Retirement portfolio. I know just enough to be dangerous

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Shangri La
Posts: 2
Joined: Sat Dec 28, 2019 11:12 am

Retirement portfolio. I know just enough to be dangerous

Post by Shangri La »

Hello everyone, I’m a long time lurker first time poster. As its the new year I’m currently doing my annual rebalance in my 401k and would like to see if I’m getting the most out of my retirement portfolio. Following the recommended posting format here is our following background:

Emergency fund: $30,000
Debt: Her student loan: $14k (employer is repaying them per her contract will be paid off 2023)
My student loan: $18K (paying $1k monthly minimum to try and take advantage of government hiatus)
Mortgage $348,000 on a 30 year fixed at 2.65% interest
Auto loan: $21k 3 years remaining with a 0% interest rate
State of residence: IA
Tax Status: Married filing Jointly
Tax Rate: 24% fed and 8.53% state
Ages: me 28, her 31, 10 month old child and one more on the way
Income: me: $116k in 2021 increases contractually annually, her $110K

Investments:
IA529 plan for child (investing minimally currently will invest more once our retirement vehicles are maxed out)

Her: State sponsored pension plan, $20k in a rolled over Fidelity IRA from previous employer 401k
Me: $85K total and Contribute 15% into Roth 401k and company has a 15% Direct contribution into traditional 401k both are handled as one through Schwab

Current AA: VINIX Vanguard Institutional Index I 59%
VEXAX Vanguard Extended Market Index Admiral 22%
VTMGX Vanguard Developed Markets Index Admiral 16%
MWTIX Metropolitan West Total Return Bd I 3%

I am trying to stick closer to the bogleheads approach with a 3-5 fund portfolio in my 401k and keep the expense ratios down. However as I am still young I do not mind being aggressive. My question is based off of the available funds listed below have I chosen good funds maximize the diversity in my portfolio or in my quest for the lowest expense ratios have I overlooked a good option? Thank you in advance for your thoughts!

Available Options:
Managed: TRRLX T.Rowe Price Retirement 2060 expense 0.64%
TRRNX T. Rowe Price Retirement 2055 expense 0.64%
Self Directed:
Stocks: Large Company
JDVWX JHancock Disciplined Value R6 expense 0.66%
PRGFX T. Rowe Price Growth Stock expense 0.64%
VINIX Vanguard Institutional Index I expense 0.035%
Small/Mid Co.:
CVERX Columbia Select Mid Cap Value Instl 2 expense 0.78%
CRRX Columbia Small Cap Value II Inst2 expense 0.88%
NWKCX Nationwide Geneva Small Cap Gr R6 expense 0.84%
VEXAX Vanguard Extended Market Index Admiral expense 0.06%
IMOZX Voya MidCap Opportunities R6 expense 0.83%
Intl/Global:
RERGX American Funds Europacific Growth R6 expense 0.46%
ODVYX Invesco Developing Markets Y expense 0.97%
VTMGX Vanguard Developed Markets Index Admiral expense 0.07%
Specialty:
CSRSC Cohen & Steers Realty Shares L expense 0.88%
Bonds:
MWTIX Metropolitan West Total Return Bd I expense 0.45%
PRHYX T. Rowe Price High Yield expense 0.70%
User avatar
Duckie
Posts: 8557
Joined: Thu Mar 08, 2007 2:55 pm

Re: Retirement portfolio. I know just enough to be dangerous

Post by Duckie »

Shangri La, welcome to the forum.
Shangri La wrote: Fri Jan 14, 2022 12:00 pm Her: State sponsored pension plan, $20k in a rolled over Fidelity IRA from previous employer 401k
Me: $85K total and Contribute 15% into Roth 401k and company has a 15% Direct contribution into traditional 401k both are handled as one through Schwab

Current AA: VINIX Vanguard Institutional Index I 59%
VEXAX Vanguard Extended Market Index Admiral 22%
VTMGX Vanguard Developed Markets Index Admiral 16%
MWTIX Metropolitan West Total Return Bd I 3%

I am trying to stick closer to the bogleheads approach with a 3-5 fund portfolio in my 401k and keep the expense ratios down. However as I am still young I do not mind being aggressive. My question is based off of the available funds listed below have I chosen good funds maximize the diversity in my portfolio or in my quest for the lowest expense ratios have I overlooked a good option?
She has $20K in a rollover IRA at Fidelity. If you want bonds then (FXNAX) Fidelity U.S. Bond Index Fund (0.025%) in the IRA would be better than (MWTIX) Metropolitan West Total Return Bond Fund Class I (0.45%) in the 401k.

Can you (he) hold different funds in the Roth 401k versus the pre-tax 401k sub-accounts or must the two accounts hold exactly the same funds?
Topic Author
Shangri La
Posts: 2
Joined: Sat Dec 28, 2019 11:12 am

Re: Retirement portfolio. I know just enough to be dangerous

Post by Shangri La »

Good idea with possible fidelity bond option thank you! As for holding different funds between the Roth and traditional, unfortunately Schwab considers the Roth and pre tax as sub units of one 401k account and so they can only hold the same funds.
KlangFool
Posts: 23515
Joined: Sat Oct 11, 2008 12:35 pm

Re: Retirement portfolio. I know just enough to be dangerous

Post by KlangFool »

OP,

1) How does it makes any sense for you to pay 30+% taxes and contribute to Roth 401K?

2) Ditto, how does it makes any sense for you to pay 30+% taxes and contribute to 529?

3) Max up your Trad 401Ks and put your tax savings into Roth IRAs.

KlangFool
40% VWENX | 12.5% VFWAX/VTIAX | 11.5% VTSAX | 16% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 40% Wellington 40% 3-funds 20% Mini-Larry
FIRWYW
Posts: 3
Joined: Thu Dec 23, 2021 9:11 am

Re: Retirement portfolio. I know just enough to be dangerous

Post by FIRWYW »

I agree with klangfool. If you are not expecting to make significantly higher income in the future you should use traditional 401k for tax savings now and put the money you save in a 529. The asset allocation you list for your wife’s account seems reasonable with the exception that 3% bonds is not going to give you any benefits to diversification. At you age if your risk tolerance is such that you can stay with it, I would recommend a change to 100% stock. (Higher long term rewards). If not, from models I have run, bonds don’t make much of a difference until you hit 15% or more and you are basically getting the risk of a 100% portfolio with slightly lower returns.
Post Reply