34yr old - First time poster - Portfolio & Life Help

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Ni_VT
Posts: 5
Joined: Thu Feb 04, 2021 10:12 am
Location: Vermont

34yr old - First time poster - Portfolio & Life Help

Post by Ni_VT »

Good morning Bogleheads,

I have been a long time reader for the forum and have learnt a lot. It's finally time for me to post my portfolio. I am stuck at cross roads in life and I want to make sure I am making the right choice financially and otherwise. I have been very candid about my situation - hope its not TMI.

Apologies for the long post! Appreciate your advice
NH
_______

Emergency funds: Have cash to cover 3-6 months (see portfolio below)

Debt: $0 (carry some small CC balances <$1000, pay off every 2 weeks)

Car: Early 2000s Beige Toyota Camry with 130K miles :D (I sold my Miata and motorcycle over the past few years)

Tax Filing Status: Single

Tax Rate: 24% Federal, 6% State (not sure how to estimate, my effective tax rate based on my returns for 2020 seems lower)

State of Residence: Vermont

Age: 34

Salary pre-tax incl bonus: ~135K/yr

Rent incl utilities: ~$1275/month

Total Annual Expenses (incl. Rent): ~35K (~$2.5-3K/month)

Desired Asset allocation: 75-85% stocks / 25-15% bonds
Desired International allocation: 20-25% of stocks

Total portfolio/Net Worth : ~$700K

Cash Assets: ~$200K

Cash (Emergency): $15K (3-6 months)

Cash (Ally): $180K

Cash (HSA): $5K

Investment Assets: ~$500K

Taxable (Fidelity)
NTSX WISDOMTREE TR 90/60 BALNCED FD (Exp Ratio:0.20%) 2%

Taxable (Vangaurd)
VIGAX Vanguard Growth Index Fd Admiral Shs (Exp Ratio:0.05%) 8%
VTIAX Vanguard Total International Stock Index Fd Admiral (Exp Ratio:0.11%) 10%
VTSAX Vanguard Total Stock Market Index Fd Admiral Shs (Exp Ratio:0.04%) 17%
VMFXX Vanguard Money Market Reserves Inc Federal Money Market Fund (Exp Ratio:0.11%) 0%

401k (Fidelity)
VWNAX VANG WINDSOR II ADM (Exp Ratio:0.26%) 5%
DFSVX DFA US SM CAP VALUE (Exp Ratio:0.49%) 7%
FXNAX FID US BOND IDX (Exp Ratio:0.03%) 9%
FXAIX FID 500 INDEX (Exp Ratio:0.02%) 7%
FSMAX FID EXTD MKT IDX (Exp Ratio:0.04%) 7%
FTIHX FID TOTAL INTL IDX (Exp Ratio:0.06%) 5%
31617E836 FID GROWTH CO POOL (Exp Ratio:0.43%) 7%
6% Employer Match

ROTH IRA (Fidelity)
FSKAX FIDELITY TOTAL MARKET INDEX FUND (Exp Ratio:0.015%) 15%

HSA (Fidelity)
FSKAX FIDELITY TOTAL MARKET INDEX FUND (Exp Ratio:0.015%) 3%

Contributions

Annual Contributions
$19,500 401k (6% Employer Match) - Max out (~16% of paycheck)
VWNAX VANG WINDSOR II ADM (Exp Ratio:0.26%) 10%
DFSVX DFA US SM CAP VALUE (Exp Ratio:0.49%) 15%
FXNAX FID US BOND IDX (Exp Ratio:0.03%) 20%
FXAIX FID 500 INDEX (Exp Ratio:0.02%) 15%
FSMAX FID EXTD MKT IDX (Exp Ratio:0.04%) 15%
FTIHX FID TOTAL INTL IDX (Exp Ratio:0.06%) 10%
31617E836 FID GROWTH CO POOL (Exp Ratio:0.43%) 15%

$6000 Roth IRA - max out

$3600 HSA ($1000 payed by employer) - max out

$18,000 taxable ($1500 per month)
VIGAX Vanguard Growth Index Fd Admiral Shs (Exp Ratio:0.05%) 20%
VTIAX Vanguard Total International Stock Index Fd Admiral (Exp Ratio:0.11%) 20%
VTSAX Vanguard Total Stock Market Index Fd Admiral Shs (Exp Ratio:0.04%) 60%

Available funds

Funds available in 401(k)
Fidelity® Growth Company Commingled Pool (Exp Ratio:0.43%)
William Blair Small Mid Cap Growth CIT (Exp Ratio:0.9%)
Fidelity® Extended Market Index Fund (FSMAX) (Exp Ratio:0.036%)
Fidelity® 500 Index Fund (FXAIX) (Exp Ratio:0.015%)
Vanguard Windsor™ II Fund Admiral™ Shares (VWNAX) (Exp Ratio:0.26%)
Vanguard Target Retirement 2065 Trust Plus (Exp Ratio:0.06%)
Vanguard Target Retirement 2060 Trust Plus (Exp Ratio:0.06%)
Vanguard Target Retirement 2050 Trust Plus (Exp Ratio:0.06%)
Vanguard Target Retirement 2055 Trust Plus (Exp Ratio:0.06%)
Vanguard Target Retirement 2045 Trust Plus (Exp Ratio:0.06%)
Vanguard Target Retirement 2040 Trust Plus (Exp Ratio:0.06%)
American Funds EuroPacific Growth Fund® Class R-6 (RERGX) (Exp Ratio:0.46%)
Vanguard Target Retirement 2035 Trust Plus (Exp Ratio:0.06%)
Vanguard Target Retirement 2030 Trust Plus (Exp Ratio:0.06%)
Vanguard Target Retirement 2025 Trust Plus (Exp Ratio:0.06%)
Vanguard Target Retirement 2020 Trust Plus (Exp Ratio:0.06%)
DFA U.S. Small Cap Value Portfolio Institutional Class (DFSVX) (Exp Ratio:0.39%)
Vanguard Target Retirement 2015 Trust Plus (Exp Ratio:0.06%)
Vanguard Target Retirement Income Trust Plus (Exp Ratio:0.06%)
Metropolitan West Total Return Bond Fund Plan Class (MWTSX) (Exp Ratio:0.38%)
Fidelity® Total International Index Fund (FTIHX) (Exp Ratio:0.06%)
Fidelity® U.S. Bond Index Fund (FXNAX) (Exp Ratio:0.025%)
Managed Income Portfolio II Class 2 (Exp Ratio:0.37%)

Situation:
1. I am not happy at megacorp (been there for 10 years). I could change my jobs or potentially go get a PhD. Tbh, Alternative job opportunities in Vermont are lacking. However, I do love being here and spending time outdoors when I can. Current job has me working from home since last march due to Covid. The arrangement should continue till September this year. However I doubt if they will open VT offices back up again. Worst case I will be laid off or they will have me move to the Southern US - which I am not a big fan of. Best case, they will keep me on as remote employee.
2. I have had a busy career oriented lifestyle the past 10 years. I feel the strong urge to settle down - buy a house, enter a committed relationship, etc. (on the short term I adopted a dog)
3. I am an immigrant, and still have years to go on my immigration process (barring immigration reform). I got my education in the US and spent my whole working life here. I am qualified and don't feel there is any threat to my long term prospects of being here, but for sure its a risk. To be clear, I want to stay and retire in the US (preferably in VT :D).

Questions:

Life question:
1. I feel like a bit of Russian nesting doll + chicken and egg problem - I really dont know which to tackle first - My unhappiness at my job (change jobs, go get a PhD), my personal life, buying a home, immigration (move to Canada? or back to home country?) etc. Any advice? I think I should fix career first, but that's always been what I fix coz its 100% in my control. <--- Provided some additional context in a reply down below.

Financial Question:
2. How much and how best to invest my cash? Ideally I want to do it in my vanguard account using mutual funds. I did open a treasury direct account with intention of buying Ibonds. Can you please tell me your fund/investment choices and how much you would invest into them?

3. I want to buy a home. I have the down-payment saved for it. But I am scared of the size of investment and tying the cash up incase I have to move. Potentially want to spend ~$350-400K. I think I will end up buying in next 2 years. If nothing, I want to make sure I have money marked for down-payment safe for those two years, but ideally want to put it to work rather than let it sit at Ally.
Note: Due to my immigration situation, I have kept most of my assets liquid. But I am also getting to a point where I should just take a leap of faith and make some choices.

4. Things I want to do but am nervous about:
Explore mega-backdoor Roth - is it even worth it at my current income levels?
Tax loss and Tax gain (I saw Klangfool post about tax gain) harvesting.
Ibonds or EE bonds - not sure if they are right for me given my age or when to buy them.
Tax efficient Municipal bond funds in taxable a/c. Is it worth it or do I just increase bond allocation in my 401K and get rid of my mental accounting logjam.

5. Are my fund choices good, do you suggest I change any of them? Hope my allocations are okay? (Thanks to this forum for NTSX recommendation)
Note: I had a large growth tilt for the past few years but switched back to balanced this year. I am thinking Small-value tilt for the next few? I honestly don't mind leaving it in balanced for a few years and seeing how the macroeconomics play out.

6. Your opinion on my monthly budget and savings? I try to hit $2.5K spend per month it crawls up to $3K inevitably.

7. Am I on track for retirement savings? Any other suggestions? Watch outs for the next few years?

8. I haven't seriously considered GME, crypto, gold, REIT, etc. (keeping true with the boglehead mentality), but if you folks suggest I am willing to put some $$ into those alternative asset classes.

9. I haven't done any estate planning (will, etc.) or additional insurance policies (besides the benefits I get from work). Any advice here would help as well.
Last edited by Ni_VT on Wed Apr 07, 2021 8:33 pm, edited 1 time in total.
NH
Barntime
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Joined: Sat Jul 20, 2019 4:22 pm

Re: 34yr old - First time poster - Portfolio & Life Help

Post by Barntime »

Thanks for sharing all the detail.

My two cents. It sounds like you have a lot of things you are thinking about. Meaning you are debating a job/career change, buying a house, moving to a different country. Each of those things by themselves are certainly big decisions and may combine to some stress if done at once. I would just keep that in mind as you process and make big decisions.

From the questions standpoint
1: try and figure out what is the cause of the unhappiness and think about how you can work on it. From the post it sounds like the job. Are there new roles with your existing company or is there something else that sounds interesting to you?

2 and 3:this is hard to answer given you may be interested in moving or going back to school. Both things that may take some serious cash.

5: I didn’t see anything that stands out that would make me reallocate. Looks like you have made some good choices.

6: living on $35k on your salary is great. Super job saving and investing.

7: hard to tell, but it seems like it based on your annual spending and investments saved up. 500k covers well above 10 years based on your annual spending, but you may desire to change your lifestyle based on job/home/move. But you seem to be in a good place on savings/retirement based on your age and where the numbers now.

8: if you decide to jump in this space ( most in this forum would say stay away), spend time researching. Not a night or two, but months. Buddy of mine told me he spent six months on and off researching one of these topics before he got involved. Theory as well is to not invest in this space if you are not worth loosing a lot, if not everything.

9: sorry no insight here.
humblecoder
Posts: 492
Joined: Thu Aug 06, 2020 8:46 am

Re: 34yr old - First time poster - Portfolio & Life Help

Post by humblecoder »

Ni_VT wrote: Tue Apr 06, 2021 11:41 am Life question:
1. I feel like a bit of Russian nesting doll + chicken and egg problem - I really dont know which to tackle first - My unhappiness at my job (change jobs, go get a PhD), my personal life, buying a home, immigration (move to Canada? or back to home country?) etc. Any advice? I think I should fix career first, but that's always been what I fix coz its 100% in my control.
I would focus on this first. Don't worry about asset allocations, crypto, tax loss harvesting, backdoor Roths, and all that jazz. That's all noise. You need to figure out why you are unhappy with your job, where you want to live (you say you want to stay in retire in VT, but then talk about moving to Canada or to your home country), buying a house, etc. Truly you are all over the map.

Here is my advice:

1. Seek counseling. Seriously. You need to sort through what is making you unhappy and what will make you happy. It sounds like you have a vague notion of something eating at you, but maybe a professional can help you get some clarity in this area. I know people sometimes get offended or insulted when somebody tells them to seek some sort of professional counseling, but I truly don't mean it in that spirit. People have this idea that this sort of suggestion is a sign of weakness. But it isn't. Just lay it out like you just did in this post with a professional and get the direction that you need. You will be a better person for it.

2. Figure out "what you want to be when you grow up" so to speak. New job? PhD? Stick with your current job? Only you can truly answer what will make you happy (see #1).

3. When you have direction on where you want your life to go, figure out if that means moving somewhere new. And if that somewhere new is going to be in a stable location, figure out if that means buying a house. I would recommend NOT buying a house until you sort out your direction. You don't want to buy something only to have to sell once you get into a PhD program in another location somewhere.

4. As far as investments go, I would simplify. Three fund portfolio or target date fund. Something that you could set and forget for 30 years or occasionally rebalance once a year at the most. You are in a good financial position with your new worth. No need to dabble in all sorts of complex stuff at this point. DON'T OVERTHINK IT!
Havoner
Posts: 35
Joined: Mon Sep 14, 2020 8:44 pm

Re: 34yr old - First time poster - Portfolio & Life Help

Post by Havoner »

Howdy Ni_VT,

Sounds like you tend to over think things about as much as I do! Overall you are doing awesome and really have a great savings rate. Here are some suggestions and answers to your questions. Best of luck to you and hope things get better soon!
:sharebeer

What are your goals? Where do you want to be at in 10-20 years? I would start with asking yourself this question and then try to work backwards from there. If this looks something like having a wife with two kids and a dog and only having to work if you want to because you have a large nest egg, well then you have most of the nest egg and the dog and you might just need to think about how you want to approach the finding a spouse piece. If the plan is to save enough money to retire early and then travel the world at your leisure you might want to rethink that dog.

1.I think most of your decisions probably tend to hinge on this one. My suggestion would be to sit tight for now and continue working at your current job and maybe look at and start applying for a new job that you think might be more interesting. Right now you are a few years away from FI at your current pace and unless you want to pursue graduate school for it's own sake I don't think it would be a great career move when you are already making so much and have a large nest egg. One nice thing working for you is that you have really kept expenses down and can take a pay cut if you need to in order to get a job that you enjoy more. The other part to this is make sure you are getting out and meeting people and hanging out with others outside of work sometimes when younger we can tend to focus a bit too much on our work and not focus as much on relationships with friends and family and these relationships can really provide a more happy and fulfilling life. On the immigration piece I don't know that much about it but would suggest you run some simple scenarios and budgets of what moving to Canada or the other country would look like. If you can go retire down in South America and live off $20,000 a year that might be something that sounds fun to you..

2. I would keep at least one years worth of expenses or around $40,000 or so in cash and invest the rest. It doesn't sound like you are in a stable job situation where you want to tie yourself down to an exact location by buying a house and even once you start a new job I would want to try to work there for a year or so before deciding if I wanted to buy a house and stay in that area long term. Normally a year's worth of expenses is more than you need but with your unstable job situation I think it would be safer. Obviously you also have your large amount of taxable investments to fall back on if needed too. I would just lump sum everything above the $40,000 into the vanguard funds like you mention.

3.This is a bad financial idea until you are in a more stable spot in your personal life. Once you have a more solid career or if you have found a spouse will make you want to get a different place for various reasons most of the time. If you do buy I would try to keep it to something simple or even consider renting a nice house just so you stay flexible over the next few years.

4. I would start with checking on the mega back door IRA and then work down the list. You could look at betterments options on automated tax lost harvesting also if you want a more hands off approach for that.

5. Allocation and fund selection seems right following tax efficiency, fund costs, and risks I would probably try to consolidate some to make it simpler but that's just a minor thing.

6. You are doing awesome here. Is there anything you can spend money on like a vacation or something that you would enjoy? Only suggestion here is to lighten up the reins and enjoy life a little bit doesn't need to get out of control but you have been working and saving hard for a while and don't want you getting burnt out.

7. You are doing well and ahead of the curve but you know that already. Maybe start adjusting allocation a little more towards bonds over the next few years. Some of the items you mentioned in question 4 are some good things to look into in order to help reduce taxes.

8. You don't need to do any of this but if you want to hedge against inflation some with 5%-10% of portfolio that might not be a bad call. I personally prefer more real estate or metals.

9. If you don't have anyone depending on your income for anything you probably don't need life insurance. If someone is I would suggest getting some cheap term life insurance to pay them. I would check beneficiaries on the retirement accounts and make sure those were setup correctly and then you could either get a will online for your state or talk to an attorney and pay about $500- $1,000 for a simple will. One thing to watch out for here is if you are leaving something to a family member outside of the US I would probably talk to an attorney just to make sure everything was setup correctly.
Outer Marker
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Re: 34yr old - First time poster - Portfolio & Life Help

Post by Outer Marker »

Welcome to the forum.

You have too many funds. Simplify and breath easy. A 3-fund portfolio would likely work well for you. viewtopic.php?f=10&t=88005
Read up on the wiki on efficient tax placement.

VT is a great place to live. If you're luck enough to hold a megacorp salary in a somewhat rural state, you're doing quite well by local standards. As a native eventually planning to move back, I'd resist moving if you can, even if it means taking a pay cut.

Consider that a job may just be a job. A means to other things - like a Miata and a season pass at Sugarbush.
okrylan
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Re: 34yr old - First time poster - Portfolio & Life Help

Post by okrylan »

Outer Marker wrote: Wed Apr 07, 2021 1:25 am You have too many funds. Simplify and breath easy. A 3-fund portfolio would likely work well for you. viewtopic.php?f=10&t=88005
Read up on the wiki on efficient tax placement.
Ni_VT wrote: Tue Apr 06, 2021 11:41 am Taxable (Vangaurd)
VIGAX Vanguard Growth Index Fd Admiral Shs (Exp Ratio:0.05%) 8%
Simplifying your portfolio should make finance one less thing to worry about. I would also like to point out your growth tilt. Vanguard Projections have growth significantly underperforming the broad market and value over the next ten years. Taking up a 3,4,5 fund non specific tilt approach will be much easier.

In terms of the cash "Dilemma". Cash is not trash, but the places you could have it can be. Not having it on hand is already the obvious first step. With interest fairly low CD's and T-Bills don't make much sense but are still a low risk better than savings account option (Sometimes :? ). Ladders are a good way to remain liquid and still get a little bit more growth.

Good luck!
Adfmacro
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Re: 34yr old - First time poster - Portfolio & Life Help

Post by Adfmacro »

As far as your employment, were you happier in the work pre-COVID? If so, what do you miss the most and is there anyway to get some of that back? I would put buying a house on hold until you expect to stay in one place for at least 5 years. However, since you are working remotely, I would want a very nice work environment. Do you need to change rentals to look for a place where your office space would be overlooking a lake, a park, or a view of your favorite outdoor spot? Do you need to invest in better office equipment?

It is never too late to change career paths. But you will want to be sure that is the direction you want to go. Making such change comes with sacrifices of time, money, and energy. Be ready for that. You are in a good place financially with expenses fairly low compared to income. But things like spouse, family, home ownership, and other wants have a way of changing things.

In my opinion, I think you have plenty of good investment choices with ERs under .15%. Any fund above that amount is not likely to be really necessary. It seems you have a little competition going. Some growth, some value, adding more large cap here and adding small or mid cap there. Deciding your sweet spot if you want to favor growth or value or lean toward large or small first. Start with a simple 3 fund plan of US stock, international stock, and bonds. Then determine if you want to slightly tilt and if so, would one additional fund be enough?

While it is good to be thinking about estate planning, until you have someone in your life who is counting on you, it is not something that you really need to concentrate on. If you are concerned about not being eligible for life insurance in the future, you can get term life insurance outside of your employer for peace of mind, but it is not currently necessary.

I work from home and work at the office on rotation. I have both a family I am with and coworkers outside of family. I am around people and I want it that way. It would be tough for me to work remotely without a fair amount of ways to socially interact with others regardless of the company I worked for. I changed careers 35 years ago and still working. I enjoy working (at least enough not to retire).
Topic Author
Ni_VT
Posts: 5
Joined: Thu Feb 04, 2021 10:12 am
Location: Vermont

Re: 34yr old - First time poster - Portfolio & Life Help

Post by Ni_VT »

Good morning,

Thanks for all the kind replies. You all are awesome. I was truly very nervous posting - given how I almost never talk about my finances and life situation with people. I will read your replies in detail and shoot some comments over this morning.

Once again appreciate the support!
NH
NH
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Tamarind
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Re: 34yr old - First time poster - Portfolio & Life Help

Post by Tamarind »

Welcome! Glad you're here. Here's a little advice from a 34 yr old in the humid South with a very fulfilling job.

I've never known anyone who already had a non-academic job whose job prospects were improved by getting a PhD. Obviously can vary by the field but you should have a much clearer idea of what you'd get out of this. Pure enjoyment of research? Change fields? Switch to teaching?

Mega backdoor Roth is worth it for anyone who can max out all the usual accounts and still has money left over to save.

Re buying a house, do you get enjoyment from cleaning & maintainance and yard work? What do you think you'd do with a house that you can't do while you are renting?

I agree with folks about that you have a lot of large life-changing solutions listed to a problem that I don't think you've fully defined. So I would work on problem definition before making any big moves. Are you missing a sense of meaning in your life? Do you have fulfilling things to do outside of work? These are really common feelings for someone our age and it's normal to need to make some adjustments.

Given your expenses you are way, way ahead on retirement savings. You are on track to retire before 50 if that was your goal. I have less specific advice for you on what to do (other than stay away from "alternative assets" and keep things simple), but I wonder if you might generally be better off letting your expenses rise just a smidge to enable you to do some more interesting things. What if you spent $40k but took a vacation to do something your enjoy outdoors or had more nice evenings with friends or insert here whatever thing brings you peace and comfort that you are denying yourself to try to cut expenses?
Topic Author
Ni_VT
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Location: Vermont

Re: 34yr old - First time poster - Portfolio & Life Help

Post by Ni_VT »

Once again thanks for all the feedback. Some comments based on the replies.

1. First of all apologies, my OP was a mind dump. Yes, I do have a lot of big things I am thinking about - but none of them are burning - they are tangled up though :sharebeer. On the plus side, I am gainfully employed, live in a beautiful place, enjoy my life... :D . However, as advised I will think through my 20 year plan/what I want to be question seriously and break my life goals down into manageable chunks. Try and seek some professional/ counselling help to sort through them. I will take the right amount of time to do this and gain clarity.

2. Just for added clarity about my job situation, immigration situation and desire to buy a house. Irrespective of all this, I will use #1 to figure out what I want to do and act on it accordingly.

Job: There used to be a time when I got a lot of joy from my job... but not so much anymore. I am jaded and burnt out by corporate America. I have been through multiple restructurings at this point and it for sure has left a bad taste in my mouth. I also am frustrated because I invested a lot into my career the past 10 years sacrificing a lot of my personal life (for example: I got a MBA from a top 5 school by travelling 12+ hours every weekend for classes for 3 years) and it has not resulted in good dividends in terms of title or pay. I do have a lot of responsibility and the stress that comes with it. On the plus side, I do pretty awesome resume as this point. Solves:
a. Just stick around for the ride, enjoy living in Vermont. Stop stressing about the job and just think of it as a means to a paycheck
b. Look for alternatives - balancing career building vs location
c. Go get a PhD and quit corporate America for good. I do love academics... but feels like a lot to go through with it. (I will only do this if I get scholarships. I have managed to get scholarships for most of my education, so this is key).
My plan is to do #a while exploring #b
Note: I love working from home... I have beautiful views of the mountains, trails are 5 mins away and I spend a good 1+ hour everyday - rain, snow or shine hiking , biking or running. Pandemic has been isolating, but its not been too bad honestly.

Immigration: This is totally not within my control. But it is for sure stress to live in a gray area. For example, If I get let go, I will have 60 days to land a new job or be deported. Solves:
a. Just wait, everybody else does. in another 10 years or so, things will work out.
b. If I want to fix this, rip the bandaid and move to home country or immigrate somewhere else
Given my current situation my plan is to go for #a

Home: This is totally about my desire to settle and plant some roots. I think of as a home as an investment to build value. I also like doing home projects and spending time on it. I have been meaning to buy for years now... and always keep pushing it off. Meanwhile, I have lived in the same place for 10 years :shock: But all in all, you guys are right - I need more stability to buy. I am going to continue to rent and invest the $$. With my savings rate, if I need to buy I should be able to save up for it and liquidate a few holdings relatively quickly.

3. I will simplify some of my holdings. Things I am thinking about financially:
a. Exit 31617E836 FID GROWTH CO POOL (Exp Ratio:0.43%) 7% position
b. Potentially exit the VIGAX Vanguard Growth Index Fd Admiral Shs (Exp Ratio:0.05%) 8% - Any opinion on taxes due to the exit?
c. Keep $40K and invest the rest
d. As one poster mentioned, I do have a "little competition" going in my fund choices. I will simplify and focus.
d. Increase bond exposure a bit more - Ibonds for inflation protection, Maybe 10-20K in municipal bonds, will explore TBills and CD ladders
e. I will call up fidelity and ask them about my 401k plan and its ability to support mega back door roth. I will read up more about it as well so I don't muck it up. When I come close, I probably will post in this forum again to make sure I am doing it right.

4. Agree, on all the feedback on renting over buying. I will invest for now, I can always pull it out if I want to buy.

5. I didnt expect this from you all: :D But, alright for sure I am game for living a little. I have been cheap ahem frugal, but now I can go and buy that lambo I always wanted. :P Just kidding, but a couple more short vacations wouldn't hurt. I thru hiked the long trail last year and it was a blast!

6. I will invest in the will this year. I keep seeing posts as to "if only they wrote a will", so yeah I want to get ahead of it. I will use a lawyer jus coz my family lives abroad.
NH
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BolderBoy
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Re: 34yr old - First time poster - Portfolio & Life Help

Post by BolderBoy »

Tamarind wrote: Wed Apr 07, 2021 7:07 amI've never known anyone who already had a non-academic job whose job prospects were improved by getting a PhD. Obviously can vary by the field but you should have a much clearer idea of what you'd get out of this. Pure enjoyment of research? Change fields? Switch to teaching?
Agree with this. If you want to get a PhD, do it for personal aggrandizement reasons. People with doctorates are getting to be a dime-a-dozen. You can't spit in my neighborhood without hitting "Dr XYZ", to include a Nobel Prize winner a couple of blocks over.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
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ruralavalon
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Re: 34yr old - First time poster - Portfolio & Life Help

Post by ruralavalon »

Welcome to the forum :) .

Life question:
1. I feel like a bit of Russian nesting doll + chicken and egg problem - I really dont know which to tackle first - My unhappiness at my job (change jobs, go get a PhD), my personal life, buying a home, immigration (move to Canada? or back to home country?) etc. Any advice? I think I should fix career first, but that's always been what I fix coz its 100% in my control.

Financial Question:
2. How much and how best to invest my cash? Ideally I want to do it in my vanguard account using mutual funds. I did open a treasury direct account with intention of buying Ibonds. Can you please tell me your fund/investment choices and how much you would invest into them?
In a taxable brokerage account for long-term investing I suggest:
1) VTSAX Vanguard Total Stock Market Index Fd Admiral Shs (Exp Ratio:0.04%); and
2) VTIAX Vanguard Total International Stock Index Fd Admiral (Exp Ratio:0.11%).

3. I want to buy a home. I have the down-payment saved for it. But I am scared of the size of investment and tying the cash up incase I have to move. Potentially want to spend ~$350-400K. I think I will end up buying in next 2 years. If nothing, I want to make sure I have money marked for down-payment safe for those two years, but ideally want to put it to work rather than let it sit at Ally.
Note: Due to my immigration situation, I have kept most of my assets liquid. But I am also getting to a point where I should just take a leap of faith and make some choices.
Do NOT buy a home until your job situation is clearer and you know where you want to live long-term.

Keep money for a home purchase in the next 2 years in a very safe savings vehicle like a federally insured savings accounts or federally insured short-term CDs.

Don't just automatically rule out living in the South.

Tax Rate: 24% Federal, 6% State (not sure how to estimate, my effective tax rate based on my returns for 2020 seems lower)
. . . . .
4. Things I want to do but am nervous about:
Explore mega-backdoor Roth - is it even worth it at my current income levels?
Tax loss and Tax gain (I saw Klangfool post about tax gain) harvesting.
Ibonds or EE bonds - not sure if they are right for me given my age or when to buy them.
Tax efficient Municipal bond funds in taxable a/c. Is it worth it or do I just increase bond allocation in my 401K and get rid of my mental accounting logjam.
I have no opinion on this.

You don't seem sure about your tax rate.

Here is a method you can use to estimate your federal tax bracket. If your income etc. is consistent from year to year, then look at your 1040 tax return for past years for your "taxable income". Then use your "taxable income" to estimate your "tax bracket". Moneychimp, "Federal Tax Brackets".

5. Are my fund choices good, do you suggest I change any of them? Hope my allocations are okay? (Thanks to this forum for NTSX recommendation)
Note: I had a large growth tilt for the past few years but switched back to balanced this year. I am thinking Small-value tilt for the next few? I honestly don't mind leaving it in balanced for a few years and seeing how the macroeconomics play out.
In your 401k plan simplify to use just:
1) FXAIX FID 500 INDEX (Exp Ratio:0.02%);
2) FTIHX FID TOTAL INTL IDX (Exp Ratio:0.06%); and
3) FXNAX FID US BOND IDX (Exp Ratio:0.03%).

In your Roth IRA and your HSA FSKAX FIDELITY TOTAL MARKET INDEX FUND (Exp Ratio:0.015%) 15% is a good choice.

In the taxable brokerage account I would cease any new purchases of and reinvestment of dividends in VIGAX Vanguard Growth Index Fd Admiral Shs (Exp Ratio:0.05%)

Don't switch between growth and value based on any opinion about current market conditions or just to see how's things play out. Stick with blend funds, use funds you can hold for the long-term.


6. Your opinion on my monthly budget and savings? I try to hit $2.5K spend per month it crawls up to $3K inevitably.
You are doing fine.

Investment Assets: ~$500K
. . . . .
Salary pre-tax incl bonus: ~135K/yr
. . . .
Annual Contributions
$19,500 401k (6% Employer Match) - Max out (~16% of paycheck)
$6000 Roth IRA - max out
$3600 HSA ($1000 payed by employer) - max out
$18,000 taxable ($1500 per month)
[total = $46.5k annually = 34% of gross]
. . . . .
7. Am I on track for retirement savings? Any other suggestions? Watch outs for the next few years?
You are doing fine.

Your savings rate is excellent in my opinion.

8. I haven't seriously considered GME, crypto, gold, REIT, etc. (keeping true with the boglehead mentality), but if you folks suggest I am willing to put some $$ into those alternative asset classes.
I suggest NOT using alternative investments.

9. I haven't done any estate planning (will, etc.) or additional insurance policies (besides the benefits I get from work). Any advice here would help as well.
What is your profession or occupation?

Do you have own occupation disability income insurance?

(You are 34, and your tax filing status is "single".) Do you have any dependents? If so then inexpensive term life insurance is important.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Topic Author
Ni_VT
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Joined: Thu Feb 04, 2021 10:12 am
Location: Vermont

Re: 34yr old - First time poster - Portfolio & Life Help

Post by Ni_VT »

Thanks for the reply.
Here is a method you can use to estimate your federal tax bracket. If your income etc. is consistent from year to year, then look at your 1040 tax return for past years for your "taxable income". Then use your "taxable income" to estimate your "tax bracket".
Thanks! Super helpful. I can confirm I am at 24% federal.
In your 401k plan simplify to use just:
1) FXAIX FID 500 INDEX (Exp Ratio:0.02%);
2) FTIHX FID TOTAL INTL IDX (Exp Ratio:0.06%); and
3) FXNAX FID US BOND IDX (Exp Ratio:0.03%).
I am going to simplify to these. 2 questions:
Any concern that 500 Index doesn't cover small and medium sectors? Should I continue to hold DFSVX DFA US SM CAP VALUE,FSMAX FID EXTD MKT IDX to get the coverage or do you feel having extended market in both taxable, ROTH and HSA has me covered?

I saw a lot of recommendations on this forum about VWNAX VANG WINDSOR II ADM (Exp Ratio:0.26%). Is it a good idea to keep one active fund just for diversification and long term growth?
cease any new purchases of and reinvestment of dividends in VIGAX Vanguard Growth Index Fd Admiral Shs (Exp Ratio:0.05%)
Got it and done
What is your profession or occupation?
I am an internal consultant in a large company
Do you have own occupation disability income insurance?
I don't on my own. Work gives me short and long term disability benefits.
Do you have any dependents? If so then inexpensive term life insurance is important.
I don't have any dependents.
NH
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ruralavalon
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Re: 34yr old - First time poster - Portfolio & Life Help

Post by ruralavalon »

In your 401k plan simplify to use just:
1) FXAIX FID 500 INDEX (Exp Ratio:0.02%);
2) FTIHX FID TOTAL INTL IDX (Exp Ratio:0.06%); and
3) FXNAX FID US BOND IDX (Exp Ratio:0.03%).
I am going to simplify to these. 2 questions:
Any concern that 500 Index doesn't cover small and medium sectors? Should I continue to hold DFSVX DFA US SM CAP VALUE,FSMAX FID EXTD MKT IDX to get the coverage or do you feel having extended market in both taxable, ROTH and HSA has me covered?

I saw a lot of recommendations on this forum about VWNAX VANG WINDSOR II ADM (Exp Ratio:0.26%). Is it a good idea to keep one active fund just for diversification and long term growth?
I would have no concern about using FXAIX FID 500 INDEX (Exp Ratio:0.02%) by itself for investing in U.S. stocks. In my opinion it's more than good enough.

A S&P 500 index fund covers over 80% of the U.S. stock market investing in stocks of selected large-cap and mid-cap U.S. companies. In the 29 years since the creation of the first total stock market index fund the two types of funds have had almost identical performance. Portfolio Visualizer, 1993-2021.

If you want to add some FSMAX FID EXTD MKT IDX then an 84/16 mix of S&P 500/extended market index funds will mimic the content of a total stock market index fund. Wiki article "Approximating total stock market", link. In my opinion this is not necessary, it is optional if you prefer to do this.

Although actively managed Vanguard Windsor II Fund Admiral Shares (VWNAX) ER 0.26% is a good fund with a low expense ratio. But I prefer a good index fund over a good actively managed fund. I don't think it adds any diversification to the S&P 500 index fund. Historically I don't see very much extra growth. Portfolio Visualizer, 1986-2021. I used the oldest share classes to get the longest period for comparison.
Last edited by ruralavalon on Wed Apr 07, 2021 8:21 pm, edited 3 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
stoptothink
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Re: 34yr old - First time poster - Portfolio & Life Help

Post by stoptothink »

BolderBoy wrote: Wed Apr 07, 2021 10:02 am
Tamarind wrote: Wed Apr 07, 2021 7:07 amI've never known anyone who already had a non-academic job whose job prospects were improved by getting a PhD. Obviously can vary by the field but you should have a much clearer idea of what you'd get out of this. Pure enjoyment of research? Change fields? Switch to teaching?
Agree with this. If you want to get a PhD, do it for personal aggrandizement reasons. People with doctorates are getting to be a dime-a-dozen. You can't spit in my neighborhood without hitting "Dr XYZ", to include a Nobel Prize winner a couple of blocks over.
I was very fortunate that a PhD (that I pursued for personal, not career reasons) actually did improve my career prospects, but I combined it with over a decade of real-world work experience in the field. In general, a PhD without a plan just puts someone 4-7yrs behind someone with an undergrad.
index2max
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Re: 34yr old - First time poster - Portfolio & Life Help

Post by index2max »

OP,

I did not read through your whole post, but see you live in Vermont.

Would you consider moving to New Hampshire? The southern part of the state has high-tech jobs, plus is close to other high-paying jobs in massachusetts. Plus you still have mountains in NH :)
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Ni_VT
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Location: Vermont

Re: 34yr old - First time poster - Portfolio & Life Help

Post by Ni_VT »

I did not read through your whole post
You did not [ Jaw drop]!! :D :D :D Just kidding!!

But yeah NH is great - no state taxes. Portsmouth is pretty amazing. I don't work in tech.. but good idea on searching for opportunities there. Also Maine, Washington, Oregon - most places with snow and mountains would be great! However, beggars can't be chooser. :wink:
NH
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Marmot
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Re: 34yr old - First time poster - Portfolio & Life Help

Post by Marmot »

humblecoder wrote: Tue Apr 06, 2021 9:53 pm
Ni_VT wrote: Tue Apr 06, 2021 11:41 am Life question:
1. I feel like a bit of Russian nesting doll + chicken and egg problem - I really dont know which to tackle first - My unhappiness at my job (change jobs, go get a PhD), my personal life, buying a home, immigration (move to Canada? or back to home country?) etc. Any advice? I think I should fix career first, but that's always been what I fix coz its 100% in my control.
I would focus on this first. Don't worry about asset allocations, crypto, tax loss harvesting, backdoor Roths, and all that jazz. That's all noise. You need to figure out why you are unhappy with your job, where you want to live (you say you want to stay in retire in VT, but then talk about moving to Canada or to your home country), buying a house, etc. Truly you are all over the map.

Here is my advice:

1. Seek counseling. Seriously. You need to sort through what is making you unhappy and what will make you happy. It sounds like you have a vague notion of something eating at you, but maybe a professional can help you get some clarity in this area. I know people sometimes get offended or insulted when somebody tells them to seek some sort of professional counseling, but I truly don't mean it in that spirit. People have this idea that this sort of suggestion is a sign of weakness. But it isn't. Just lay it out like you just did in this post with a professional and get the direction that you need. You will be a better person for it.

2. Figure out "what you want to be when you grow up" so to speak. New job? PhD? Stick with your current job? Only you can truly answer what will make you happy (see #1).

3. When you have direction on where you want your life to go, figure out if that means moving somewhere new. And if that somewhere new is going to be in a stable location, figure out if that means buying a house. I would recommend NOT buying a house until you sort out your direction. You don't want to buy something only to have to sell once you get into a PhD program in another location somewhere.

4. As far as investments go, I would simplify. Three fund portfolio or target date fund. Something that you could set and forget for 30 years or occasionally rebalance once a year at the most. You are in a good financial position with your new worth. No need to dabble in all sorts of complex stuff at this point. DON'T OVERTHINK IT!
I agree totally. Number one is what I wouldn’t have done at that age, but that is spot on. Someone to bounce ideas off. The PhD route might give you time to think a bit also.
Marty....don't go to the year 2020....Dr. Emmett Brown
angelescrest
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Location: MCOL, no state income tax

Re: 34yr old - First time poster - Portfolio & Life Help

Post by angelescrest »

OP, I’ve been in your shoes earlier in my life. Career was everything, and I saved a lot of money. Was in a career I loved but due to personal life or lack thereof I wasn’t happy.

You are doing great financially. I wouldn’t buy a house while single. That would just make me feel more alone. My recommendation would be to invest in experiences that will allow you to live more and meet more people. You are spending so little, I’d suggest spending $1000 more a month on experiences (not stuff) that will give you more fulfillment.
guitarguy
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Re: 34yr old - First time poster - Portfolio & Life Help

Post by guitarguy »

Ni_VT wrote: Thu Apr 08, 2021 8:08 am Also Maine, Washington, Oregon - most places with snow and mountains would be great! However, beggars can't be chooser. :wink:
Welcome to the forum!

I don't have any new advice...but will echo what has been given (simplify your portfolio, don't buy a house until you're ready, you're doing an amazing job on saving, etc).

I will add this:

You are definitely not a beggar!

Spend some time soul searching on what you want to do career wise and where you want to live, and go do it. :beer
caffeperfavore
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Re: 34yr old - First time poster - Portfolio & Life Help

Post by caffeperfavore »

Your situation is something that many of us could have written at one point or another.

It sounds like you just need a change. Perhaps you need more things to provide meaning outside of work? New hobbies? Organizations to join? Causes? A new job or even a new role may help. For many, helping others in some way provides the most happiness. Whatever it is, you won't find it standing still. You'll have to try some things out.

For me, becoming my own boss made a world of difference in work. My life improved greatly upon meeting my spouse. And nowadays, I get the most satisfaction out of serving as a mentor to younger people.
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