Am I missing something?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Frugalbear
Posts: 248
Joined: Sun Jun 02, 2019 7:35 am

Am I missing something?

Post by Frugalbear »

Just trying to dot my i's and cross my t's..
Questions:
1.How does my financial picture look?
2.Anything I can add to make it more lucrative or optimal?



Emergency Fund:
- 9 months of expenses

Debt:
-122.8k mortgage (2.9% interest/15year- just refinanced last month)

Tax FIling:
MFJ

Tax Rate:
Federal 22% State 3.07


Avg salary:
$130k

State: PA

AGE:32

Desired Asset Location: 90% Stocks 10% Bonds

Taxable account:
VOO- 2shares- $600 and change

401k(pretax): $81k
*Will max out this year*
Company match up 100% up to 6%
80%Northern Trust S&P 500 Index Fund Tier 3 **.02 Expense Ration**
20% Northern Trust aggregate Bond Index Fund - Non Lending - Tier 3 **.04 Expense Ratio**

Roth IRA:$50K
100% VTSAX **.04 Expense Ratio**
Maxed 1/2/2020


Funds Available 401k:

Goldman Sachs Financial Square Government Fund - FST Class **.17 EXP**
Northern Trust Aggregate Bond Index Fund - Non Lending - Tier 3 **.04 EXP**
Seix Intermediate Bond Fund **.17 EXP**
JPMCB SmartRetirement 2020 Fund **.35 Exp*
JPMCB SmartRetirement 2025 Fund **.35Exp**
JPMCB SmartRetirement 2030 Fund **.36exp**
JPMCB SmartRetirement 2035 Fund - **.39 exp**
JPMCB SmartRetirement 2045 Fund - **.39 exp**
JPMCB SmartRetirement 2055 Fund - CF B **.39 exp**
JPMCB SmartRetirement 2060 Fund - CF B **.39 exp**
JPMCB SmartRetirement Income Fund - Investment Class **.42Exp**
Northern Trust S&P 500 Index Fund Tier 3 **.02 Expense Ratio**
American Century Global Growth ACWI Trust Tier 1 **.09 exp**
Columbia Dividend Value Fund **.12% expense ratio*
Northern Trust Extended Equity Market Index Fund - DC Non Lending - Tier 3**.55% expense ratio*
Voya Small Cap Growth Trust Fund - Class 4 **.69% expense ratio**
FIAM Select International Plus-Commingled Pool **.61% expense ratio*
American Century Small Cap Value Fund **.69% expense ratio*
Northern Trust ACWI ex US Index Fund DC Non Lending - Tier Three**.63% expense ratio*
WTC-CIF II (Series 4) Portfolio **.49% expense ratio*
KlangFool
Posts: 17872
Joined: Sat Oct 11, 2008 12:35 pm

Re: Am I missing something?

Post by KlangFool »

OP,

1) Are you maxing one or two Roth IRAs?


2) Single income or dual income household?


3) What is your annual expense?


4) What is your annual saving?


5) What is your annual saving as per annual expense? 100%? 50%?


6) What is your number? 25X annual expense? 30X annual expense?


7) When do you aim to reach your number?


You could only judge how well you are doing based on your own goal.

KlangFool
User avatar
Eagle33
Posts: 944
Joined: Wed Aug 30, 2017 3:20 pm

Re: Am I missing something?

Post by Eagle33 »

Open a Roth IRA for spouse and max it every year along with your Roth.
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.
mega317
Posts: 4582
Joined: Tue Apr 19, 2016 10:55 am

Re: Am I missing something?

Post by mega317 »

A 32 year old doctor making 130k with that amount saved and no debt outside the mortgage is rocking it. But if you've been working for 10 years and never had massive student loans then not so much. So yeah, need more info.
Spousal Roth?
Refinance again?
Do you have access to HSA?
https://www.bogleheads.org/forum/viewtopic.php?t=6212
Topic Author
Frugalbear
Posts: 248
Joined: Sun Jun 02, 2019 7:35 am

Re: Am I missing something?

Post by Frugalbear »

KlangFool wrote: Sun Sep 06, 2020 9:21 pm OP,

1) Are you maxing one or two Roth IRAs?
2 Roth IRA

2) Single income or dual income household?
Dual income

3) What is your annual expense?
$35k

4) What is your annual saving?
Not sure, this was a year of paying all student loans off, all of cars off, new roof.

5) What is your annual saving as per annual expense? 100%? 50%?
As of right now I'd say 20%


6) What is your number? 25X annual expense? 30X annual expense?
Never thought about this

7) When do you aim to reach your number?
60, but never thought about what that said number would be...how does one determine that?

You could only judge how well you are doing based on your own goal.

KlangFool
Topic Author
Frugalbear
Posts: 248
Joined: Sun Jun 02, 2019 7:35 am

Re: Am I missing something?

Post by Frugalbear »

mega317 wrote: Sun Sep 06, 2020 9:32 pm A 32 year old doctor making 130k with that amount saved and no debt outside the mortgage is rocking it. But if you've been working for 10 years and never had massive student loans then not so much. So yeah, need more info.
Spousal Roth?
Refinance again?
Do you have access to HSA?
Paid student loans off this year.

Probably won't refinance again 2.9 is sufficient... Unless I can get one for 2.2 then game on.

No access to hsa $500 deductible.. $20copay... $60/biweekly for me and spouse
KlangFool
Posts: 17872
Joined: Sat Oct 11, 2008 12:35 pm

Re: Am I missing something?

Post by KlangFool »

Frugalbear wrote: Sun Sep 06, 2020 9:38 pm
KlangFool wrote: Sun Sep 06, 2020 9:21 pm OP,

1) Are you maxing one or two Roth IRAs?
2 Roth IRA

2) Single income or dual income household?
Dual income

3) What is your annual expense?
$35k

4) What is your annual saving?
Not sure, this was a year of paying all student loans off, all of cars off, new roof.

5) What is your annual saving as per annual expense? 100%? 50%?
As of right now I'd say 20%


6) What is your number? 25X annual expense? 30X annual expense?
Never thought about this

7) When do you aim to reach your number?
60, but never thought about what that said number would be...how does one determine that?

You could only judge how well you are doing based on your own goal.

KlangFool

Frugalbear,


1) Are you maxing one 410K or two 401K?


2) If your annual expense is 35K and assuming the taxes is 40K, your annual saving would be 55K per year.


<<6) What is your number? 25X annual expense? 30X annual expense?
Never thought about this

7) When do you aim to reach your number?
60, but never thought about what that said number would be...how does one determine that?>>

If you do not know your number, take 30X to start.


In summary, find out exactly what is your annual expense and saving.


<<5) What is your annual saving as per annual expense? 100%? 50%?
As of right now I'd say 20%>>

If you annual expense is 35K and your annual saving is 35K, the answer is 35/35 = 100%.

KlangFool
Affable at 50
Posts: 57
Joined: Fri Dec 27, 2019 2:34 am

Re: Am I missing something?

Post by Affable at 50 »

OP,

I have always calculated a savings rate based upon my total income. I have also read that the Federal Reserve defines saving rate as a ratio of personal savings to disposable personal income, income from all sources minus the tax you pay on that income.

Whether you use Klangfool’s formula or mine, you want to maximize what you save annually, manage your debt, and invest the surplus. Once you know what the available monthly surplus decide on a monthly investing plan and automate as much as possible.

You have 2 shares of VOO. BHs advocate aggressive regular investing. If your brokerage account is held at Vanguard, Fidelity, or other low cost brokerage plan to invest what you can afford to every month in VOO or VTI, if you prefer ETFs. You may be able to automate regular investments in index funds such as VTSAX but that comes down to a personal preference. There are many postings discussing the pros and cons of ETFs vs Traditional index funds and you can review the BH wiki to learn more,
Topic Author
Frugalbear
Posts: 248
Joined: Sun Jun 02, 2019 7:35 am

Re: Am I missing something?

Post by Frugalbear »

Affable at 50 wrote: Sun Sep 06, 2020 10:27 pm OP,

I have always calculated a savings rate based upon my total income. I have also read that the Federal Reserve defines saving rate as a ratio of personal savings to disposable personal income, income from all sources minus the tax you pay on that income.

Whether you use Klangfool’s formula or mine, you want to maximize what you save annually, manage your debt, and invest the surplus. Once you know what the available monthly surplus decide on a monthly investing plan and automate as much as possible.

You have 2 shares of VOO. BHs advocate aggressive regular investing. If your brokerage account is held at Vanguard, Fidelity, or other low cost brokerage plan to invest what you can afford to every month in VOO or VTI, if you prefer ETFs. You may be able to automate regular investments in index funds such as VTSAX but that comes down to a personal preference. There are many postings discussing the pros and cons of ETFs vs Traditional index funds and you can review the BH wiki to learn more,
Yeah that is one thing I need to do with my taxable, automate a bit more. My plan was to buy one share every pay check. You have my word I'll start that following next pay check. Cheers and thanks
User avatar
CyclingDuo
Posts: 3685
Joined: Fri Jan 06, 2017 9:07 am

Re: Am I missing something?

Post by CyclingDuo »

Frugalbear wrote: Mon Sep 07, 2020 10:02 amYeah that is one thing I need to do with my taxable, automate a bit more. My plan was to buy one share every pay check. You have my word I'll start that following next pay check. Cheers and thanks
What are your goals for the taxable account over the intermediate term 5-7 years and the longer term?

If you are going to stick with ETF's in the taxable account, there's nothing wrong with the automation being a combination of a regular amount going from your bank account to your money market selection at Vanguard (or wherever your taxable account is held) each month on a certain date or dates (after your paycheck(s) roll in), and then with the money that has gathered in the money market fund at your taxable account, you login and make the purchase during market hours and select which investment(s) it goes into from the money market fund on a monthly, bi-monthly, quarterly, etc... basis. In other words, it depends on how much you send to the taxable account each month and how much the ETF price is for VOO or VTI or VXUS or whichever ETF you are purchasing. Although that method works, it is not quite as automated as full automation. Nothing wrong with that, but it is what it is.

There are firms that do allow automated investments into those ETF's without the step of you logging in and making the purchase. They also allow you to purchase fractional shares of ETF's.

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
Topic Author
Frugalbear
Posts: 248
Joined: Sun Jun 02, 2019 7:35 am

Re: Am I missing something?

Post by Frugalbear »

CyclingDuo wrote: Mon Sep 07, 2020 10:33 am
Frugalbear wrote: Mon Sep 07, 2020 10:02 amYeah that is one thing I need to do with my taxable, automate a bit more. My plan was to buy one share every pay check. You have my word I'll start that following next pay check. Cheers and thanks
What are your goals for the taxable account over the intermediate term 5-7 years and the longer term?

If you are going to stick with ETF's in the taxable account, there's nothing wrong with the automation being a combination of a regular amount going from your bank account to your money market selection at Vanguard (or wherever your taxable account is held) each month on a certain date or dates (after your paycheck(s) roll in), and then with the money that has gathered in the money market fund at your taxable account, you login and make the purchase during market hours and select which investment(s) it goes into from the money market fund on a monthly, bi-monthly, quarterly, etc... basis. In other words, it depends on how much you send to the taxable account each month and how much the ETF price is for VOO or VTI or VXUS or whichever ETF you are purchasing. Although that method works, it is not quite as automated as full automation. Nothing wrong with that, but it is what it is.

There are firms that do allow automated investments into those ETF's without the step of you logging in and making the purchase. They also allow you to purchase fractional shares of ETF's.

CyclingDuo
Hi Cycling Duo!

I didnt really have a goal for the money in the taxable. I was just trying to save somewhere where i can get a better return. I've maxed out all of pretax and roth plans...wife does the same.

Im with Vanguard for Roth and taxable...i like the website and find it user friendly. my goal is to buy 26 shares per year.

Do you think 9months emergency is sufficient or go for 12 months?...i figured 9months was a good sweet spot betweem 6 and 12
I guess one of my goala were once it got to something substantial ($50k?) I would see where I was at with the house principal and maybe put that to rest. Although at 2.9% interest, idk if I should ever aggressively pay that off.
Affable at 50
Posts: 57
Joined: Fri Dec 27, 2019 2:34 am

Re: Am I missing something?

Post by Affable at 50 »

Frugalbear,

Now that you have paid off substantial debt, this is an excellent time to build your taxable portfolio. You’re doing very well with your retirement savings and you and your wife are excellent savers.

Once you have figured out your monthly free cash flow, allocate an increasing amount to your VOO investments. You can also allocate some of you free cash flow to the mortgage.

Set some goals. If you want a paid off mortgage by (pick an age), you can calculate how much extra to allocate toward your mortgage. With a mortgage rate of 3.00% or lower you’re in a great position to pay that off slowly if you so desire.

Without knowing your goals, I can only project what my next priority would be and that would be to contribute regularly to your investments following your paycheck. I have a potion of every check going to my Fidelity brokerage account and have scheduled monthly purchases of traditional index funds. Vanguard allows you to schedule regular index purchases as well and if you like VOO, why not buy VFIAX? Or you could remind yourself to login monthly to buy VOO. The key is to get started and invest what you can afford on a regular basis. Every year you can reaffirm or reassess your goals.
Topic Author
Frugalbear
Posts: 248
Joined: Sun Jun 02, 2019 7:35 am

Re: Am I missing something?

Post by Frugalbear »

Affable at 50 wrote: Mon Sep 07, 2020 1:16 pm Frugalbear,

Now that you have paid off substantial debt, this is an excellent time to build your taxable portfolio. You’re doing very well with your retirement savings and you and your wife are excellent savers.

Once you have figured out your monthly free cash flow, allocate an increasing amount to your VOO investments. You can also allocate some of you free cash flow to the mortgage.

Set some goals. If you want a paid off mortgage by (pick an age), you can calculate how much extra to allocate toward your mortgage. With a mortgage rate of 3.00% or lower you’re in a great position to pay that off slowly if you so desire.

Without knowing your goals, I can only project what my next priority would be and that would be to contribute regularly to your investments following your paycheck. I have a potion of every check going to my Fidelity brokerage account and have scheduled monthly purchases of traditional index funds. Vanguard allows you to schedule regular index purchases as well and if you like VOO, why not buy VFIAX? Or you could remind yourself to login monthly to buy VOO. The key is to get started and invest what you can afford on a regular basis. Every year you can reaffirm or reassess your goals.
Thanks for looking at my situation. We were always good savers, but we were a bit misguided until we found Bogleheads.

I went with VOO because I have VTSAX in my Roth account. Also, because it didn't require $3k down

Have you ever used money from your taxable account? If so, how do you know when is a good time besides, "when you need money"?

Also, how do you set your goals? I understand it's personal finance... I just don't have any other goal besides retire at 60.

Thank you
KlangFool
Posts: 17872
Joined: Sat Oct 11, 2008 12:35 pm

Re: Am I missing something?

Post by KlangFool »

Frugalbear wrote: Mon Sep 07, 2020 1:36 pm

Also, how do you set your goals? I understand it's personal finance... I just don't have any other goal besides retire at 60.

Frugalbear,

If you do not calculate/estimate your number, how do you know you will meet or exceed your goal of retiring at 60? Why it is not 50 or 67?

Estimate your actual expense. Use 30X as your goal to start.

KlangFool
User avatar
CyclingDuo
Posts: 3685
Joined: Fri Jan 06, 2017 9:07 am

Re: Am I missing something?

Post by CyclingDuo »

Frugalbear wrote: Mon Sep 07, 2020 11:12 amI didnt really have a goal for the money in the taxable. I was just trying to save somewhere where i can get a better return. I've maxed out all of pretax and roth plans...wife does the same.
That's fine. In that case the goal is simply to increase your overall nest egg. I was just wondering if there were any upcoming things such as a 20% or more down payment on a home, the purchase of a vehicle, etc... .
Frugalbear wrote: Mon Sep 07, 2020 11:12 amIm with Vanguard for Roth and taxable...i like the website and find it user friendly. my goal is to buy 26 shares per year.
Again, that's fine. We keep a taxable investing account at Vanguard as well and have had one there for 30 years or so. The step required of logging into your account to purchase the ETF shares is not that difficult as the money arrives from your regular deposits. I do it myself as well these days. Originally, the account only contained mutual funds so deposits were on automatic pilot into those funds. Now, I have several ETF's in the account and when the money market fund builds up enough, I purchase the ETF shares for the full share price. The dividends are on automatic pilot and in that regard, we do purchase additional fractional shares of my favorite ETFs in that account without any additional steps on our part.
Frugalbear wrote: Mon Sep 07, 2020 11:12 amDo you think 9months emergency is sufficient or go for 12 months?...i figured 9months was a good sweet spot between 6 and 12
Best decided on by combining the stability of your current jobs, economic conditions (recession or expansion), what you have needed and used from an emergency fund in years past, and your preferences. Some are fine with 3-6 months, some with 6-12 months, some with even more. The good news is that if grows too large and you are not tapping it, you can always spend it down or move the money around to get the ER fund to a lower level.
Frugalbear wrote: Mon Sep 07, 2020 11:12 amI guess one of my goals were once it got to something substantial ($50k?) I would see where I was at with the house principal and maybe put that to rest.
Always a possibility - and not a bad goal for a taxable account. Even better, if you can manage your income and pre-tax retirement deductions in a way that your taxable account would have 0% cap gains tax if and when you did sell shares along the way to help pay down the note.

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
Topic Author
Frugalbear
Posts: 248
Joined: Sun Jun 02, 2019 7:35 am

Re: Am I missing something?

Post by Frugalbear »

CyclingDuo wrote: Tue Sep 08, 2020 8:00 am
Frugalbear wrote: Mon Sep 07, 2020 11:12 amI didnt really have a goal for the money in the taxable. I was just trying to save somewhere where i can get a better return. I've maxed out all of pretax and roth plans...wife does the same.
That's fine. In that case the goal is simply to increase your overall nest egg. I was just wondering if there were any upcoming things such as a 20% or more down payment on a home, the purchase of a vehicle, etc... .
Frugalbear wrote: Mon Sep 07, 2020 11:12 amIm with Vanguard for Roth and taxable...i like the website and find it user friendly. my goal is to buy 26 shares per year.
Again, that's fine. We keep a taxable investing account at Vanguard as well and have had one there for 30 years or so. The step required of logging into your account to purchase the ETF shares is not that difficult as the money arrives from your regular deposits. I do it myself as well these days. Originally, the account only contained mutual funds so deposits were on automatic pilot into those funds. Now, I have several ETF's in the account and when the money market fund builds up enough, I purchase the ETF shares for the full share price. The dividends are on automatic pilot and in that regard, we do purchase additional fractional shares of my favorite ETFs in that account without any additional steps on our part.
Frugalbear wrote: Mon Sep 07, 2020 11:12 amDo you think 9months emergency is sufficient or go for 12 months?...i figured 9months was a good sweet spot between 6 and 12
Best decided on by combining the stability of your current jobs, economic conditions (recession or expansion), what you have needed and used from an emergency fund in years past, and your preferences. Some are fine with 3-6 months, some with 6-12 months, some with even more. The good news is that if grows too large and you are not tapping it, you can always spend it down or move the money around to get the ER fund to a lower level.
Frugalbear wrote: Mon Sep 07, 2020 11:12 amI guess one of my goals were once it got to something substantial ($50k?) I would see where I was at with the house principal and maybe put that to rest.

CyclingDuo
Thanks, I appreciate you taking the time out of your day to go into depth. The problem I am running into, I find myself trying to DCA with this ETF. But that is a personal problem. Thanks again!
Always a possibility - and not a bad goal for a taxable account. Even better, if you can manage your income and pre-tax retirement deductions in a way that your taxable account would have 0% cap gains tax if and when you did sell shares along the way to help pay down the note.
Post Reply