40K inheritance did i invest reasonably?

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Topic Author
jbinpa59
Posts: 10
Joined: Wed Jul 10, 2019 3:29 pm

40K inheritance did i invest reasonably?

Post by jbinpa59 » Sat Jul 13, 2019 7:20 pm

im a 60yo postal employee that can walk now but want 3yrs min to 5yrs probable to retirement under FERS system
wife works mostly to get out of house

have about a year of normal net pay as EMF (need to move some, 50%? to a MMfund)
also have a year plus of sick leave

no debt at this time
kids are out of house and no school loans

file MJ 12% fed 3.08% flat state (pa)

my Trad TSP 640K
Roth TSP 50K plus will have 18k more by year end to max out
both split 75% C 25% S, more or less = US TSM I'm not fond of I fund
planning on shiffting 15-20% of total portfolio to G (about 110-150K)

my roth ira 18K before inheritance $
in TRP Health Sci PRHSX .77ex

wife has no pension
does have two small 401k,s totaling 10k from previous employers that she needs to roll over and consolidate

i recieved an inheritance of $40k cash which I invested BEFORE I found bogleheads
looking at that plus actually realizing what i had in cash locally

I put 7k in my Roth IRA at TRP to max it for 2019 plus 13K in a taxable account to preplace $ to max out my RIRA for 2020and2021
and
I put 7k in a Roth IRA for wife at TRP in Communications and Tech PRMTX .78ex to max it for 2019 plus 13K in a taxable accou
nt to preplace $ to max out her RIRA for 2020and2021

I realize by BH standards both funds are higher cost, any suggestions of similar Vangaurd or Fidelity funds

after finally realizing i had excess local cash i paid off mortgage bal of 13K @4% which only had 2 yrs left anyway
freeing up $500 mo cash flow to put into TSP to max that out plus max out the catch up at least for this year

So basicly what should i of maybe done differently to follow the BH way and best way to fix it??

besides maxing the TSP earlier instead of prepaying a 4% mort which would now require a time machine :oops:
and the taxable funds need to stay put until july 2020 or get moved real soon to keep the cap gains low


TIA

User avatar
Watty
Posts: 16522
Joined: Wed Oct 10, 2007 3:55 pm

Re: 40K inheritance did i invest reasonably?

Post by Watty » Sat Jul 13, 2019 8:53 pm

I think paying off the mortage is fine and I would have done that in your situation since it is like getting a risk free tax free 4% investment.
jbinpa59 wrote:
Sat Jul 13, 2019 7:20 pm
I realize by BH standards both funds are higher cost, any suggestions of similar Vangaurd or Fidelity funds
One option would be to just move the Roth money to Vanguard and put it in one of their Target Date retirement funds like a 2025 fund to get the lower expense ratio. You could also use the TSP version of that for your TSP money too.

Some people think that the target date funds are some sort of dumbed investing for dummies choice that needs to be improved on but in the right situation they are an excellent choice. The main reasons not to use them are;
1) You don't have a good low cost one in your retirement account.
2) You have a lot of retirement money in a taxable account so you need to worry about the tax efficiency.

Before I retired I did not have a good low cost target date fund in my 401k but when I retired I moved the money to Vanguard and invested almost all my funds in a low cost target date fund. Part of my reasoning is that it will be easier to manage 20 years from now when I may be less financially capable and it will also be easier for my less financially knowledgeable wife if she has to manage the money some day.

Topic Author
jbinpa59
Posts: 10
Joined: Wed Jul 10, 2019 3:29 pm

Re: 40K inheritance did i invest reasonably?

Post by jbinpa59 » Sun Jul 14, 2019 1:47 am

Thanx for the info Watty

retiredjg
Posts: 36804
Joined: Thu Jan 10, 2008 12:56 pm

Re: 40K inheritance did i invest reasonably?

Post by retiredjg » Sun Jul 14, 2019 7:11 am

Using 100% stocks at your age seems like a lot to me. Consider increasing your bond allocation to at least 30%.

You really don't need to hold a tech or health sector fund at all. All of those stocks are included in the total stock market. If you really want to overweight those sectors, I know that Vanguard probably has something. Fidelity may as well.

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