Novice Portfolio Review Request

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Topic Author
GiveMeYourInsights
Posts: 2
Joined: Sun Apr 04, 2021 2:55 pm

Novice Portfolio Review Request

Post by GiveMeYourInsights »

Hello everyone. I have never put a lot of time reviewing my investment options, but I put together the following based on the high-level guidance I've seen. I would greatly appreciate feedback and any recommended changes. Thank you to everyone in advance!

Basics
Emergency funds: Already set-up(and excluded from the below)
Debt: None
Tax Filing Status: Married Filing Jointly with 1 dependent. Note that our finances are separate, so the portfolio info below only reflects myself (in case that matters)
Tax Rate: 32% Federal, 10.3% State
State of Residence: CA
Age: 34
Desired Asset allocation: 85% stocks / 15% bonds
Desired International allocation: 40% of stocks
Portfolio size: Mid-six figure range

Current retirement assets

Taxable
5.75% cash for investing (looking for something I can pull it out at end of year if needed)
27.62% Vanguard Total Stock Market Index Fund ETF (VTI) [.03]
14.24% Vanguard Developed Markets Index Fund Admiral Shares (VTMGX) [.07]

401k #1 @ Fidelity (old employer)
14.14% Fidelity U.S. Bond Index Fund (FXNAX) [.03]
6.78% Fidelity International Index Fund (FSPSX) [.04]
3.39% Fidelity Emerging Markets Index Fund (FPADX) [.08]
2.88% Fidelity® Total Market Index Fund (FSKAX) [.02]

401k #2 (current employer)
14.14% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) [.04]
no match

Roth IRA @ Fidelity
19.08% Vanguard Total World Stock Index Fund ETF (VT) [.08]

_______________________________________________________________

Contributions

New annual Contributions
$19,500 to 401(k) #2
$6,000 Roth IRA
+mid-5 figures cash

Available funds

Funds available in 401(k) #1
FID 500 INDEX (FXAIX)
FID TOTAL MKT IDX (FSKAX)
FID MID CAP IDX (FSMDX)
FID US BOND IDX (FXNAX)
FID SM CAP IDX (FSSNX)
FID LT TR BD IDX (FNBGX)
FID INTL INDEX (FSPSX)
FID EXTD MKT IDX (FSMAX)
FID REAL ESTATE IDX (FSRNX)
FID EMRG MKTS IDX (FPADX)
FID GOVT MMKT (SPAXX)
FID TOTAL BOND (FTBFX)
FID LARGE CAP STOCK (FLCSX)
FID FREEDOM 2005 (FFFVX)
FID FREEDOM INCOME (FFFAX)
FID FREEDOM 2010 (FFFCX)
FID PURITAN (FPURX)
INVS DIVRS DIVD R5 (DDFIX)
FID FREEDOM 2015 (FFVFX)
FID FREEDOM 2020 (FFFDX)
FID FREEDOM 2025 (FFTWX)
NORTHERN SM CAP CORE (NSGRX)
FID FREEDOM 2030 (FFFEX)
FID HIGH INCOME (SPHIX)
FID FREEDOM 2035 (FFTHX)
FID FREEDOM 2040 (FFFFX)
FID FREEDOM 2045 (FFFGX)
FID FREEDOM 2050 (FFFHX)
FID FREEDOM 2055 (FDEEX)
FID FREEDOM 2060 (FDKVX)
FID FREEDOM 2065 (FFSFX)
FID LOW PRICED STK (FLPSX)
PIMCO REAL RTN BD AD (PARRX)
FID CONTRAFUND (FCNTX)
J H TRITON T (JATTX)
FID SMALL CAP VALUE (FCPVX)
FID INTL GROWTH (FIGFX)
CRLN E MID CAP GR A (HAGAX)
VRTS DP REAL EST I (PHRIX)
HTFD INTL OPPS R4 (IHOSX)
WF EMRG MKTS EQ ADM (EMGYX)

Funds available in 401(k) #2
VBTLX
VTSAX
VTMGX
VTIAX
DFALX
VEMAX
Note: there are others but is not easy to copy/paste and I figured these would be most relevant to the forums recommendations
_______________________________________________________________


Questions:
1. Is 40% too high for international stock allocation? I know this is a personal preference but I've seen a pretty wide spectrums of recommendations and wanted to understand if I'm going against the general consensus.

2. I saw it was recommended to put international investments in taxable accounts but I have some in my 401(k) #1. Given I live in CA where there is not foreign tax credit, I assume there's no incentive of consolidating my international stocks in only taxable accounts, but let me know if I am incorrect.

3. Are there better vehicles I should be using for my taxable account? VTI and VTMGX seemed fine, but I'm open to alternatives.

4. As I'm in a high tax bracket, is there anything else I should be doing currently? My company just introduced an HSA so I will be using that, but is there any other legal opportunity I'm not taking advantage of?

5. I have ~$35 K in cash I may want to access at the end of the year. It's currently in a savings account. Is there a better short term vehicle for it?

Thank you all in advance!
User avatar
geerhardusvos
Posts: 2046
Joined: Wed Oct 23, 2019 10:20 pm
Location: heavenlies

Re: Novice Portfolio Review Request

Post by geerhardusvos »

40% international is pretty close to world weighting, so that’s fine. I keep all my international in my 401(k). My entire taxable is almost all in VTI/VTSAX. It’s very tax efficient. I personally don’t keep any cash. I put it all in VTSAX in taxable.

You are doing great, keep it up! Make sure to read through the wiki if you haven’t already.
VTSAX and chill
Grt2bOutdoors
Posts: 23513
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Novice Portfolio Review Request

Post by Grt2bOutdoors »

GiveMeYourInsights wrote: Sun Apr 04, 2021 6:23 pm Hello everyone. I have never put a lot of time reviewing my investment options, but I put together the following based on the high-level guidance I've seen. I would greatly appreciate feedback and any recommended changes. Thank you to everyone in advance!

Basics
Emergency funds: Already set-up(and excluded from the below)
Debt: None
Tax Filing Status: Married Filing Jointly with 1 dependent. Note that our finances are separate, so the portfolio info below only reflects myself (in case that matters)
Tax Rate: 32% Federal, 10.3% State
State of Residence: CA
Age: 34
Desired Asset allocation: 85% stocks / 15% bonds
Desired International allocation: 40% of stocks
Portfolio size: Mid-six figure range

Current retirement assets

Taxable
5.75% cash for investing (looking for something I can pull it out at end of year if needed)
27.62% Vanguard Total Stock Market Index Fund ETF (VTI) [.03]
14.24% Vanguard Developed Markets Index Fund Admiral Shares (VTMGX) [.07]

401k #1 @ Fidelity (old employer)
14.14% Fidelity U.S. Bond Index Fund (FXNAX) [.03]
6.78% Fidelity International Index Fund (FSPSX) [.04]
3.39% Fidelity Emerging Markets Index Fund (FPADX) [.08]
2.88% Fidelity® Total Market Index Fund (FSKAX) [.02]

401k #2 (current employer)
14.14% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) [.04]
no match

Roth IRA @ Fidelity
19.08% Vanguard Total World Stock Index Fund ETF (VT) [.08]

_______________________________________________________________

Contributions

New annual Contributions
$19,500 to 401(k) #2
$6,000 Roth IRA
+mid-5 figures cash

Available funds

Funds available in 401(k) #1
FID 500 INDEX (FXAIX)
FID TOTAL MKT IDX (FSKAX)
FID MID CAP IDX (FSMDX)
FID US BOND IDX (FXNAX)
FID SM CAP IDX (FSSNX)
FID LT TR BD IDX (FNBGX)
FID INTL INDEX (FSPSX)
FID EXTD MKT IDX (FSMAX)
FID REAL ESTATE IDX (FSRNX)
FID EMRG MKTS IDX (FPADX)
FID GOVT MMKT (SPAXX)
FID TOTAL BOND (FTBFX)
FID LARGE CAP STOCK (FLCSX)
FID FREEDOM 2005 (FFFVX)
FID FREEDOM INCOME (FFFAX)
FID FREEDOM 2010 (FFFCX)
FID PURITAN (FPURX)
INVS DIVRS DIVD R5 (DDFIX)
FID FREEDOM 2015 (FFVFX)
FID FREEDOM 2020 (FFFDX)
FID FREEDOM 2025 (FFTWX)
NORTHERN SM CAP CORE (NSGRX)
FID FREEDOM 2030 (FFFEX)
FID HIGH INCOME (SPHIX)
FID FREEDOM 2035 (FFTHX)
FID FREEDOM 2040 (FFFFX)
FID FREEDOM 2045 (FFFGX)
FID FREEDOM 2050 (FFFHX)
FID FREEDOM 2055 (FDEEX)
FID FREEDOM 2060 (FDKVX)
FID FREEDOM 2065 (FFSFX)
FID LOW PRICED STK (FLPSX)
PIMCO REAL RTN BD AD (PARRX)
FID CONTRAFUND (FCNTX)
J H TRITON T (JATTX)
FID SMALL CAP VALUE (FCPVX)
FID INTL GROWTH (FIGFX)
CRLN E MID CAP GR A (HAGAX)
VRTS DP REAL EST I (PHRIX)
HTFD INTL OPPS R4 (IHOSX)
WF EMRG MKTS EQ ADM (EMGYX)

Funds available in 401(k) #2
VBTLX
VTSAX
VTMGX
VTIAX
DFALX
VEMAX
Note: there are others but is not easy to copy/paste and I figured these would be most relevant to the forums recommendations
_______________________________________________________________


Questions:
1. Is 40% too high for international stock allocation? I know this is a personal preference but I've seen a pretty wide spectrums of recommendations and wanted to understand if I'm going against the general consensus.
Welcome to the forum! No, it's not too high. Vanguard uses a 40% allocation in their recommendations. Anywhere between 20-40% in international would capture the majority of the benefits of diversification. I myself use 30% as the middle ground but totally fine to use 40%.
2. I saw it was recommended to put international investments in taxable accounts but I have some in my 401(k) #1. Given I live in CA where there is not foreign tax credit, I assume there's no incentive of consolidating my international stocks in only taxable accounts, but let me know if I am incorrect.
It's fine to leave it in your 401k plan. I hold a diversified mix in my own plans including international.
3. Are there better vehicles I should be using for my taxable account? VTI and VTMGX seemed fine, but I'm open to alternatives.
There is no better, there is the thought of better but that doesn't necessarily make it "the" best.
4. As I'm in a high tax bracket, is there anything else I should be doing currently? My company just introduced an HSA so I will be using that, but is there any other legal opportunity I'm not taking advantage of?
Does your employer offer the ability to do a Mega Back Door Roth IRA, that is the super contribution to the 401k plan in the form after tax dollars that can then be rolled over on an annual basis into a ROTH IRA through the means of an in-service distribution? You would have to read your plan's Summary Plan Description to see if such an option is offered.
5. I have ~$35 K in cash I may want to access at the end of the year. It's currently in a savings account. Is there a better short term vehicle for it?
No, not one that likely yields as much on a totally safe basis. No risk to principal.
Thank you all in advance!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Topic Author
GiveMeYourInsights
Posts: 2
Joined: Sun Apr 04, 2021 2:55 pm

Re: Novice Portfolio Review Request

Post by GiveMeYourInsights »

Appreciate the feedback so far - anything else I should be aware of?
retiredjg
Posts: 43706
Joined: Thu Jan 10, 2008 12:56 pm

Re: Novice Portfolio Review Request

Post by retiredjg »

GiveMeYourInsights wrote: Sun Apr 04, 2021 6:23 pm 1. Is 40% too high for international stock allocation? I know this is a personal preference but I've seen a pretty wide spectrums of recommendations and wanted to understand if I'm going against the general consensus.
40% is reasonable if that is your preference. Market weight tends to run a little higher.

2. I saw it was recommended to put international investments in taxable accounts but I have some in my 401(k) #1. Given I live in CA where there is not foreign tax credit, I assume there's no incentive of consolidating my international stocks in only taxable accounts, but let me know if I am incorrect.
International stocks can be held anywhere. Broad index funds tend to be tax-efficient and combined with the foreign tax credit, they are similar in tax-efficiency to broad US stock index funds in taxable. You can hold all of yours in taxable or split it up as you are currently doing. It is not going to make a lot of difference in the long run.

3. Are there better vehicles I should be using for my taxable account? VTI and VTMGX seemed fine, but I'm open to alternatives.
What you have is fine.

4. As I'm in a high tax bracket, is there anything else I should be doing currently? My company just introduced an HSA so I will be using that, but is there any other legal opportunity I'm not taking advantage of?
You might check to see if your current 401k plan offers the option to contribute to an after-tax account (which is not the same as Roth 401k) and roll it out to Roth IRA (or over into Roth 401k). Around here, this is called the "mega-backdoor Roth". This would be an alternative choice for money that would otherwise be invested in your taxable account.

5. I have ~$35 K in cash I may want to access at the end of the year. It's currently in a savings account. Is there a better short term vehicle for it?
If you want at least $35k available at a specific time, you cannot invest in anything other than cash - CD - money market.
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