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lotr61671
Posts: 12
Joined: Wed Oct 03, 2018 2:36 pm

Newcomer to Retirement Investing-Help/Advice!

Post by lotr61671 » Thu Oct 11, 2018 10:07 am

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Last edited by lotr61671 on Fri Oct 12, 2018 12:01 pm, edited 1 time in total.

Living Free
Posts: 130
Joined: Thu Jul 19, 2018 7:31 pm

Re: Newcomer to Retirement Investing-Help/Advice!

Post by Living Free » Thu Oct 11, 2018 12:02 pm

lotr61671 wrote:
Thu Oct 11, 2018 10:07 am
Hello, thank you all for taking the time to read/provide any helpful advice! I will start off by posting my current portfolio as indicated:

Emergency Funds:Yes, have this
Debt: No current debt, but will be looking to buy a home in the next 1-2 years
Tax Filing Status: Single, but will be married in 2019.
Tax Rate: Federal=22% State= 5.1% (Mass)
Sate of Residence: Massachusetts
Age: 27
Desired Asset Allocation: 80% Stock (of which 60-70% US; 40-30% International, not sure what is best?) 20%Bonds

Current Retirement Assets:
Roth IRA at TD Ameritrade:
SWPPX Expense Ratio: 0.03
PRGSX Expense Ratio: 0.84
TRIRX Expense Ratio: 0.31
Will contribute no less than $2,000 per year, maybe not the limit of $5,500, but somewhere in the middle

403b Options: As a state employee, I am paying into the pension, which hopefully will be good at my retirement age, if I stay my entire career (undecided at this point)
The 2 firms I would go with would be either Fidelity or TIAA. I am thinking Fidelity: there 403b options are located here: https://pcs.fidelity.com/public/netbene ... ient=99999

Questions:
1. I am thinking of using 403b only for bond allocation, as I have seen that having bonds in 403b as opposed to in my Roth IRA is more tax efficient, why is this?

2. No matter if I choose to have bonds in my 403b or IRA, what are good bond funds for investment? I assume government bonds are the safest, as they are the least likely ones to be defaulted on?

3. Also would appreciate any advice on my current Roth IRA investment choices, if I should choose a different mutual index fund, or if an index ETF would be better suited?

Thank you so much again! I am starting to do this a supplemental retirement income, hoping to never have to use these funds until retirement, and hoping to have enough for retirement.
1. I would use the FID US BOND IDX PR which is the Fidelity US bond index fund in the 403b. It is not more tax efficient to have bonds in the 403b rather than the roth; you'd rather have assets with more growth potential (ie, stocks) in the roth so that they will have more time to grow as you would expect to draw from the roth after the 403b once you are retired. Both of those options are more tax efficient for bonds compared to investing in a taxable/brokerage account (ie, a non-retirement account)

2. Again, I'd recommend a US bond index fund. Typically it's about 70% US Government bonds, which you can look up by clicking the link to your fund from the list you provided or googling the name and going to fidelity's website.

3. Given your recent experience with having to pay the transaction fee in your IRA I'd consider moving that to vanguard or fidelity or schwab. the S&P 500 index is fine but I'd personally prefer a total US stock market index mutual fund. As to the other two funds I think they are too expensive. Also the TRIRX is a large cap fund so overlapping with the S&P 500 index fund. I'd recommend reading up on the 3 fund portfolio and lazy portfolios and determine an asset allocation that is appropriate for your situation (at your age I'd do 80-90% stock and 10-20% bonds) and then go from there.

lotr61671
Posts: 12
Joined: Wed Oct 03, 2018 2:36 pm

Re: Newcomer to Retirement Investing-Help/Advice!

Post by lotr61671 » Thu Oct 11, 2018 2:13 pm

@living free: Thank you!
Based on more research I have done, Schwab and others definitely offer better options for funds. The "non-transaction fee" mutual funds TD offers, the majority of them have incredibly high expense ratios.

lotr61671
Posts: 12
Joined: Wed Oct 03, 2018 2:36 pm

Re: Newcomer to Retirement Investing-Help/Advice!

Post by lotr61671 » Fri Oct 12, 2018 9:22 am

Living Free wrote:
Thu Oct 11, 2018 12:02 pm
lotr61671 wrote:
Thu Oct 11, 2018 10:07 am
Hello, thank you all for taking the time to read/provide any helpful advice! I will start off by posting my current portfolio as indicated:

Emergency Funds:Yes, have this
Debt: No current debt, but will be looking to buy a home in the next 1-2 years
Tax Filing Status: Single, but will be married in 2019.
Tax Rate: Federal=22% State= 5.1% (Mass)
Sate of Residence: Massachusetts
Age: 27
Desired Asset Allocation: 80% Stock (of which 60-70% US; 40-30% International, not sure what is best?) 20%Bonds

Current Retirement Assets:
Roth IRA at TD Ameritrade:
SWPPX Expense Ratio: 0.03
PRGSX Expense Ratio: 0.84
TRIRX Expense Ratio: 0.31
Will contribute no less than $2,000 per year, maybe not the limit of $5,500, but somewhere in the middle

403b Options: As a state employee, I am paying into the pension, which hopefully will be good at my retirement age, if I stay my entire career (undecided at this point)
The 2 firms I would go with would be either Fidelity or TIAA. I am thinking Fidelity: there 403b options are located here: https://pcs.fidelity.com/public/netbene ... ient=99999

Questions:
1. I am thinking of using 403b only for bond allocation, as I have seen that having bonds in 403b as opposed to in my Roth IRA is more tax efficient, why is this?

2. No matter if I choose to have bonds in my 403b or IRA, what are good bond funds for investment? I assume government bonds are the safest, as they are the least likely ones to be defaulted on?

3. Also would appreciate any advice on my current Roth IRA investment choices, if I should choose a different mutual index fund, or if an index ETF would be better suited?

Thank you so much again! I am starting to do this a supplemental retirement income, hoping to never have to use these funds until retirement, and hoping to have enough for retirement.
1. I would use the FID US BOND IDX PR which is the Fidelity US bond index fund in the 403b. It is not more tax efficient to have bonds in the 403b rather than the roth; you'd rather have assets with more growth potential (ie, stocks) in the roth so that they will have more time to grow as you would expect to draw from the roth after the 403b once you are retired. Both of those options are more tax efficient for bonds compared to investing in a taxable/brokerage account (ie, a non-retirement account)

2. Again, I'd recommend a US bond index fund. Typically it's about 70% US Government bonds, which you can look up by clicking the link to your fund from the list you provided or googling the name and going to fidelity's website.

3. Given your recent experience with having to pay the transaction fee in your IRA I'd consider moving that to vanguard or fidelity or schwab. the S&P 500 index is fine but I'd personally prefer a total US stock market index mutual fund. As to the other two funds I think they are too expensive. Also the TRIRX is a large cap fund so overlapping with the S&P 500 index fund. I'd recommend reading up on the 3 fund portfolio and lazy portfolios and determine an asset allocation that is appropriate for your situation (at your age I'd do 80-90% stock and 10-20% bonds) and then go from there.
The only bond choice my plans offer are the Vanguard Total Bond Market Index Fund (VBLTX), is this comparable to a US bond index fund? It is not solely a government/treasury fund.

Living Free
Posts: 130
Joined: Thu Jul 19, 2018 7:31 pm

Re: Newcomer to Retirement Investing-Help/Advice!

Post by Living Free » Fri Oct 12, 2018 11:55 am

the vanguard bond index should be comparable to the fidelity one and be a good choice. also around 70% government bonds. see https://investor.vanguard.com/mutual-fu ... file/VBTLX

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