Learning as I get older [current allocation(s) for retirement investments]

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newguyhere00
Posts: 5
Joined: Tue Apr 02, 2024 2:38 pm

Learning as I get older [current allocation(s) for retirement investments]

Post by newguyhere00 »

Hey there!
Hope this is appropriate, but I've been reading more lately about my retirement set up. I've also noticed the past few years we've been given more options for investments (compared to when I first started working, when it was "Aggressive" "Moderate" and "Conservative".

Wondering if I could get anyone's two cents on my current allocation(s) or any other comments I should be considering.

I am 37, started depositing for retirement at age 20. In the paperwork i recall selecting 90% "Aggressive strategy" and 10% "Conservative"
(apparently some time in the past they moved the funds from those "strategies" to Vanguard funds)

Opening my account, here's what it says...

~290,000.00 Total.

of that 240,000 is VASGX
and 50,000 is VSCGX

And then for "source" it says...

Profit sharing - ~80,000
401k - ~40,000
Roth - ~61,000
"Match" - 109,000

For my age, with a pretty high risk tolerance, would this fall in line with 'on the right track'? I've been trying to look in to the details about differences between say... VASGX or VINIX (blend vs an S&P500 index?)

Not saying I'm jumping at the bits trying to change any allocations right here right now, but I guess I'm opening up to anyone who might think I should consider changing something. Or further reading in to something.

Hope was okay to ask, thanks for anyone who's read this!

[Title edited for clarity. Moderator Pops1860]
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ruralavalon
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Location: Illinois

Re: Learning as I get older

Post by ruralavalon »

Welcome to the forum :D .

Its great to see that you started early saving for retirement, use a tax-advantaged account, and invest in very diversified index funds with low expense ratios. You are doing great, with $290k saved at age 37.


newguyhere00 wrote: Tue Apr 02, 2024 2:59 pm Hey there!
Hope this is appropriate, but I've been reading more lately about my retirement set up. I've also noticed the past few years we've been given more options for investments (compared to when I first started working, when it was "Aggressive" "Moderate" and "Conservative".

Wondering if I could get anyone's two cents on my current allocation(s) or any other comments I should be considering.

I am 37, started depositing for retirement at age 20. In the paperwork i recall selecting 90% "Aggressive strategy" and 10% "Conservative"
(apparently some time in the past they moved the funds from those "strategies" to Vanguard funds)

Opening my account, here's what it says...

~290,000.00 Total.

of that 240,000 is Vanguard LifeStrategy Growth Inv, 80/20 allocation, VASGX
and 50,000 is Vanguard LifeStrategy Cnsrv Gr Inv , 40/60 allocation VSCGX

And then for "source" it says...

Profit sharing - ~80,000
401k - ~40,000
Roth - ~61,000
"Match" - 109,000

For my age, with a pretty high risk tolerance, would this fall in line with 'on the right track'? I've been trying to look in to the details about differences between say... VASGX or VINIX (blend vs an S&P500 index?)

Not saying I'm jumping at the bits trying to change any allocations right here right now, but I guess I'm opening up to anyone who might think I should consider changing something. Or further reading in to something.

Hope was okay to ask, thanks for anyone who's read this!
More information will be helpful.

What are the funds offered in your employer's plan? Please give fund names, tickers and expense ratios. There may be better funds to use.

Do you have any other accounts? If so what funds do you use in each account?

How much (in dollars) do you currently contribute annually to your employer's plan? Establishing a high rate of contributions is the most important investing decision you can make, forum discussion. What is your profession or occupation? What is your tax bracket, both federal and state? What is your tax filing status? Which state do you pay any state income tax to?

Please simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.

Please use this format: Asking Portfolio Questions.

Will you be eligible for both a substantial pension and Social Security benefits?

It looks like your current asset allocation is about 72% stocks/28% bonds. In my opinion that is probably within the range of what is reasonable at age 37.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
loukycpa
Posts: 801
Joined: Wed Aug 05, 2020 9:52 am

Re: Learning as I get older

Post by loukycpa »

Welcome to the forum!

In summary I see zero wrong with what you are doing. What you own are two funds of funds, both of which own low cost, total market index funds. Your asset allocation of about 70%/75% stocks is reasonable for someone in accumulation stage. You don't have to change anything.

You have a lot of international diversification consistent with what Vanguard recommends, as Vanguard is placing 40% of your allocation to stocks in a total market international stock fund and 30% of your allocation to bonds is allocated to international bonds. There is a lot of debate on Bogleheads about how much to have in international stocks, and you will generally hear anywhere from 0% to 50% being recommended. So you are on the high end of that spectrum but not outside it.

I would stay the course and resist the urge to tinker.
"The safe assumption for an investor is that over the next hundred years, the currency is going to zero." - Charlie Munger
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arcticpineapplecorp.
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Re: Learning as I get older

Post by arcticpineapplecorp. »

newguyhere00 wrote: Tue Apr 02, 2024 2:59 pm ~290,000.00 Total.

of that 240,000 is VASGX
and 50,000 is VSCGX

And then for "source" it says...

Profit sharing - ~80,000
401k - ~40,000
Roth - ~61,000
"Match" - 109,000

For my age, with a pretty high risk tolerance, would this fall in line with 'on the right track'? I've been trying to look in to the details about differences between say... VASGX or VINIX (blend vs an S&P500 index?)
Welcome to the group.

So here's what i see:
1. VASGX for those who don't want to look up the tickers is Vanguard LifeStrategy Growth Fund. It's 80% stock (20% fixed income).
2. VSCGX is Vanguard LifeStrategy Conservative Growth which is 40% stock (60% fixed income)
3. There's usually 4 types for the LifeStrategy which I'll call LS for short:
a. LS Growth Fund (80/20 stock/bond)
b. LS Moderate Growth Fund (60/40)
c. LS Conservative Growth Fund (40/60)
d. LS Income Fund (20/80)

4. You have a and c.

5. why, I'm not sure. If you want a certain allocation overall you could simply pick one fund that's closest to the overall allocation you want instead of holding 2 separate funds. There may be a good reason to do this, but that's for you to explain. But for instance:

6. If you have $240,000 in growth fund (80/20) and $50,000 in conservative fund (40/60) you have:
$192,000 of the $240,000 in stocks in the growth fund
$20,000 of the $50,000 in stocks in the conservative fund

or said another way, you have $212,000 ($192,000 + $20,000) in stocks (out of $290,000 total).

$212,000 / $290,000 = 73% in stocks overall.

So your overall portfolio is really 73/27.

7. So you have to ask if that's what you want or not, and if not, what are other ways you can go about that.

8. It's also unknown how much money and what funds are being used for the Roth vs the 401k (assuming the 401k is pretax, dunno). For Roth Assets, it may be better/best to just have stocks in that account and have more bonds/fixed income in the pretax account. I.E., you could use a LifeStrategy Fund for the 401k, but just a stock fund for the Roth account (not a stock and bond fund combined). This is more tax efficient for different reasons I won't get into unless you want to learn more or look up tax efficient placement at bogleheads.

what do you think?
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
bonesly
Posts: 1277
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Location: WA

Re: Learning as I get older

Post by bonesly »

newguyhere00 wrote: Tue Apr 02, 2024 2:59 pm 240,000 is VASGX
50,000 is VSCGX
...
For my age, with a pretty high risk tolerance, would this fall in line with 'on the right track'?
The most important difference between your current portfolio and some alternative mix of funds will be the Asset Allocation (AA) among stocks and bonds (totaling to 100% for all retirement accounts) and followed by the dollar-weighted average expense ratio (ER) across all holdings in all accounts. For ER, you want the lowest you can find for a passive index fund; the Vanguard LifeStrategy funds fit this bill. For AA, only you can know what's right for you as that's based on your time-frame (essentially your life expectancy, so long) and your Risk Tolerance, which varies from person to person and thus is very personal/unique to you. If you don't have a target AA in mind, then you should determine one; try taking the Vanguard Investor Questionnaire, then questioning its recommendation if you think it's too conservative or too agressive.

The AA you have is 73/37 as @arcticpineapplecorp said. That might be aggressive enough for some, but if you say you're "pretty high risk tolerance" is that enough stocks (or too much bonds) for you? Only you can answer that.

Once you pick an AA, we can make suggestions to get you from 73/37 to your target; as also mentioned it helps to know if you have any other retirement accounts (or is it just the one Roth 401k?) and if you do, what the dollar-value, fund names, ticker symbols, and ERs are for each holding in each account. Omitting parts of a portfolio can result in advice that is sub-optimal (or even outright bad), so it's best to provide the complete picture for the best advice.
Topic Author
newguyhere00
Posts: 5
Joined: Tue Apr 02, 2024 2:38 pm

Re: Learning as I get older

Post by newguyhere00 »

loukycpa wrote: Tue Apr 02, 2024 5:20 pm Welcome to the forum!

In summary I see zero wrong with what you are doing. What you own are two funds of funds, both of which own low cost, total market index funds. Your asset allocation of about 70%/75% stocks is reasonable for someone in accumulation stage. You don't have to change anything.

You have a lot of international diversification consistent with what Vanguard recommends, as Vanguard is placing 40% of your allocation to stocks in a total market international stock fund and 30% of your allocation to bonds is allocated to international bonds. There is a lot of debate on Bogleheads about how much to have in international stocks, and you will generally hear anywhere from 0% to 50% being recommended. So you are on the high end of that spectrum but not outside it.

I would stay the course and resist the urge to tinker.
Thank you so much for your input!

I'll have to do more reading in to folks' opinions in international stocks.
I know there's many people out there that would just like to set n forget, but as I'm finding more time lately to do more reading and learning about the complexities of investing, I'm finding more topics to read in to.

I appreciate your 2 cents and reassurance!
steadyosmosis
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Re: Learning as I get older

Post by steadyosmosis »

Probably should be doing pre-tax 401k (not Roth 401k), but no marginal tax info provided, so impossible to say for sure.
Age<59.5. Early-retired. AA ~55/45. Taxable account, Roth IRA, HSA...all are 100% equities. 100% of fixed income is in tIRA. I spend from taxable account and rebalance in tIRA.
Topic Author
newguyhere00
Posts: 5
Joined: Tue Apr 02, 2024 2:38 pm

Re: Learning as I get older

Post by newguyhere00 »

arcticpineapplecorp. wrote: Tue Apr 02, 2024 6:38 pm
newguyhere00 wrote: Tue Apr 02, 2024 2:59 pm ~290,000.00 Total.

of that 240,000 is VASGX
and 50,000 is VSCGX

And then for "source" it says...

Profit sharing - ~80,000
401k - ~40,000
Roth - ~61,000
"Match" - 109,000

For my age, with a pretty high risk tolerance, would this fall in line with 'on the right track'? I've been trying to look in to the details about differences between say... VASGX or VINIX (blend vs an S&P500 index?)
Welcome to the group.

So here's what i see:
1. VASGX for those who don't want to look up the tickers is Vanguard LifeStrategy Growth Fund. It's 80% stock (20% fixed income).
2. VSCGX is Vanguard LifeStrategy Conservative Growth which is 40% stock (60% fixed income)
3. There's usually 4 types for the LifeStrategy which I'll call LS for short:
a. LS Growth Fund (80/20 stock/bond)
b. LS Moderate Growth Fund (60/40)
c. LS Conservative Growth Fund (40/60)
d. LS Income Fund (20/80)

4. You have a and c.

5. why, I'm not sure. If you want a certain allocation overall you could simply pick one fund that's closest to the overall allocation you want instead of holding 2 separate funds. There may be a good reason to do this, but that's for you to explain. But for instance:

6. If you have $240,000 in growth fund (80/20) and $50,000 in conservative fund (40/60) you have:
$192,000 of the $240,000 in stocks in the growth fund
$20,000 of the $50,000 in stocks in the conservative fund

or said another way, you have $212,000 ($192,000 + $20,000) in stocks (out of $290,000 total).

$212,000 / $290,000 = 73% in stocks overall.

So your overall portfolio is really 73/27.

7. So you have to ask if that's what you want or not, and if not, what are other ways you can go about that.

8. It's also unknown how much money and what funds are being used for the Roth vs the 401k (assuming the 401k is pretax, dunno). For Roth Assets, it may be better/best to just have stocks in that account and have more bonds/fixed income in the pretax account. I.E., you could use a LifeStrategy Fund for the 401k, but just a stock fund for the Roth account (not a stock and bond fund combined). This is more tax efficient for different reasons I won't get into unless you want to learn more or look up tax efficient placement at bogleheads.

what do you think?
Thank you so much for your time!

So I have two thoughts that come from your response;

So first is (after taking that questionnaire) I appear to have a 80/20 stock/bond suggested by my answers submitted.

Second is, I'll have to do more exploration in my account, it's with NWPS and I too was wondering how sources like "profit sharing" and "match" were distributed - so I'll have to see if there's a section in the site where it gives more detail, or maybe even make a phone call for a better explanation.
Also related, is that I'd like to know more about tax efficiency and figure out what is where between the pre-tax and the Roth.

I really appreciate your input and how it gave me a few questions/curiosities I'd like to have solid answers for (I've basically spent the past 16 years just ignoring the account until very recently)
Golf maniac
Posts: 1363
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Location: Florida

Re: Learning as I get older

Post by Golf maniac »

I would start off with a very broad goal. What are you trying to accomplish? So my broad goal was to be able to retire at 56. I wasn’t sure if I would actually retire or not, I just wanted to have the option. Then I set a plan to make it happen and stuck to that plan. There are lots of calculators out there to assist and you can say something like I want to have sufficient income to replace 80% of current expenses or whatever you want your goal to be. Luckily I set a goal because at 56 I hated my job and was ready to retire. If you have the risk tolerance you should have all your money in an all stock fund. Depending on your goal you have 20 to 30 years of growth.
hudson
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Joined: Fri Apr 06, 2007 9:15 am

Re: Learning as I get older [current allocation(s) for retirement investments]

Post by hudson »

newguyhere00 wrote: Tue Apr 02, 2024 2:59 pm
~290,000.00 Total.

of that 240,000 is VASGX
and 50,000 is VSCGX

Those funds are OK for now and forever.

What would I do if I were in your shoes? I know that I'm splitting hairs.
The expense ratios for those two funds give me a little heartburn.
Vanguard Total Stock Market would be my choice with an expense ratio of .04% or the same thing in an ETF at .03%...VTI. It's good to throw expense ratio-basis-points around like manhole covers. :)
How much would you save a year by changing over?

Bottom Line: You are fine where you are.

Consider reading Bill Bernstein's Pillars, 2d Ed. https://www.amazon.com/Four-Pillars-Inv ... b_title_bk
Topic Author
newguyhere00
Posts: 5
Joined: Tue Apr 02, 2024 2:38 pm

Re: Learning as I get older [current allocation(s) for retirement investments]

Post by newguyhere00 »

hudson wrote: Wed Apr 03, 2024 6:28 pm
newguyhere00 wrote: Tue Apr 02, 2024 2:59 pm
~290,000.00 Total.

of that 240,000 is VASGX
and 50,000 is VSCGX

Those funds are OK for now and forever.

What would I do if I were in your shoes? I know that I'm splitting hairs.
The expense ratios for those two funds give me a little heartburn.
Vanguard Total Stock Market would be my choice with an expense ratio of .04% or the same thing in an ETF at .03%...VTI. It's good to throw expense ratio-basis-points around like manhole covers. :)
How much would you save a year by changing over?

Bottom Line: You are fine where you are.

Consider reading Bill Bernstein's Pillars, 2d Ed. https://www.amazon.com/Four-Pillars-Inv ... b_title_bk

Thank you so much for your 2 cents!

I have heard that we want to try and keep expense ratios low, I'll definitely make sure to keep that in mind as pretty important.

Also, thank you for the reading suggestion, I've got that downloading to my kindle as I'm typing.

Thanks again for your thoughts. I really do appreciate it.
Topic Author
newguyhere00
Posts: 5
Joined: Tue Apr 02, 2024 2:38 pm

Re: Learning as I get older

Post by newguyhere00 »

Golf maniac wrote: Wed Apr 03, 2024 1:01 pm I would start off with a very broad goal. What are you trying to accomplish? So my broad goal was to be able to retire at 56. I wasn’t sure if I would actually retire or not, I just wanted to have the option. Then I set a plan to make it happen and stuck to that plan. There are lots of calculators out there to assist and you can say something like I want to have sufficient income to replace 80% of current expenses or whatever you want your goal to be. Luckily I set a goal because at 56 I hated my job and was ready to retire. If you have the risk tolerance you should have all your money in an all stock fund. Depending on your goal you have 20 to 30 years of growth.
I think you bring up something I've continued to struggle imagining, let alone articulating.
Background:
As a child growing up, we hardly had much. I caught a lucky break (for work/carreer), and also had two individuals that made sure that I filled out the forms to set aside $$ for retirement.

So thinking now, "what do I want to be doing in 30 years?" I draw a blank, lol.

Do I think I won't be working at all @ 59 or 67? I don't believe so.
I feel like working gives me a sense of purpose, and I've been fortunate enough to work around people I get along with, as well as the 'relationship' with the company- but I'm under no illusion that it'll be like that forever.

Maybe I'm viewing retirement (or what I've been saving) as an "option to work part time at a slower or lower demand pace" or maybe "be that relative that helps other aspirational relatives achieve what they want" (whether that's me helping financially, or through advice or time).

This probably isn't the place for philosophical pondering on my part but putting it in the perspective of "what would I like to accomplish" makes sense, and I should probably do some self-reflecting about what I'd like to do other than just be a worker til I expire.

Thank you for your insight. I appreciate what it's making me ponder.
Golf maniac
Posts: 1363
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Location: Florida

Re: Learning as I get older [current allocation(s) for retirement investments]

Post by Golf maniac »

I think you have it exactly right. Financial freedom gives you choices. You don’t have to retire, but I can tell you it is great to have the freedom at whatever age. We never know about health, job security, or our outlook when we are looking 20 or more years down the line. So having that freedom is mind blowing when you reach that goal. For me personally, I hated my job and decided to quit. I thought I would work in consulting full time after the job. But then as I was exploring jobs I found other things I wanted to do and explore. So I said maybe I will just work part time consulting. But after 6 months I decided I had plenty to do without working and I woke up each day with a big smile and not dreading getting up. Everyone is different but having that freedom, it is priceless.
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