Portfolio feedback for mid-30s (TIAA, Vanguard, and NYSDCP 457b options)

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Topic Author
essmac
Posts: 2
Joined: Fri Nov 08, 2019 9:05 pm

Portfolio feedback for mid-30s (TIAA, Vanguard, and NYSDCP 457b options)

Post by essmac » Fri Nov 08, 2019 10:59 pm

Hi all, first post! I'm in my mid-30s, residing in NYC and my employer just picked up my 3% contribution to TIAA, for a total of 11% a year. I have the option of opening their group SRA or joining the New York State Deferred Compensation Plan (NYSDCP 457b). I'd really appreciate a quick review of my allocations and your input on a few other questions noted below. Thanks in advance!

Emergency funds: ~2 months
Debt: $7.7k credit card (0% to 05/2020, 24% after, paying ~700/mo), $63k student loans (~5.53% weighted)
Tax Filing Status: Single
Tax Rate: 22% Federal, 6.33% NY State/City

Desired Asset allocation: 85% stocks (~55-60% US) / 6-7% bonds / 8-9% real estate
*Open to changing this: I'd like an aggressive mix aiming for ~10% annual returns if possible

Total portfolio: $98k ($47.3k TIAA, $50.5k Vanguard)

_______________________________________________________________
Holdings

50.8% Domestic
34% International
7.1% Bonds/Guaranteed
8.1% Real Estate (TIAA)

**TIAA holdings**
9.7% TIAA Access Equity Index Fund T1 (~TIEIX) 0.15 -restricted/no new contribs.
7.5% TIAA Access Vanguard 500 Index T1 (~VFIAX) 0.14
0.9% TIAA Access Small-Cap Blend Index Fund T1 (~TISBX) 0.16 -restricted
4.2% TIAA Access Vanguard Extended Mkt Index T1 (~VEXAX) 0.16

9.9% TIAA Access International Equity Index Fund T1 (~TCIEX) 0.16
4.6% TIAA Access Delaware Emg Mkts R6 T1 (~DEMZX) 1.35

1.4% CREF Bond Market R3 (QCBMIX) 0.31 -restricted
2.0% TIAA Traditional Annuity

8.1% TIAA Real Estate (QREARX) 0.83

**Vanguard (Rollover IRA)**
28.5% VG Total Stock Market Index Fund Admiral (VTSAX) 0.04
19.5% VG Total International Stock Index Fund Admiral (VTIAX) 0.11
3.7% VG Total Bond Market Index Fund Admiral (VBTLX) 0.05
_______________________________________________________________
Current Contributions (11% employer)

48% TIAA Access Vanguard 500 Index T1 (~VFIAX) 0.14
12% TIAA Access Vanguard Extended Mkt Index T1 (~VEXAX) 0.16

24% TIAA Access International Equity Index Fund T1 (~TCIEX) 0.16
6% TIAA Access Delaware Emg Mkts R6 T1 (~DEMZX) 1.35

4% TIAA Traditional Annuity
6% TIAA Real Estate (QREARX) 0.83

_______________________________________________________________
Available funds

***TIAA***
CREF Stock R3 0.3%
TIAA Access American Beacon Bridgeway Large Cap Growth T1 1.03%
TIAA Access Ariel Appreciation T1 0.92%
TIAA Access Champlain Mid Cap T1 1%
TIAA Access Delaware Emg Mkts T1 1.35%
TIAA Access Growth & Income Fund T1 0.5%
TIAA Access International Equity Index Fund T1 0.16%
TIAA Access JPMorgan Small Cap Value T1 0.86%
TIAA Access Large-Cap Value Fund T1 0.5%
TIAA Access Lazard International Equity T1 0.91%
TIAA Access MFS Mid Cap Value T1 0.79%
TIAA Access Mid-Cap Growth Fund T1 0.57%
TIAA Access Nationwide Geneva Small Cap Growth T1 0.96%
TIAA Access Parnassus Institutional T1 0.79%
TIAA Access T. Rowe Price QM U.S. Small Cap Growth Equity T1 0.76%
TIAA Access Vanguard Equity Income T1 0.28%

CREF Inflation-Linked Bond R3 0.22%
TIAA Access Lord Abbett High Yield T1 0.7%
TIAA Access Templeton Global Bond T1 0.77%
TIAA Access Vanguard Total Bond Market Index T1 0.14%
TIAA Access-Western Asset Management Core Plus Bond T1 0.52%


***NYSDCB 457b***
Delaware Small Cap Value Fund - Institutional Class (DEVIX) 0.90%
T. Rowe Price QM US Small-Cap Growth Equity Fund – I Class (TQAIX) 0.66%
NYSDCB Russell 2500 Index Unitized Account (NYSDCR25) 0.02%
Vanguard Strategic Equity Fund - Investor Shares (VSEQX) 0.17%
Boston Partners Large Cap Value Equity Fund Share Class C (NY44C) 0.52%
Fidelity OTC Portfolio – Class K (FOCKX) 0.78%
NYSDCB Equity Index Unitized Account (NYSDCINDX) 0.01%
T. Rowe Price Blue Chip Growth Trust – Class T6 (NY43C) 0.35%
T. Rowe Price Equity Income Trust (NY20C) 0.33%
Vanguard PRIMECAP Fund - Admiral Shares (VPMAX) 0.31%
Vanguard Wellington Fund - Admiral Shares (VWENX) 0.17%

International Equity Fund - Index Portfolio (IEFIX) 0.15%
Morgan Stanley Institutional Fund, Inc. - Emerging Markets Portfolio - Class IS (MMMPX) 0.93%
Pax Global Environmental Markets Fund - Institutional Class (PGINX) 0.99%

NYSDCB US Debt Index Unitized Account (NYSDCDEBT) 0.02%
Voya Core Plus Trust Fund (NY27C) 0.23%
_______________________________________________________________
Questions:

1. I'm slugging that newfound 3% salary towards my credit card debt, which I hope to have paid off by August 2020. Once paid off, I'm not sure where to start contributing next (likely bumping it up to 4-5%)---TIAA, NYSDCP, or Vanguard. What might be best, given the fund choices and my ability to rebalance in the future?

2. The NYSDCB 457b account has some interesting options with low fees, although I still need to research the plan rules/tax implications, etc. Would you opt for this over TIAA or some other option? Is it worth the extra complication/spread to have access to lower cost funds?

3. Where would TIAA Real Estate factor into my allocation mix, given a 30-year investment horizon? It seems fairly stable, falling somewhere between a stock and bond, but correlates negatively with stocks according to their FAQ. Would it be fair to count it as part of my bond mix (or even replace bonds on the TIAA side, i.e. replace TRAD with it for the next several years)?

4. Am I on the right track? Is there a more efficient mix that I'm not seeing?

HomeStretch
Posts: 2629
Joined: Thu Dec 27, 2018 3:06 pm

Re: Portfolio feedback for mid-30s (TIAA, Vanguard, and NYSDCP 457b options)

Post by HomeStretch » Fri Nov 08, 2019 11:52 pm

Welcome!

Consider increasing your two-month emergency fund to 3-6 months.

Have you checked current refi rates to see if a better rate is available for your $63k students loans at 5.53%?

Your $7.7k credit card debt has a 0% rate until May 2020. You will be paying interest at 24% per annum thereafter until you pay the debt off in August 2020. Can you pay off this debt by May perhaps by cutting living expenses, lowering your student loan payments via refi or rollover the balance to another 0% card?

Your new savings are your 11% employer TIAA contributions. Try to get the savings rate up to at least 15% in the near future.

Consider holding fewer funds in your TIAA account to simplify. A couple of your holdings have high ERs (DEMZX 1.35%, QREARX 0.83%).

Hold your total 6-7% bond allocation in your Vanguard IRA VBTLX 0.05% as it has a lower ER than your TIAA bond fund QCBMIX 0.31%.

Topic Author
essmac
Posts: 2
Joined: Fri Nov 08, 2019 9:05 pm

Re: Portfolio feedback for mid-30s (TIAA, Vanguard, and NYSDCP 457b options)

Post by essmac » Sat Nov 09, 2019 5:09 pm

HomeStretch wrote:
Fri Nov 08, 2019 11:52 pm
Welcome!

Consider increasing your two-month emergency fund to 3-6 months.

Have you checked current refi rates to see if a better rate is available for your $63k students loans at 5.53%?

Your $7.7k credit card debt has a 0% rate until May 2020. You will be paying interest at 24% per annum thereafter until you pay the debt off in August 2020. Can you pay off this debt by May perhaps by cutting living expenses, lowering your student loan payments via refi or rollover the balance to another 0% card?

Your new savings are your 11% employer TIAA contributions. Try to get the savings rate up to at least 15% in the near future.

Consider holding fewer funds in your TIAA account to simplify. A couple of your holdings have high ERs (DEMZX 1.35%, QREARX 0.83%).

Hold your total 6-7% bond allocation in your Vanguard IRA VBTLX 0.05% as it has a lower ER than your TIAA bond fund QCBMIX 0.31%.
Thanks for the feedback and suggestions. I'll try to address each:

I plan on increasing my emergency fund to ~6 months once my credit card debt is paid off. My average CC payments have been ~$700 (+/- $100), so with that cash, I'll devote around $160 to voluntary retirement savings and the rest to emergency savings. It will take around 10 months at that rate to get there.

I looked at refi rates last summer, but the estimates didn't seem very competitive. I'll check again next summer, since my credit score should exceed 800 by then (with a lowered debt-to-credit ratio).

Once May comes and my APR jumps to 24%, I'll roll the balance (expected $3500) to a 9% card that I have. I may have other 0% offers, but I'll have to check. My budgeted payments of $700 is the max I can do right now, but any unbudgeted income will go straight to the balance (for example, my tax refund and the 2 months each year where there are 3 pay periods instead of 2).

I was going to sell DEMZX, but it's been doing really well compared to Vanguard's Emerging Markets Index (VEMAX, 0.14 ER). I think this is because it has ~15% in developed markets and leans more large-cap, so that's something to monitor. But I do plan to sell it eventually.

The other higher ER fund you mention is QREARX (TIAA Real Estate), but that's because it primarily holds and manages real property, and is not an index at all. This is the fund I struggle with the most, decision-wise, because it's pretty unique.

You mention keeping my bond allocation with Vanguard instead of TIAA. I guess I've been approaching these two providers with the idea of keeping equities and fixed in each for the purposes of reallocation when needed. But, I could blend them together and still reallocate once my balances in each get high enough (which may be approaching now). Is one method easier than the other?

HomeStretch
Posts: 2629
Joined: Thu Dec 27, 2018 3:06 pm

Re: Portfolio feedback for mid-30s (TIAA, Vanguard, and NYSDCP 457b options)

Post by HomeStretch » Sat Nov 09, 2019 6:04 pm

essmac wrote:
Sat Nov 09, 2019 5:09 pm
You mention keeping my bond allocation with Vanguard instead of TIAA. I guess I've been approaching these two providers with the idea of keeping equities and fixed in each for the purposes of reallocation when needed. But, I could blend them together and still reallocate once my balances in each get high enough (which may be approaching now). Is one method easier than the other?
It’s a personal choice. If you held your International and bond allocations in the Vanguard account, you could do all your rebalancing in the Vanguard account.

User avatar
Duckie
Posts: 6867
Joined: Thu Mar 08, 2007 2:55 pm
Location: California Bay Area

Re: Portfolio feedback for mid-30s (TIAA, Vanguard, and NYSDCP 457b options)

Post by Duckie » Sat Nov 09, 2019 9:47 pm

essmac wrote:Available funds

***TIAA***
The best options are:
  • TIAA Access Vanguard 500 Index 0.14% -- Large caps, 80% of US stocks
  • TIAA Access Vanguard Extended Market Index 0.16% -- Mid/small caps, 20% of US stocks
  • TIAA Access International Equity Index 0.16% -- Developed markets, 75% of international stocks
  • TIAA Access Vanguard Total Bond Market Index 0.14% -- US bonds
***NYSDCB 457b***
The best options are:
  • NYSDCB Equity Index 0.01% -- Large caps, 80% of US stocks
  • NYSDCB Russell 2500 Index 0.02% -- Mid/small caps, 20% of US stocks
  • International Equity Fund - Index 0.15% -- Developed markets, 75% of international stocks
  • NYSDCB US Debt Index 0.02% -- US bonds
I'm slugging that newfound 3% salary towards my credit card debt, which I hope to have paid off by August 2020. Once paid off, I'm not sure where to start contributing next (likely bumping it up to 4-5%)---TIAA, NYSDCP, or Vanguard. What might be best, given the fund choices and my ability to rebalance in the future?
I would be maxing the Roth IRA and the NYSDCP because it has cheaper options than TIAA. Is TIAA also a 457b or is it a 401k/403b?
The NYSDCB 457b account has some interesting options with low fees, although I still need to research the plan rules/tax implications, etc. Would you opt for this over TIAA or some other option?
I would choose NYSDCB over TIAA for all future contributions. I would shift any TIAA assets that can be moved into the NYSDCB plan if possible. The TIAA Traditional Annuity and TIAA Real Estate may be exceptions. But I would consider putting all the bonds in the employer plans and using the IRA for international stocks (more complete) and REITs (much lower cost).
Is it worth the extra complication/spread to have access to lower cost funds?
To me, yes.

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