Investment Organization - 33 yo - need advice

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tturner2
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Joined: Wed Feb 07, 2018 8:44 pm

Investment Organization - 33 yo - need advice

Post by tturner2 » Wed Feb 07, 2018 9:08 pm

Hoping to get investments more organized. Any suggestions would be appreciated:

33 yo single male
Gross income ~$135k/yr
$95k in cash on hand
$18k with 5% match in employee 403(b) yearly
$138k mortgage remains, value $260k
$25k left on vehicle loan

Part-time employer 401(k) with Merrill Lynch
-MyRetirement 2050 Fund ~$118k
-$6k in stock incentive
-Both fully vested

~$25k in Wal-Mart stock

Full time employer 403(b) with Fidelity (recently signed up for PASW .5% cost through work)
-$62k was recently in FID FREEDOM 2050 K (FNSBX)

Recently Fidelity PAS suggested 59% domestic, 24% foreign, 17% bonds and 1% short term
Planning on doing a 2017 backdoor ROTH and will also do this for 2018

Would like to put $50k in a new taxable account. Possibly looking at Vanguard PAS or sticking with Fidelity. Considering putting in $5k per month up to the $50k but won't qualify for PAS.

Looking for suggestions on best approach or changes that need to be made in current investments.
Last edited by tturner2 on Wed Feb 07, 2018 10:45 pm, edited 1 time in total.

haban01
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Location: Wisconsin

Re: Investment Organization - 33 yo - need advice

Post by haban01 » Wed Feb 07, 2018 10:23 pm

Congratulations on getting started down a great path!

The biggest decision to overcome in one of our Asset Allocation plan over all if your accounts. I prefer to keep Retirement as it's own AA and not lump in other unrelated goals.

I would assume that the My Retirement Fund 2050 is a lifestage fund that it almost all equities. Jack Bogle suggests using your age in bonds as a starting point.

Let's say that you have 200K in Retirement. If that turned into 100k in 6 months how would you feel?

I'd sell the Walmart stock as long as it is a LTCG.

I would recommend picking up a copy of the Bogleheads' book and start there.

That is a large fund of cash. Why not pay off the car?
Maybe consider doing a non deductible IRA and then converting into a Roth IRA too.

Great Job so far in life! :happy
Eric Haban | | "Stay the Course" | "Press on Regardless" | | Wisconsin Bogleheads Chapter Coordinator

tturner2
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Joined: Wed Feb 07, 2018 8:44 pm

Re: Investment Organization - 33 yo - need advice

Post by tturner2 » Thu Feb 08, 2018 11:40 am

thanks for the advice.
I am planning to do the back door Roth. My 401k/403b are in for the long haul and am ok being aggressive. The Fidelity 2050 fund I was in was 62% domestic, 30 international, 6.5 bonds, 1.5 in short. I am confused to the new less aggressive PAS recommendations. Would the Wal-Mart stock be good to fund some of the 50k put into a taxable? My vehicle loan is a really low interest and I hope to recoup more than that. I read mixed opinions on placing a lump sum in vs. gradual chucks, wondering if my situation leads to one being a better option?

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BL
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Re: Investment Organization - 33 yo - need advice

Post by BL » Thu Feb 08, 2018 12:26 pm

If you list the funds available in 401k, including name, ticker, and ER, the folks here can help you pick the best choices, and you might skip the extra advisor fees, or at least make the decision.
Fidelity PAS is usually not cheap and they may not put you into low-ER funds, so that is a double whammy. Also Fidelity has Target INDEX funds; not sure if that is what you are using, but they are much lower ER (cost).

Consider selling any individual stocks: Walmart + your company.

If hesitant to buy, consider at least getting started. Since you are holding cash, I would start with total stock market. You could even buy CDs with some of your cash instead of bonds, if you choose.

tturner2
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Re: Investment Organization - 33 yo - need advice

Post by tturner2 » Thu Feb 08, 2018 1:34 pm

i have an image of the funds but I'm struggling to get them on here.

tturner2
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Re: Investment Organization - 33 yo - need advice

Post by tturner2 » Thu Feb 08, 2018 10:31 pm

I went ahead today and started a taxable account:
10k in vanguard admiral total stock, 5k in international total, and 3k in total bond.
I went ahead and but 11k into my trad IRA(2017 and 2018) in general fund which I can't backdoor until funds post, my question is should I take a similar approach as above or a target fund when I switch to my Roth IRA? Thanks.

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BL
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Re: Investment Organization - 33 yo - need advice

Post by BL » Sat Feb 10, 2018 7:35 pm

I guess you could do something like 5-3-3 of the 3 funds, if that is close enough. You can even things out next year. Or just do a Target date or Life Strategy fund with bond allocation closest to your preference, at least until you have enough so it is not so complicated.

Ideally, you would choose 401k first, since that could be limited, and then fill in others to keep up the allocation. Some do prefer to do 3 in each account, others put most of bonds in 401k and equity funds in taxable and Roth. Bonds are not as tax-efficient in taxable accounts as you are taxed annually on dividends at your regular tax rate. Vanguard total stock market is quite tax-efficient, with about 2% mostly qualified dividends and no Capital Gains distributions. International has less qualified dividends so you pay more at regular tax rate, but then you also get a foreign tax credit to offset it partially.

It doesn't sound like you need a PAS at all. I would trust the Vanguard one not to put you in expensive funds, but all bets are off with other companies.

tturner2
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Re: Investment Organization - 33 yo - need advice

Post by tturner2 » Tue Feb 13, 2018 2:08 am

Image

My 403b is currently in the freedom 2050. Should I just leave it there or pick a three fund profile. These are my choices above. Thanks for any suggestions.

TwstdSista
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Re: Investment Organization - 33 yo - need advice

Post by TwstdSista » Tue Feb 13, 2018 4:51 am

Fidelity Freedom 2050 Fund - Class K (FNSBX) has an expense ratio of 0.64%.

I'd switch to:
Fidelity S&P 500 Index Fund Institutional Class (FXSIX) ER 0.03%
Fidelity International Fund Premium Class (FSIVX) ER 0.06%
Fidelity Total Bond Market Index Fund Premium Class (FSITX) ER 0.045%

In an IRA I'd buy an Extended Market Index Fund and an Emerging Markets Index Fund for full total US market and total international coverage.

In a taxable account at Vanguard I would purchase:
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%
Vanguard Total International Market Index Fund Admiral Shares (VTIAX) ER 0.11%

Skip PAS, especially at Fidelity -- too expensive. Vanguard's is less expensive and a better service if you really need it.

tturner2
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Re: Investment Organization - 33 yo - need advice

Post by tturner2 » Tue Feb 13, 2018 10:23 am

Thanks for the advice. Is there a reason to not put the same types of funds in my Roth as I have in my taxable account?

TwstdSista
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Re: Investment Organization - 33 yo - need advice

Post by TwstdSista » Thu Feb 15, 2018 4:36 am

tturner2 wrote:
Tue Feb 13, 2018 10:23 am
Thanks for the advice. Is there a reason to not put the same types of funds in my Roth as I have in my taxable account?
Generally bonds should go in pre-tax (traditional) retirement accounts. Equities (stocks) in Roth and tax efficient equities in a taxable account. See: https://www.bogleheads.org/wiki/Tax-eff ... _placement

Tax efficient funds:
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%
Vanguard Total International Market Index Fund Admiral Shares (VTIAX) ER 0.11%
or
Vanguard Total Stock Market Index Fund Investor Shares (VTSMX) ER 0.15%
Vanguard Total International Market Index Fund Investor Shares (VGTSX) ER 0.18%
and
Vanguard Tax Managed Balanced Fund Admiral Shares (VTMFX) ER 0.09%
Vanguard Tax Exempt Bond Index Fund Admiral Shares (VTEAX) ER 0.09%

There may also be a tax efficient bond fund specific to your state....

tturner2
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Re: Investment Organization - 33 yo - need advice

Post by tturner2 » Thu Feb 15, 2018 10:32 am

Would it be best to remove my bonds from my taxable completely? Looking at my 403b my target 2050 fund is allocated as follows:

Image

These are the options I have in my Merrill Lynch account, my 2050 fund is a private fund that doesn't show me allocations:

Image

Having multiple accounts is defiantly causing me some confusion. I feel if I switch out one of my 2050 funds I should do both. Recommendations with funds to choose in Merrill Lynch 401k? I am comfortable anywhere between 90/10 and 80/20. Apologize for the multiple questions, but I'm new to this and it can be a little overwhelming.

TwstdSista
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Re: Investment Organization - 33 yo - need advice

Post by TwstdSista » Thu Feb 15, 2018 11:09 am

"Index" is usually a good indicator of a low expense ratio. I'd look into:

Blackrock Intl Eqty Index Trust -- international
Blackrock Russell 1000 Index Trust -- 92% total stock market
Blackrock Russell 2000 Index Trust -- 8% total stock market
Blackrock Bond Index Trust -- bonds

Where is the $25k in WalMart stock located? Taxable or the ML 401k?

How much of the $95 cash is your emergency fund? (I'm guessing $45k since you want to invest $50k....)

tturner2
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Re: Investment Organization - 33 yo - need advice

Post by tturner2 » Thu Feb 15, 2018 1:53 pm

The Wal-Mart stock is in taxable. After looking I have $5900 in gifted shares and another $28k through stock purchase plan/some gifted. I would like to keep $40k for cash. I already put in $18 in a taxable and another $11k in backdoor Roth.

tturner2
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Joined: Wed Feb 07, 2018 8:44 pm

Re: Investment Organization - 33 yo - need advice

Post by tturner2 » Thu Feb 15, 2018 1:55 pm

is the FID growth K with er0.75% a fund to stay away from?

TwstdSista
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Re: Investment Organization - 33 yo - need advice

Post by TwstdSista » Thu Feb 15, 2018 2:03 pm

Okay, so the money has moved since the original post. I would take the time to figure out how much of your total portfolio, percentage-wise, is in each fund/position in each account (the total should add up to 100% overall). Read a lot of of threads here and you'll get the idea.

And look into the expense ratios of the funds suggested. Also, $25k seems to be too high of a position in a single stock. I'd look to reduce that to 5-10% at the most.

TwstdSista
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Re: Investment Organization - 33 yo - need advice

Post by TwstdSista » Thu Feb 15, 2018 2:04 pm

tturner2 wrote:
Thu Feb 15, 2018 1:55 pm
is the FID growth K with er0.75% a fund to stay away from?
Yes. An ER over .20% is generally not considered "good" on this forum. Keep costs low!

tturner2
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Re: Investment Organization - 33 yo - need advice

Post by tturner2 » Sun Feb 18, 2018 10:28 pm

Could I choose the top two options and the bonds or do I need the top three with bonds? Stay away from the international equity fund (0.48%)?

Image

I think I am going to set up my Roth the same as my taxable with total US and total international (bond allocation will be moved to my 403b or 401k). Does this sound reasonable?

TwstdSista
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Re: Investment Organization - 33 yo - need advice

Post by TwstdSista » Mon Feb 19, 2018 7:03 am

tturner2 wrote:
Sun Feb 18, 2018 10:28 pm
Could I choose the top two options and the bonds or do I need the top three with bonds? Stay away from the international equity fund (0.48%)?
The top two or three, with bonds. Either of those works! And definitely stay away from the international equity fund (0.48%) -- Blackrock Intl Eqty Index Trust (0.11%) is and international fund, so you're covered.
tturner2 wrote:
Sun Feb 18, 2018 10:28 pm
I think I am going to set up my Roth the same as my taxable with total US and total international (bond allocation will be moved to my 403b or 401k). Does this sound reasonable?
Yes, exactly what I would do.

tturner2
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Re: Investment Organization - 33 yo - need advice

Post by tturner2 » Mon Feb 19, 2018 9:00 am

The 2050 target fund is 0.33% after looking. Being that low, does it make the argument to just leave it be? It's half the cost of my fidelity fee. Thanks.

TwstdSista
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Re: Investment Organization - 33 yo - need advice

Post by TwstdSista » Mon Feb 19, 2018 12:35 pm

tturner2 wrote:
Mon Feb 19, 2018 9:00 am
The 2050 target fund is 0.33% after looking. Being that low, does it make the argument to just leave it be? It's half the cost of my fidelity fee. Thanks.
For the sake of simplicity, yes. It does make sense to leave it be. But ditch the PAS fee -- totally unnecessary, especially with target date funds.

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