Portfolio help, 50k to invest

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Frogline
Posts: 6
Joined: Wed Apr 11, 2012 11:55 pm

Portfolio help, 50k to invest

Post by Frogline » Mon Sep 11, 2017 8:56 pm

Hi, its been several years since I’ve posted here though I linger every once in a while to make sure I’m on the right path. I’ve spent the last years building some reserves, getting rid of debt and buying a house. Now that I’ve got the goals met, it’s time for me to open a taxable account and increase my savings rate. I've got about 50k that needs to be invested between an HSA and a new taxable account. I’d really appreciate a look at what I’ve got and what you all think an appropriate move going forward would be.
I reread boglehead’s guide again before posting and tried to present this information as clearly as possible. Please just let me know what needs updating in the post. Thanks so much for your help!!

:sharebeer

Emergency funds: About 4 months worth in a capital one savings account @0.75% APY
Debt: Mortgage 650k 30 year fixed @ 3.875% (Have ~35% equity)
Tax Filing Status: Married filing jointly
Tax Rate: 33% Federal, 0% State
State of Residence: Texas
Age: 34 & 33 (5yo, 3yo and maybe one on the way)
College: Texas savings plan 529: 5yo- 118k 3yo- 79k
Desired Asset allocation: 62% stocks / 33% bonds / 5% REIT
Desired International allocation: 7% of stock
Income: ~$350,000

Total Portfolio: ~500k


No taxable account YET (Will invest after this post, will be ~5% of the portfolio)

HSA (TD Ameritrade) 4%
-Not invested yet

His 401k (Slavic) 42%
-100% in Vanguard Target 2045 ER 0.09%?

Hers 403b (Fidelity) 32%
-100% Fidelity Freedom 2045 ER .64%

Hers 401a (Fidelity) 8%
-100% Fidelity Freedom 2045 ER .64%

His Roth (Both Roths in Raymond James accounts with 1% AUM fee) 8%
**Would assume the ERs are the same as Morningstar but can’t tell through the Raymond James software

10% VANGUARD DIVIDEND GROWTH FUND INVESTOR CLASS N/L (VDIGX)
80% VANGUARD TARGET RETIREMENT 2050 FUND INVESTOR CLASS N/L (VFIFX)
10% VANGUARD TOTAL STOCK MARKET INDEX FUND INVESTOR CLASS N/L (VTSMX)

Her Roth 6%
10% VANGUARD DIVIDEND GROWTH FUND INVESTOR CLASS N/L (VDIGX)
80% VANGUARD TARGET RETIREMENT 2050 FUND INVESTOR CLASS N/L (VFIFX)
10% VANGUARD TOTAL STOCK MARKET INDEX FUND INVESTOR CLASS N/L (VTSMX)


Contributions

New annual Contributions
$18,000 his 401k (4% match ~10k)
$18,000 her 403b 4% match ~2k)
$5,500 his IRA/Roth IRA
$5,500 her IRA/Roth IRA
$6,750 Family HSA
$15,500 taxable

Available funds

Funds available in his 401(k)
**The ER are not shown on the site, links you to Morningstar

American Funds The Investment Company of America RICGX 0.30%
American Small Cap World Fund CL R6 RLLGX 0.70%
Delaware Small Cap Value DEVI 0.99%
Dodge & Cox Income DODIX 0.43%
Eaton Vance Atlanta Capital SMD-R6 ERASX 0.87%
Fidelity 500 Index FXSIX 0.03%
FidelityContra FCNTX 0.68%
Hartford World Bond CL Y HWDYX 0.70%
Invesco Diversified Dividend R6 LCEFX 0.42%
JPMorgan Mid Cap Value FLMVX 0.75%
Laudus Mondrian Int'l Equity LIEIX 0.90%
MFS Growth R6 MFEKX 0.62%
Oppenheimer Developing Markets I ODVIX 0.88%
Prudential High Yield Cl Q PHYQX 0.45%
Reliance NY Life Anchor Series 1 CL 0 QEWFQ ??%
Vanguard Developed Mrkts Index VTMGX .07%
Vanguard Explorer VEXRX 0.34%
Vanguard Mid Cap Index VMCIX .05%
Vanguard REIT Index Admiral VGSLX 0.12%
Vanguard Short-Term Bond Index Admiral VBIRX 0.07%
Vanguard Small Cap Index VSCIX 0.05%
Vanguard Target Retirement 2015 VITVX 0.09%
Vanguard Target Retirement 2020 VITWX 0.09%
Vanguard Target Retirement 2025 VRIVX 0.09%
Vanguard Target Retirement 2030 VTTWX 0.09%
Vanguard Target Retirement 2035 VITFX 0.09%
Vanguard Target Retirement 2040 VIRSX 0.09%
Vanguard Target Retirement 2045 VITLX 0.09%
Vanguard Target Retirement 2050 VTRLX 0.09%
Vanguard Target Retirement 2055 VIVLX 0.09%
Vanguard Target Retirement 2060 VILVX 0.09%
Vanguard Target Retirement Income VITRX 0.09%
Vanguard Total Bond Market Index Admiral VBTLX 0.05%



Funds available in her 403(b)/401(a)

AM CENT VALUE I (AVLIX) Large Cap 0.78%
FID 500 INDEX PR (FUSVX) Large Cap 0.035%
FID CONTRAFUND K (FCNKX) Large Cap 0.58%
AM CENT MD CP VAL I (AVUAX) Mid-Cap 0.81%
FID EXT MKT IDX PR (FSEVX) Mid-Cap 0.07%
HARTFORD MIDCAP R5 (HFMTX) Mid-Cap 0.86%
EAGLE SM CAP GRTH I (HSIIX) Small Cap 0.81%
NB GENESIS - INST CL (NBGIX) Small Cap 0.85%
NORTHERN SM CAP VAL (NOSGX) Small Cap 1.14%
DODGE & COX INTL STK (DODFX) International 0.64%
LZRD EMRG MKTS EQ IS (LZEMX) International 1.09%
FID SEL NATURAL RES (FNARX) Specialty 0.84%
FID BALANCED K (FBAKX) N/A 0.46%
FID FREEDOM K 2005 (FFKVX) N/A 0.44%
FID FREEDOM K 2010 (FFKCX) N/A 0.47%
FID FREEDOM K 2015 (FKVFX) N/A 0.5%
FID FREEDOM K 2020 (FFKDX) N/A 0.54%
FID FREEDOM K 2025 (FKTWX) N/A 0.57%
FID FREEDOM K 2030 (FFKEX) N/A 0.61%
FID FREEDOM K 2035 (FKTHX) N/A 0.64%
FID FREEDOM K 2040 (FFKFX) N/A 0.64%
FID FREEDOM K 2045 (FFKGX) N/A 0.64%
FID FREEDOM K 2050 (FFKHX) N/A 0.64%
FID FREEDOM K 2055 (FDENX) N/A 0.64%
FID FREEDOM K 2060 (FDKNX) N/A 0.64%
FID FREEDOM K INCOME (FFKAX) N/A 0.42%
PRINCIPAL FIXED ACCT Stable Value --
AMCENT INFL ADJBD R5 (AIANX) Income 0.27%
DODGE & COX INCOME (DODIX) Income 0.43%
FID INT TR IDX PR (FIBAX) Income 0.06%
FID RET GOVT MM (FGMXX) 0.63%



Questions:

I’m debating on whether to get rid of the target date funds be closer to a more traditional 3 fund. Main advantage would be to decrease costs though I do seem to have decent target date options. Thoughts?

1. Thoughts on the allocation? Too much in REIT? REIT in the 401K or taxable?

2. I’m paying about $750 in fees yearly to the financial planner to handle my roths. They do a yearly financial review with us. It’s about 1.5 hrs and covers investments/insurance/college… I think it’s worth it until it gets over $1,500 in fees. Thoughts?

3. I’ll be investing the HSA and taxable account after this post. Both will probably be Vanguard TSM. I know it’s better to get it invested but is the timing bad?....(I know I know, don’t try to time the market)

4. Is it worth setting up a CD ladder for the emergency fund? I found a savings account paying 1.3%, maybe the better option?

Thank you all in advance!!
:beer

User avatar
Duckie
Posts: 5076
Joined: Thu Mar 08, 2007 2:55 pm

Re: Portfolio help, 50k to invest

Post by Duckie » Tue Sep 12, 2017 6:30 pm

Frogline wrote:Desired Asset allocation: 62% stocks / 33% bonds / 5% REIT
Desired International allocation: 7% of stock
That breaks down to 62% US stocks (including REITs), 5% international stocks, and 33% bonds.
His Roth (Both Roths in Raymond James accounts with 1% AUM fee) 8%
Why pay that 1% AUM fee? Since you are investing in Vanguard funds just transfer your Roth IRAs to Vanguard.
Funds available in his 401(k)
The best options are:
  • Fidelity 500 Index FXSIX 0.03% -- Large caps, 80% of US stocks
  • Vanguard Mid Cap Index VMCIX .05% -- Mid caps, 6% of US stocks
  • Vanguard Small Cap Index VSCIX 0.05% -- Small caps, 14% of US stocks
  • Vanguard REIT Index VGSLX 0.12% -- REITs
  • Vanguard Developed Markets Index VTMGX .07% -- Developed markets, 75% of international stocks
  • Vanguard Total Bond Market Index VBTLX 0.05% -- US bonds
  • Or the Target Retirement 0.09% that comes closest to your 33% bond AA
The ER are not shown on the site, links you to Morningstar
Hopefully that means the 401k uses the retail expense ratios and doesn't tack on extra fees.
Funds available in her 403(b)/401(a)
The best options are:
  • FID 500 INDEX (FUSVX) 0.035% -- Large caps, 80% of US stocks
  • FID EXT MKT INDEX (FSEVX) 0.07% -- Mid/small caps, 20% of US stocks
  • FID INT TR INDEX (FIBAX) 0.06% -- US treasury bonds
I’m debating on whether to get rid of the target date funds be closer to a more traditional 3 fund. Main advantage would be to decrease costs though I do seem to have decent target date options. Thoughts?
His 401k has decent low-cost target-date funds. Her 403b does not. It's better to make it all or nothing (as in all accounts are t-d or no accounts are t-d). Once you add a taxable account for retirement purposes, using t-d funds is not optimum because they don't belong in taxable.
Thoughts on the allocation? Too much in REIT? REIT in the 401K or taxable?
5% REIT is fine. Never put REITs in taxable. Either use his 401k or one of the Roth IRAs.

Your AA is for 7% of stocks in international which amounts to about 5%. Why such a low amount? Vanguard has found between 20% and 40% of stocks in international to be the "sweet spot". See the Vanguard paper link and the discussion. I usually split the difference and recommend 30% of stocks.
I’m paying about $750 in fees yearly to the financial planner to handle my roths. They do a yearly financial review with us. It’s about 1.5 hrs and covers investments/insurance/college… I think it’s worth it until it gets over $1,500 in fees. Thoughts?
What would it cost you do get a financial review somewhere without keeping your assets at Raymond James?

Given your above AA the following is an example of what you could have now:

His 401k at Slavic -- 42%
4% (FXSIX) Fidelity 500 Index Fund Institutional Class (0.03%)
5% (VGSLX) Vanguard REIT Index Fund Admiral Shares (0.12%)
33% (VBTLX) Vanguard Total Bond Market Index Fund Admiral Shares (0.05%)

Her 403b at Fidelity -- 32%
23% (FUSVX) Fidelity 500 Index Fund Premium Class (0.035%)
9% (FSEVX) Fidelity Extended Market Index Fund Premium Class (0.07%)

Her 401a at Fidelity -- 8%
8% (FUSVX) Fidelity 500 Index Fund Premium Class (0.035%)

His Roth IRA at Raymond James -- 8%
8% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

Her Roth IRA at Raymond James -- 6%
6% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)

His HSA at TDAmeritrade -- 4%
4% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

My comments:
  • This puts the REITs in his 401k.
  • This puts international in her Roth IRA because the Vanguard fund is better than the employer options. It's 6% instead of 5% for simplicity.
  • 80% large caps (FXSIX in his 401k, FUSVX in her 403b/401a) plus 20% mid/small caps (FSEVX in her 403b) makes up the total US stock market.
  • I'm not sure if your HSA offers Admiral class shares, but 4% of $500K is $20K so I gave you admiral shares in the example.
  • I put all the bonds in his 401k because I prefer the more diversified VBTLX to the limited FBIAX.
Just some possibilities.

Frogline
Posts: 6
Joined: Wed Apr 11, 2012 11:55 pm

Re: Portfolio help, 50k to invest

Post by Frogline » Tue Sep 12, 2017 9:15 pm

First, THANK YOU for spending the time to help me.
His Roth (Both Roths in Raymond James accounts with 1% AUM fee) 8%
Why pay that 1% AUM fee? Since you are investing in Vanguard funds just transfer your Roth IRAs to Vanguard.
Will likely do this and just pay hourly for consult. They're helpful and fiduciaries but I HATE giving up the 1%.

I’m debating on whether to get rid of the target date funds be closer to a more traditional 3 fund. Main advantage would be to decrease costs though I do seem to have decent target date options. Thoughts?
His 401k has decent low-cost target-date funds. Her 403b does not. It's better to make it all or nothing (as in all accounts are t-d or no accounts are t-d). Once you add a taxable account for retirement purposes, using t-d funds is not optimum because they don't belong in taxable.
Understood and agreed. I'm going to dump them and switch. Can customize and balance easier in the future as well.


Your AA is for 7% of stocks in international which amounts to about 5%. Why such a low amount? Vanguard has found between 20% and 40% of stocks in international to be the "sweet spot". See the Vanguard paper link and the discussion. I usually split the difference and recommend 30% of stocks.
Read the linked paper, thanks! Just nerves and unfamiliarity with international stock. I'll research and likely take the advice to increase the allocation of international.


Given your above AA the following is an example of what you could have now:

His 401k at Slavic -- 42%
4% (FXSIX) Fidelity 500 Index Fund Institutional Class (0.03%)
5% (VGSLX) Vanguard REIT Index Fund Admiral Shares (0.12%)
33% (VBTLX) Vanguard Total Bond Market Index Fund Admiral Shares (0.05%)

Her 403b at Fidelity -- 32%
23% (FUSVX) Fidelity 500 Index Fund Premium Class (0.035%)
9% (FSEVX) Fidelity Extended Market Index Fund Premium Class (0.07%)

Her 401a at Fidelity -- 8%
8% (FUSVX) Fidelity 500 Index Fund Premium Class (0.035%)

His Roth IRA at Raymond James -- 8%
8% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

Her Roth IRA at Raymond James -- 6%
6% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.11%)

His HSA at TDAmeritrade -- 4%
4% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.04%)

Super helpful and exactly what I needed for some guidance. You guys are so awesome.

I'll also be funding my taxable account with about 30k. I'm assuming the suggestion would be VTSM for all of that and shift the bonds up in the 401ks? I'll shift also to increase international exposure.

User avatar
Duckie
Posts: 5076
Joined: Thu Mar 08, 2007 2:55 pm

Re: Portfolio help, 50k to invest

Post by Duckie » Wed Sep 13, 2017 2:53 pm

Frogline wrote:I'll also be funding my taxable account with about 30k. I'm assuming the suggestion would be VTSM for all of that and shift the bonds up in the 401ks?
The best options for taxable are Total Stock Market or Total International Stock Market. If you put TISM in taxable you can take advantage of the Foreign tax credit. But TSM is just fine.

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