting value. You are exposing yourself to potential losses, rather than changing that. ESPP's do change category with holding time, but we still sell immediately to get the guaranteed gain and diversify.

Royal Blue
Posts: 62
Joined: Wed Dec 18, 2019 4:07 pm

Re: Am I saving enough?

Post by Royal Blue » Tue Jan 14, 2020 4:53 am

I
• Individual: AAPL, NFLX, GOOG, AMZN, TSLA, MSFT, CRM total 165k (planning to hold these till retirement and beyond)
I wouldn’t be so quick to unload these, combined in these names there’s over a half TRILLION in cash. They can weather any storm (TSLA excluded, but damn, betting against Elon hasn’t been a good strategy). You’re tilted towards tech, but let’s face it, that’s been the winning strategy for the last two decades and I don’t see any future without these players. You’re the best person to decide on your RSU’s too. What does your gut say about your firm? Do you believe the story? Do you believe in your team and management and mission? If so, hold. Follow your gut. I’d focus new contributions towards bonds, and start building a defensive position.

Topic Author
Target30
Posts: 6
Joined: Mon Jan 13, 2020 12:10 am

Re: Am I saving enough?

Post by Target30 » Tue Jan 14, 2020 12:45 pm

RedJunglefowl wrote:
Tue Jan 14, 2020 2:27 am
Target30 wrote:
Tue Jan 14, 2020 1:09 am
Jack FFR1846 wrote:
Mon Jan 13, 2020 3:35 pm
I would be quite worried about all the RSU/Options you're holding. If it were me, I'd be online right now, selling them all.

I get RSUs and sell them at vest.
I am worried about the over-exposure and I have been selling it 1 year after vesting to get to long term cap gains. However in retrospect if I hadn't sold as regularly I could be retired already. Our CFO in our last all hands said another 50% growth over the next few years if we continue to execute well, so its tempting hold on. Guess I have to bite bullet and stay the course. Thanks

I don't understand this. When they vest, aren't you taxed on the FMV at vesting as ordinary income? Then you hold them for a year, maybe they go up, maybe they go down and you sell them realizing a small gain or loss. Why not just sell them at vest with a 0 capital gain?

Furthermore, who cares what the CFO says? Does the CFO control the whole stock market? Most of the gains or losses of your employer's stock are based on the movement of the overall market. If the CFO is badly wrong that might correlate with your RSUs losing value and you losing your job. Also, will the CFO ever be anything but a cheerleader for the stock? If the CFO thought it was not doing well, I don't think they would tell everyone they thought the stock was going to plummet. But regardless, If you had 286k in cash right now, would you spend it all to buy your employer's stock?
They hold back shares at grant for taxes and they start vesting 1 year from the grant. I use eTrade to tell me which ones are long vs short term cap gains. And since I have been getting and selling annually I am guessing my exposure has remained flat as % of my portfolio. And am I correct in assuming that selling immediately at vest (with long term cap gains) is not going to reduce my exposure since I will get another grant.

And to be honest I wouldn't buy 286k of any stock if I had the cash, but this is where my emotions are muddled. I am an insider, I work on the material presented to Institutional investors. I also contribute to the 3 year planning cycles. The management and leadership has been stable and are well admired. So I feel fairly confident about the growth story. I think a fair compromise might be selling a portion every quarter so that I get the diversification and get some of the upside that I strongly believe exists.

Topic Author
Target30
Posts: 6
Joined: Mon Jan 13, 2020 12:10 am

Re: Am I saving enough?

Post by Target30 » Tue Jan 14, 2020 1:00 pm

BocaEli wrote:
Tue Jan 14, 2020 4:53 am
I
• Individual: AAPL, NFLX, GOOG, AMZN, TSLA, MSFT, CRM total 165k (planning to hold these till retirement and beyond)
I wouldn’t be so quick to unload these, combined in these names there’s over a half TRILLION in cash. They can weather any storm (TSLA excluded, but damn, betting against Elon hasn’t been a good strategy). You’re tilted towards tech, but let’s face it, that’s been the winning strategy for the last two decades and I don’t see any future without these players. You’re the best person to decide on your RSU’s too. What does your gut say about your firm? Do you believe the story? Do you believe in your team and management and mission? If so, hold. Follow your gut. I’d focus new contributions towards bonds, and start building a defensive position.
I agree, I don't think of these companies as tech, but they use tech to disrupt traditional industries like media, auto, retail etc, its ~10% of my portfolio so I think its alright to have some risk and it give me some agency & keeps me intellectually stimulated.

Topic Author
Target30
Posts: 6
Joined: Mon Jan 13, 2020 12:10 am

Re: Am I saving enough?

Post by Target30 » Tue Jan 14, 2020 1:45 pm

sailaway wrote:
Tue Jan 14, 2020 2:32 am
Target30 wrote:
Tue Jan 14, 2020 1:09 am
Jack FFR1846 wrote:
Mon Jan 13, 2020 3:35 pm
I would be quite worried about all the RSU/Options you're holding. If it were me, I'd be online right now, selling them all.

I get RSUs and sell them at vest.
I am worried about the over-exposure and I have been selling it 1 year after vesting to get to long term cap gains. However in retrospect if I hadn't sold as regularly I could be retired already. Our CFO in our last all hands said another 50% growth over the next few years if we continue to execute well, so its tempting hold on. Guess I have to bite bullet and stay the course. Thanks
For RSUs, you pay income tax in the vesting value. You are exposing yourself to potential losses, rather than changing that. ESPP's do change category with holding time, but we still sell immediately to get the guaranteed gain and diversify.
Ah, maybe I was assuming RSU and ESPPs are the same, will check it out.

klondike
Posts: 15
Joined: Thu Jan 10, 2019 6:58 pm

Re: Am I saving enough?

Post by klondike » Tue Jan 14, 2020 1:53 pm

BocaEli wrote:
Tue Jan 14, 2020 4:53 am
I
• Individual: AAPL, NFLX, GOOG, AMZN, TSLA, MSFT, CRM total 165k (planning to hold these till retirement and beyond)
I wouldn’t be so quick to unload these, combined in these names there’s over a half TRILLION in cash. They can weather any storm (TSLA excluded, but damn, betting against Elon hasn’t been a good strategy). You’re tilted towards tech, but let’s face it, that’s been the winning strategy for the last two decades and I don’t see any future without these players.
I second this. I'm tilted to tech and big name defense contractors which severe me very well. And yes, betting against Elon is a bad idea.

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