Getting Started: Am I on track?

[MightyB]

Hello All,

I am just starting my journey and want to cross check if I am on track. I recently read the Bogleheads guide to investing, and want to understand how to implement the concepts practically. I have just opened my first Brokerage account. Below are my details.

Emergency funds: Six months (currently in a money market fund Blackrock Treasury Trust TTTXX)

Debt: None

Tax Filing Status:HOH

Tax Rate: 18§ Federal, 5% State

State of Residence: Tri-State (NY-NJ-CT)

Age: 35

Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation: 25% of stocks

Please provide an approximate size of your total portfolio (as in 50K, 700k, 1.4M, etc.) or as (high four-figures, mid five-figures, low six-figures, etc.).
Mid six figures

Current retirement assets
* The format below is shown using his/her pronouns. Use whatever pronouns or identifying names you prefer as long as it is clear which assets belong to which person.

Taxable
35% cash (for investing – do not include emergency funds)

His 401k (I currently need to better understand this breakdown)
45% Target Age Retirement Fund
Company matches 10%
20% Passive equities

_______________________________________________________________
Note: Total percentage of all the above accounts together (not each account individually) should equal 100%.

Contributions

New annual Contributions
$23k 401k (Max out contributions)


Available funds
35% Money Market Fund (Blackrock Treasury Trust TTTXX)

Funds available in his 401(k)
Target Retirement Funds
(Need to find more information)

Questions:
Currently I am preparing to buy a home. As the search is ongoing I have my down payment + emergency fund in a Money Market Fund Blackrock Treasury TTTXX. As I hope to use those funds in the near future. My 401k allocation is on a platform with limited options that I am working on getting a better understanding of, so unfortunately I don’t have the details on, but hope to have a review this month. It’s mostly managed, and I have inadvertently been using the 3 fund portfolio - sort of. I set my risk profile, and allocate between available options. I currently have it set for a target retirement fund and passive equities. (70/30)

Where I am at: I am planning to get started with what funds I have available outside those earmarked for the home down payment + emergency fund. I wanted to start with a total stock fund like FSKAX (but it is not available on Merrill Edge - which is what I currently use). I want to get started while I figure out and move to (re)balance my portfolio through the 401k platform.

1. Would an equivalent alternative to FSKAX be buying VTI through ETFs? (I am not too knowledgeable, but I would do some limit buys for this, I think) This would be the first ETFs I buy.

2. The adage is to invest often. Would putting left over funds at the end of the month into VTI, be a sound way to get started? should I do so more often if possible? (Every 2 weeks) Just to start I am okay starting out with stock allocations.

Gradually, I plan to learn to use the Brokerage account and start to buy international and Bond options. I am targeting simplicity or “lazy” approach.

3. Any other thoughts or items I would consider would be helpful.

[Beensabu]

Hi! Sorry your post fell through the cracks. Let's bring it back up for you

1. Would an equivalent alternative to FSKAX be buying VTI through ETFs? (I am not too knowledgeable, but I would do some limit buys for this, I think) This would be the first ETFs I buy.

Yes. FSKAX is Fidelity Total Market Index Fund and VTI is Vanguard Total Stock Market Index Fund. They are both US Total Stock Market index funds. It is better to hold ETFs (like VTI) in a taxable account, because they are portable across brokerages (i.e. you can leave Merrill for another brokerage if you ever want/need to without having to sell and pay taxes on capital gains for a fund that is not available at the brokerage you are transferring to).

2. The adage is to invest often. Would putting left over funds at the end of the month into VTI, be a sound way to get started? should I do so more often if possible? (Every 2 weeks) Just to start I am okay starting out with stock allocations.

That is reasonable. However, you really want to start thinking of your portfolio as a whole (all accounts together, not separate). Which means you need to figure out what stock:bond asset allocation (AA) you are most comfortable with. Once you do that, you want to make sure you have enough fixed income (bonds/cash) in your 401k to balance out your stock contributions to your taxable account so that you maintain that desired AA.

Gradually, I plan to learn to use the Brokerage account and start to buy international and Bond options. I am targeting simplicity or “lazy” approach.

You do not need to buy bonds in your taxable account as long as you have room for them in your 401k (or other tax-advantaged accounts like an IRA).

3. Any other thoughts or items I would consider would be helpful.

You will get more (and more helpful) responses if you edit your original post to include the following:

- expense ratio of the target date fund you have in your 401k
- breakdown (what % of the fund is in each asset class or sub-fund) of that target date fund
- the other "passive equities" you have in your 401k - fund names/tickers and what percentage of total portfolio in each, along with expense ratios
- all the 401k options you have - fund names/tickers, along with expense ratios

You just need to provide some more relevant information for others to respond to usefully. If you edit your post to include that information, then people are here to help.

[Raspberry-503]

If you can pay yourself first, invest a certain sum at the start of the month and live on your planned budget rather than hope some is left at the end of the month.

[bonesly]

Emergency funds: Six months (currently in a money market fund Blackrock Treasury Trust TTTXX)

This is an excellent start. Typically your emergency fund (EF) should be sized to cover N months of expenses (not income), where N is the longest duration you think it would take you to find a replacement job, given your education, experience, and current salary (which industry you're in can also impact job search-time). If it will only take 6 months at most to find a new job, then you're set, otherwise you might need to increase your EF.

Tax Rate: 18§ Federal, 5% State

When making investment decisions that involve tax rates, we look at the marginal rate, not the average/effective rate. According to Engaging Data: Tax Visualization, an 18% average Fed rate for 2025 Head-of-Household is for a gross income of $227K, which is the 32% Fed marginal rate. That's a high enough bracket that you'll want to try and adhere to Tax-Efficient Fund Placement when you start a Taxable (and/or Roth IRA) investment accounts. The synopsis of tax-efficient placement is that Taxable and Roth Tax-Free accounts should be 100% stocks, while all the bonds should be held in Trad Tax-Deferred accounts, along with the balance of stocks to meet your asset allocation (AA).

Current retirement assets

Your Current layout doesn't have enough US stock & bonds, but is pretty close to your int'l stock target (assuming a 75/25 split of the passive stock funds among US and int'l), but the cash for investing hasn't been deployed yet. The Proposed layout deploys all the cash to Total US Stock Market (VTI) and replaces the target date fund with three passive index funds that comprise the core holdings of a 3-Fund Portfolio. This provides more control and exactly meets your desired AA of 70/30 with 25% of stocks in int'l. You can certainly substitute VTI for any total US stock index that's convenient to the brokerage you're dealing with. You might consider setting aside $7K of the Taxable cash to put into a Roth IRA via the Backdoor Roth Contribution process, which works around your AGI possibly phasing out direct contributions (phase out starts at AGI ≥ $236K for 2025 contributions).



A template spreadsheet (not your data) to help with asset allocation assessment and rebalance planning is linked below. Make a copy in your local GoogleSheets space to edit (or download to your local machine if you have Excel).
Asset Allocation Sheet
AA Current and Proposed

New annual Contributions
$23k 401k (Max out contributions)

Can you include $7K for (backdoor) Roth IRAs going forward? It's pretty valuable to have some dollars in all three account types (Taxable, Trad Tax-Deferred, and Roth Tax-Free) to provide flexibility in managing tax burden during retirement withdrawals.

1. Would an equivalent alternative to FSKAX be buying VTI through ETFs? (I am not too knowledgeable, but I would do some limit buys for this, I think) This would be the first ETFs I buy.

Yes, you'll be able to swap in VTI or ITOT or SPTM as a substitute for FSKAX. ETF orders should be placed during market open and might have to be placed in number of shares (some brokerages have an option to purchase in dollars, but that just converts on the back-end to number of shares at the price you ended up with if the trade executes). You might consider avoiding the first and last hour of market open, which tends to have more price volatility, but if you look at the previous hour's price chart and it's stable, then feel free to trade even near open/close. Aside from that an ETF is much like a mutual fund, but selling fractional shares with specific identification can be an issue (which is a non-issue for funds).

2. The adage is to invest often. Would putting left over funds at the end of the month into VTI, be a sound way to get started? should I do so more often if possible? (Every 2 weeks) Just to start I am okay starting out with stock allocations.

Yes, that's fine... I would not add administrative burden and would likely do this once a month, not every 2 weeks. If you pay quarterly estimated taxes, then I'd drop down from monthly to quarterly (same time I submit 1040ES).

Gradually, I plan to learn to use the Brokerage account and start to buy international and Bond options. I am targeting simplicity or “lazy” approach.

At your tax bracket, you don't want cash or bonds in Taxable. The EF and the house-down payment plus whatever is in checking is all fine, although at your tax rate you might consider holding the EF in your 401k once your Taxable stock balance is 2X the balance of your EF; see the concept for Holding Cash in a Tax-Deferred Account. Future reference... you need to build up your Taxable stock balance to 2X your cash need before you can execute that concept to improve tax-efficient placement.

3. Any other thoughts or items I would consider would be helpful.

Keep reading, asking questions here, and learning. The more you know the more confidence you'll have in your financial planning path and eventually the less you'll need to think about investing. Investing will be on autopilot and you'll have the knowledge & experience to ignore what the market's doing even in a -50% crash because you know your plan will get you there under the worst of outcomes (5th percentile balance-at-retirement).

If you haven't already, read the five introductory topics in Wiki Main Page (left side) under "Getting Started for US Investors":
1) Getting started - Start here.
2) Investment philosophy - Our investment principles.
3) Investing start-up kit - A top-down approach to start investing.
4) Investment policy statement - Identify your investment objectives and how you plan to meet them.
5) Prioritizing investments - Choosing where to save your investing money, such as an employer's retirement plan or a savings account.

Book Suggestions
The Bogleheads' Guide to Investing (Lindauer)
The Little Book of Common Sense Investing (Bogle)
Common Sense on Mutual Funds (Bogle) <-- personal favorite
If You Can – How Millennials Can Get Rich Slowly (Bernstein) <-- free & brief online PDF

The Wiki also has a Suggested Reading List.