Funds Advise

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
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Topic Author
Waitingadi
Posts: 1
Joined: Thu May 21, 2020 11:23 pm

Funds Advise

Post by Waitingadi » Thu May 21, 2020 11:44 pm

Emergency funds: 7-8 months of emergency funds

Debt: Mortgage at 3.5 (no other loans)

Tax Filing Status: Married filing jointly

Tax Rate: 23% Federal, 13% State

State of Residence: CA

Age: 40

Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation: 20% of stocks

Please provide a hint as to the size of your current total portfolio (as in high four-figures, mid five-figures, low six-figures, etc.) - mid six figure

Show us your current portfolio including all investment and retirement accounts (yourself and spouse or civil partner, if applicable) as it's important to look at the portfolio as a unified whole rather than look at accounts in isolation. Also include the available funds in your employer provided retirement plans.
90% stock
5% bond
5% Cash


Show each fund or holding as a percentage of the entire portfolio, not as a percentage of the account that holding is in. If this instruction is not clear, see the example under the Key Points section below. For example:

Current retirement assets

His 401k
fund name (ticker symbol) (expense ratio)
RFHTX (.38)
FXAIX
VTI

Company match? Yes


Her 401k
fund name (ticker symbol) (expense ratio)
FXAIX (Fidelity 500)

Company match? Yes

_______________________________________________________________

Questions:
1. I am reading the book “Boggleheads guide to investing and realizing I am too heavily invested in stocks. I want to get a 70-30 spilt”. I want to do a rollover IRA so have access to majority of the funds.

Which funds should I invest to lower my stock exposure?

lakpr
Posts: 4970
Joined: Fri Mar 18, 2011 9:59 am

Re: Funds Advise

Post by lakpr » Fri May 22, 2020 7:38 am

Without showing the available fund choices in His and Her 401k plans, how can we advise what funds to use to lower your stock exposure?
I also notice that you are invested in FXAIX and VTI, choose one or the other, they both have identical performance. One is a S&P500 stock mutual fund, the other one is a Total Stock Market index ETF.

There is also no 23% Federal tax bracket. If your California state tax bracket is 13%, I think you are in the 32% Federal tax bracket.

In the 32% Federal tax bracket, you are better off having all your funds in the 401k so that you can do a Backdoor Roth annually. The Rollover IRA will prevent the backdoor Roth, so it's not advisable. "Access to broad list of funds" is absolutely unnecessary. You just need a couple of good funds available with which you can buy the entire US Stock market, the entire International stock market, and a good Bond fund with low expense ratio. Everything else is just fluff, adding nothing to your portfolio in terms of either returns or risk.

petulant
Posts: 1205
Joined: Thu Sep 22, 2016 1:09 pm

Re: Funds Advise

Post by petulant » Fri May 22, 2020 8:57 am

lakpr wrote:
Fri May 22, 2020 7:38 am
Without showing the available fund choices in His and Her 401k plans, how can we advise what funds to use to lower your stock exposure?
I also notice that you are invested in FXAIX and VTI, choose one or the other, they both have identical performance. One is a S&P500 stock mutual fund, the other one is a Total Stock Market index ETF.

There is also no 23% Federal tax bracket. If your California state tax bracket is 13%, I think you are in the 32% Federal tax bracket.

In the 32% Federal tax bracket, you are better off having all your funds in the 401k so that you can do a Backdoor Roth annually. The Rollover IRA will prevent the backdoor Roth, so it's not advisable. "Access to broad list of funds" is absolutely unnecessary. You just need a couple of good funds available with which you can buy the entire US Stock market, the entire International stock market, and a good Bond fund with low expense ratio. Everything else is just fluff, adding nothing to your portfolio in terms of either returns or risk.
+1.

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