Beginner questions, getting ready to move away from "managed" to DIY

[newboglehead310]

Note: This post has been edited to follow the required posting template.
_______________________________________________________________

Emergency funds: Yes - 3/4 months of expenses saved in High interest savings account

Debt:

• owe ~10K left on a car (no interest charged - owe to family)
• owe about ~200k on a mortgage. I just refinanced at valuation of ~350k at 3.5%, which I understand means I have 150k in "equity".

Tax Filing Status: Married Filing Jointly

Tax Rate: 22% Federal, 0% State

State of Residence: Tennessee

Age: 34M (me)/ 33F (spouse)

Desired Asset allocation: >95% stocks / ?% bonds
Desired International allocation: unknown

Approximate size of total portfolio: a little over 100K

Current retirement assets
This is given as an image from an excel doc where I maintain this:


_______________________________________________________________

Contributions

New annual Contributions

• $544 - my hsa
• $1,119.83 - my 403b
  • I currently contribute 17% of my paycheck, allocated like this:
    • 8% to Voluntary Pretax Deferral
    • 9% to Voluntary Roth Deferral
  • My job matches a maximum of 5% (3% is mandatory)
  • So monthly, it looks like this:
    • Employee Mandatory: 213.98
    • Voluntary Pretax Deferral: 553.50
    • Employer Match: 213.98
    • Voluntary Match: 138.37
    which if I've understood it correctly, means $1,119.83 every month in my 403b.
• $6k - my IRA/Roth IRA
• $6k - her IRA/Roth IRA
• $0 taxable: none planned right now

_______________________________________________________________

Available funds :

Funds available in my 403b:
This is given as an image from an excel doc where I maintain this:


_______________________________________________________________

Context:

No other credit card or student loans. We pay off our credit card every month.

I know my spouse and I are "behind", but we both went to graduate school (shes almost done).

I am a CS/Math person, but have ignored my financial health due to complicated mental health reasons. Since the birth of my son, I am determined to correct this. But still struggle with "paying attention" to money for extended periods of time.

I am the point where I have hit the major beginning steps and feel it might not be worth it anymore to continue paying 200 a month to Facet, but am frankly very "scared" to leave.

I realized that I entered into this Facet Wealth relationship expecting a financial tutor but that doesn't really work that way. Ive noticed the meetings are getting further apart, and answers to questions are more and more "well discuss at our next meeting". I started reading the Boglehead guide to investing and it mostly makes sense, though I need to go back and re-read and re-re-read etc. (especially on taxes).

The books make it seem doable, but the forum here makes it seem anything but! Most of these discussions strike me as much more complicated than the books, or even the sub-reddit.

I believe in the Bogleheads philosophy which I paraphrase as "Just keep buying". Since my investment horizon is long, I can tolerate basically any risk as I don't check my account balance and frankly don't care. I know that ~85% of portfolio growth is explained with ~7 days a year, so time is my best friend.

_______________________________________________________________

Questions:

1. How are we doing? Is there something I should be focusing on now? Should I change my portfolios in any of the accounts?

2. With a child on the way, my wife joining industry and probably x3 her salary, us needing to move all within 1.5 years from now, how can I best prepare for an uncertain future like this?

3. When I leave facet, should I move into a "robo-advisor" like Wealthfront for example? Can they do all my accounts?

4. When I leave facet, how do I "re-balance" my portfolio? I'm quite confused about selling and triggering "taxable events".

5. When I leave facet, their portfolio is different than the other "standard high-risk" portfolios I've seen recommended, and different than the ones robo investors have recommended for me. How do I correct this? Should I correct this? A "running joke" on the subreddit is "100% VTI forever". I can see this a joke, but is it very far from the truth?

6. Should I open a different 529 for child 2? Or use the same one?

7. Is there a beginner friendly section of the forum? Or IRC/discord/etc for more "informal" type chat with bogleheads?

[retired@50]

Hello all,

This is my first post here, so I apologize if this is the wrong section, or I have done something incorrectly.

Welcome to the forum.

Well, the upside is that you've provided much of the information needed, but you haven't provided it in the standard Asking Portfolio Questions format.

If you edit your original post by using the pencil icon in the upper right corner you'll be able to add the missing details and you'll get more responses.

Regards,

[Charon]

The books make it seem doable, but the forum here makes it seem anything but! Most of these discussions strike me as much more complicated than the books, or even the sub-reddit.

Welcome.

It is very doable. The truth is nearly everything you need to know fits on an index card: https://www.npr.org/sections/alltechcon ... k-is-there

Automate your contributions, and invest in single funds that don't need rebalancing (e.g., target date funds if you want a glide path, or fixed-allocation funds like LifeStrategy if you don't). You shouldn't pay attention to your money for extended periods of time. Ignore it most of the time. Check in once a year if you want to keep track, but with a single-fund investment you don't even need to do that.

You're using the right kinds of accounts (IRA, 403b, HSA, 529), have a good income and it's going to get better, and seem like you're in a good position. All good; go enjoy life.

This forum is useful if you have specific questions on minutiae that are hard to google, about obscure parts of the tax code, arcane aspects of account types you don't have, etc. Some of us hang out here just because we're interested in financial curiosities, or we're trying to avoid work

As a technically minded person, you may have the same trouble with personal finance that I do. I'm of the mindset that I always need to know more about everything, and that knowing more will always help. Not true in personal finance. Learning more just tempts you to do complicated things like factor investing and margin loans, which does not benefit the average person. Most of us shouldn't get any more complicated than the https://www.bogleheads.org/wiki/Three-fund_Portfolio , and I'm a proponent of the one-fund portfolio. Set and forget.

If you want to know more, start here: https://www.bogleheads.org/wiki/Getting_started

[Charon]

[*] When I leave facet, how do I "re-balance" my portfolio? I'm quite confused about selling and triggering "taxable events".

To answer one specific question, this isn't a worry. Rebalancing just means selling one asset class (like stocks) and using that money to purchase another asset class (like bonds) to get back to your intended asset allocation. (This drifts over time because stocks may go up more than bonds, or they may drop more than bonds in a down market.)

Rebalancing doesn't trigger taxable events for tax-deferred or tax-free accounts like IRAs, 403(b)s, etc., because the money never leaves the account. With most places you can set up the account to automatically rebalance (say, on your birthday). Or if you use a single-fund approach, you never need to rebalance.

If you get to a point where you're saving up a lot of money in taxable accounts, then you'll have to think carefully before selling (including rebalancing), as that triggers taxes. At your current income level, I suspect you've got plenty of tax-advantaged space to play with, though, so won't be building up a lot of taxable investments anytime soon.

[ClaycordJCA]

Welcome! I think you will find the Bogleheads to be very helpful and patient. And if you follow the advice I suspect your investments will do better than they are now because you won’t be paying the monthly advisor fee.

I have some preliminary observations even before you update your post to reflect the Bogleheads-approved format.

Your brokerage account is overly complicated. It has too many positions. Advisors like to make it complicated because you think you can’t do it yourself. But you can. Three funds are all you really need across all of your accounts: a total stock market fund, a total international stock market fund, and a total bond fund (and some will say you don’t really need any international stocks). Read the thread on the Three Fund Portfolio. All of it. It changed my investing life.

Something else caught my eye. You indicated you have a life insurance policy for your son. What about for your expected child? And your wife? If your 2 year old son is the sole beneficiary of the life insurance policy, do you understand what legal restrictions may exist in your state on how the money can be used for his benefit when he is a minor and what access he will have to the funds when he reaches age 18? I recommend that you and your wife sit down with an estate planning attorney so you understand all of the ramifications and develop an estate plan that works for your entire family.

What is the value of your disability plan through your job? Is it enough to support your family if you have increased medical costs and aren’t bringing in any income? You are much more likely to become disabled than die and SSDI isn’t all that much - remember you could be facing daycare costs for two kids.

Have you considered what your ideal asset allocation is? How does that compare to your current portfolio?

What is your time horizon for using some or all of the investments in your brokerage account? If you are contemplating putting those investments toward a new house in 1.5 years, I would sell the current investments and consider short-term treasuries, a CD, or high yield savings account.

Good luck. You can do this.

[newboglehead310]

If you edit your original post by using the pencil icon in the upper right corner you'll be able to add the missing details and you'll get more responses.

Regards,

Hello! Thank you for pointing this out. I am going to edit my post to follow this format. I have to "unite" all my accounts to calculate percentages across my "entire portfolio".

[newboglehead310]

I just setup the Fidelity "Full View" tool, and it gives me a report that (when I put into excel and massage a bit) looks like this:



Can I post this report? Or should I massage in into the specific phpbb format given here?

Also, should I remove the Units, Price and Market Value columns (hiding the actual dollar amounts)?

Thank you!

[JonL]

I recommend that you and your wife sit down with an estate planning attorney so you understand all of the ramifications and develop an estate plan that works for your entire family.

What is the value of your disability plan through your job? Is it enough to support your family if you have increased medical costs and aren’t bringing in any income? You are much more likely to become disabled than die and SSDI isn’t all that much - remember you could be facing daycare costs for two kids.

+1

These are your real risks.

Most folks are overly concerned with taxes and the optimal asset allocation. That is relatively inconsequential compared to the above.

I strongly encourage the folks I work with to focus on those two above items first. Generally, those are urgent priorities. Asset allocation can wait.

Moreover, your workplace policy likely isn't any good. (Of course, you can read it to confirm that.) That means purchasing a private policy providing better coverage. Learn more: https://www.bogleheads.org/wiki/Disability_insurance

[retiredjg]

I just setup the Fidelity "Full View" tool, and it gives me a report that (when I put into excel and massage a bit) looks like this:



Can I post this report? Or should I massage in into the specific phpbb format given here?

Also, should I remove the Units, Price and Market Value columns (hiding the actual dollar amounts)?

Thank you!

You are allowed to do whatever you like, but...the easier it is to see the information we need, the more and better help you will get.

That is why we have the format. The format presents all the information needed with the least amount of clutter and everything is easily found because it is where we are accustomed to look for it.

If you do use the full view tool, separate by each account, try to put a space between accounts, try to put the "percent of portfolio" column first and do get rid of units, price, and market value (all visual clutter). For any funds we may not know, and expense ratio is needed.

[newboglehead310]

Thank you all for the help. I have edited the top post to give all required information.

[newboglehead310]

Your brokerage account is overly complicated. It has too many positions. Advisors like to make it complicated because you think you can’t do it yourself. But you can. Three funds are all you really need across all of your accounts: a total stock market fund, a total international stock market fund, and a total bond fund (and some will say you don’t really need any international stocks). Read the thread on the Three Fund Portfolio. All of it. It changed my investing life.

Thank you! This is what I thought as well. I have been slowly reading the books which also are big proponents of this portfolio, and I will continue to do so. One big question I ahve now is, given where I currently am,

How do I "simplify" this without triggering "taxable events" (scary!)?

Something else caught my eye. You indicated you have a life insurance policy for your son. What about for your expected child? And your wife? If your 2 year old son is the sole beneficiary of the life insurance policy, do you understand what legal restrictions may exist in your state on how the money can be used for his benefit when he is a minor and what access he will have to the funds when he reaches age 18? I recommend that you and your wife sit down with an estate planning attorney so you understand all of the ramifications and develop an estate plan that works for your entire family.

We are in the process of doing this. I have a policy and listed my wife as the beneficiary. I meant "i got it for my son" in the sense that when he was born I decided I really needed one.

I'm considering raising the policy term length (and amount) now that we are expecting another.

Have you considered what your ideal asset allocation is? How does that compare to your current portfolio?

Based on what I've read, due to my age (starting late) and time horizon (retirement) and mental state (I have no problem with risk and high variability, as I understand this is the drive towards higher returns and its culled as your portfolio becomes more "stable" in "bonds" as you age) I would imagine over 95% stocks.

What is your time horizon for using some or all of the investments in your brokerage account? If you are contemplating putting those investments toward a new house in 1.5 years, I would sell the current investments and consider short-term treasuries, a CD, or high yield savings account.

I did not place them in there for short term investments. I had a large sum of money in savings and my financial advisor advised me to place them in there. I treat that as another retirement account.

Good luck. You can do this.

Thank you!!

[newboglehead310]

What is the value of your disability plan through your job? Is it enough to support your family if you have increased medical costs and aren’t bringing in any income? You are much more likely to become disabled than die and SSDI isn’t all that much - remember you could be facing daycare costs for two kids.

Right now, I have the following:

• Full Long-Term Disability: I pay ~16 a month, for them to pay 60% of my base salary.
• Supplemental Life Insurance (through employer - I have an external policy as well): I pay ~11 a month for them to pay a one time 4x my salary
• Voluntary Accidental Death and Dismemberment: I pay ~9 a month for the "$400,000 Family" tier (a bit unclear as to how this one works).

[ClaycordJCA]

What is the value of your disability plan through your job? Is it enough to support your family if you have increased medical costs and aren’t bringing in any income? You are much more likely to become disabled than die and SSDI isn’t all that much - remember you could be facing daycare costs for two kids.

Right now, I have the following:

• Full Long-Term Disability: I pay ~16 a month, for them to pay 60% of my base salary.
• Supplemental Life Insurance (through employer - I have an external policy as well): I pay ~11 a month for them to pay a one time 4x my salary
• Voluntary Accidental Death and Dismemberment: I pay ~9 a month for the "$400,000 Family" tier (a bit unclear as to how this one works).

Have you reviewed whether your life and disability insurances are sufficient to cover your and/or family’s expenses for an extended period of time? Do those expenses include childcare? Future college costs? You may want to consider consulting with a fee only certified financial planner, who is a fiduciary and not just an investment advisor, to review your insurance needs and potentially your investment plan. A number of Bogleheads have used Mark Zoril at Plan Vision (remote meetings via Zoom and email) and have been happy with his services, but I remember at least one was not. Our experience with Mark has been positive, but we are retired so I cannot speak to his evaluation of life and disability insurance needs. He did put together a nice retirement financial plan for us. Another option for finding a local fee only fiduciary advisor is through NAPFA or the Garrett Planning Network.

[retiredjg]

Thank you for updating the information.

New annual Contributions

• $544 - my hsa
• $1,119.83 - my 403b
  • I currently contribute 17% of my paycheck, allocated like this:
    • 8% to Voluntary Pretax Deferral
    • 9% to Voluntary Roth Deferral
  • My job matches a maximum of 5% (3% is mandatory)
  • So monthly, it looks like this:
    • Employee Mandatory: 213.98
    • Voluntary Pretax Deferral: 553.50
    • Employer Match: 213.98
    • Voluntary Match: 138.37
    which if I've understood it correctly, means $1,119.83 every month in my 403b.
• $6k - my IRA/Roth IRA
• $6k - her IRA/Roth IRA
• $0 taxable: none planned right now

This is a little difficult to understand. But it appears that more than half of your annual contributions are going into Roth accounts. Is that correct?

Are you going to have a pension? Is that what the "employee mandatory" contribution is?

I know my spouse and I are "behind", but we both went to graduate school (shes almost done).

I don't think you are behind at all. You have a reasonable amount of debt, already have a home, and you have started a nest egg which contains about $100k. This is not "behind" in my view.

But still struggle with "paying attention" to money for extended periods of time.

Things to consider that might help with this are

• -consider if your wife might be the better person to handle the financial matters
  
  -simplify your portfolio
  
  -use target funds where you can (not in the taxable account)
  
  -use a low cost advisor like Vanguard PAS to manage your portfolio, at least until you can see how to do it for yourself.

I am the point where I have hit the major beginning steps and feel it might not be worth it anymore to continue paying 200 a month to Facet, but am frankly very "scared" to leave.

If you are paying $2400 a year on a $100k portfolio, that is outrageously high. You are right. You cannot afford that and it is not benefiting you in any way (unless the advisor has been instrumental in keeping you from doing stupid stuff).

Yes, it can be scary to leave, but it is not impossible.

I realized that I entered into this Facet Wealth relationship expecting a financial tutor but that doesn't really work that way. Ive noticed the meetings are getting further apart, and answers to questions are more and more "well discuss at our next meeting". I started reading the Boglehead guide to investing and it mostly makes sense, though I need to go back and re-read and re-re-read etc. (especially on taxes).

You got the part about the "advisor" figured out. For the most part, they are salespeople. However, your investments are considerably better than we see from most advisors. You don't need an overhaul, just a bit of clean up.

The books make it seem doable, but the forum here makes it seem anything but! Most of these discussions strike me as much more complicated than the books, or even the sub-reddit.

It is doable. Do not be concerned about some of the higher level discussions you see here. Many of the subjects being discussed do not necessarily apply to you. And we spend inordinate amounts of time discussing things that matter very little....there are a lot of optimizers here who want to root out that extra .0001% that won't affect their retirement years in any way.

1. How are we doing? Is there something I should be focusing on now? Should I change my portfolios in any of the accounts?

You are doing fine. Some improvements can be made. They do not need to be done quickly.

What I think you should focus on first is moving away from the expensive advisor. Which accounts are being managed by the advisor?

2. With a child on the way, my wife joining industry and probably x3 her salary, us needing to move all within 1.5 years from now, how can I best prepare for an uncertain future like this?

Increase your emergency fund. Babies and moving are expensive.

3. When I leave facet, should I move into a "robo-advisor" like Wealthfront for example? Can they do all my accounts?

You can, but this will complicate your portfolio a great deal and that will make it harder, not easier, for you to manage it.

4. When I leave facet, how do I "re-balance" my portfolio? I'm quite confused about selling and triggering "taxable events".

Rebalance means to bring your portfolio back to your target stock to bond ratio. You are asking about "re-allocation". I'm not sure much of a re-allocation needs to be done. Clean up, perhaps. Re-allocation, not so much.

The only thing that will cause a taxable event is to sell something you are holding in your taxable account. While I believe your taxable account is much too complicated, it is not particularly harmful and can be "cleaned up" over a long time if you are not ready to tackle it all now.

On the other hand, the market is down. You might be able to sell things in taxable without triggering taxes at all.

5. When I leave facet, their portfolio is different than the other "standard high-risk" portfolios I've seen recommended, and different than the ones robo investors have recommended for me. How do I correct this? Should I correct this? A "running joke" on the subreddit is "100% VTI forever". I can see this a joke, but is it very far from the truth?

My usual recommendation for taxable is to use broad stock index funds. Total Stock Index and/or Total international Index.

What you have now is that plus a bit of clutter. We can talk about those details later.

6. Should I open a different 529 for child 2? Or use the same one?

It seems that people use a separate one for each child. But I've never done it, so I don't know.

7. Is there a beginner friendly section of the forum? Or IRC/discord/etc for more "informal" type chat with bogleheads?

You are fine right here.

One thing that I see in your posting - you are trying to tackle multiple projects and questions at one time. To the extent you can, pick one thing and focus on that until you are making progress on it. Put your portfolio questions and your insurance questions in different threads so that things don't get all tangled up. You get the idea.

The way to eat an elephant is one bite at a time.

If you will answer the questions I asked, we can move on to sorting out where to start.