Portfolio review request

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Topic Author
bismillah
Posts: 22
Joined: Thu Jan 30, 2025 7:15 am

Portfolio review request

Post by bismillah »

Howdy! I've made my first attempt at describing my current investment portfolio, using the "Asking Portfolio Questions" template. If there is anything obviously wrong, if any changes to formatting are required, or if you have any miscellaneous questions/requests please let me know -- I'm happy to try and make reviewing as easy for ya'll as possible.

I'm also linking my first BH post from a few days ago, in case that context is of any use to anyone. Looking forward to what ya'll have to say... thanks in advance!
Emergency funds: 6 months
Debt: None
Tax Filing Status: Married Filing Jointly
Tax Rate: 24% Federal, 5% State
State of Residence: Massachusetts
Age: 49
Desired Asset allocation: 75% stocks / 25% bonds
Desired International allocation: 20% of stocks
Total Portfolio Value: $785k

Current retirement assets

Taxable (JTWROS at RBC)
00.00% cash
00.01% money market
02.73% Franklin Income Fund Class A (FKIQX) (0.71%)
01.06% Invesco Rochester® Municipal Opportunities Fund Class C (ORNCX) (1.95%)
00.19% Invesco Senior Floating Rate Fund Class A (OOSAX) (1.09%)
00.11% John Hancock Bond Fund Class A (JHNBX) (0.77%)
00.11% PIMCO Income Fund Class A (PONAX) (1.23%)
03.24% CoStar Group, Inc. (CSGP)

Child UTMA at RBC
00.17% cash
00.38% money market
00.11% John Hancock Bond Fund Class A (JHNBX) (0.77%)
00.46% Lord Abbett Short Duration Income Fund Class A (LALDX) (0.59%)
00.63% PIMCO Income Fund Class A (PONAX) (1.23%)
00.17% Pioneer Strategic Income Fund Class A (PSRAX) (1.11%)

His 401k at Fidelity
03.32% 2040 Target Retirement Date Fund (N/A) (0.0311%)
Company match: 50% up to 8%

His Roth IRA at RBC
01.46% money market
01.06% First Trust Tactical High Yield ETF (HYLS) (1.02%)
00.90% Roblox Corporation (RBLX)
01.11% Zoom Communications Inc. (ZM)
02.85% Alger Spectra Fund Class A (SPECX) (1.50%)
00.91% John Hancock Bond Fund Class I (JHBIX) (0.47%)
00.71% John Hancock Funds Disciplined Value Mid Cap Fund Class I (JVMIX) (0.87%)
00.31% John Hancock Funds Strategic Income Opportunities Fund Class A (JIPAX) (1.08%)
01.46% John Hancock Funds International Growth Fund Class I (GOGIX) (1.02%)
00.79% John Hancock Funds III U.S. Growth Fund - Class A (JSGAX) (0.98%)
00.72% JPMorgan Value Advantage Fund Class A (JVAAX) (0.99%)
00.37% T. Rowe Price Blue Chip Growth Fund (TRBCX) (0.70%)

His Rollover IRA at RBC
00.39% money market
03.98% First Trust Rising Dividend Achievers ETF (RDVY) (0.49%)
06.64% Invesco QQQ Trust Series I (QQQ) (0.20%)
01.51% iShares Core S&P Small Cap ETF (IJR) (0.06%)
04.97% SPDR S&P 500 ETF Trust (SPY) (0.09%)
01.15% Vanguard Real Estate ETF (VNQ) (0.13%)
00.89% John Hancock Bond Fund Class I (JHBIX) (0.47%)
00.73% John Hancock Funds Strategic Income Opportunities Fund Class A (JIPAX) (1.08%)
01.00% John Hancock Funds International Growth Fund Class A (GOIGX) (1.32%)
00.22% John Hancock High Yield Fund Class A (JHHBX) (0.92%)
01.86% JPMorgan U.S. Equity Fund Class I (JUESX) (0.69%)
00.88% JPMorgan Value Advantage Fund Class A (JVAAX) (0.99%)
02.02% JPMorgan Large Cap Growth Fund I Class (SEEGX) (0.69%)
00.52% Macquarie Systematic Emerging Markets Equity Fund Class A (IPOAX) (1.05%)
00.71% Victory Sycamore Established Value Fund Class I (VEVIX) (0.58%)

Her Roth IRA at RBC
01.03% money market
02.44% Alger Spectra Fund Class A (SPECX) (1.50%)
00.13% Franklin Core Plus Bond Fund Class A (FRSTX) (0.94%)
01.03% Franklin Growth Opportunities Fund Class A (FGRAX) (0.91%)
00.22% John Hancock Funds III U.S. Growth Fund - Class C (JSGCX) (1.73%)
00.16% PIMCO Income Fund Class A (PONAX) (1.23%)

Her Rollover IRA at RBC
00.01% cash
00.51% money market
01.11% Adobe Inc. (ADBE)
00.81% FT Vest S&P 500 Dividend Aristocrats Target Income ETF (KNG) (0.75%)
01.70% First Trust Value Line Dividend Index Fund (FVD) (0.60%)
00.65% General Electric Company (GE)
00.01% GE HealthCare Technologies Inc. (GEHC)
00.28% GE Vernova Inc. (GEV)
06.64% Invesco QQQ Trust Series I (QQQ) (0.20%)
07.65% SPDR S&P 500 ETF Trust (SPY) (0.09%)
07.51% SPDR S&P Midcap 400 ETF Trust (MDY) (0.24%)
01.44% The Walt Disney Company (DIS)
01.11% Zoom Communications Inc. (ZM)
01.25% Fidelity Capital & Income Fund (FAGIX) (0.97%)
03.78% John Hancock Bond Fund Class I (JHBIX) (0.47%)
03.62% John Hancock Funds International Growth Fund Class I (GOGIX) (1.02%)
04.10% T. Rowe Price Blue Chip Growth Fund (TRBCX) (0.70%)

Contributions

New annual Contributions
$23500 his 401k (50% employer match to 8%)
$8000 his Roth IRA
$8000 her Roth IRA
$0 taxable (for retirement, not short term goals)

Available funds

Funds available in his 401(k)
US LARGE CAP EQUITY (N/A) (0.208%)
US LG CAP EQUITY IDX (N/A) (0.0048%)
US SMID CAP EQ INDEX (N/A) (0.0132%)
US SMID CAP EQUITY (N/A) (0.529%)
NON US EQUITY INDEX (N/A) (0.0333%)
NON-US EQUITY FUND (N/A) (0.7273%)
STABLE VALUE FUND (N/A) (0.0944%)
INCOME FUND (N/A) (0.1843%)
US AGGREGATE BND IND (N/A) (0.0143%)
US TIPS INDEX FUND (N/A) (0.0168%)
2025 TARGET RET FUND (N/A) (0.0306%)
2030 TARGET RET FUND (N/A) (0.0311%)
2035 TARGET RET FUND (N/A) (0.0310%)
2040 TARGET RET FUND (N/A) (0.0311%)
2045 TARGET RET FUND (N/A) (0.0307%)
2050 TARGET RET FUND (N/A) (0.0307%)
2055 TARGET RET FUND (N/A) (0.0306%)
2060 TARGET RET FUND (N/A) (0.0316%)
2065 TARGET RET FUND (N/A) (0.0362%)
TARGET RET INCOME (N/A) (0.0313%)


Questions
1. This is the state of my portfolio after being managed for 20yrs by my advisor. I've already been told by other non-BH folks who took an early look that many of my expense ratios are too high & that the whole thing could stand to be consolidated / simplified into a 3fund setup. Do BH folks agree with those high-level statements?

2. I've been told that Fidelity has a better customer experience than Vanguard (e.g. phone support, desktop/mobile apps) -AND- they have Fidelity-specific equivalents to each Vanguard (see below). As such, I'm leaning towards moving my portfolio from RBC to Fidelity... any reason(s) I shouldn't (or be wary of doing so)?

* VTSAX at Vanguard ~=~ FSKAX at Fidelity
* VTIAX at Vanguard ~=~ FZILX at Fidelity
* VBTLX at Vanguard ~=~ FXNAX at Fidelity
HomeStretch
Posts: 13031
Joined: Thu Dec 27, 2018 2:06 pm

Re: Portfolio review request

Post by HomeStretch »

Your current advisor-managed portfolio is complex and high cost. Moving to Fidelity is a good idea imo if you are ready to self-manage. You can set up receiving accounts and initiate account transfers online at Fidelity. For your RBC Taxable accounts, print or download your cost basis records.

Once the account transfers are complete, you can exchange all tax advantaged holdings without tax consequences. There are tax consequences for selling in the Taxable accounts so you will need to look at the unrealized gains to understand the tax cost of selling (which will be offset by ER savings). Set the Fidelity Taxable accounts to a specific ID cost basis method and turn off automatic reinvestment of dividends and capital gain distributions so you don’t buy more of the holdings you don’t want.

The Fidelity international fund FZILX you listed is a proprietary zero-ER fund which means you have to sell if you ever want to transfer out of Fidelity. It’s fine to use the zero funds in a tax advantaged account but don’t use them in a Taxable account.
User avatar
BolderBoy
Posts: 7089
Joined: Wed Apr 07, 2010 12:16 pm
Location: Colorado

Re: Portfolio review request

Post by BolderBoy »

I agree with HomeStretch's recommendations.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
Topic Author
bismillah
Posts: 22
Joined: Thu Jan 30, 2025 7:15 am

Re: Portfolio review request

Post by bismillah »

HomeStretch wrote: Mon Feb 03, 2025 10:38 am Your current advisor-managed portfolio is complex and high cost. Moving to Fidelity is a good idea imo if you are ready to self-manage. You can set up receiving accounts and initiate account transfers online at Fidelity. For your RBC Taxable accounts, print or download your cost basis records.

Once the account transfers are complete, you can exchange all tax advantaged holdings without tax consequences. There are tax consequences for selling in the Taxable accounts so you will need to look at the unrealized gains to understand the tax cost of selling (which will be offset by ER savings). Set the Fidelity Taxable accounts to a specific ID cost basis method and turn off automatic reinvestment of dividends and capital gain distributions so you don’t buy more of the holdings you don’t want.

The Fidelity international fund FZILX you listed is a proprietary zero-ER fund which means you have to sell if you ever want to transfer out of Fidelity. It’s fine to use the zero funds in a tax advantaged account but don’t use them in a Taxable account.
What is "ID"? And what are some examples of the "specific ID cost basis method" I should be looking for? Sorry, starting from scratch here...
Last edited by bismillah on Mon Feb 03, 2025 4:08 pm, edited 1 time in total.
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retiredjg
Posts: 56515
Joined: Thu Jan 10, 2008 11:56 am

Re: Portfolio review request

Post by retiredjg »

By Boglehead standards, your portfolio can be improved quite a lot. :happy

Fidelity would be a fine place to do that as long as you don't get tangled up with a Fidelity advisor managing your assets.

bismillah wrote: Mon Feb 03, 2025 10:20 am
Taxable (JTWROS at RBC)
00.00% cash
00.01% money market
02.73% Franklin Income Fund Class A (FKIQX) (0.71%)
01.06% Invesco Rochester® Municipal Opportunities Fund Class C (ORNCX) (1.95%)
00.19% Invesco Senior Floating Rate Fund Class A (OOSAX) (1.09%)
00.11% John Hancock Bond Fund Class A (JHNBX) (0.77%)
00.11% PIMCO Income Fund Class A (PONAX) (1.23%)
03.24% CoStar Group, Inc. (CSGP)
This is the only account that will cost you money to adjust. The others can be fixed with no tax cost. The good news is that this account is only about 7.5% of your assets (about $59k). And much of it is bonds which should have low gains (possibly losses). So the cost of fixing this account should not be great.

Replacing these high cost and tax-inefficient funds with low cost tax-efficient funds - should break even pretty quickly.

You will probably have to pay a fee to close the IRA accounts. Maybe $100 each. That's a bitter pill, but just do it. This portfolio is not in your best interests. Fidelity has offered in the past to reimburse people for these fees...be sure to ask about that.

You have about 60 funds in this portfolio not counting kid's account. It can all be done with 6 to 10.. No wonder you think that investing is hard.
epoche
Posts: 233
Joined: Sat Jul 31, 2021 12:57 pm

Re: Portfolio review request

Post by epoche »

Yes, you can simplify greatly and reduce expenses. You've already gotten good advice from others re: Fidelity and exchanging funds in tax-advantaged (401k, IRA, etc.).

If I've done the math right, you have less than $60k in the taxable account (not all of that will be capital gains, you need to figure out your cost basis). In the 24% MFJ bracket, you can make up to $600k in capital gains and still pay only 15% on long-term capital gains for 2025. Above $250k MAGI, you will pay an additional 3.8% net investment income tax (NIIT). If your MAGI is above $250k and you expect it to stay there for the forseeable future, you can sell all in the taxable and be done with it in one fell swoop. If you are under $250k MAGI, you can do a bit of tax optimization and sell only enough to keep you under $250k to avoid the NIIT. Even so, it may be worth it to pay the NIIT to get it over with. If any of the holdings are currently less than 1 year old, you could wait until they are past 1 year old to sell for the long-term gains rates.

Massachusetts will tax you 5% on long-term capital gains and 8.5% on short-term gains regardless.

Hope that helps.
HomeStretch
Posts: 13031
Joined: Thu Dec 27, 2018 2:06 pm

Re: Portfolio review request

Post by HomeStretch »

bismillah wrote: Mon Feb 03, 2025 12:40 pm What is "_ID_"? And what are some examples of the "_specific ID cost basis method_" I should be looking for? Sorry, starting from scratch here...
Sorry for the confusion. ID = identification. When you set up your Fidelity Taxable account online, in your account settings you can set a cost basis method for each holding. A specific identification cost basis method is anything other than “average cost”. This allows you to choose which tax lots you want to sell as the unrealized gain varies by tax lot. When you sell holdings in your Taxable account that you no longer want, it is a no brainer to sell any tax lots with a loss or no/small gain as step 1 of the clean-up.

This Bogleheads wiki page about “Cost Basis Methods” may be helpful:
https://www.bogleheads.org/wiki/Cost_basis_methods
Topic Author
bismillah
Posts: 22
Joined: Thu Jan 30, 2025 7:15 am

Re: Portfolio review request

Post by bismillah »

HomeStretch wrote: Mon Feb 03, 2025 1:59 pm
bismillah wrote: Mon Feb 03, 2025 12:40 pm What is "_ID_"? And what are some examples of the "_specific ID cost basis method_" I should be looking for? Sorry, starting from scratch here...
Sorry for the confusion. ID = identification. When you set up your Fidelity Taxable account online, in your account settings you can set a cost basis method for each holding. A specific identification cost basis method is anything other than “average cost”. This allows you to choose which tax lots you want to sell as the unrealized gain varies by tax lot. When you sell holdings in your Taxable account that you no longer want, it is a no brainer to sell any tax lots with a loss or no/small gain as step 1 of the clean-up.

This Bogleheads wiki page about “Cost Basis Methods” may be helpful:
https://www.bogleheads.org/wiki/Cost_basis_methods
Great, thank you for the explanation. I started reading up about cost basis today, but I hadn't seen the BH wiki article yet... I'll definitely read that top-to-bottom tonight.
Topic Author
bismillah
Posts: 22
Joined: Thu Jan 30, 2025 7:15 am

Re: Portfolio review request

Post by bismillah »

epoche wrote: Mon Feb 03, 2025 1:31 pm Yes, you can simplify greatly and reduce expenses. You've already gotten good advice from others re: Fidelity and exchanging funds in tax-advantaged (401k, IRA, etc.).

If I've done the math right, you have less than $60k in the taxable account (not all of that will be capital gains, you need to figure out your cost basis). In the 24% MFJ bracket, you can make up to $600k in capital gains and still pay only 15% on long-term capital gains for 2025. Above $250k MAGI, you will pay an additional 3.8% net investment income tax (NIIT). If your MAGI is above $250k and you expect it to stay there for the forseeable future, you can sell all in the taxable and be done with it in one fell swoop. If you are under $250k MAGI, you can do a bit of tax optimization and sell only enough to keep you under $250k to avoid the NIIT. Even so, it may be worth it to pay the NIIT to get it over with. If any of the holdings are currently less than 1 year old, you could wait until they are past 1 year old to sell for the long-term gains rates.

Massachusetts will tax you 5% on long-term capital gains and 8.5% on short-term gains regardless.

Hope that helps.
I think my MAGI is the same as my AGI ($150k), & I'm almost positive all of the holdings in my taxable account have been there for at least a year. Is the amount of time I've been in each of those funds something you'd expect I should be able to see in my RBC portfolio dashboard?

However, assuming a MAGI of $150k & given there's only $60k in my taxable account, it sounds like I can sell everything & set aside 25% of the proceeds to pay for taxes in April 2026. Does it make sense to set aside the remaining 75% & use it to fund maximum 401k contributions (for me) & Roth IRA contributions (for my wife & I) next year, so that the money goes into tax-deferred or tax-exempt accounts for good? I guess I'm not sure what I should be doing with that 75%...
bonesly
Posts: 2505
Joined: Mon Dec 18, 2017 9:28 pm
Location: WA

Re: Portfolio review request

Post by bonesly »

bismillah wrote: Mon Feb 03, 2025 10:20 am 1. This is the state of my portfolio after being managed for 20yrs by my advisor. I've already been told by other non-BH folks who took an early look that many of my expense ratios are too high & that the whole thing could stand to be consolidated / simplified into a 3fund setup. Do BH folks agree with those high-level statements?
Yes... a 3-Fund Portfolio is simple yet effective at providing all the diversification you need (you could easily get down to <12 holdings, maybe as few as one per account with the exception of the largest tax-deferred account which would have 3 holdings). Any funds charging an expense ratio >0.30% in this day and age of low-cost index funds represents you choosing to give your money to the fund managers (guaranteed) in exchange for the hope that you'll outperform the passive index (not at all guaranteed and probably less than 20% in a given year and less than 4% over 20 consecutive years).

80% of Active Managers Fail to Beat the Market in 2021
94% of Active Managers Failed to Beat the Market for 20 Years
bismillah wrote: Mon Feb 03, 2025 10:20 am 2. I've been told that Fidelity has a better customer experience than Vanguard (e.g. phone support, desktop/mobile apps) -AND- they have Fidelity-specific equivalents to each Vanguard (see below). As such, I'm leaning towards moving my portfolio from RBC to Fidelity... any reason(s) I shouldn't (or be wary of doing so)?

* VTSAX at Vanguard ~=~ FSKAX at Fidelity
* VTIAX at Vanguard ~=~ FZILX at Fidelity
* VBTLX at Vanguard ~=~ FXNAX at Fidelity
Among Vanguard, Fidelity, and Scwhab, Vanguard gets the least points (from posts here) on customer service. You can get equivalent funds/ETFs at any of the three brokerages often cited here. The biggest difference, aside from customer service, is the cash sweep and interest rates on uninvested cash.

Vanguard's MMFs are typically the highest paying interest rates. Schwab's come in second place, but Schwab notoriously makes you move distributions from their sub-1% settlement fund to one of their second-place MMFs. If you don't pay attention your cash from distributions could just sit earning next to nothing. Fidelity MMFs are sadly the lowest paying interest rates (that great customer service has to be paid for somewhere and it seems to be in the higher costs on their MMFs).

If customer service is highest priority for you, I'd suggest Fidelity. If you're a DIY investor that rarely (if ever) needs hand-holding, then I'd suggest Vanguard. Schwab acquired TD Ameritrade so if you're a stock-trader and ThinkOrSwim™ is of interest, I'd probably recommend Schwab (that's not typical of buy-and-hold Bogleheads, but some end up at Schwab because they were the 401k plan admin for their employer, and some of those some want to trade stocks, options, etc. ... otherwise I can't really see the appeal of Schwab).

If you need a financial advisor choose one very carefully. We've seen posters disclose "horror story" portfolios from Fidelity despite it being an often-recommended shop here and I wouldn't put it past Schwab to also have some bad advisors. Vangaurd advisors all run from the same playbook and are very low-cost but will give you something "like" a 3-Fund portfolio of index funds that they manage for you... you could do the same yourself and save the 0.30% AUM (although that's very cheap compared to a typical AUM of 1.50%).

MMFs at Vanguard, Schwab, and Fidelity
Vanguard MMFs
4.30% Vanguard Cash Reserves Federal Money Market Fund (VMRXX, ER=0.10%, $3K min)
4.27% Vanguard Treasury Money Market Fund (VUSXX, ER=0.09%, $3K min)

Schwab MMFs
4.22% Schwab Value Advantage Money Fund® (SWVXX, ER=0.34%, $0 min)
4.10% Schwab Government Money Fund (SNVXX, ER=0.34%, $0 min)

Fidelity MMFs
4.07% Fidelity® Money Market Fund (SPRXX, ER=0.42%, $0 min)
4.03% Fidelity® Government Money Market Fund (SPAXX, ER=0.42%, $0 min)

You might find better rates at Schwab & Fido if you have over $100K to invest in a MMF.
Don't do what Bogleheads tell you. Listen to what we say, consider other sources, and make your own decisions, since you have to live with the risks & rewards (not us or anyone else).
rakish_weasel
Posts: 96
Joined: Thu May 21, 2015 1:02 pm

Re: Portfolio review request

Post by rakish_weasel »

bismillah wrote: Mon Feb 03, 2025 10:20 am
Available funds
Funds available in his 401(k)

US LARGE CAP EQUITY (N/A) (0.208%)
US LG CAP EQUITY IDX (N/A) (0.0048%)
US SMID CAP EQ INDEX (N/A) (0.0132%)
US SMID CAP EQUITY (N/A) (0.529%)
NON US EQUITY INDEX (N/A) (0.0333%)
[snip]
Nitpicking perhaps, but expense ratios are crucial and the devil's in the details, as the saying goes.

Presume the above should be 0.048% for the Large Cap Equity Index? The listed value above is far cheaper than even the cheapest Total Market or S&P500 index (not counting FZROX, obviously).

-rw
Topic Author
bismillah
Posts: 22
Joined: Thu Jan 30, 2025 7:15 am

Re: Portfolio review request

Post by bismillah »

rakish_weasel wrote: Mon Feb 03, 2025 4:51 pm Nitpicking perhaps, but expense ratios are crucial and the devil's in the details, as the saying goes.

Presume the above should be 0.048% for the Large Cap Equity Index? The listed value above is far cheaper than even the cheapest Total Market or S&P500 index (not counting FZROX, obviously).
FWIW I copied it correctly from the site: the PE for that fund is definitely listed like this:

Code: Select all

Exp Ratio (Gross) 09/30/2024 ($0.048 per $1,000) 0.0048%
epoche
Posts: 233
Joined: Sat Jul 31, 2021 12:57 pm

Re: Portfolio review request

Post by epoche »

bismillah wrote: Mon Feb 03, 2025 4:29 pm
epoche wrote: Mon Feb 03, 2025 1:31 pm Yes, you can simplify greatly and reduce expenses. You've already gotten good advice from others re: Fidelity and exchanging funds in tax-advantaged (401k, IRA, etc.).

If I've done the math right, you have less than $60k in the taxable account (not all of that will be capital gains, you need to figure out your cost basis). In the 24% MFJ bracket, you can make up to $600k in capital gains and still pay only 15% on long-term capital gains for 2025. Above $250k MAGI, you will pay an additional 3.8% net investment income tax (NIIT). If your MAGI is above $250k and you expect it to stay there for the forseeable future, you can sell all in the taxable and be done with it in one fell swoop. If you are under $250k MAGI, you can do a bit of tax optimization and sell only enough to keep you under $250k to avoid the NIIT. Even so, it may be worth it to pay the NIIT to get it over with. If any of the holdings are currently less than 1 year old, you could wait until they are past 1 year old to sell for the long-term gains rates.

Massachusetts will tax you 5% on long-term capital gains and 8.5% on short-term gains regardless.

Hope that helps.
I think my MAGI is the same as my AGI ($150k), & I'm almost positive all of the holdings in my taxable account have been there for at least a year. Is the amount of time I've been in each of those funds something you'd expect I should be able to see in my RBC portfolio dashboard?

However, assuming a MAGI of $150k & given there's only $60k in my taxable account, it sounds like I can sell everything & set aside 25% of the proceeds to pay for taxes in April 2026. Does it make sense to set aside the remaining 75% & use it to fund maximum 401k contributions (for me) & Roth IRA contributions (for my wife & I) next year, so that the money goes into tax-deferred or tax-exempt accounts for good? I guess I'm not sure what I should be doing with that 75%...
Yes, you should be able to see the dates of purchase in your account or statements to determine if you have any holdings (or parts of holding - lots) less than a year old.

At $150k AGI, sounds like you can just sell all the holdings in taxable without worrying about NIIT. But do check the details first. Maybe run a mock tax form.

You'll be taxed on the gains only, so figure out what that is and set aside an amount that makes you comfortable for taxes (15% would be the expected tax rate based on what you've said).

As for what to do with the other portion (75-85%), what are you doing with money in the taxable account now? If it is just savings above your tax-advantaged accounts, then keep doing that. You say you are already planning on contributing $39.5k to 401k and 2 Roths - presumably that money is coming from your employment. Note that unless you turned 49 in the already-passed month+ of this year, you should be eligible to put an extra $7500 in your 401k for being above 50 (which I assume you will be, given that you're contributing $8k to Roth). That would be a way to move some taxable savings to tax-advantaged. Otherwise, just keep saving it in a taxable account at Fidelity or other brokerage.

Hope that helps.
Topic Author
bismillah
Posts: 22
Joined: Thu Jan 30, 2025 7:15 am

Re: Portfolio review request

Post by bismillah »

epoche wrote: Mon Feb 03, 2025 8:03 pm As for what to do with the other portion (75-85%), what are you doing with money in the taxable account now? If it is just savings above your tax-advantaged accounts, then keep doing that. You say you are already planning on contributing $39.5k to 401k and 2 Roths - presumably that money is coming from your employment. Note that unless you turned 49 in the already-passed month+ of this year, you should be eligible to put an extra $7500 in your 401k for being above 50 (which I assume you will be, given that you're contributing $8k to Roth). That would be a way to move some taxable savings to tax-advantaged. Otherwise, just keep saving it in a taxable account at Fidelity or other brokerage.
I wasn't really doing anything with the taxable account. Almost half of it is from a former employer ESPP; the rest was my advisor's doing over the years.

I turn 50 later this year & didn't realize I could contribute $7500 extra to my 401k at that point -- thank you so much for pointing that out! That extra $7500 is called a "catch-up contribution", right? Also, I don't need to make that contribution in any special fashion, right -- I just make sure to contribute $31k over the course of the year, instead of $23500?
Topic Author
bismillah
Posts: 22
Joined: Thu Jan 30, 2025 7:15 am

Re: Portfolio review request

Post by bismillah »

HomeStretch wrote: Mon Feb 03, 2025 10:38 am The Fidelity international fund FZILX you listed is a proprietary zero-ER fund which means you have to sell if you ever want to transfer out of Fidelity. It’s fine to use the zero funds in a tax advantaged account but don’t use them in a Taxable account.
Is there any guidance about how I should be investing the funds in my taxable account? I'd originally assumed those should also go into a 3fund setup, up until you mentioned not using zero funds in taxable accounts. Should I be investing that money differently, especially if I plan on draining those funds over time to fund max contributions to tax-advantaged accounts?
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retiredjg
Posts: 56515
Joined: Thu Jan 10, 2008 11:56 am

Re: Portfolio review request

Post by retiredjg »

Here is an example of how your portfolio could look. I believe you are asking for 55% US stocks, 20% international stocks, and 25% bonds which translates in Boglehead speech to 75% stocks, 25% bonds with 27% of the stocks in international (which may not be what you want...but you get the idea).

This does not add up to 100% because of rounding, but it is close enough to be an example.


Taxable 7.45%
7.45% Total Stock Market (not a zero fund)

His 401k at Fidelity 3.32%
1.3% US LG CAP EQUITY IDX (N/A) (0.0048%)
2% US AGGREGATE BND IND (N/A) (0.0143%)

His Roth IRA at RBC 12.7%
12.7% 500 index
0% for now total international

His Rollover IRA 27.5%
18.5% 500 index
9% intermediate bond fund

Her Roth IRA 5%
5% total international

Her Rollover IRA 46.9%
17.9% 500 index
15% total international
14% intermediate bond fund



I set it up this way so that your contributions will flow into the portfolio without adding extra funds. The only accounts receiving money are His 401k and His and Her Roth IRAs. The other accounts can just sit there. All the bonds and some of the US stocks would go into His 401k. All the international would go into the Roth IRAs with the leftover space being filled with 500 index.

I did not use total stock in any account other than taxable so that you don't have to think about wash sales. 500 index is an excellent substitute for total stock.
Topic Author
bismillah
Posts: 22
Joined: Thu Jan 30, 2025 7:15 am

Re: Portfolio review request

Post by bismillah »

retiredjg wrote: Wed Feb 05, 2025 7:58 am Here is an example of how your portfolio could look. I believe you are asking for 55% US stocks, 20% international stocks, and 25% bonds which translates in Boglehead speech to 75% stocks, 25% bonds with 27% of the stocks in international (which may not be what you want...but you get the idea).

This does not add up to 100% because of rounding, but it is close enough to be an example.


Taxable 7.45%
7.45% Total Stock Market (not a zero fund)

His 401k at Fidelity 3.32%
1.3% US LG CAP EQUITY IDX (N/A) (0.0048%)
2% US AGGREGATE BND IND (N/A) (0.0143%)

His Roth IRA at RBC 12.7%
12.7% 500 index
0% for now total international

His Rollover IRA 27.5%
18.5% 500 index
9% intermediate bond fund

Her Roth IRA 5%
5% total international

Her Rollover IRA 46.9%
17.9% 500 index
15% total international
14% intermediate bond fund



I set it up this way so that your contributions will flow into the portfolio without adding extra funds. The only accounts receiving money are His 401k and His and Her Roth IRAs. The other accounts can just sit there. All the bonds and some of the US stocks would go into His 401k. All the international would go into the Roth IRAs with the leftover space being filled with 500 index.

I did not use total stock in any account other than taxable so that you don't have to think about wash sales. 500 index is an excellent substitute for total stock.
This is really helpful -- thank you. I've been struggling to figure out what my portfolio should look like, when it's all straightened out. Is there a reason taxable (7.45%) gets allocated to a non-zero fund, besides the fact that it's Fidelity proprietary? Everyone's been good about hammering the fact that I have more flexibility to reallocate tax-advantaged accounts, but I'm still trying to understand how to approach taxable / non-advantaged accounts (of which I only have one).

Also, thank you for that explanation of percentages regarding stocks, bonds, & international. The math makes a lot more sense now, after you provided that 27% figure... I still have yet to understand how much of an impact the international stocks % might have on my portfolio, but I'm happy to use the recommended value (20% of stocks) as a starting point & figure it out as I go.
HomeStretch
Posts: 13031
Joined: Thu Dec 27, 2018 2:06 pm

Re: Portfolio review request

Post by HomeStretch »

bismillah wrote: Tue Feb 04, 2025 10:13 pm
HomeStretch wrote: Mon Feb 03, 2025 10:38 am The Fidelity international fund FZILX you listed is a proprietary zero-ER fund which means you have to sell if you ever want to transfer out of Fidelity. It’s fine to use the zero funds in a tax advantaged account but don’t use them in a Taxable account.
Is there any guidance about how I should be investing the funds in my taxable account? I'd originally assumed those should also go into a 3fund setup, up until you mentioned not using zero funds in taxable accounts. Should I be investing that money differently, especially if I plan on draining those funds over time to fund max contributions to tax-advantaged accounts?
retiredjg suggested a great portfolio.

With a 3-fund portfolio, you can choose to hold all 3 funds in the same %s in each account type (i.e., taxable, tax deferred, Roth). Or, for simplicity and tax efficiency, you can place the 3 funds selectively across your account types. I prefer the latter and the suggested portfolio falls into the latter category. This BH wiki page about tax efficient fund placement may be helpful:
https://www.bogleheads.org/wiki/Tax-eff ... _placement
User avatar
retiredjg
Posts: 56515
Joined: Thu Jan 10, 2008 11:56 am

Re: Portfolio review request

Post by retiredjg »

bismillah wrote: Wed Feb 05, 2025 5:36 pm
retiredjg wrote: Wed Feb 05, 2025 7:58 am Here is an example of how your portfolio could look. I believe you are asking for 55% US stocks, 20% international stocks, and 25% bonds which translates in Boglehead speech to 75% stocks, 25% bonds with 27% of the stocks in international (which may not be what you want...but you get the idea).

This does not add up to 100% because of rounding, but it is close enough to be an example.


Taxable 7.45%
7.45% Total Stock Market (not a zero fund)

His 401k at Fidelity 3.32%
1.3% US LG CAP EQUITY IDX (N/A) (0.0048%)
2% US AGGREGATE BND IND (N/A) (0.0143%)

His Roth IRA at RBC 12.7%
12.7% 500 index
0% for now total international

His Rollover IRA 27.5%
18.5% 500 index
9% intermediate bond fund

Her Roth IRA 5%
5% total international

Her Rollover IRA 46.9%
17.9% 500 index
15% total international
14% intermediate bond fund



I set it up this way so that your contributions will flow into the portfolio without adding extra funds. The only accounts receiving money are His 401k and His and Her Roth IRAs. The other accounts can just sit there. All the bonds and some of the US stocks would go into His 401k. All the international would go into the Roth IRAs with the leftover space being filled with 500 index.

I did not use total stock in any account other than taxable so that you don't have to think about wash sales. 500 index is an excellent substitute for total stock.
This is really helpful -- thank you. I've been struggling to figure out what my portfolio should look like, when it's all straightened out. Is there a reason taxable (7.45%) gets allocated to a non-zero fund, besides the fact that it's Fidelity proprietary?
No, that is the reason. People need or want to move their assets from time to time. Using a zero fund in taxable locks you into that fund...you cannot transfer it somewhere else. In order to move your money, you have to sell the zero fund (which can trigger taxes) and buy another.

Don't do that. The zero fund is no better than the other total stock funds that can be easily moved. There is no reason to use a zero fund in taxable. They are fine elsewhere.

Also, thank you for that explanation of percentages regarding stocks, bonds, & international. The math makes a lot more sense now, after you provided that 27% figure... I still have yet to understand how much of an impact the international stocks % might have on my portfolio, but I'm happy to use the recommended value (20% of stocks) as a starting point & figure it out as I go.
This is a common confusion.

When we talk of having 20% of of your stocks in international, that means 20% of whatever your stock allocation is.....in your case it would be 20% of 75% which is 15% of the portfolio.

I don't know which one you meant. I just sensed you meant 55% US and 20% international to make up your 75% allocation to stocks.
Topic Author
bismillah
Posts: 22
Joined: Thu Jan 30, 2025 7:15 am

Re: Portfolio review request

Post by bismillah »

HomeStretch wrote: Wed Feb 05, 2025 5:53 pm retiredjg suggested a great portfolio.

With a 3-fund portfolio, you can choose to hold all 3 funds in the same %s in each account type (i.e., taxable, tax deferred, Roth). Or, for simplicity and tax efficiency, you can place the 3 funds selectively across your account types. I prefer the latter and the suggested portfolio falls into the latter category. This BH wiki page about tax efficient fund placement may be helpful:
https://www.bogleheads.org/wiki/Tax-eff ... _placement
Awesome, yet another wiki article that I hadn't happened across but directly addresses one of the concepts I've been struggling with. Thank you for pointing me at it!
mike_in_ny
Posts: 152
Joined: Sat Dec 23, 2017 8:48 am

Re: Portfolio review request

Post by mike_in_ny »

Agree with the above and retiredjg's portfolio is spot on.

You should ask if there are any promotions or bonuses for moving your account to
Fidelity or Schwab. You may be able to get some money for making this move that
could offset some of the expenses or taxes. There is a thread that sometimes
comes up on this -- but I would suggest going to one of those two and not chasing
an extra small bonus.

The only thing I might check on is if your 401k accepts rollovers from an IRA. This
would open up the possibility of a Backdoor Roth, and it looks like the fees are
pretty good in your 401k. It looks like she (or the "Her" portfolios) is not working
or does not have a 401k.
Topic Author
bismillah
Posts: 22
Joined: Thu Jan 30, 2025 7:15 am

Re: Portfolio review request

Post by bismillah »

mike_in_ny wrote: Thu Feb 06, 2025 8:34 pm Agree with the above and retiredjg's portfolio is spot on.

You should ask if there are any promotions or bonuses for moving your account to
Fidelity or Schwab. You may be able to get some money for making this move that
could offset some of the expenses or taxes. There is a thread that sometimes
comes up on this -- but I would suggest going to one of those two and not chasing
an extra small bonus.

The only thing I might check on is if your 401k accepts rollovers from an IRA. This
would open up the possibility of a Backdoor Roth, and it looks like the fees are
pretty good in your 401k. It looks like she (or the "Her" portfolios) is not working
or does not have a 401k.
At this point, I'm committed to going to Fidelity.

I've not heard of Backdoor Roth IRAs before, and I'm not sure how you determined that "the feeds are pretty good in [my] 401k". Given that I'm still actively contributing to the 401k, when would I take advantage of a Backdoor Roth... is that an annual thing? Finally, you're correct: my wife is not working & doesn't have a 401k.
bonesly
Posts: 2505
Joined: Mon Dec 18, 2017 9:28 pm
Location: WA

Re: Portfolio review request

Post by bonesly »

bismillah wrote: Fri Feb 07, 2025 5:00 pm I've not heard of Backdoor Roth IRAs before, and I'm not sure how you determined that "the feeds are pretty good in [my] 401k". Given that I'm still actively contributing to the 401k, when would I take advantage of a Backdoor Roth... is that an annual thing? Finally, you're correct: my wife is not working & doesn't have a 401k.
Backdoor Roth is a legal workaround that allows high-income earners that have been phased out of a full $7K contribution to still put the full $7K contributions in (just with more steps, and a bit of paperwork with IRS Form 8606). Even if your wife is not working you can still put in $7K for each of you to a Roth IRA through the backdoor process. You can't have any Trad IRAs with a non-zero balance or that complicates things (pro rata rules on conversion) for whichever one of you has a Trad IRA. Read the Wiki topic and ask questions if it doesn't make sense or you need clarificaiton.
Don't do what Bogleheads tell you. Listen to what we say, consider other sources, and make your own decisions, since you have to live with the risks & rewards (not us or anyone else).
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