New member. Rudderless but hoping to get on track

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Topic Author
Shorty71
Posts: 8
Joined: Sun Oct 04, 2020 9:11 am
Location: GA

New member. Rudderless but hoping to get on track

Post by Shorty71 »

Greetings Bogleheads. I just found out about this place today. Our financial strategy to date has been to live below my means and squirrel away as much as I can stand, then leave it alone. We've followed that plan pretty effectively but I feel rudderless. I'd like to share my outline and would love some help distilling a plan.

Emergency funds: 3 months of expenses in credit union savings account (not part of asset allocation)
Debt: No credit card debt; Mortgage $240k balance at 4%; Car loan $12k balance at 3.59%
Tax Filing Status: Married Filing Jointly with 2 dependent children - HS sophomore and College sophomore
Tax Rate: 22% Federal, 5.75% State
State of Residence: Georgia
Age: 49
Desired Asset allocation: Seeking guidance
Desired International allocation: Seeking guidance
Current total portfolio: mid six figures

Current retirement assets

Taxable
No taxable assets outside of retirement accounts
$175k equity in primary residence

Retirement accounts

His Vanguard Rollover IRA
21.6% Vanguard LifeStrategy Growth Fund Investor Shares (VASGX) (0.14%)
1.7% Vanguard High Dividend Yield Index Fund Admiral (VHYAX) (0.08%)
5.3% Vanguard Small-Cap Growth Index Fund Admiral Shares (VSGAX) (0.07%)
5.8% Vanguard Mid-Cap Growth Index Fund Admiral Shares (VMGMX) (0.07%)
2.0% Vanguard Real Estate Index Fund Admiral Shares (VGSLX) (0.12%)
5.5% Vanguard Strategic Equity Fund Investor Shares (VSEQX) (0.17%)

His Vanguard Roth IRA
9.1% Vanguard Growth Index Fund Admiral Shares (VIGAX) (0.05%)

His Profunds Roth IRA (Note: this Roth is being migrated to Vanguard as of 10/5)
2.1% Profunds UltraBull Investor (ULPIX) (1.50%)
4.2% Profunds UltraNASDAQ-100 Investor (UOPIX) (1.50%)

His Vanguard current employer 401k
10.4% Vanguard Inst Target Ret 2035 Fund (VITFX) (0.09%)

His Vanguard current employer Roth 401k (Note: no longer directing money to Roth 401k)
6.5% Vanguard Inst Target Ret 2035 Fund (VITFX) (0.09%)

His Vanguard 401k investment options

BOND FUNDS
Baird Core Plus Bond Fund Class Institutional (BCOIX) 0.30%
Goldman Sachs Infl Protected Secs Instl (GSIPX) 0.34%
Vanguard Inter-Term Treasury Adm (VFIUX) 0.10%
BALANCED FUNDS (STOCKS AND BONDS)
American Funds American Balanced R6 (RLBGX) 0.26%
BlackRock Global Allocation Instl (MALOX) 0.85%
Franklin Small Cap Growth Fund Class R6 (FSMLX) 0.68%
Janus Henderson Small Cap Value Fund Class N (JDSNX) 0.68%
JPMorgan Equity Income Fund Class R6 (OIEJX) 0.50%
MFS Mid Cap Value Fund Class R6 (MVCKX) 0.68%
T. Rowe Price Blue Chip Growth Fund I Class (TBCIX) 0.56%
Vanguard Institutional Index Fund Institutional Shares (VINIX) 0.04%
Vanguard Mid-Cap Index Fund Institutional Shares (VMCIX) 0.04%
Vanguard Russell 1000 Value Index Fund Institutional Shares (VRVIX) 0.07%
Vanguard Russell 2000 Index Fund Institutional Shares (VRTIX) 0.08%
Voya MidCap Opportunities Fund Class R6 (IMOZX) 0.85%
INTERNATIONAL STOCK FUNDS
Invesco Oppenheimer Developing Markets Fund Class R6 (ODVIX) 0.83%
MFS International Growth Fund Class R6 (MGRDX) 0.74%
MFS International Diversification Fund Class R6 (MDIZX) 0.77%
Vanguard Developed Markets Index Fund Institutional Shares (VTMNX) 0.05%
CLIENT SPECIFIC FUNDS
Vanguard Russell 1000 Growth Index Fund Institutional Shares (VRGWX) 0.07%
TARGET FUNDS
Vanguard Institutional Target Ret Inc Fund (VITRX) (0.09%)
Vanguard Institutional Target Ret 2020 Fund (VITWX) (0.09%)
Vanguard Institutional Target Ret 2025 Fund (VRIVX) (0.09%)
Vanguard Institutional Target Ret 2030 Fund (VTTWX) (0.09%)
Vanguard Institutional Target Ret 2035 Fund (VITFX) (0.09%)
Vanguard Institutional Target Ret 2040 Fund (VIRSX) (0.09%)
Vanguard Institutional Target Ret 2045 Fund (VITLX) (0.09%)
Vanguard Institutional Target Ret 2050 Fund (VTRLX) (0.09%)
Vanguard Institutional Target Ret 2055 Fund (VIVLX) (0.09%)
Vanguard Institutional Target Ret 2060 Fund (VILVX) (0.09%)
Vanguard Institutional Target Ret 2065 Fund (VSXFX) (0.09%)

Her Vanguard Rollover IRA
13.9% moneymarket (rolled week of 9/28/2020)

Her Principal Financial 403B
6.0% Vanguard Institutional Target Retirement 2040 Inst Fund (VIRSX) (0.09%)
6.0% Vanguard Institutional Target Retirement 2035 Inst Fund (VITFX) (0.09%)

Her 403B investment options

Metropolitan West Total Return Bond Plan Fund (MWTSX) 0.38%
PIMCO Total Return Instl Fund (PTTRX) 0.70%
Vanguard Total Bond Market Index Admiral Fund (VBTLX) 0.05%
American Funds American Balanced R6 Fund (RLBGX) 0.26%
American Funds AMCAP R6 Fund (RAFGX) 0.34%
American Funds Washington Mutual Investors R6 Fund (RWMGX) 0.27%
Massachusetts Financial Value R6 Fund (MEIKX) 0.47%
T. Rowe Price Blue Chip Growth I Fund (TBCIX) 0.56%
Vanguard Institutional Index Fund Institutional Shares (VINIX) 0.04%
JP Morgan Small Cap Value R6 Fund (JSVUX) 0.77%
T. Rowe Price QM US Small-Cap Growth Equity Institutional Fd (TQAIX) 0.65%
Vanguard Mid Cap Index Institutional Fund (VMCIX) 0.04%
Vanguard Small Cap Index Institutional Fund (VSCIX) 0.04%
American Funds New Perspective R6 Fund (RNPGX) 0.42%
TARGET FUNDS
Vanguard Institutional Target Ret Income Inst Fund (VITRX) 0.09%
Vanguard Institutional Target Ret 2015 Inst Fund (VITVX) 0.09%
Vanguard Institutional Target Ret 2020 Fund (VITWX) (0.09%)
Vanguard Institutional Target Ret 2025 Fund (VRIVX) (0.09%)
Vanguard Institutional Target Ret 2030 Fund (VTTWX) (0.09%)
Vanguard Institutional Target Ret 2035 Fund (VITFX) (0.09%)
Vanguard Institutional Target Ret 2040 Fund (VIRSX) (0.09%)
Vanguard Institutional Target Ret 2045 Fund (VITLX) (0.09%)
Vanguard Institutional Target Ret 2050 Fund (VTRLX) (0.09%)
Vanguard Institutional Target Ret 2055 Fund (VIVLX) (0.09%)
Vanguard Institutional Target Ret 2060 Fund (VILVX) (0.09%)
Vanguard Institutional Target Ret 2065 Fund (VSXFX) (0.09%)


Contributions

New annual Contributions
$18,000 his 401k (employer matches 50% of first 6$K saved)
$10,050 her 403b (employer matches 50% of first 4% saved)

Other assets
$55,000 in 529 plan for current college sophomore (living at home due to Covid) at in-state university
$55,000 in 529 plan for current HS sophomore
..Contributing $1,200 per month to feed these

Questions:
1. Is there obvious redundancy or lack of diversity in my current holdings that merit adjustment?
2. Is hiring Vanguard’s investment advisory service wise?
3. What can I do to get this under control?


========================================================
Update 01 (10/5/2020): Added details of his 401k & her 403b plans
Last edited by Shorty71 on Mon Oct 05, 2020 6:30 pm, edited 4 times in total.
User avatar
ruralavalon
Posts: 19687
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: New member. Rudderless but hoping to get on track

Post by ruralavalon »

Welcome to the forum :) .

Shorty71 wrote: Sun Oct 04, 2020 12:27 pm Greetings Bogleheads. I just found out about this place today. Our financial strategy to date has been to live below my means and squirrel away as much as I can stand, then leave it alone. We've followed that plan pretty effectively but I feel rudderless. I'd like to share my outline and would love some help distilling a plan.
That's a good basic strategy.

What funds are offered in your employer's 401k plan?

What funds are offered in her employer's 403b plan?

Please give fund names, tickers and expense ratios.

How much much (in dollars) is the employer match for each p!an?

Does her employer also offer a 457b plan?

Please simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
Last edited by ruralavalon on Sun Oct 04, 2020 2:00 pm, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
tashnewbie
Posts: 933
Joined: Thu Apr 23, 2020 12:44 pm

Re: New member. Rudderless but hoping to get on track

Post by tashnewbie »

Welcome to the forum!

Definitely look into a no cost refinance of your mortgage. You don’t say how many years are left on it. Nowadays, people seem to be able to get 30 years for no more than around 3% and 15 years around 2.5%.

I’d prioritize paying off the car loan. Can you refinance it?

I don’t know the type of place where you hold the Profund IRAs, but I’d move them ASAP to Vanguard (to consolidate the number of logins you have) and invest in low cost index funds.
lakpr
Posts: 6190
Joined: Fri Mar 18, 2011 9:59 am

Re: New member. Rudderless but hoping to get on track

Post by lakpr »

  1. The "no taxable assets outside of retirement accounts" concerns me a bit. Yes I did notice that you have 3 months of EF, but that is a bit too little to my taste.
    Dummy text
  2. Both your mortgage balance and your car loan balance, are after-tax rates. At a combine 27.75% (Fed + State) marginal tax bracket, paying the mortgage and the car loan down is like buying a 5.5% CD and 5% CD respectively for the duration of the mortgage and car-loan term respectively. If someone offers me a 5% CD, in today's day and age, I would be all over it. Even at the cost of emptying out the emergency fund, I would suggest you at least pay off the car loan, and look to refinance the mortgage as @tashnewbie suggested.
    Dummy text
  3. When you are refinancing, try to look for a cash-out refinancing, pulling out some equity out of your house, and pay off the car loan. As I said, both the car loan and the mortgage are after-tax rates. Tax Cuts and Jobs Act has made the mortgage interest on cash-out refinances non-eligible for tax deductions; but in your case, since the mortgage interest is only $9600. Even if we assume the max $10k SALT deductions, your itemized total becomes only $19,600; less than the $24,800 standard deduction. That's why I said your mortgage interest rate is after-tax rate.
    Dummy text
    Given that both the primary mortgage and cash-out refinance are both essentially non-deductible, you might as well consolidate both debts into one.
    Dummy text
  4. For a person almost 50 years old (I am 50, by the way), I would suggest 30% (if you are of aggressive bent, like me) or 35% (a bit more moderate) allocation to bonds. That's basically a 70:30 or 65:35 portfolio. I would also suggest 20% to 30% of the stocks to international equities, which means essentially a 55:15:30 portfolio, or a 50:15:35 portfolio.
    Dummy text
  5. As @tashnewbie also suggested, move over your Profunds Roth IRA to the existing Vanguard Roth IRA. 1.5% fees is obscene.
    Dummy text
  6. If your overall balance is mid-six figures, your non-Roth balances are about 78% per figures you gave above, which means you have only about $400k or thereabouts in pre-tax funds. Given that, I do not believe making a Roth-401k contribution at work is prudent. Look to switch those contributions to Traditional 401k instead. If you had a million dollars in pre-tax assets, I would be more ambivalent. If you had more than $1.5 million dollars, I would have definitely agreed with the Roth-401k contributions.
    Dummy text
  7. If the options in your 401k/403b plans are decent with low expense ratios, look to consolidate your Rollover IRAs into the 401k / 403b plan. I noted that you rolled "Her Rollover IRA" only last week; perhaps you may leave it there, and consider converting that piece by piece to Roth over the next few years.
    Dummy text
  8. Consider maximizing the 401k and 403b contributions respectively. You are opting for a Roth-401k contribution now, of $18k. A 27.75% credit on that amount -- which is what your income would reduce by if you were to opt for Traditional 401k -- would put an additional $5000 in your pocket, which can help maximize at least the 401k plan and about half-way to the max in Her 403b plan.
    Dummy text
  9. Do not fund the 529 plans any more. $55k should be enough to see your college sophomore through the final year of college in an in-state university (I think), and you have two more years to prepare for your second kid's college. Use the 2 years to increase your savings through mortgage-refi, car-loan pay off, Trad-401k + Trad-403b and take home more money.
    Dummy text
Topic Author
Shorty71
Posts: 8
Joined: Sun Oct 04, 2020 9:11 am
Location: GA

Re: New member. Rudderless but hoping to get on track

Post by Shorty71 »

ruralavalon wrote: Sun Oct 04, 2020 1:58 pm Welcome to the forum :) .

That's a good basic strategy.

What funds are offered in your employer's 401k plan?

What funds are offered in her employer's 403b plan?

Please give fund names, tickers and expense ratios.

How much much (in dollars) is the employer match for each p!an?

Does her employer also offer a 457b plan?

Please simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
Thanks! My Vanguard employer 401K control panel appears to be locked down pretty heavily (on the web interface). I made an initial election and it’s not so clear when I try to make changes. I will make a phone call tomorrow and then come edit the OP with that and a reply with info on wife’s 403b.


tashnewbie wrote: Sun Oct 04, 2020 2:00 pm Welcome to the forum!

Definitely look into a no cost refinance of your mortgage. You don’t say how many years are left on it. Nowadays, people seem to be able to get 30 years for no more than around 3% and 15 years around 2.5%.

I’d prioritize paying off the car loan. Can you refinance it?

I don’t know the type of place where you hold the Profund IRAs, but I’d move them ASAP to Vanguard (to consolidate the number of logins you have) and invest in low cost index funds.
Mortgage refi is a good idea. Car loan balance is small - could refi but not sure what I would gain by doing so(?). Profunds accounts are direct with Profunds- Consolidation is a good idea.

Edit: car loan info above is useful. Feels weird but I do understand.
Topic Author
Shorty71
Posts: 8
Joined: Sun Oct 04, 2020 9:11 am
Location: GA

Re: New member. Rudderless but hoping to get on track

Post by Shorty71 »

lakpr wrote: Sun Oct 04, 2020 3:24 pm
  1. The "no taxable assets outside of retirement accounts" concerns me a bit. Yes I did notice that you have 3 months of EF, but that is a bit too little to my taste.
    Dummy text
  2. Both your mortgage balance and your car loan balance, are after-tax rates. At a combine 27.75% (Fed + State) marginal tax bracket, paying the mortgage and the car loan down is like buying a 5.5% CD and 5% CD respectively for the duration of the mortgage and car-loan term respectively. If someone offers me a 5% CD, in today's day and age, I would be all over it. Even at the cost of emptying out the emergency fund, I would suggest you at least pay off the car loan, and look to refinance the mortgage as @tashnewbie suggested.
    Dummy text
  3. When you are refinancing, try to look for a cash-out refinancing, pulling out some equity out of your house, and pay off the car loan. As I said, both the car loan and the mortgage are after-tax rates. Tax Cuts and Jobs Act has made the mortgage interest on cash-out refinances non-eligible for tax deductions; but in your case, since the mortgage interest is only $9600. Even if we assume the max $10k SALT deductions, your itemized total becomes only $19,600; less than the $24,800 standard deduction. That's why I said your mortgage interest rate is after-tax rate.
    Dummy text
    Given that both the primary mortgage and cash-out refinance are both essentially non-deductible, you might as well consolidate both debts into one.
    Dummy text
  4. For a person almost 50 years old (I am 50, by the way), I would suggest 30% (if you are of aggressive bent, like me) or 35% (a bit more moderate) allocation to bonds. That's basically a 70:30 or 65:35 portfolio. I would also suggest 20% to 30% of the stocks to international equities, which means essentially a 55:15:30 portfolio, or a 50:15:35 portfolio.
    Dummy text
  5. As @tashnewbie also suggested, move over your Profunds Roth IRA to the existing Vanguard Roth IRA. 1.5% fees is obscene.
    Dummy text
  6. If your overall balance is mid-six figures, your non-Roth balances are about 78% per figures you gave above, which means you have only about $400k or thereabouts in pre-tax funds. Given that, I do not believe making a Roth-401k contribution at work is prudent. Look to switch those contributions to Traditional 401k instead. If you had a million dollars in pre-tax assets, I would be more ambivalent. If you had more than $1.5 million dollars, I would have definitely agreed with the Roth-401k contributions.
    Dummy text
  7. If the options in your 401k/403b plans are decent with low expense ratios, look to consolidate your Rollover IRAs into the 401k / 403b plan. I noted that you rolled "Her Rollover IRA" only last week; perhaps you may leave it there, and consider converting that piece by piece to Roth over the next few years.
    Dummy text
  8. Consider maximizing the 401k and 403b contributions respectively. You are opting for a Roth-401k contribution now, of $18k. A 27.75% credit on that amount -- which is what your income would reduce by if you were to opt for Traditional 401k -- would put an additional $5000 in your pocket, which can help maximize at least the 401k plan and about half-way to the max in Her 403b plan.
    Dummy text
  9. Do not fund the 529 plans any more. $55k should be enough to see your college sophomore through the final year of college in an in-state university (I think), and you have two more years to prepare for your second kid's college. Use the 2 years to increase your savings through mortgage-refi, car-loan pay off, Trad-401k + Trad-403b and take home more money.
    Dummy text
I really appreciate the long response.

1) Can’t disagree. I’ve been on 15% pay reduction since April due to Covid related concerns - lots of projects on hold. That’s about $650/month that I was mainlining into savings. The Pay reduction has been lifted as of October 1 so much I am eager to get more cash in hand.

2) I’m not going to empty the e-fund to pay off a car since my industry is on very sketchy footings right now but I do have a more focused appreciation for the true cost of that car loan. So thanks for that.

3) This conceptually strains my life’s habits (using a mortgage to pay off a car) but you’ve explained it well.

4) I need to get into this in detail once I have the complete profile info requested. Will work on completing this info asap.

5) Roger that. Profunds won’t transfer electronically so I’m getting the paperwork going now.

6) Earlier this year I stopped contributing to Roth 401k. 100% toward the traditional 401k now.

7) Acknowledged.

8) See number six. Agreed regarding increasing wife’s contribution amount.

9) Can you please elaborate? Each in-state kid will cost around $100k. (COVID actually works favorably due to one living at home right now but hopefully that’s temporary). We’ve calculated the current contribution amount needed to reach that amount (deposits until the start of the 2nd semester in their fourth year) at a total of $1,200/month unless they find a scholarship or the investments take a rocket ride. If I stop funding these they fall well short. Are you suggesting paying for college out of an alternate funding source?
Topic Author
Shorty71
Posts: 8
Joined: Sun Oct 04, 2020 9:11 am
Location: GA

Re: New member. Rudderless but hoping to get on track

Post by Shorty71 »

Apologies if this is stated clearly somewhere.. I did not see it addressed in forum rules/etiquette.

As I modify asset positions and descriptions - such as migrating Profunds to Vanguard.. should I simply edit the original post or is it better to add a new reply with updates?
lakpr
Posts: 6190
Joined: Fri Mar 18, 2011 9:59 am

Re: New member. Rudderless but hoping to get on track

Post by lakpr »

Shorty71 wrote: Sun Oct 04, 2020 5:02 pm Apologies if this is stated clearly somewhere.. I did not see it addressed in forum rules/etiquette.

As I modify asset positions and descriptions - such as migrating Profunds to Vanguard.. should I simply edit the original post or is it better to add a new reply with updates?
The normal protocol is to scratch out the previous edits and leave in place, or edit them out completely and just add a note at the very top saying you edited the original post. Something like this:

Update: Edited with the details of 401k plan
===================================
<< original content edited content >>
OR simply
<< edited content >>
Last edited by lakpr on Sun Oct 04, 2020 5:37 pm, edited 1 time in total.
lakpr
Posts: 6190
Joined: Fri Mar 18, 2011 9:59 am

Re: New member. Rudderless but hoping to get on track

Post by lakpr »

Shorty71 wrote: Sun Oct 04, 2020 4:35 pm 9) Can you please elaborate? Each in-state kid will cost around $100k. (COVID actually works favorably due to one living at home right now but hopefully that’s temporary). We’ve calculated the current contribution amount needed to reach that amount (deposits until the start of the 2nd semester in their fourth year) at a total of $1,200/month unless they find a scholarship or the investments take a rocket ride. If I stop funding these they fall well short. Are you suggesting paying for college out of an alternate funding source?
Perhaps I am biased, but in my state, once the student has lived on-campus for two years, he/she can opt for off-campus living. Room and board expenses tend to drastically come down.

$55k left in the college sophomore's account means at the very least it would support two years worth of tuition. Perhaps not room and board, but if your child can live off campus it can be pulled off ...

For the last year, pay it out of a taxable account.

Putting too much money into the 529 funds may result in funds being left in the account, which you cannot pull out without paying a 10% penalty and ordinary income taxes on the gains (10% + 22%). If instead you kept the money in a taxable account, you need not pay the 10% penalty, and the tax rate on capital gains would only be 15% instead of 32% (states usually tax capital gains as ordinary income, so state-tax is the same whether you pull the extra money out of 529 plan or out of taxable).

This ensures that your older kid's 529 plan is guaranteed to be exhausted, and you need to focus only on your younger kid's expenses. If you already have $55k in the younger kid's plan, that's two more years of tuition already spoken for. So you really have 4 years to get your financials on a more solid footing.

Take care of yourself first, before feeling obligated to pay for your kids' education. There is an alternative for your kids -- student loans, as unpalatable they may be -- but if you stumble financially, no one to pick you up or lend a hand. That $1200 per month = $14k per year, I feel is put to better use in a taxable account in YOUR + SPOUSE's name rather than in a 529 plan, from where you cannot extract it out. The taxable account can be spent on whatever you choose to ... including your child's education.
Shorty71 wrote: Sun Oct 04, 2020 4:35 pm 3) This conceptually strains my life’s habits (using a mortgage to pay off a car) but you’ve explained it well.
You might consider cash-out refinancing to pay for your kids' education too!
tashnewbie
Posts: 933
Joined: Thu Apr 23, 2020 12:44 pm

Re: New member. Rudderless but hoping to get on track

Post by tashnewbie »

One thing I forgot that I don’t see mentioned by anyone else: do you contribute to a Roth IRA for your wife? After switching to traditional 401k and 403b, you’ll have extra money in your pocket each month. If you still have more money after maxing the traditional amounts, I think you should put it in a Roth IRA for your wife. I’d do that before taxable investing. Sounds like even based on your current savings, you could put $500/month into her Roth IRA and $700 in taxable, instead of 529. Your contributions, but not the earnings, can be withdrawn penalty- and tax-free at any time. You could use those to fund your youngest’s college expenses, if need be. At the very least, I think you should take advantage of this limited tax-advantaged space each year.
snowman
Posts: 1196
Joined: Thu Jan 31, 2013 12:59 pm

Re: New member. Rudderless but hoping to get on track

Post by snowman »

With current low interest rates, I would refi to below 3%, that's a no brainer. After that, I would get HELOC, and I would stop 529 contributions.

I would also consolidate IRA accounts, and would go straight to Vanguard index funds - total US stock market and total international. Decide on the split, and stay with it forever.

Once this is done, I would come up with a glide path plan - when and how much to start contributing towards bonds. Unlike many here, I don't think you have to have bonds at your age (I didn't), but you definitely do want to have a plan in place.

And welcome, you are in good company here!
Topic Author
Shorty71
Posts: 8
Joined: Sun Oct 04, 2020 9:11 am
Location: GA

Re: New member. Rudderless but hoping to get on track

Post by Shorty71 »

lakpr wrote: Sun Oct 04, 2020 5:19 pm
Shorty71 wrote: Sun Oct 04, 2020 5:02 pm Apologies if this is stated clearly somewhere.. I did not see it addressed in forum rules/etiquette.

As I modify asset positions and descriptions - such as migrating Profunds to Vanguard.. should I simply edit the original post or is it better to add a new reply with updates?
The normal protocol is to scratch out the previous edits and leave in place, or edit them out completely and just add a note at the very top saying you edited the original post. Something like this:

Update: Edited with the details of 401k plan
===================================
<< original content edited content >>
OR simply
<< edited content >>
Okay. Thank you.
Topic Author
Shorty71
Posts: 8
Joined: Sun Oct 04, 2020 9:11 am
Location: GA

Re: New member. Rudderless but hoping to get on track

Post by Shorty71 »

Updated 10/5 - added 401k & 403b options to original post

Moves initiated for [Profunds] Roth IRA's to Vanguard & placed his 401k into a target year fund for now.


snowman wrote: Sun Oct 04, 2020 6:19 pm With current low interest rates, I would refi to below 3%, that's a no brainer. After that, I would get HELOC, and I would stop 529 contributions.

I would also consolidate IRA accounts, and would go straight to Vanguard index funds - total US stock market and total international. Decide on the split, and stay with it forever.

Once this is done, I would come up with a glide path plan - when and how much to start contributing towards bonds. Unlike many here, I don't think you have to have bonds at your age (I didn't), but you definitely do want to have a plan in place.

And welcome, you are in good company here!
What's the ticker for recommended index funds?
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ruralavalon
Posts: 19687
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: New member. Rudderless but hoping to get on track

Post by ruralavalon »

There are some excellent funds offered in both work-based plans, you are fortunate.

In selecting funds to use strive for a combination of both broad diversification (to reduce risk) and low expense ratios (to increase your net returns).

Plan A.
Since you have only tax-advantaged accounts, and inexpensive target date funds are offered both his employer's 401k plan and her employer's 403b plan, you could simply use a single target date fund in all
accounts -- in both of those accounts, in both of the Roth IRAs, and in both rollover IRAs.


Plan B.
Using separate index funds will give you lower expense ratios, and allow you to choose the asset allocation that suits you.

If you want to use separate index funds, perhaps in a three-fund type portfolio, then these are funds you could consider.

In my opinion in his employer's 401k plan the better funds to consider using include:
1) Vanguard Institutional Index Fund Institutional Shares (covers over over 80% of U.S. stock market) (VINIX) ER 0.04%;
2) Vanguard Developed Markets Index Fund Institutional Shares (VTMNX) ER 0.05%; and
3) Vanguard Intermediate-Term Treasury fund Admiral Shares (VFIUX) ER 0.10%.

In my opinion in her employer's 403b plan the better funds to consider using include:
1) Vanguard Institutional Index Fund Institutional Shares (covers over over 80% of U.S. stock market) (VINIX) ER 0.04%; and
2) Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) ER 0.05%.

In your Roth IRAs at Vanguard consider using stock index funds, specifically:
1) Vanguard Total Stock Market Index Fund (VTSAX) ER 0.04%; and
2) Vanguard Total International Stock Index Fund (VTIAX) ER 0.11%.

Bond funds are ordinarily best held in a tax-deferred account like a traditional 401k, traditional 403b, or traditional IRA.

It's often best to coordinate investments among all accounts, treating all accounts together as a single unified portfolio, rather than treating each account. It's not necessary to hold all elements of the asset allocation in each account.



Additional Information, asset allocation.
I didn't see an international stock fund listed as being offered in her employer's 403b plan, could you double check on that? (I think it's a good idea to include an investment in international stocks.)
Shorty71 wrote: Sun Oct 04, 2020 12:27 pmAge: 49
Desired Asset allocation: Seeking guidance
Desired International allocation: Seeking guidance
Will either or both of you be eligible for a significant pension in addition to Social Security? (I think that will be important in considering asset allocation, i.e. the stock/bond mix to use).

How much (in dollars) is the maximum annual employer match in his 401k? How much (in dollars) is the maximum annual employer match in her 403b?

Does his employer's 401k plan permit use the of different funds in the traditional sub-account than in the Roth sub-account?

Again please simply add new information to your original post using the edit button, it helps if all of your information is in one place.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Colorado Guy
Posts: 94
Joined: Sun Nov 05, 2017 1:57 pm

Re: New member. Rudderless but hoping to get on track

Post by Colorado Guy »

Shorty71 wrote: Sun Oct 04, 2020 4:35 pm
lakpr wrote: Sun Oct 04, 2020 3:24 pm [*]The "no taxable assets outside of retirement accounts" concerns me a bit. Yes I did notice that you have 3 months of EF, but that is a bit too little to my taste.
I really appreciate the long response.

1) Can’t disagree. I’ve been on 15% pay reduction since April due to Covid related concerns - lots of projects on hold. That’s about $650/month that I was mainlining into savings. The Pay reduction has been lifted as of October 1 so much I am eager to get more cash in hand.
With regards to your return to full pay as of October, currently having only a 3 month emergency fund, and your statement "Our financial strategy to date has been to live below my means and squirrel away as much as I can stand", suggest you be prepared for a longer duration emergency. In my career I have had practically a year of unemployment due to a number of factors and an unwillingness at the time to relocate. As you are currently 49, and if seeking other opportunities, a barrier to quick employment is hitting the "does our company want to hire someone this old or hire someone younger and less expensive" wall, which still exists in subtle forms. There are ways to overcome this, of course, with current skill sets, but it does seem to still exist in many areas.

Investing in taxable accounts above and beyond the 401k limits provides that assurance, but it does take discipline. If you could devote 5-10% of your "back to normal 15% money" to this savings, it could both increase your emergency fund and provide Roth related options as you get older.

EDIT: You will really appreciate savings in a taxable account once you get to the RMD stage of life.
Topic Author
Shorty71
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Joined: Sun Oct 04, 2020 9:11 am
Location: GA

Re: New member. Rudderless but hoping to get on track

Post by Shorty71 »

Many thanks to all that have replied.

In the last week I’ve initiated the Roth transfer out of Profunds and another small Merrill Roth account - to Vanguard. Will update the OP when it’s settled. My wife does have a small pension through her hospital employer - worth around $400/month based on current tenure but forecasting up to $1600/mo if she stays for a lot longer than she’d like. So it’ll be something and something is better than nothing. Not sure of my employer match maximum but I contribute the limit so I’m getting as much as they will give. Gonna try to bump her contribution up too.

Definitely going to refi the house and do some consolidation within these accounts. Still not sure I want to borrow my way out of debt on the car loan but the I hear the advice about that and the 529 contributions. It’s truly empowering just to feel like I’m wrapping my hands around this stuff. I like the idea of starting cash investing but unsure about tax implications. Gonna need to do some learning in that regard. This site and the people here are invaluable.
Last edited by Shorty71 on Sun Oct 11, 2020 7:20 am, edited 1 time in total.
Olemiss540
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Joined: Fri Aug 18, 2017 8:46 pm

Re: New member. Rudderless but hoping to get on track

Post by Olemiss540 »

I would consolidate all retirement investing into a target retirement fund. They are excellent options and what I hold for all of my pretax and Roth investments.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
Topic Author
Shorty71
Posts: 8
Joined: Sun Oct 04, 2020 9:11 am
Location: GA

Re: New member. Rudderless but hoping to get on track

Post by Shorty71 »

Olemiss540 wrote: Fri Oct 09, 2020 11:34 pm I would consolidate all retirement investing into a target retirement fund. They are excellent options and what I hold for all of my pretax and Roth investments.
Absolutely going in that direction. Then I intend to do more learning and may make changes but my goal is getting to a place where I feel like the positions are not randomly selected.
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ruralavalon
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Location: Illinois

Re: New member. Rudderless but hoping to get on track

Post by ruralavalon »

Shorty71 wrote: Sun Oct 11, 2020 7:23 am
Olemiss540 wrote: Fri Oct 09, 2020 11:34 pm I would consolidate all retirement investing into a target retirement fund. They are excellent options and what I hold for all of my pretax and Roth investments.
Absolutely going in that direction. Then I intend to do more learning and may make changes but my goal is getting to a place where I feel like the positions are not randomly selected.
That is a good choice.

I suggest that you read one or two books on investing. For book ideas please see the wiki article "Books: recommendations and reviews" .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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