Late to the party at 50 - Need advise

[Naturelover]

Hello everyone, First off thanks to this great forum and amazing set of people around here who constantly provides tremendous guidance

I had couple of stocks before I started looking at Bogle head forums hence some of these allocations are all over the place. After going through the forums, I have made some adjustments to make it a 3 fund portfolio. Looking for advise to rebalance the portfolio and any other suggestions you all may have.

Here is my situation. Married. Both of us are going to be 50 soon.
Employment and Income - Combined household income is $225K with me and wife making $100k each. $25k from rental home ( $2100 per month rent)
Assets - Including rental home and our primary residence, we have $600k in home equity. No outstanding debts. Have enough emergency funds in CD's. Son will be in college and might need some money for studies. Need to decide on that.

Our current portfolio
Our Brokerage and Retirement Account in total is worth $660K (Our Stock Brokerage Accounts $295k, My IRA-$285k, Wife's 401K- $80K).
Her 401k.
What funds are offered in her employer's 401k plan? Please give fund names, tickers and expense ratios.
Current employer's 401k - $50k by TransAmerica Vanguard Institutional Target Retirement 2035
Expense Ratio - Type 29; 0.09% of fund assets
Vanguard Total Stock Market Idx Index 45%, Vanguard Total International Stock Index Inv 30%, Vanguard Total Bond Market II 17%, Vanguard Total Intl Bd Idx Admiral 8%
Her former employer Thrift savings Account - Government G Funds securities - $25K

His IRA
My Traditional IRA Account is with Vanguard. Out of $285K, VTI-45%, VXUS-35%, BND/BNDX 20%
There is no 40k plan from my employer. I have started putting $6000 as contribution (less than 50 now)

Taxable account : We have brokerage accounts with Van guard, Charles schwab and Etrade. Not much of trading happens on these
Tax bracket: We are filing as Married filing jointly. In 24% Federal and 5.75% State for Virginia
No pension. Only Social security

Out of this total $660K portfolio, following is the split
- $490K is from these 4 allocations. Tesla stocks-$100K, VTI ETF-$185K, VXUS ETF-$105K, $100K from a combination of BND/BNDX, Vanguard Total Bond Market, International, Government G fund securities from mine and her retirement Accounts
- $110K is from these allocations. Vanguard Total stock & Total International stock Market index - $40K, Apple and AMAT - $30K, Vanguard Small-Cap and Mid Cap funds like VBK, VOT, VOE, VTV - $35K
- Rest $60K is from various stocks... some of the stocks I picked up when prices went down earlier this year.

As you can see,
- Overall, only 15% allocation is in Bonds & securities($100k out of $660k). Portfolio has heavy dependency on Tesla and ETF's like VTI, VXUS.
- I have been working from late 90's and wife for the last 10 years. Didn't focus on retirement accounts. Hence low retirement balance. But we have started doing the additional contributions etc
- Haven't checked social security benefits yet
- On the positive side, we have home equity of $600k plus (Both houses combined should worth $1.1M, Rental is almost paid off. I still owe $450K as mortgage on a 15 year loan with 2.5% interest rate)

What are your suggestions on rebalancing the portfolio?

Thanks in advance

[123]

...Tesla stocks-$100K...

If you do nothing else diversify out of this ASAP. You don't want to holding it when the music stops. It's probably better to pay taxes to liquidate, if you don't you may very well get a tax loss harvest opportunity out of it.

[inbox788]

I had couple of stocks before I started looking at Bogle head forums hence some of these allocations are all over the place. After going through the forums, I have made some adjustments to make it a 3 fund portfolio. Looking for advise to rebalance the portfolio and any other suggestions you all may have.

Assets - Including rental home and our primary residence, we have $600k in home equity. No outstanding debts. Have enough emergency funds in CD's. Son will be in college and might need some money for studies. Need to decide on that.

Our current portfolio
Our Brokerage and Retirement Account in total is worth $660K (Our Stock Brokerage Accounts $295k, My IRA-$285k, Wife's 401K- $80K).

Out of this $660K portfolio, following is the split
- $490K is from these 4 allocations. Tesla stocks-$100K, VTI ETF-$185K, VXUS ETF-$105K, BND/BNDX-$100k.
- $110K is from these allocations. Vanguard Total stock & Total International stock Market index - $40K, Apple and AMAT - $30K, Vanguard Small-Cap and Mid Cap funds like VBK, VOT, VOE, VTV - $35K
- Rest $60K is from various stocks... some of the stocks I picked up when prices went down earlier this year.

As you can see,
- Overall, only 17% allocation is in Bonds ($100k out of $660k). Portfolio has heavy dependency on Tesla and ETF's like VTI, VXUS.
- I have been working from late 90's and wife for the last 10 years. Didn't focus on retirement accounts. Hence low retirement balance. But we have started doing the additional contributions etc

- On the positive side, we have home equity of $600k plus (Both houses combined should worth $1.1M, Rental is almost paid off. I still owe $450K as mortgage on a 15 year loan with 2.5% interest rate)

What are your suggestions on rebalancing the portfolio?

Did you "pick up" individual stocks this year?

What is your goal? AA? Individual stocks vs diversified funds? Small caps/mid caps vs total market?

What are the tax consequences on the individual stocks? Do you want to pay some taxes now and diversify or take on individual stock risk and delay taxes?

Short of sell everything that's not a 3 fund portfolio and invest it in a 60/40 fund or allocation, it depends on what you want to do. Nothing wrong with VTI, VXUS, and BND. You just need to triple those values and you're all set. [200/100/100 = 400k 75/25 AA] You could even sell the investment property and lump that into your overall investments and you'd pretty much have nearly 1.2M, which could generate 50k retirement income (4% SWR) plus paid off home plus SS. So, overall you're doing fine and pretty much will be FI once college expenses and mortgage are elimanted.

FWIW, you've got an emergency fund all set. You have extra income from investment property which could pretty much cash flow the college expenses. Your mortgage rate is reasonable, so you can do whatever you want with it and it won't make a big impact. Pay it off, don't pay it off, whatever.

[ruralavalon]

Welcome to the forum .

In your 50s is not too late. It's good to see that you are debt free other than your mortgage, have an emergency fund, have a low interest rate on your mortgage note, and are interested in using a very diversified low expense three-fund type portfolio.

Some additional information is needed, see my questions below.

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.

Please see this for information needed and format: "Asking Portfolio Questions" .

Hello everyone, First off thanks to this great forum and amazing set of people around here who constantly provides tremendous guidance

I had couple of stocks before I started looking at Bogle head forums hence some of these allocations are all over the place. After going through the forums, I have made some adjustments to make it a 3 fund portfolio. Looking for advise to rebalance the portfolio and any other suggestions you all may have.

Here is my situation. Married. Both of us are going to be 50 soon.
Employment and Income - Combined household income is $225K with me and wife making $100k each. $25k from rental home. My current employer doesn’t offer 401K but wife's does.
Assets - Including rental home and our primary residence, we have $600k in home equity. No outstanding debts. Have enough emergency funds in CD's. Son will be in college and might need some money for studies. Need to decide on that.

Our current portfolio
Our Brokerage and Retirement Account in total is worth $660K (Our Stock Brokerage Accounts $295k, My IRA-$285k, Wife's 401K- $80K).

Out of this $660K portfolio, following is the split
- $490K is from these 4 allocations. Tesla stocks-$100K, VTI ETF-$185K, VXUS ETF-$105K, BND/BNDX-$100k.
- $110K is from these allocations. Vanguard Total stock & Total International stock Market index - $40K, Apple and AMAT - $30K, Vanguard Small-Cap and Mid Cap funds like VBK, VOT, VOE, VTV - $35K
- Rest $60K is from various stocks... some of the stocks I picked up when prices went down earlier this year.

As you can see,
- Overall, only 17% allocation is in Bonds ($100k out of $660k). Portfolio has heavy dependency on Tesla and ETF's like VTI, VXUS.
- I have been working from late 90's and wife for the last 10 years. Didn't focus on retirement accounts. Hence low retirement balance. But we have started doing the additional contributions etc
- Haven't checked social security benefits yet
- On the positive side, we have home equity of $600k plus (Both houses combined should worth $1.1M, Rental is almost paid off. I still owe $450K as mortgage on a 15 year loan with 2.5% interest rate)

What are your suggestions on rebalancing the portfolio?

Thanks in advance

Her 401k.
What funds are offered in her employer's 401k plan? Please give fund names, tickers and expense ratios.

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.

If any decent funds are offered, then she should make maximum annual employee contributions ($26k including catch up contributions) to that plan. Start this immediately.

Does her employer's 401k plan permit Roth contributions?

Will either or both of you be eligible for a substantial pension in addition to Social Security?


IRAs.
What fund firm or brokerage is your IRA with? Is it a traditional IRA or a Roth IRA?

How much do you contribute annually to this account?


Taxable account.
Which fund firm or brokerage is your taxable brokerage account with?

What is your tax bracket, both federal and state? What is your tax filing status? What state do you pay any state income tax to?

You should keep your current investments that you have in both Vanguard Total Stock Market ETF (VTI) ER 0.03% and Vanguard Total International Stock ETF (VXUS) ER 0.08%. Both are very diversified, have very low expense ratios, and are very tax-efficient.

Turn off any automatic reinvestment of dividends and gains that you may have set up in the other investments. Do this immediately. Use the cash to buy more shares of VTI and VXUS.

Bond funds are not tax-efficient and ordinarily should not be held in a taxable account. Sell both Vanguard Total Bond Market ETF (BND) and Vanguard Total International Bond ETF (BNDX). Use the cash to buy more shares of VTI and VXUS.

What is the capital gain status and amount for each stock investment you have in this account?


Annual contributions.
About how much (in dollars) do you believe that you might be able to contribute annually to investing (total, all accounts)?

[Mr.BB]

Does your wife's employer offer matching on her 401k? If they do that is free money and something you may want to look at maxing out, depending on their funds and matching protocols. Also, do they offer a 401k Roth?

[hand]

Employment and Income - Combined household income is $225K with me and wife making $100k each. $25k from rental home. My current employer

Is rental income (rent - expenses) really $25k / yr, or is that your annual rent number?

In terms of investments standard general guidance is likely fine, but you'll probably get better feedback if you can share 1) your expected retirement age 2) your expected annual expenses, and 3) how long (safe) a retirement you are comfortable planning for.

[dandinsac]

I just turned 56. Looking back when I was 49.5, I had about $900K savings + home equity and a salary/bonus of about $175K. Now, my savings+equity is $1.5M, which is an increase in savings of about $400K and increase in equity of about $200K.

You have a net worth of $1.2M, so, I guess I was even later to the party.

Here’s what I did:

1. Maxed out my tax-deductible 401K. Once I turned 50, I added the catchup contribution once I turned 50.
2. Fully funded my wife’s tax-deductible IRA since she wasn’t covered by a retirement plan.
3. Funded a Roth IRA for myself, when my income was low enough to qualify.
4. Increased my taxable savings from ~$10K to ~$100K.
5. Prepaid a bit on my mortgage when it was @3.75%. (I refinanced the mortgage two times this year first to lower the rate to 3.25% /20 years and then 2.375% for 15 years. I do not plan to prepay any more.)
6. Started saving the maximum amount in an HSA, with a high-deductible health plan.

Good luck!

[randybobandy]

- Overall, only 17% allocation is in Bonds ($100k out of $660k).

this is just a hair over 15%, just want to make sure you have the right numbers on your path to getting things ironed out.

- Randy Bo Bandy

[Naturelover]

Thanks everyone for your inputs. I have updated the original post with requested details

[ruralavalon]

Her 401k.
What funds are offered in her employer's 401k plan? Please give fund names, tickers and expense ratios.
Current employer's 401k - $50k by TransAmerica Vanguard Institutional Target Retirement 2035
Expense Ratio - Type 29; 0.09% of fund assets
Vanguard Total Stock Market Idx Index 45%, Vanguard Total International Stock Index Inv 30%, Vanguard Total Bond Market II 17%, Vanguard Total Intl Bd Idx Admiral 8%

What other funds are offered in her current employer's 401k plan in addition to the fund she is using, Vanguard Institutional Target Retirement 2035?

Please w fund names, tickers and expense ratios.

[Naturelover]

Thanks. Her TransAmerica 401K offers the following as well. Currently her $50k allocations in TA Vanguard Instl Trg Re 2035.

Large-Cap Stocks - Legal & General S&P 500 Ret Acct
Interm./Long-Term Bonds - Baird Aggregate Bond Ret Acct, SSgA U.S. Bond Index Ret Acct
Small/Mid-Cap Stocks -Legal & General S&P 400 Ret Acct, DFA US Small Cap Value Ret Acct, Legal & General Ret Acct
Janus Triton Ret Acct, Fidelity Real Estate Index Ret Acct
International Stocks -American Funds EuroPacific Gr Ret Acct, American Funds New Prespective Ret Acct, SSgA International Index Ret Acct
Multi-Asset/Other: TA Vanguard Instl Trgt Re Inc, TA Vanguard Instl Trg Re 2015, TA Vanguard Instl Trg Re 2020, TA Vanguard Instl Trg Re 2025, TA Vanguard Instl Trg Re 2030 , TA Vanguard Instl Trg Re 2035, TA Vanguard Instl Trg Re 2040, TA Vanguard Instl Trg Re 2045, TA Vanguard Instl Trg Re 2050, TA Vanguard Instl Trg Re 2055, TA Vanguard Instl Trg Re 2060, TA Vanguard Instl Target Ret 2065 Ret Acct
Expense ratio for all Multi Asset portfolios are .09%.

She also has $25k in Government G security funds in Thrift savings from previous employer

[ruralavalon]

In my opinion the better funds to consider using in her current 401k plan may be these funds, depending on the expense ratios charged:
1) Legal & General S&P 500 Ret Acct (covers over 80% of U.S. stock market);
2) SSgA International Index Ret Acct (tracks the MSCI ACWI ex-US, pdf, covers both developed and emerging markets); and
3) SSgA U.S. Bond Index Ret Acct. (tracks the Bloomberg U.S. Aggregate Bond Index, pdf, a total bond market index).

In her employer's 401k plan what expense ratio is charged for each of those funds? (That may vary with each employer.)