Portfolio Review - Tightening Up - $140K Cash

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Topic Author
rocketsrule
Posts: 17
Joined: Wed Jul 10, 2019 1:32 pm

Portfolio Review - Tightening Up - $140K Cash

Post by rocketsrule » Thu Jul 11, 2019 8:17 pm

I'm looking on tighten up my portfolio a little bit and squeak out some more gains or places to put money where it can work for me whether savings.
  • What are some avenues I could look to deploy my Cash?
  • Could I tighten up on my portfolio at all in terms of allocation? I really have been thinking of shifting International to Domestic
  • Is a 529 worth it?
  • CD's or Treasury funds?

Age: 35
Married: Filing Jointly
Federal Tax: 22% / State: 0%
Annual: Approx $225k + 401 Max each year with 3% match
Debt: Mortgage 30yr $325K 4.75%- 7 months in
Dependent: Toddler

401K - $425K
76% - BSPIX https://www.marketwatch.com/investing/fund/bspix
16% - SLMCX - - https://www.marketwatch.com/investing/fund/slmcx
8% - PTTAX - https://www.marketwatch.com/investing/fund/pttax

Taxable -Fido - $424K
63% - FSKAX - https://www.marketwatch.com/investing/fund/fskax
25% - FTIHX - About 2K loss so far. https://www.marketwatch.com/investing/fund/ftihx
2% - FTEC - https://www.marketwatch.com/investing/fund/ftec
10%K - VTEB - https://www.marketwatch.com/investing/fund/vteb

Roth - Fido - $39K
51% - FSKAX - https://www.marketwatch.com/investing/fund/fskax
49% - FXNAX - https://www.marketwatch.com/investing/fund/fxnax

Cash $140K - No short term need but would like to keep a cushion. This includes emergency fund
Last edited by rocketsrule on Thu Jul 11, 2019 10:24 pm, edited 1 time in total.

mpsz
Posts: 354
Joined: Sat Jan 09, 2016 7:11 pm

Re: Portfolio Review - Tightening Up - $140K Cash

Post by mpsz » Thu Jul 11, 2019 9:14 pm

Does that $140k in cash include your emergency funds? If so, not sure I would make any changes, that's ~7.5 months of earnings.

If you really want to... paying maybe ~$20k towards your mortgage principal is a good option... 4.75% returns.

MotoTrojan
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Joined: Wed Feb 01, 2017 8:39 pm

Re: Portfolio Review - Tightening Up - $140K Cash

Post by MotoTrojan » Thu Jul 11, 2019 9:19 pm

You'll get much better responses if you post what each of those tickers is.

529 is absolutely worth it.

Look into tax-efficient fund placement.

Most importantly I would move all of your International to Domestic; that way all of my International holdings will explode with 25% CAGR :P .

nix4me
Posts: 252
Joined: Sat Oct 13, 2018 9:32 am

Re: Portfolio Review - Tightening Up - $140K Cash

Post by nix4me » Thu Jul 11, 2019 9:29 pm

If you deploy $20K now into the 529, the toddler will go to any school in 16-18 years - tax free for you.
Do you have an HSA to shelter some money in?

Otherwise, not sure you need to do anything. Just keep jamming money into those accounts and you are going to be good to go.

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Watty
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Joined: Wed Oct 10, 2007 3:55 pm

Re: Portfolio Review - Tightening Up - $140K Cash

Post by Watty » Thu Jul 11, 2019 10:01 pm

rocketsrule wrote:
Thu Jul 11, 2019 8:17 pm
Debt: Mortgage 30yr $325K 4.75%- 7 months in
......
Cash $140K - No short term need but would like to keep a cushion
You have a really bad interest rate on your mortage.

You should be able to refinance to a MUCH lower interest rate.

There are all sorts of options on what type of mortage to get but if I was in your position I would take a hard look at getting a 15 years mortage in the low 3% range that would be paid off when you turn 50. You could put in maybe an extra $100K to reduce mortage to $225K to keep the mortage payment near what it is now.

That would also mean that your house would be paid off by the time your kid starts college.

Topic Author
rocketsrule
Posts: 17
Joined: Wed Jul 10, 2019 1:32 pm

Re: Portfolio Review - Tightening Up - $140K Cash

Post by rocketsrule » Thu Jul 11, 2019 10:22 pm

Watty wrote:
Thu Jul 11, 2019 10:01 pm
rocketsrule wrote:
Thu Jul 11, 2019 8:17 pm
Debt: Mortgage 30yr $325K 4.75%- 7 months in
......
Cash $140K - No short term need but would like to keep a cushion
This includes emergency fund so deploy part of it
You have a really bad interest rate on your mortage.

You should be able to refinance to a MUCH lower interest rate.

There are all sorts of options on what type of mortage to get but if I was in your position I would take a hard look at getting a 15 years mortage in the low 3% range that would be paid off when you turn 50. You could put in maybe an extra $100K to reduce mortage to $225K to keep the mortage payment near what it is now.

That would also mean that your house would be paid off by the time your kid starts college.
I know it's high and I plan to refi to a lower rate at a 30yr or do a 20+25 for around same payment

Topic Author
rocketsrule
Posts: 17
Joined: Wed Jul 10, 2019 1:32 pm

Re: Portfolio Review - Tightening Up - $140K Cash

Post by rocketsrule » Thu Jul 11, 2019 10:23 pm

mpsz wrote:
Thu Jul 11, 2019 9:14 pm
Does that $140k in cash include your emergency funds? If so, not sure I would make any changes, that's ~7.5 months of earnings.

If you really want to... paying maybe ~$20k towards your mortgage principal is a good option... 4.75% returns.
It includes emergency. I would like to refinance shortly to a 30yr at a 3.6-3.7 or a 20-25yr

boogiehead
Posts: 94
Joined: Wed Sep 27, 2017 11:45 pm

Re: Portfolio Review - Tightening Up - $140K Cash

Post by boogiehead » Thu Jul 11, 2019 10:36 pm

Use that money towards principal to refi to 15 if u can, no need to mess with cds and stuff.

lakpr
Posts: 1836
Joined: Fri Mar 18, 2011 9:59 am

Re: Portfolio Review - Tightening Up - $140K Cash

Post by lakpr » Thu Jul 11, 2019 10:42 pm

rocketsrule wrote:
Thu Jul 11, 2019 10:23 pm
mpsz wrote:
Thu Jul 11, 2019 9:14 pm
Does that $140k in cash include your emergency funds? If so, not sure I would make any changes, that's ~7.5 months of earnings.

If you really want to... paying maybe ~$20k towards your mortgage principal is a good option... 4.75% returns.
It includes emergency. I would like to refinance shortly to a 30yr at a 3.6-3.7 or a 20-25yr
rocketsrule,

You may be interested in putting your $140k to a greater use, following the idea in this particular post by forum member vineviz:

viewtopic.php?f=1&t=285427&p=4637413#p4637413

Your liquidity will not be affected, and you will be accepting only a slightly more investment risk than cash in the bank.

HomeStretch
Posts: 750
Joined: Thu Dec 27, 2018 3:06 pm

Re: Portfolio Review - Tightening Up - $140K Cash

Post by HomeStretch » Thu Jul 11, 2019 10:56 pm

rocketsrule wrote:
Thu Jul 11, 2019 8:17 pm
I'm looking on tighten up my portfolio a little bit and squeak out some more gains or places to put money where it can work for me whether savings.

1. What are some avenues I could look to deploy my Cash?
2. Could I tighten up on my portfolio at all in terms of allocation? I really have been thinking of shifting International to Domestic
3.Is a 529 worth it?
4. CD's or Treasury funds?
It would be helpful to edit your original post to include fund names and ERs, and to update the fund % to be a % of your total portfolio rather than a % of each account.

1. The cash that represents your EF of at least 6 months of expenses is probably best kept in a high yield savings account or in a money market fund in your Fidelity taxable account. Anything extra towards mortgage/refinance.
2. What is your desired allocation?
3. Funding a 529 can make sense after you have maxed your contributions to 401k and Roth IRA. I only see one IRA account - what about a spousal IRA account?

Topic Author
rocketsrule
Posts: 17
Joined: Wed Jul 10, 2019 1:32 pm

Re: Portfolio Review - Tightening Up - $140K Cash

Post by rocketsrule » Fri Jul 12, 2019 8:45 am

HomeStretch wrote:
Thu Jul 11, 2019 10:56 pm
rocketsrule wrote:
Thu Jul 11, 2019 8:17 pm
I'm looking on tighten up my portfolio a little bit and squeak out some more gains or places to put money where it can work for me whether savings.

1. What are some avenues I could look to deploy my Cash?
2. Could I tighten up on my portfolio at all in terms of allocation? I really have been thinking of shifting International to Domestic
3.Is a 529 worth it?
4. CD's or Treasury funds?
It would be helpful to edit your original post to include fund names and ERs, and to update the fund % to be a % of your total portfolio rather than a % of each account.

1. The cash that represents your EF of at least 6 months of expenses is probably best kept in a high yield savings account or in a money market fund in your Fidelity taxable account. Anything extra towards mortgage/refinance.
2. What is your desired allocation?
3. Funding a 529 can make sense after you have maxed your contributions to 401k and Roth IRA. I only see one IRA account - what about a spousal IRA account?
I will update. Desired allocation is about 70/30 or 80/30 and thinking of dropping down international by about 1/3 - 1/2 and moving to Fidelity Total US (FSKAK).

Spouse has an IRA account that is small. Opened a medical practice so for this year were a little on my income while things ramp up.

lakpr
Posts: 1836
Joined: Fri Mar 18, 2011 9:59 am

Re: Portfolio Review - Tightening Up - $140K Cash

Post by lakpr » Fri Jul 12, 2019 10:19 am

If your income is likely to ramp up with you spouse starting to earn big bucks, perhaps now is the time to start doing some Roth conversions and use this $10k to pay taxes for the conversion outside of the converted amounts.

In the 22% tax bracket, with $10k available to pay tax, you can convert around $40k that would grow tax free in the future. Remember that tax rates are poised to spring back to 15% / 25% / 28% / 36% brackets in 2026 and beyond, as tax laws stand now. View it as a “limited time Roth sale” from the government.

Topic Author
rocketsrule
Posts: 17
Joined: Wed Jul 10, 2019 1:32 pm

Re: Portfolio Review - Tightening Up - $140K Cash

Post by rocketsrule » Fri Jul 12, 2019 10:25 am

lakpr wrote:
Fri Jul 12, 2019 10:19 am
If your income is likely to ramp up with you spouse starting to earn big bucks, perhaps now is the time to start doing some Roth conversions and use this $10k to pay taxes for the conversion outside of the converted amounts.

In the 22% tax bracket, with $10k available to pay tax, you can convert around $40k that would grow tax free in the future. Remember that tax rates are poised to spring back to 15% / 25% / 28% / 36% brackets in 2026 and beyond, as tax laws stand now. View it as a “limited time Roth sale” from the government.
Probably going to take 2-3 years to ramp up and I might ramp down a bit by that point.

Im not following the 10K conversion for taxes. I do the $5,500 backdoor each year

lakpr
Posts: 1836
Joined: Fri Mar 18, 2011 9:59 am

Re: Portfolio Review - Tightening Up - $140K Cash

Post by lakpr » Fri Jul 12, 2019 10:32 am

Sorry I should have stated it a bit more clearly. I assumed that your 401k plan offers the Roth 401k option. It is quite likely that (and I would be completely surprised if that not the case) your plan would allow the contributions you did make previously on a pre-tax basis, to be converted to Roth. Money still stays within the plan, but in Roth form.

At your tax bracket, if you convert approximately $35k to $36k, you will owe additional $10k in taxes. Pay them with this $10k you have in your hand.

You can also choose to convert your spouse’s IRA to Roth

Topic Author
rocketsrule
Posts: 17
Joined: Wed Jul 10, 2019 1:32 pm

Re: Portfolio Review - Tightening Up - $140K Cash

Post by rocketsrule » Fri Jul 12, 2019 10:39 am

lakpr wrote:
Fri Jul 12, 2019 10:32 am
Sorry I should have stated it a bit more clearly. I assumed that your 401k plan offers the Roth 401k option. It is quite likely that (and I would be completely surprised if that not the case) your plan would allow the contributions you did make previously on a pre-tax basis, to be converted to Roth. Money still stays within the plan, but in Roth form.

At your tax bracket, if you convert approximately $35k to $36k, you will owe additional $10k in taxes. Pay them with this $10k you have in your hand.

You can also choose to convert your spouse’s IRA to Roth
My company offers a pretax 401K not a Roth 401K. I then do a post tax IRA conversion with backdoor to Roth

lakpr
Posts: 1836
Joined: Fri Mar 18, 2011 9:59 am

Re: Portfolio Review - Tightening Up - $140K Cash

Post by lakpr » Fri Jul 12, 2019 10:50 am

rocketsrule wrote:
Fri Jul 12, 2019 10:39 am
My company offers a pretax 401K not a Roth 401K. I then do a post tax IRA conversion with backdoor to Roth
My apologies for over assuming.

Topic Author
rocketsrule
Posts: 17
Joined: Wed Jul 10, 2019 1:32 pm

Re: Portfolio Review - Tightening Up - $140K Cash

Post by rocketsrule » Tue Jul 16, 2019 9:17 am

lakpr wrote:
Fri Jul 12, 2019 10:50 am
rocketsrule wrote:
Fri Jul 12, 2019 10:39 am
My company offers a pretax 401K not a Roth 401K. I then do a post tax IRA conversion with backdoor to Roth
My apologies for over assuming.
Its ok :)

retiredjg
Posts: 36759
Joined: Thu Jan 10, 2008 12:56 pm

Re: Portfolio Review - Tightening Up - $140K Cash

Post by retiredjg » Tue Jul 16, 2019 9:32 am

You will get much better answers if you tell us the whole story and put it in the format we use to help people with their portfolio questions. For example, how can we help you improve your 401k without knowing what is available in the 401k?

Also, just give us the name, ticker if any, and expense ratio of your current funds and the funds available to you. Nobody is going to click on all those links and even if someone did, they will not actually remember what you have. Keep in mind that the easier it is for someone to help you, the more and better help you will get.

See the link below for how to do that.

You would have to have A LOT of deductions to get from that salary to that tax bracket. Are you sure?

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