Need Investing Advice / Portfolio Help

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Topic Author
BryantRichard
Posts: 8
Joined: Sat Apr 13, 2019 4:30 pm

Need Investing Advice / Portfolio Help

Post by BryantRichard » Sat Apr 13, 2019 8:00 pm

Hello Bogleheads!

I am a brand-new member here (as of today!), and could use some help getting my investing strategy / portfolio / finances on track. I am relatively new to investing and feel the advice I can get here will be invaluable to help me move in the right direction after years of feeling I was making zero progress due to many twists and turns of employment. I'm turning 40 this year, and know that I need to get my money working for me. Any advice will be greatly appreciated!

Emergency Funds:
I currently have $45,000 in two checking accounts (planning to invest some more of this soon)
1st checking account: $35,000 (3% APY on first $25,000)
2nd checking account: $10,000 (very low APY)

Debt:
Student Loan: $9,000 at 3.25%
Auto Loan: $4,750 at 3.5%

Tax Filing Status: Single
Tax Rate: Federal = 24% State = 5.5%
State of Residence: North Carolina
Age: 40

Desired Asset Allocation: I am not risk adverse. I have a stable job. I have at least 25 years to retirement. I'd like to be aggressive and am comfortable placing as much as possible into stocks. What is appropriate?

Desired International Allocation: Again, what is appropriate here for someone in my situation?

Current Retirement Assets:
Merrill Edge Roth IRA: $12,500 (planning to contribute additional $6,000 for year 2019)
- American New World Fund: NEWFX: $1,800 Expense Ratio: 1%
- American Capital World: CWGIX: $5,000 Expense Ratio: .76%
- T Rowe Price 2045 Fund: TRRKX: $5,700 Expense Ratio: .72%

Company Sponsored 401K: $9,000
- LifePath Index 2045 Fund: LNJTT: $9,000 Expense Ratio: .08%
- I currently contribute 6% to my 401K with company matching 5% (total of 11%)

Available 401K Funds:

Equity / Stock Symbol Expense Price
BLACKROCK EQUITY DIVIDEND CF BEDTT 0.49% $21.10
BLACKROCK US FDMTL LRG CL T BUFTT 0.49% $25.91
DODGE & COX STOCK FUND DODGX 0.52% $189.66
FIAM SMALL MID CAP CORE II FD PYSMT 0.57% $22.01
MFS INTERNATIONAL GROWTH MIGFT 0.38% $16.81
NF GLOBAL SUSTAINABILITY INDEX NSRIX 0.34% $14.32
QS U.S. SM CAP EQUITY CIF HVVBT 0.49% $10.19
STATE STREET REAL ASSET C SGACT 0.22% $12.25
T ROWE INST LARGE-CAP GROWTH TRLGX 0.56% $41.82
TEMPLETON INTL EQUITY CIT TMIET 0.51% $9.77
VANGUARD INSTL 500 INDEX TRUST VGINT 0.01% $118.49
VANGUARD INSTL EXTENDED MKT VGIET 0.02% $112.70
VANGUARD INSTL TTL INTL STOCK VGIST 0.06% $101.51

Bond / Fixed Income
PIMCO TOTAL RETURN PORT. INSTL PTTRX 0.55% $10.07
VANGUARD INFLATION-PROTECTED VIPIX 0.07% $10.25
VANGUARD INSTL TTL BD MKT IND VGITT 0.03% $102.87
WESTERN ASSET CORE BOND CL IS WACSX 0.45% $12.60

Money Market / Stable Value
STABLE VALUE FUND MLSVF 0.03% $22.75

Allocation Funds
BLACKROCK GLOBAL ALLOC I MALOX 0.88% $18.84
LIFEPATH INDEX 2020 FUND O LOMMT 0.08% $15.82
LIFEPATH INDEX 2025 FUND O LNMMT 0.08% $16.76
LIFEPATH INDEX 2030 FUND O LQMMT 0.08% $17.63
LIFEPATH INDEX 2035 FUND O LFMTT 0.08% $18.48
LIFEPATH INDEX 2040 FUND O LBMTT 0.08% $19.23
LIFEPATH INDEX 2045 FUND O LNJTT 0.08% $19.84
LIFEPATH INDEX 2050 FUND O LBMIT 0.08% $20.26
LIFEPATH INDEX 2055 FUND O LGHMT 0.08% $20.96
LIFEPATH INDEX 2060 FUND O LKMMT 0.08% $13.64
LIFEPATH INDEX RETIREMENT FD O LZMMT 0.08% $14.71
PIMCO ALL ASSET FUND PAAIX 1.10% $11.50

Questions:
1. How should I invest my company sponsored 401K? Do I leave it parked in the LifePath Index 2045 Fund, or do you see better options listed above?
2. How should I invest my Merrill Edge Roth IRA funds, and is contributing an additional $6,000 for year 2019 a good first step right now? I don't really care for the America Funds that I recently rolled over from Edward Jones. I like the simplicity of the T Rowe Price 2045 Fund, but are there better options with lower expense ratios that I should consider?
3. Should I just continue paying my debt down slowly since I have relatively low interest rates at 3.25% and 3.5% respectively?
4. I am currently renting (paying about $1,050 a month). I live and work in fast-growing urban area. I am considering renting for at least another year, but am wondering if I should be more seriously considering home ownership and prioritizing getting a down-payment together as part of my overall strategy.
5. What am I missing?

Flyer24
Posts: 789
Joined: Sun Apr 08, 2018 4:21 pm

Re: Need Investing Advice / Portfolio Help

Post by Flyer24 » Sat Apr 13, 2019 8:19 pm

You need to transfer your Roth IRA to Fidelity or Vanguard. Your funds are way too expensive.

Topic Author
BryantRichard
Posts: 8
Joined: Sat Apr 13, 2019 4:30 pm

Re: Need Investing Advice / Portfolio Help

Post by BryantRichard » Sat Apr 13, 2019 8:33 pm

Could I just keep my Roth IRA at Merrill Edge and change where the funds are invested?

In other words, if I wanted to invest all of my Roth IRA into the Vanguard Target Retirement 2045 Fund (VTIVX) with an expense ratio of only .15%, that would work just as well, correct?

lakpr
Posts: 1141
Joined: Fri Mar 18, 2011 9:59 am

Re: Need Investing Advice / Portfolio Help

Post by lakpr » Sat Apr 13, 2019 8:56 pm

BryantRichard wrote:
Sat Apr 13, 2019 8:33 pm
Could I just keep my Roth IRA at Merrill Edge and change where the funds are invested?

In other words, if I wanted to invest all of my Roth IRA into the Vanguard Target Retirement 2045 Fund (VTIVX) with an expense ratio of only .15%, that would work just as well, correct?
Yes you can do that. But I suggest instead of a Target Date fund, you invest everything in Total Stock Market Index fund. Roth IRAs should be all equities all the time, so they get the maximum growth, tax free.

You make up for this aggressive allocation in Roth by going more conservative in your 401k. Instead of 10% or 15% bonds, you go 30% to 40% bonds. When viewed across all assets in your overall portfolio, your allocation should still be 80:20. This has the advantage of constraining the growth in 401k plans, thus eventually lesser tax to the government at the time of withdrawal.

LifePath funds in your 401k are fine, I suggest you choose a 2030 Target Date fund (to increase the bonds allocation, see my reasoning above)

Lastly, you should be maximizing the 401k contribution, to attain the maximum $19k. The ERs in your plan are great, there is no excuse to not maximize the contributions.

Also, why are you not paying off student loan and car debt inspite of having liquid funds? The APR you have on these debts, if converted to taxable equivalent at your marginal tax bracket, comes to around 5%. In other words, you need to obtain a yield of 5%, just to break even, on your liquid funds. I am sure you are not anywhere close.

Topic Author
BryantRichard
Posts: 8
Joined: Sat Apr 13, 2019 4:30 pm

Re: Need Investing Advice / Portfolio Help

Post by BryantRichard » Sat Apr 13, 2019 9:57 pm

This is the kind of advice I was looking for. Thank you!

In terms of investing all my Roth IRA in a Total Stock Market Index fund, I was looking at the Vanguard 500 Index Fund Admiral Shares (VFIAX) or Vanguards Total Stock Market Index Fund Admiral Shares (VTSAX). Would there be a strong reason to choose one over the other? It looks like they both have an expense ratio of .04%

I also like the idea of choosing a LifePath Index Fund with an earlier date for my 401K to give myself more exposure to bonds in my overall portfolio. Also, I'll try to maximize the contributions to ensure I am hitting the maximum 19K as you mentioned.

As for the debt, yes, from what you said it makes sense to pay that off aggressively. There were some other life circumstances that were preventing me from doing that sooner, but now there is really nothing stopping me from taking care of that. I appreciate the additional insight you provided here on that.

anil686
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Re: Need Investing Advice / Portfolio Help

Post by anil686 » Sat Apr 13, 2019 9:58 pm

To the OP:

1. The lifepath index would be fine - I use a Target retirement fund as well. I like balanced funds because they sell when high and buy when low - the opposite typically of what most people want to do. The costs are really cheap and it is a great choice.

2. I think either Vanguard or Fidelity index TR funds or Vanguard Life strategy funds are good here - agree with a heavier stock mix as alluded to above. 80/20 or higher will have a similar return to a 100% stock allocation IMHO... I use the Lifestrategy growth fund from vanguard as my roth holding. Is there any reason you are doing the Roth right now instead of putting it all in the 401K? Maybe it does not lower your taxes and so a Roth makes sense?

3. No - I would pay it all off - you can better put the interest you would be spending in your investments

4. Personal choice - I view home ownership not as an investment or something smart to do with money but rather a place to live. If you are happy renting (meaning in your apartment) that is all that matters. If you would like to be a home owner, that is also fine but I don't view it as a financially driven choice. I think many studies have shown returns on equities as equal to or better than real estate returns in most markets. Obviously location and price specific...

5. Not much. Perhaps an HSA if you are in good health and your employer contributes some amount to it.

Hope that helps...

Topic Author
BryantRichard
Posts: 8
Joined: Sat Apr 13, 2019 4:30 pm

Re: Need Investing Advice / Portfolio Help

Post by BryantRichard » Sat Apr 13, 2019 10:23 pm

Yes, this is very helpful as well. Thanks for another perspective and for bringing up some good questions that I probably need to give more thought and research to. In particular I need to look into the tax implications of whether I put my money into the Roth IRA or focus on maximizing my contribution to my 401k (in the event that I can't do both this year).

Both you and lakpr suggest paying off my debt sooner rather than later. The point lakpr made was, why have all my liquid assets just sitting around earning a marginal interest rate while I am ultimately paying around 5% on my debts when converted to my taxable equivalent. I agree with that. I just wondered if anyone would recommend investing more of my liquid assets in stocks for a possible return that could outpace the interest I am paying on my debts...

lakpr
Posts: 1141
Joined: Fri Mar 18, 2011 9:59 am

Re: Need Investing Advice / Portfolio Help

Post by lakpr » Sun Apr 14, 2019 9:04 am

BryantRichard wrote:
Sat Apr 13, 2019 9:57 pm
In terms of investing all my Roth IRA in a Total Stock Market Index fund, I was looking at the Vanguard 500 Index Fund Admiral Shares (VFIAX) or Vanguards Total Stock Market Index Fund Admiral Shares (VTSAX). Would there be a strong reason to choose one over the other? It looks like they both have an expense ratio of .04%
I suggest you use VFIAX in your Roth IRA, there is really no difference between the returns of either fund over the last couple of decades. But why I suggest VFIAX in Roth IRA is that, eventually you will be investing in taxable account, and I suggest VTSAX for taxable. It is slightly (just a teeny bit) more tax efficient than VFIAX, since it tries to represent the entire stock market. Once the fund buys a stock, it usually stays with it forever. So there are no capital gains distributions — pardon me, to be accurate, there will be much less frequent CG distributions. Tax considerations are moot for Roth.

For tax loss harvesting reasons, you also want to NOT have the same fund between an IRA and taxable. If you sell a fund in taxable to capture short term losses, but happen to buy same fund in IRA due to dividend reinvestment, a portion of your short term loss will be disallowed.

I realize I am changing my original recommendation, sorry about that.

lakpr
Posts: 1141
Joined: Fri Mar 18, 2011 9:59 am

Re: Need Investing Advice / Portfolio Help

Post by lakpr » Sun Apr 14, 2019 9:18 am

BryantRichard wrote:
Sat Apr 13, 2019 10:23 pm
In particular I need to look into the tax implications of whether I put my money into the Roth IRA or focus on maximizing my contribution to my 401k (in the event that I can't do both this year).
Perhaps you haven’t realized that, if you maximize your 401k contribution to $19k, based on your Federal and State marginal tax brackets, you will escape 29.5% in taxes. That is $19,000 * 0.295 = $5605. Almost the maximum of $6000 Roth IRA contribution. In retail sales terms, buy 401k, get Roth IRA for free

Flyer24
Posts: 789
Joined: Sun Apr 08, 2018 4:21 pm

Re: Need Investing Advice / Portfolio Help

Post by Flyer24 » Sun Apr 14, 2019 9:30 am

lakpr wrote:
Sun Apr 14, 2019 9:18 am
BryantRichard wrote:
Sat Apr 13, 2019 10:23 pm
In particular I need to look into the tax implications of whether I put my money into the Roth IRA or focus on maximizing my contribution to my 401k (in the event that I can't do both this year).
Perhaps you haven’t realized that, if you maximize your 401k contribution to $19k, based on your Federal and State marginal tax brackets, you will escape 29.5% in taxes. That is $19,000 * 0.295 = $5605. Almost the maximum of $6000 Roth IRA contribution. In retail sales terms, buy 401k, get Roth IRA for free
That didn’t really make sense. You aren’t escaping taxes..just deferring.

lakpr
Posts: 1141
Joined: Fri Mar 18, 2011 9:59 am

Re: Need Investing Advice / Portfolio Help

Post by lakpr » Sun Apr 14, 2019 9:34 am

Flyer24 wrote:
Sun Apr 14, 2019 9:30 am
lakpr wrote:
Sun Apr 14, 2019 9:18 am
BryantRichard wrote:
Sat Apr 13, 2019 10:23 pm
In particular I need to look into the tax implications of whether I put my money into the Roth IRA or focus on maximizing my contribution to my 401k (in the event that I can't do both this year).
Perhaps you haven’t realized that, if you maximize your 401k contribution to $19k, based on your Federal and State marginal tax brackets, you will escape 29.5% in taxes. That is $19,000 * 0.295 = $5605. Almost the maximum of $6000 Roth IRA contribution. In retail sales terms, buy 401k, get Roth IRA for free
That didn’t really make sense. You aren’t escaping taxes..just deferring.
Touché. Agreed with you, I meant escaping for now. Quite likely he will be in a lower tax bracket in retirement, so it is still a win. There is also the possibility of truly escaping the state taxes, if the OP moves to a no-income-tax state in retirement.

Topic Author
BryantRichard
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Joined: Sat Apr 13, 2019 4:30 pm

Re: Need Investing Advice / Portfolio Help

Post by BryantRichard » Sun Apr 14, 2019 9:52 am

Wow, this is great discussion, and is helping me realize some things regarding the tax implications that I had not considered yet. In light of the back and forth, it sounds like a first good step would be to increase my 401k contribution amount so that by the end of the year I am as close to the 19k limit that I can be. Then, if I am in a good spot to devote more to retirement savings, making sure to maximize my Roth IRA is an equally important next step.

I'm also working on getting things aligned better in my Roth IRA. I think because two of the funds I recently rolled over from Edward Jones (see below) are in a different fund family, it doesn't appear that I can simply execute a trade for Vanguard's VFIAX on the Merrill Edge platform. I may have to first sell both of these American Funds, and then invest the proceeds back into VFIAX. Does that sound right? Regardless, the online system won't allow me to place the trade.
- American New World Fund: NEWFX: $1,800 Expense Ratio: 1%
- American Capital World: CWGIX: $5,000 Expense Ratio: .76%

For purposes of the 401k contribution limit, does the IRS calculate total contributions from January 1, 2019 - December 31, 2019? In other words, do I need to make sure to hit the 19k by end of December, or is it like a Roth IRA where you can wait until April 15 to meet the limit?

Thanks again everyone for all the insights!

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ruralavalon
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Location: Illinois

Re: Need Investing Advice / Portfolio Help

Post by ruralavalon » Sun Apr 14, 2019 10:45 am

Welcome to the forum :) .

BryantRichard wrote:
Sat Apr 13, 2019 8:00 pm
Tax Filing Status: Single
Tax Rate: Federal = 24% State = 5.5%
State of Residence: North Carolina
Age: 40

Desired Asset Allocation: I am not risk adverse. I have a stable job. I have at least 25 years to retirement. I'd like to be aggressive and am comfortable placing as much as possible into stocks. What is appropriate?

Desired International Allocation: Again, what is appropriate here for someone in my situation?
At age 40 I suggest about 25-30% in bonds or other fixed income investments (like CDs, savings accounts, money market fund). This is expected to substantially reduce portfolio volatility (risk), with only a relatively modest decrease in portfolio return. Graph, "An Efficient Frontier: the power of diversification". Please see the wiki articles Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk", and "Asset allocation".

I suggest around 20 - 30% of stocks in international stocks. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities". Historically, allocating 20% of an equity portfolio to non-U.S. stocks would have captured about 84% of the maximum possible diversification benefit, and allocating 30% of an equity portfolio to non-U.S. stocks would have captured about 99% of the maximum possible diversification benefit (p. 6). (You can find lots of debate here on international allocation, opinions ranging all the way from 00% to 50% of stocks in international stocks. If you want more viewpoints on international stocks please try the Google search box, upper right, this page).

That works out to about 30% bonds, 20% international stocks, and 50% domestic stocks. Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your own ability, willingness and need to take risk.


BryantRichard wrote:
Sat Apr 13, 2019 8:00 pm
Questions:
1. How should I invest my company sponsored 401K? Do I leave it parked in the LifePath Index 2045 Fund, or do you see better options listed above?
In your 401k ($9k) the BlackRock LifePath funds (ER 0.08%) are a good very diversified low expense approach, or you could use a combination of:
1) Vanguard Institutional 500 Index Trust (VGINT) ER 0.01%;
2) Vanguard Institutional Total International Stock Index Trust v(VGIST) ER 0.06%; and
3) Vanguard Institutional Total Bond Market Index Trust (VGITT) ER 0.03%.

BryantRichard wrote:
Sat Apr 13, 2019 8:00 pm
2. How should I invest my Merrill Edge Roth IRA funds, and is contributing an additional $6,000 for year 2019 a good first step right now? I don't really care for the America Funds that I recently rolled over from Edward Jones. I like the simplicity of the T Rowe Price 2045 Fund, but are there better options with lower expense ratios that I should consider?
At Merrill Edge (Roth IRA: $12.5k, planning to contribute additional $6,000 for year 2019) you could consider using a combination of these no NTF (no transaction fee) funds:
1) T. Rowe Price Total Equity Market Index Fund (POMIX; 0.30%);
2) T. Rowe Price International Equity Index Fund (developed markets only) (PIEQX; 0.45%); and
3) TIAA-CREF Bond Index Fund (Retail) (TBILX; 0.47%)
Wiki article, "Merrill Edge".

You don't have enough in the Merrill Edge account to get free trades on ETFs.

Merrill Edge charges a per transaction fee if you use Vanguard funds in their Roth IRA. This destroys the benefit you otherwise expect from the lower expense ratio. ($19.95 for each online transaction, $29.95 for each broker assisted transaction, applies to buys, sells, and exchanges. link)

I suggest rolling over the Roth IRA to a low cost provider like Vanguard, to use their lower expense funds without the necessity of paying trading fees. You could use a much less expensive Vanguard target date fund in the Roth IRA, while continuing to use a very inexpensive BlackRock LifePath fund in your 401k.


BryantRichard wrote:
Sat Apr 13, 2019 8:00 pm
Emergency Funds:
I currently have $45,000 in two checking accounts (planning to invest some more of this soon)
1st checking account: $35,000 (3% APY on first $25,000)
2nd checking account: $10,000 (very low APY)

Debt:
Student Loan: $9,000 at 3.25%
Auto Loan: $4,750 at 3.5%
. . . . .
3. Should I just continue paying my debt down slowly since I have relatively low interest rates at 3.25% and 3.5% respectively?
About how much in an emergency fund would it take to cover 3-6 months of basic living expenses?

I see $45k in checking and $13.75k in debt costing a higher interest rate than the checking accounts earn. I suggest using the checking account money to pay off all of the debt.




BryantRichard wrote:
Sat Apr 13, 2019 8:00 pm
Tax Filing Status: Single
Tax Rate: Federal = 24% State = 5.5%
State of Residence: North Carolina
Age: 40
. . . . .
4. I am currently renting (paying about $1,050 a month). I live and work in fast-growing urban area. I am considering renting for at least another year, but am wondering if I should be more seriously considering home ownership and prioritizing getting a down-payment together as part of my overall strategy.
I have no opinion about your buying a home. Owning a home is a personal lifestyle choice, and the financial aspect depends on the local real estate market in your area.

Wiki article, "Owning vs renting".

NY Times, "Is It Better to Rent or Buy?"


BryantRichard wrote:
Sat Apr 13, 2019 8:00 pm
5. What am I missing?
I agree with lakpr's suggestion that you make the maximum annual contribution to your 401k, $19k/yr. You have excellent funds offered in your 401k plan, you are fortunate.

You could use target date funds in both accounts for simplicity. I agree with lakpr's suggestion to use target date funds more closely matching your desired asset allocation.

Otherwise use a three-fund type portfolio in both accounts, using the funds which I listed above. In selecting funds strive for a combination of broad diversification (to reduce risk) and low expense ratios (to increase your net gain). To simply and easily achieve those two goals I suggest choosing funds to simulate the very well diversified, low expense ratio "three-fund portfolio". Wiki article "Three-fund portfolio". Forum discussion, "The Three-Fund Portfolio".

Merrill Edge charges a per transaction fee if you use Vanguard funds in their Roth IRA. ($19.95 for each online transaction, $29.95 for each broker assisted transaction, applies to buys, sells, and exchanges. link) This destroys the benefit you otherwise expect from the lower expense ratio.

I suggest instead that you rollover the Roth IRA to a Roth IRA at Vanguard in order to use Vanguard funds without the unnecessary extra transaction fees.

BryantRichard wrote:
Sun Apr 14, 2019 9:52 am
. . . , it sounds like a first good step would be to increase my 401k contribution amount so that by the end of the year I am as close to the 19k limit that I can be. Then, if I am in a good spot to devote more to retirement savings, making sure to maximize my Roth IRA is an equally important next step.
That is correct.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
BryantRichard
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Re: Need Investing Advice / Portfolio Help

Post by BryantRichard » Sun Apr 14, 2019 12:23 pm

Thanks for the warm welcome and the very detailed response!

I'm going to take some time this week to dig into the links / articles you included and will be sure to reply as other questions come up. I have already taken the step to increase my 401k contribution amount to put me much closer to the targeted 19k by year end (as many have suggested here). I'm also taking the steps to get my Roth IRA allocated differently - although running into some difficulties, as you noted, due to the inability to easily exchange my existing funds for Vanguard Funds on the Merrill platform, and the need to pay a $19.95 online transaction fee for the Vanguard funds.

Hopefully will get much more of this figured out in the days ahead!

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Wiggums
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Re: Need Investing Advice / Portfolio Help

Post by Wiggums » Sun Apr 14, 2019 12:34 pm

Welcome to the forum.

You got great advice.

Is there a reason why you want to keep the money at Merrill?

NYCwriter
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Re: Need Investing Advice / Portfolio Help

Post by NYCwriter » Sun Apr 14, 2019 2:05 pm

I agree that there's no reason to keep paying interest on debt when you have excess. Instead of considering yourself 15K poorer afterwards, recognize that you're more than 15K poorer on your current path (the debt won't go away) and calculate the amount you save on interest. That's a check you've written to yourself.

The only reason to hold student loans at this point is if you expect to be eligible for a public service waiver. In a low interest environment, it's sometimes recommended that prime earners split the difference and pay into favorable retirement vehicles, but you're ahead and can remove this burden.

Not sure what Merrill charges to transfer. It can't be a good feeling that they're nickle-and-diming average earners in a competitive environment.

Topic Author
BryantRichard
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Re: Need Investing Advice / Portfolio Help

Post by BryantRichard » Sun Apr 14, 2019 2:45 pm

Great advice - sounds like everyone is in agreement that it is time to just knock the debt out and be done with any more interest payments.

Regarding the question of why I am considering keeping my Roth with Merrill Edge: I am currently a Preferred Rewards Platinum client with Bank of America, so I automatically qualify for 30 free stock / ETF trades per month on the Merrill Edge Platform. I use Bank of America for all my primary banking needs. My company 401k is also managed by Merrill Lynch. Therefore, it is very convenient for me to keep the Roth at Merrill Edge because I can link all my accounts, see balances in one place, easily and quickly transfer funds between accounts, etc.

Not sure if those are reasons enough to keep the Roth at Merrill Edge, but that is why it would be nice to find a work-around with Vanguard ETFs perhaps, or another way to invest in the low-cost Vanguard index funds without incurring the $19.95 online transaction fee. I'm also curious if for the sake of convenience it makes sense to pay the transaction fee, especially if I know that I will be holding the funds for an extended period of time.

lakpr
Posts: 1141
Joined: Fri Mar 18, 2011 9:59 am

Re: Need Investing Advice / Portfolio Help

Post by lakpr » Sun Apr 14, 2019 4:14 pm

Yeah, those are good enough reasons to keep your investments all at one place, at Merrill Edge. As brokers go, ME is not a bad one.

Since you have enough assets at Merrill Edge to get 30 free trades a month, I suggest that you use the ETF equivalents of Vanguard mutual funds to buy in your Roth IRA. VOO = Vanguard S&P 500 ETF; VTI = Vanguard Total Stock Market Index ETF; VXUS = Vanguard International excluding US Index ETF. MY understanding (I don't have Merrill Edge account) is that ETFs are free to buy

Topic Author
BryantRichard
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Re: Need Investing Advice / Portfolio Help

Post by BryantRichard » Mon Apr 15, 2019 4:41 pm

Thanks for this information on the ETFs. That is the route that I was beginning to consider as well as a potential work-around to avoid paying the online fee for the Vanguard Mutual Funds. I have that on my list of things to look into and take care of this week outside of work :)

All the advice and information this past week has been incredibly helpful. Thanks to everyone for contributing the insights thus far. Feeling like I am already taking many steps to get myself in a better spot going forward. Very appreciated!

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