Question on Portfolio Creation

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Topic Author
CaInvestor007
Posts: 2
Joined: Thu Jan 13, 2022 10:49 pm

Question on Portfolio Creation

Post by CaInvestor007 »

I hope everyone here is staying safe.

For various reasons, I did not invest any significant money in the stock market for almost the first 48 years of my life. I traded off and on with mixed results. I realize that I am a financially conservative person who have problem risking money. I worked for an employer who had a 401-k but no matching. I was almost traumatized when I saw some very dear people lose their life's saving when I was just finishing grad school and joining the work force due to the Dotcom bust. As I was getting to start investing, again came 2008, and there went my ideas of jumping into the stock market.

I finally got enough courage to start saving towards retirement only recently. It is better late than never, so please pardon my tardiness.

Emergency funds: Most of my money is in cash

Debt: mortgage 450k left, 2.5%

Tax Filing Status: Married Filing Jointly

Tax Rate: 22% Federal, 7.5% State

State of Residence: California

Age: 52

Desired Asset allocation: 60% stocks / 40% bonds
Desired International allocation: 30% of stocks

Taxable
60% cash (about $250k for investing – not including emergency funds)

His 401k
20% TRRDX (T Rowe Price Retirement 2040, ER 0.60%)
Company match? Varies, considering 0 for being conservative

His Roth IRA
10% VWELX (Vanguard Wellington, ER 0.24%)

Her 403b
10% VWINX (Vanguard Wellesley, ER 0.22%)
Company match? Not Applicable

_______________________________________________________________
Note: Total percentage of all the above accounts together (not each account individually) should equal 100%.

Contributions

New annual Contributions
$20000 his 401k (No employer matching contributions)
$7000 his IRA/Roth IRA
$7000 her IRA/Roth IRA
$20000 taxable (for retirement, not short term goals)

250k


Questions:
1. Trying to figure out two to four funds (Vanguard or other NL fund) for investing the $250k in cash that I have in sitting idle.

2. Is California muni bonds funds (VCITX) a good parking vehicle for about $50k cash that I don't need right away but want to keep in an interest bearing account and willing to take some risk for a higher rate of return than CDs and also not pay any taxes on the interest?
Last edited by CaInvestor007 on Fri Jan 14, 2022 12:18 pm, edited 1 time in total.
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Sandtrap
Posts: 15330
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

Re: Question on Portfolio Creation

Post by Sandtrap »

Welcome.
1
Can you please take a moment to edit your original post to add the "fund name" before the "Ticker symbol", then (expense ratio IE: .03), and percent of your total assets invested (ie: 20%). (use the pencil icon to edit).
It will help you get more responses since not everyone knows the ticker symbols.
2
Also list, funds that are available to you in the accounts (IE: company match, 401k, etc)
It will help others give suggestions for alternate funds, etc.

Thanks!
j
Wiki Bogleheads Wiki: Everything You Need to Know
HomeStretch
Posts: 7353
Joined: Thu Dec 27, 2018 3:06 pm

Re: Question on Portfolio Creation

Post by HomeStretch »

Welcome to the forum!
CaInvestor007 wrote: Thu Jan 13, 2022 11:32 pm … 2. Is California muni bonds funds (VCITX) a good parking vehicle for about $50k cash that I don't need right away but want to keep in an interest bearing account and willing to take some risk for a higher rate of return than CDs and also not pay any taxes on the interest?
Consider U.S. Treasury I-Bonds for a portion of the $50k. You and spouse can each purchase up to $10k annually in TreasuryDirect accounts and up to $5k with a Federal income tax refund. Current purchases have an annual rate of 7.12% (rate changes every 6 months). I-Bonds are Federal tax deferred, state tax exempt and have some inflation protection. I-Bonds are liquid after 1 year.

BH wiki page on I-Bonds:
https://www.bogleheads.org/wiki/I_savings_bonds
sureshoe
Posts: 843
Joined: Tue Jan 15, 2019 4:26 pm

Re: Question on Portfolio Creation

Post by sureshoe »

There is no shortage of fund recommendations for the $250k. You can do something as simple as 40% VTI, 20% VT, and 40% BND. There are a lot of mixes, I'll let others point you in a direction. My one recommendation I'd consider is to invest this $250k slowly over 1-2 years. My fear for you would be you put $250k into the market and we suddenly have a 20% (or more) pullback. Now, you feel wrecked and wasted and cheated.

With the financial story you've painted, and considering you have another $250k in currently idle cash - I personally would not keep the $50k in munis. I'd pay down my mortgage some. Get the 2.5% guaranteed return. I'd toss $50-$150k at the mortgage right now and dollar cost average the rest into the market over the course of a year while also contributing to a better asset allocation.
Topic Author
CaInvestor007
Posts: 2
Joined: Thu Jan 13, 2022 10:49 pm

Re: Question on Portfolio Creation

Post by CaInvestor007 »

Thank you everyone for your replies and suggestions.
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