Need advice for further investments

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Topic Author
Sloopik
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Joined: Mon Jan 07, 2019 8:50 pm

Need advice for further investments

Post by Sloopik » Mon Jan 07, 2019 9:01 pm

I'm looking for suggestions/advice on what kinds of accounts to use if I've already maxed out my Roth IRA and am already contributing enough to get free employer contributions at work, but still have enough money left over to want to keep investing.

The reason I DON'T want to contribute more into my work accounts (457 specifically) is because I want more control over my investments, specifically to keep investing with Vanguard.

Are there good types of accounts to use outside of IRA's that get some tax advantages etc? How do you guys invest if not inside a Roth IRA?

More about me:
I have no debt, no kids and am married. I realize I could max out my wife's IRA as well (and I probably will), however I'm still looking for advice to the previous question.

What kinds of OTHER accounts are commonly used to save and invest outside of IRAs? Thanks in advance!


**EDIT** First off, thanks for the warm welcome! This forum already seems pretty awesome. As requested, here's more info about me to help with your answers.

- Tax Bracket - Federal = 12%, State (CA)= 8.38%
- My employer is technically a government hospital (however, I'm not a federal or state employee) because of where our funding derives from. So my main retirement account through them is a 401(a) with optional contributions. They are giving me a free 6% automatically with no contributions required. The secondary account is a 457 with only 50% match for my first 5 years of employment, then they do eventually go to 150% match much later (I think after 15 years or so). 100% is after 10 years.
- The funds offered in the accounts are mostly Fidelity Freedom Target Retirement Funds. Exp. Ratio of 0.75% (FDEEX) >.< This is why I want more control over where my money is invested. If I remember correctly, they do not offer any of the 0 expense ratio funds. But I'll check again.
Last edited by Sloopik on Tue Jan 08, 2019 3:48 pm, edited 3 times in total.

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CABob
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Location: Southern California

Re: Need advice for further investments

Post by CABob » Mon Jan 07, 2019 11:50 pm

I suggest a taxable account and buy broad based index funds such as the total stock market. They are fairly tax efficient. You will be paying tax on dividends but the tax on capital gains are delayed until you sell.
Bob

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FiveK
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Re: Need advice for further investments

Post by FiveK » Tue Jan 08, 2019 12:01 am

Sloopik, welcome to the forum.

See Getting started and Investment Order for pertinent reading.

JBTX
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Re: Need advice for further investments

Post by JBTX » Tue Jan 08, 2019 9:48 am

Sloopik wrote:
Mon Jan 07, 2019 9:01 pm
I'm looking for suggestions/advice on what kinds of accounts to use if I've already maxed out my Roth IRA and am already contributing enough to get free employer contributions at work, but still have enough money left over to want to keep investing.

The reason I DON'T want to contribute more into my work accounts (457 specifically) is because I want more control over my investments, specifically to keep investing with Vanguard.

Are there good types of accounts to use outside of IRA's that get some tax advantages etc? How do you guys invest if not inside a Roth IRA?

More about me:
I have no debt, no kids and am married. I realize I could max out my wife's IRA as well (and I probably will), however I'm still looking for advice to the previous question.

What kinds of OTHER accounts are commonly used to save and invest outside of IRAs? Thanks in advance!
You may want to rethink this. It really depends on what the fees and investment choices are, the type of 457 plan and other considerations such as marginal tax rate, etc, but there is a decent chance you are still better maxing out the 457, even with modest fees, than putting money in a taxable account. The tax preference, level of fees and type of investment is more important than whether it is Vanguard or not.

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ruralavalon
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Location: Illinois

Re: Need advice for further investments

Post by ruralavalon » Tue Jan 08, 2019 10:44 am

Welcome to the forum :) .


It is great see that you are debt free, interested in using low expense mutual funds from companies like Vanguard, are contributing enough to your work-based plan to get the employer match, also making maximum contributions to an IRA, and able to contribute more to investing.

It looks like you are off to a very good start.

Sloopik wrote:
Mon Jan 07, 2019 9:01 pm
I'm looking for suggestions/advice on what kinds of accounts to use if I've already maxed out my Roth IRA and am already contributing enough to get free employer contributions at work, but still have enough money left over to want to keep investing.

The reason I DON'T want to contribute more into my work accounts (457 specifically) is because I want more control over my investments, specifically to keep investing with Vanguard [emphasis added].

Are there good types of accounts to use outside of IRA's that get some tax advantages etc? How do you guys invest if not inside a Roth IRA?

More about me:
I have no debt, no kids and am married. I realize I could max out my wife's IRA as well (and I probably will) [emphasis added],however I'm still looking for advice to the previous question.

What kinds of OTHER accounts are commonly used to save and invest outside of IRAs? Thanks in advance!
Definitely do contribute the maximum $6k annually to an IRA for your wife.

If there are any decent funds offered in your work-based plan, then contribute more to that plan up to the maximum of $19k annually. The tax advantage is usually very valuable.

A little more information will be useful.

What is your tax bracket, both federal and state?

What funds are offered in your work-based plan? Please give fund names, tickers and expense ratios.

Is your employer a government or governmental body, or is it a charity or non-profit? (It makes a difference for 457 plans.)

Does your employer also offer a 403b plan or 401k plan?

You can 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.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
Sloopik
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Joined: Mon Jan 07, 2019 8:50 pm

Re: Need advice for further investments

Post by Sloopik » Tue Jan 08, 2019 3:49 pm

Ok I updated my original post! I really appreciate the info and helpfulness.

Northern Flicker
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Re: Need advice for further investments

Post by Northern Flicker » Tue Jan 08, 2019 3:57 pm

It is likely that the benefits of a tax-qualified account exceed the benefits you hope to achieve by avoiding it, even without the 50% match, but the 50% match is worth far more than lowering an ER of .75%.
Taking a break from Bogleheads.

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ruralavalon
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Location: Illinois

Re: Need advice for further investments

Post by ruralavalon » Tue Jan 08, 2019 4:20 pm

The new Fidelity ZERO funds won't be offered in your 457 plan. They are available only in individual accounts, like IRAs or brokerage accounts.

I agree that the Fidelity Freedom Funds are not a very good buy because so expensive (ER 0.75%). It's still probably better to use your 457 plan as a priority over using a taxable account.

What is your age? About how long do you expect that you might remain with this employer?

What funds are offered in your 457 plan addition to the Fidelity Freedom Funds? Please give fund names, tickers and expense ratios.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
Sloopik
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Joined: Mon Jan 07, 2019 8:50 pm

Re: Need advice for further investments

Post by Sloopik » Tue Jan 08, 2019 7:47 pm

Ok after looking in the account at work I'm actually invested in the (FFLDX) which has an ER of 0.14%, so much better than I remembered.

But to answer your questions, I'm 28, I actually don't plan on staying with the company for very long. Maybe 3 more years at the very most (which will still be under 10 total).

The Funds offered are all of the FIdelity Freedom Retirement Funds plus the list below.

Their core funds are:

Stocks:
-FXAIX, ER of 0.015% (pretty solid).
-FSMAX, ER of 0.045%
-FSGGX, ER of 0.06%
-SPAXX, ER of 0.42%
-AVFIX, ER of 0.83
-GSFTX, ER of 0.71%
-FBGKX, ER of 0.62%
-FDIKX, ER of 0.4%
-FGCKX, ER of 0.75%
-FSCOX, ER of 1.11%
-FLPKX, ER of 0.53%
-FKMCX, ER of 0.51%
-FCPGX, ER of 1.02%
-FBAKX, ER of 0.45%
-FFLEX, ER of 0.14%
-FFGZX, ER of 0.12%

Bonds:
-FGMNX, ER of 0.45%
-FXNAX, ER of 0.025%

Honestly, I was considering just ignoring any of these with an ER over 0.14% anyway since that's what I'm getting in my Target Retirement Fund....

Northern Flicker
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Joined: Fri Apr 10, 2015 12:29 am

Re: Need advice for further investments

Post by Northern Flicker » Tue Jan 08, 2019 8:09 pm

FFLDX is a very good option. Fidelity has both index-fund-based and actively managed Freedom Funds which may be the source of your confusion.

You can save some in ER by managing individual funds yourself, but I would recommend sticking to Target year funds while you work out your budget and figure out your max contribution level as that is a better use of your time. You are much better off contributing more to the 457 than you would be opening a taxable account.
Taking a break from Bogleheads.

Topic Author
Sloopik
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Joined: Mon Jan 07, 2019 8:50 pm

Re: Need advice for further investments

Post by Sloopik » Tue Jan 08, 2019 8:18 pm

jalbert wrote:
Tue Jan 08, 2019 8:09 pm
You are much better off contributing more to the 457 than you would be opening a taxable account.
Ya this is a common theme I keep hearing and something I'll probably end up doing. After I max out my wife's IRA of course.

Northern Flicker
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Joined: Fri Apr 10, 2015 12:29 am

Re: Need advice for further investments

Post by Northern Flicker » Tue Jan 08, 2019 8:43 pm

Sloopik wrote:
Tue Jan 08, 2019 8:18 pm
jalbert wrote:
Tue Jan 08, 2019 8:09 pm
You are much better off contributing more to the 457 than you would be opening a taxable account.
Ya this is a common theme I keep hearing and something I'll probably end up doing. After I max out my wife's IRA of course.
Would suggest getting all of the matching funds available at any point in time in the 457 as a higher priority than funding IRAs.
Taking a break from Bogleheads.

Topic Author
Sloopik
Posts: 12
Joined: Mon Jan 07, 2019 8:50 pm

Re: Need advice for further investments

Post by Sloopik » Tue Jan 08, 2019 8:47 pm

jalbert wrote:
Tue Jan 08, 2019 8:43 pm
Sloopik wrote:
Tue Jan 08, 2019 8:18 pm
jalbert wrote:
Tue Jan 08, 2019 8:09 pm
You are much better off contributing more to the 457 than you would be opening a taxable account.
Ya this is a common theme I keep hearing and something I'll probably end up doing. After I max out my wife's IRA of course.
Would suggest getting all of the matching funds available at any point in time in the 457 as a higher priority than funding IRAs.
Now do you find more value in a Roth 457 or Deferred Comp? I've heard good arguments for both, but I tend to be a Roth kind of guy across the board.

Northern Flicker
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Re: Need advice for further investments

Post by Northern Flicker » Tue Jan 08, 2019 11:25 pm

Suppose all of your retirement assets were Roth. You would pay no tax on withdrawals, but some of those withdrawals would have been in the zero bracket anyway, meaning you needlessly paid tax on the income when it was earned. You also may retire in a state without income tax, saving the CA tax on the contribution. The tax-deferred contributions are most likely preferred but there are some circumstances where the Roth contribution will win. I would suggest tax-deferred 457 contributions and Roth IRA contributions.
Taking a break from Bogleheads.

Topic Author
Sloopik
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Joined: Mon Jan 07, 2019 8:50 pm

Re: Need advice for further investments

Post by Sloopik » Wed Jan 09, 2019 1:18 am

jalbert wrote:
Tue Jan 08, 2019 11:25 pm
Suppose all of your retirement assets were Roth. You would pay no tax on withdrawals, but some of those withdrawals would have been in the zero bracket anyway, meaning you needlessly paid tax on the income when it was earned. You also may retire in a state without income tax, saving the CA tax on the contribution. The tax-deferred contributions are most likely preferred but there are some circumstances where the Roth contribution will win. I would suggest tax-deferred 457 contributions and Roth IRA contributions.
Ok thank you, ya I switched over to a tax-deferred today actually. I thought some more about it and definitely agree.

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ruralavalon
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Location: Illinois

Re: Need advice for further investments

Post by ruralavalon » Wed Jan 09, 2019 9:39 am

You have some excellent, broadly diversified, low expense funds offered in your 401k. You are fortunate.

With those fund choices available in your 457 plan it is clear that making the maximum employee contribution is best (not limiting yourself just to the contribution needed to get the employer match).
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
Sloopik
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Joined: Mon Jan 07, 2019 8:50 pm

Re: Need advice for further investments

Post by Sloopik » Wed Jan 09, 2019 3:02 pm

ruralavalon wrote:
Wed Jan 09, 2019 9:39 am
You have some excellent, broadly diversified, low expense funds offered in your 401k. You are fortunate.

With those fund choices available in your 457 plan it is clear that making the maximum employee contribution is best (not limiting yourself just to the contribution needed to get the employer match).
Thank you! Ya I think I'm going to end up doing that. I really appreciate all of the advice guys!

Valuethinker
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Re: Need advice for further investments

Post by Valuethinker » Thu Jan 10, 2019 10:02 am

Sloopik wrote:
Tue Jan 08, 2019 7:47 pm
Ok after looking in the account at work I'm actually invested in the (FFLDX) which has an ER of 0.14%, so much better than I remembered.

But to answer your questions, I'm 28, I actually don't plan on staying with the company for very long. Maybe 3 more years at the very most (which will still be under 10 total).

The Funds offered are all of the FIdelity Freedom Retirement Funds plus the list below.

Their core funds are:

Stocks:
-FXAIX, ER of 0.015% (pretty solid).
-FSMAX, ER of 0.045%
-FSGGX, ER of 0.06%
-SPAXX, ER of 0.42%
-AVFIX, ER of 0.83
-GSFTX, ER of 0.71%
-FBGKX, ER of 0.62%
-FDIKX, ER of 0.4%
-FGCKX, ER of 0.75%
-FSCOX, ER of 1.11%
-FLPKX, ER of 0.53%
-FKMCX, ER of 0.51%
-FCPGX, ER of 1.02%
-FBAKX, ER of 0.45%
-FFLEX, ER of 0.14%
-FFGZX, ER of 0.12%

Bonds:
-FGMNX, ER of 0.45%
-FXNAX, ER of 0.025%

Honestly, I was considering just ignoring any of these with an ER over 0.14% anyway since that's what I'm getting in my Target Retirement Fund....
I doubt many people here would recognize all those ticker codes.

It helps if you put in all the fund names - if you feel you need any more advice.

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ruralavalon
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Location: Illinois

Re: Need advice for further investments

Post by ruralavalon » Thu Jan 10, 2019 12:02 pm

Sloopik wrote:
Tue Jan 08, 2019 7:47 pm
Ok after looking in the account at work I'm actually invested in the (FFLDX) which has an ER of 0.14%, so much better than I remembered.

But to answer your questions, I'm 28, I actually don't plan on staying with the company for very long. Maybe 3 more years at the very most (which will still be under 10 total).

The Funds offered are all of the FIdelity Freedom Retirement Funds plus the list below.

Their core funds are:

Stocks:
-FXAIX, ER of 0.015% (pretty solid).
-FSMAX, ER of 0.045%
-FSGGX, ER of 0.06%
-SPAXX, ER of 0.42%
-AVFIX, ER of 0.83
-GSFTX, ER of 0.71%
-FBGKX, ER of 0.62%
-FDIKX, ER of 0.4%
-FGCKX, ER of 0.75%
-FSCOX, ER of 1.11%
-FLPKX, ER of 0.53%
-FKMCX, ER of 0.51%
-FCPGX, ER of 1.02%
-FBAKX, ER of 0.45%
-FFLEX, ER of 0.14%
-FFGZX, ER of 0.12%

Bonds:
-FGMNX, ER of 0.45%
-FXNAX, ER of 0.025%

Honestly, I was considering just ignoring any of these with an ER over 0.14% anyway since that's what I'm getting in my Target Retirement Fund....
Fidelity Freedom Index 2055 Fund (FFLDX) ER 0.14% is a good choice for a very simple single fund portfolio.

If you want your own mix of investments then the 3 funds to use would be:
1) Fidelity 500 Index Fund (FXAIX) ER 0.015%;
2) Fidelity Global ex-U.S. Index Fund (FSGGX) ER 0.06%; and
3) Fidelity U.S. Bond Index Fund (FXNAX) 0.025%.
This gives you a combination of both very broad diversification (to decrease risk) and very low expense ratios (to increase net return).

As mentioned these are excellent funds. Contribute the annual maximum of $19k to your 401k if that is practical for you, don't limit yourself to just enough to get the employer match.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
Sloopik
Posts: 12
Joined: Mon Jan 07, 2019 8:50 pm

Re: Need advice for further investments

Post by Sloopik » Thu Jan 10, 2019 10:28 pm

ruralavalon wrote:
Thu Jan 10, 2019 12:02 pm
Sloopik wrote:
Tue Jan 08, 2019 7:47 pm
Ok after looking in the account at work I'm actually invested in the (FFLDX) which has an ER of 0.14%, so much better than I remembered.

But to answer your questions, I'm 28, I actually don't plan on staying with the company for very long. Maybe 3 more years at the very most (which will still be under 10 total).

The Funds offered are all of the FIdelity Freedom Retirement Funds plus the list below.

Their core funds are:

Stocks:
-FXAIX, ER of 0.015% (pretty solid).
-FSMAX, ER of 0.045%
-FSGGX, ER of 0.06%
-SPAXX, ER of 0.42%
-AVFIX, ER of 0.83
-GSFTX, ER of 0.71%
-FBGKX, ER of 0.62%
-FDIKX, ER of 0.4%
-FGCKX, ER of 0.75%
-FSCOX, ER of 1.11%
-FLPKX, ER of 0.53%
-FKMCX, ER of 0.51%
-FCPGX, ER of 1.02%
-FBAKX, ER of 0.45%
-FFLEX, ER of 0.14%
-FFGZX, ER of 0.12%

Bonds:
-FGMNX, ER of 0.45%
-FXNAX, ER of 0.025%

Honestly, I was considering just ignoring any of these with an ER over 0.14% anyway since that's what I'm getting in my Target Retirement Fund....
Fidelity Freedom Index 2055 Fund (FFLDX) ER 0.14% is a good choice for a very simple single fund portfolio.

If you want your own mix of investments then the 3 funds to use would be:
1) Fidelity 500 Index Fund (FXAIX) ER 0.015%;
2) Fidelity Global ex-U.S. Index Fund (FSGGX) ER 0.06%; and
3) Fidelity U.S. Bond Index Fund (FXNAX) 0.025%.
This gives you a combination of both very broad diversification (to decrease risk) and very low expense ratios (to increase net return).

As mentioned these are excellent funds. Contribute the annual maximum of $19k to your 401k if that is practical for you, don't limit yourself to just enough to get the employer match.
Ya I decided that I'm going to stick with the Target Retirement Fund because it has the Fidelity Total Stock Market Index in it which isn't offered individually as well as the others you mentioned there. It's actually not a bad fund all things considered. I really appreciate all the help though!

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