Help with Personal Investments (401k and Brokerage Account)

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Topic Author
Palico
Posts: 3
Joined: Mon Jun 29, 2020 2:34 pm

Help with Personal Investments (401k and Brokerage Account)

Post by Palico » Mon Jun 29, 2020 2:58 pm

Hi all, I've filled out the below template and was hoping for advice on rebalancing my 401k and brokerage account. I realize my 401k options are quite poor. Any help would be very much appreciated. Thank you!

Emergency funds: I have six months' of expenses in an Ally savings account

Debt: No debt

Tax Filing Status: Single

Tax Rate: 35% Federal, 6.49% State, 3.88% Local

State of Residence: New York

Age: 30

Desired Asset allocation: 90% stocks / 10% bonds [I am fairly risk tolerant, and given my age - does this seem appropriate?]
Desired International allocation: TBD

Size of Current Total Portfolio: $230,000

Current retirement assets: https://imgur.com/lTUD87w

Contributions

New annual Contributions
Traditional 401k - $19,500
Taxable Brokerage Account - $5k-10k

Available funds

Funds available in 401(k): https://i.imgur.com/v86EeTi.jpg

Lots of options for the Vanguard brokerage account - please just let me know if you need me to list those out.


Thoughts/Questions:
1. I realize my current asset allocation needs to be revised because I had not been looking at my portfolio on an aggregate level. My gut feeling is to move most of my 401k into the T. Rowe S&P 500 fund and get better access to international stocks / bonds through Vanguard.

2. Can you please let me know what a more ideal allocation for me would be? I'm really just looking to optimize my retirement income at this point.

Thanks again!!

retired@50
Posts: 3049
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Help with Personal Investments (401k and Brokerage Account)

Post by retired@50 » Mon Jun 29, 2020 3:51 pm

Palico wrote:
Mon Jun 29, 2020 2:58 pm

Thoughts/Questions:
1. I realize my current asset allocation needs to be revised because I had not been looking at my portfolio on an aggregate level. My gut feeling is to move most of my 401k into the T. Rowe S&P 500 fund and get better access to international stocks / bonds through Vanguard.

2. Can you please let me know what a more ideal allocation for me would be? I'm really just looking to optimize my retirement income at this point.

Thanks again!!
Welcome to the forum.

Answers to questions.
1. Your "gut feeling" above is wise. You might continue to hold some bonds in the 401k account, otherwise, given your high tax bracket, you could look into a NY Municipal Bond fund at Vanguard. See link.
https://investor.vanguard.com/mutual-fu ... file/VNYTX

2. Ideal asset allocation isn't really a thing, or at least it's not known until time has passed and you can see what would have been ideal. Knowing what has worked well in the past doesn't necessarily mean it will work well in the future. At 90/10 you've got an aggressive approach which can payoff * IF * you can stomach the roller coaster ride of the markets from now until you're closer to retirement. By the time you're in your 50s you should likely be holding at least 30% in bonds. See link.
https://www.bogleheads.org/wiki/Asset_allocation

The general idea here on Bogleheads is to use the three-fund approach using stock and bond index funds. The final mixture is up to you. Staying out of the weeds by avoiding sector funds or actively managed funds should be enough to keep you out of trouble. See link.
https://www.bogleheads.org/wiki/Boglehe ... philosophy

Regards,
This is one person's opinion. Nothing more.

retiredjg
Posts: 40864
Joined: Thu Jan 10, 2008 12:56 pm

Re: Help with Personal Investments (401k and Brokerage Account)

Post by retiredjg » Mon Jun 29, 2020 4:05 pm

You have only 1 bond fund available in your 401k? Just the one short term bond fund?

I would use only the equity index and the bond fund in the 401k. Hold total stock and total international in taxable. It would be OK to put half your bonds in taxable in the form of a NY state tax-exempt bond but you do not want all your bonds in there.

The total bond index in taxable is a bad idea - it is not very tax-efficient and you are in a very high tax bracket.

Topic Author
Palico
Posts: 3
Joined: Mon Jun 29, 2020 2:34 pm

Re: Help with Personal Investments (401k and Brokerage Account)

Post by Palico » Tue Jun 30, 2020 9:21 am

retiredjg wrote:
Mon Jun 29, 2020 4:05 pm
You have only 1 bond fund available in your 401k? Just the one short term bond fund?
Yes, unfortunately I have only the Short-Term Bond Fund (ticker: PRWBX) in my 401k plan.

In terms of my aggregate allocation, I'm settling on 80% stocks / 20% bonds. So are you suggesting I could put half of my bond allocation in the 401k short-term bond fund and then half in the NY state tax-exempt bond fund (retired@50 provided this fund from Vanguard: https://investor.vanguard.com/mutual-fu ... file/VNYTX )

And then for my 80% stock allocation: I was planning on having 70% of that be in domestic (the 401k SP500 fund and the Vanguard Total Stock Market ETF) and the remaining 30% in international (Vanguard Total International Stock ETF).

Seems balanced to me, but other thoughts definitely welcome and appreciated!

Thank you all

nix4me
Posts: 610
Joined: Sat Oct 13, 2018 9:32 am

Re: Help with Personal Investments (401k and Brokerage Account)

Post by nix4me » Tue Jun 30, 2020 11:11 am

There are no target retirement funds in your 401k?

retiredjg
Posts: 40864
Joined: Thu Jan 10, 2008 12:56 pm

Re: Help with Personal Investments (401k and Brokerage Account)

Post by retiredjg » Tue Jun 30, 2020 11:12 am

Sounds like a near perfect plan to me. Another near perfect plan would be to put all the bonds in the 401k. "Near perfect" is good enough, excellent in fact. "Perfect" does not exist. :happy

Do you know if the NY tax-exempt bond eliminates the 3.88% local tax as well? If yes, I think I might prefer that route (half the bond in taxable). If not, it probably does not matter much.

Topic Author
Palico
Posts: 3
Joined: Mon Jun 29, 2020 2:34 pm

Re: Help with Personal Investments (401k and Brokerage Account)

Post by Palico » Sat Jul 04, 2020 11:51 am

retiredjg wrote:
Tue Jun 30, 2020 11:12 am
Sounds like a near perfect plan to me. Another near perfect plan would be to put all the bonds in the 401k. "Near perfect" is good enough, excellent in fact. "Perfect" does not exist. :happy

Do you know if the NY tax-exempt bond eliminates the 3.88% local tax as well? If yes, I think I might prefer that route (half the bond in taxable). If not, it probably does not matter much.
I don't believe it eliminates the local tax, unfortunately :( I think it would just eliminate federal and state. So I think I will still do half of my bond allocation in that fund and then the remainder in my 401k.

Thank you for your help!

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