Portfolio Review Request

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Topic Author
kimmer2k
Posts: 2
Joined: Fri Dec 06, 2019 1:16 am

Portfolio Review Request

Post by kimmer2k » Fri Dec 06, 2019 1:32 am

Emergency funds:
~6 months ($70k)

Debt:
$623k @ 3.88% mortgage (primary home, worth $1.1M)
$281k @ 3.25% mortgage (rental, worth $660k, $1.5k/mo net income)
$8.25k @ 1.8% auto

Tax Filing Status:
Married Filing Jointly

Tax Rate:
22% Federal, 0% State

State of Residence:
Washington State

Age:
34 (him), 34 (her)

Desired Asset allocation:
85% stocks / 15% bonds
Desired International allocation: 30% of stocks

Current retirement assets
$980k (roughly 65% US Stocks, 25% Int'l Stocks, 10% Bonds)

His Taxable
1.39% Total International Stock Index Fund Admiral Shares (VTIAX) (0.11%)
7.02% Total Stock Market Index Fund Admiral Shares (VTSAX) (0.04%)
0.44% S&P 500 Index Fund () (0.03%)
0.38% International Index Fund () (0.09%)
0.45% Russell 2000 Index Fund () (0.03%)

Hers Taxable
9.59% Total Stock Market Index Fund Admiral Shares (VTSAX) (0.04%)

His 401k
10.11% International Index Fund () (0.09%)
12.71% S&P 500 Index Fund () (0.03%)
6.25% Bond Market Index Fund () (0.03%)
8.35% Russell 2000 Index Fund () (0.03%)
6% match

His Roth IRA at Vanguard
7.22% Total International Stock Index Fund Admiral Shares (VTIAX) (0.11%)
3.66% Total Stock Market Index Fund Admiral Shares (VTSAX) (0.04%)
3.05% Total Bond Market Index Fund Admiral Shares (VBLTX) (0.15%)

His Traditional IRA at Vanguard
0.67% Total International Stock Index Fund Admiral Shares (VTIAX) (0.11%)

Her 401k
None

Hers Roth IRA at Vanguard
6.00% Total International Stock Index Fund Admiral Shares (VTIAX) (0.11%)
3.79% Total Stock Market Index Fund Admiral Shares (VTSAX) (0.04%)

Her Traditional IRA at Vanguard
17.49% Total Stock Market Index Fund Admiral Shares (VTSAX) (0.04%)

Both HSA
1.17% Institutional Index Fund Institutional Plus Shares (VIIIX) (0.05%)
0.27% Total Bond Market Index Fund Institutional Plus Shares (VBMPX) (0.06%)

Other - not part of retirement
$57.4k NY 529 (Kid 1, age 3)
-Aggressive Portfolio (0.13% ER)
-52.5% Vanguard Total Stock Market Index Fund (VSTSX)
-35% Vanguard Total International Stock Index Fund (VTISX)
-8.75% Vanguard Total Bond Market II Index Fund (VTBNX)
-3.75% Vanguard Total International Bond Index Fund (VTIFX)

$28.5k NY 529 (Kid 2, age 0)
-Aggressive Growth Portfolio (0.13% ER)
-60% Vanguard Total Stock Market Index Fund (VSTSX)
-40% Vanguard Total International Stock Index Fund (VTISX)

$7.3k Lending Club

Contributions

New annual Contributions
$42k his 401k (+$21k company match)
-after-tax contributions are rolled into his Roth IRA
-excess of $56k goes to a taxable account
$6k his Roth IRA
$6k her Roth IRA
$18k taxable (from rental)

Notes
My wife has been unemployed this past year due to the birth of our 2nd child, so we rolled her 401k to her TIRA. She plans to get a job next year and roll her TIRA back to a 401k so she can continue executing a backdoor Roth.

I have been slowly transferring funds from Lending Club into a taxable account. I just wanted one less thing to worry about in my portfolio, and the fact that it wasn't very liquid.

Questions:
1. Nothing specific, just looking for a 2nd opinion... any glaring issues? Any advice or suggestions welcomed.
2. Do I really need that much of an emergency fund? Nearly half of it is for the 2 mortgages.
3. Not sure how dumb this sounds, but I think I have a bit of home equity just sitting around - should I take out a HELOC to invest in a taxable account? Or am I just too heavily invested in real estate?

Thank you in advance!
Last edited by kimmer2k on Sat Dec 07, 2019 10:48 am, edited 1 time in total.

blahblahsunshine
Posts: 87
Joined: Sun Jan 14, 2018 8:11 pm

Re: Portfolio Review Request

Post by blahblahsunshine » Fri Dec 06, 2019 12:40 pm

I would be tempted to sell the rental and take the 300K and put that toward the primary mortgage (either reamortizing it or refinancing it). If you reamortize the loan your monthly payments would be cut down by quite a bit allowing you to pay ahead on the mortgage in good times (by paying whatever you are today) and not having to pay nearly so much in lean times (the reamortized value).

I don't see anything really glaringly out of whack with what you have. I would keep the 70K cash on hand, but that is just me. I also would not take out a heloc for investment purposes. Net net, I would be thinking of ways to decrease your debt/leverage not increase it.

ExitStageLeft
Posts: 1800
Joined: Sat Jan 20, 2018 4:02 pm

Re: Portfolio Review Request

Post by ExitStageLeft » Fri Dec 06, 2019 3:18 pm

Welcome to the forum!

You have a very robust portfolio, not much to offer than to echo the concern that nearly half your net worth is in real estate, presumably in the same local market. That's a concentration of risk that I wouldn't be comfortable with.

By cash on hand, if you are referring to the EF then yes, you should keep that much on hand in the event of employment disruption for you. If you'd rather put it in the market then if you later need it you should be prepared for the resulting capital gain or loss and resulting tax implications.

Overall you're doing great, way to live below your means and save! Congrats on being in the two-comma club for net worth at a young age.

HomeStretch
Posts: 3523
Joined: Thu Dec 27, 2018 3:06 pm

Re: Portfolio Review Request

Post by HomeStretch » Sat Dec 07, 2019 2:18 am

Welcome!

Your portfolio looks good. Couple minor items to consider:

1. Use $8k from your emergency fund to payoff car loan. Your EF is likely not earning 1.8% after tax.

2. His Taxable account - sell the 3 holdings < 1% to simplify.

3. His Roth IRA - eliminate the bond holding (you can bump up bonds in His 401k to offset this). Hold 100% equities in Roth IRAs for highest expected growth, tax free.

4. His Traditional IRA - convert this very small balance to Roth IRA so you can do a backdoor Roth without being impacted by the pro rata rule. Do a $6k backdoor Roth for 2019.

Topic Author
kimmer2k
Posts: 2
Joined: Fri Dec 06, 2019 1:16 am

Re: Portfolio Review Request

Post by kimmer2k » Sat Dec 07, 2019 11:20 am

blahblahsunshine wrote:
Fri Dec 06, 2019 12:40 pm
I would be tempted to sell the rental and take the 300K and put that toward the primary mortgage (either reamortizing it or refinancing it). If you reamortize the loan your monthly payments would be cut down by quite a bit allowing you to pay ahead on the mortgage in good times (by paying whatever you are today) and not having to pay nearly so much in lean times (the reamortized value).
Thanks for the input. I believe 250k of that would be taxed as gains as this was not my primary home 2 of the 5 last years. Would this still be advisable?
ExitStageLeft wrote:
Fri Dec 06, 2019 3:18 pm
Overall you're doing great, way to live below your means and save! Congrats on being in the two-comma club for net worth at a young age.
Thanks for the advice and kind words!
HomeStretch wrote:
Sat Dec 07, 2019 2:18 am
1. Use $8k from your emergency fund to payoff car loan. Your EF is likely not earning 1.8% after tax.
2. His Taxable account - sell the 3 holdings < 1% to simplify.
3. His Roth IRA - eliminate the bond holding (you can bump up bonds in His 401k to offset this). Hold 100% equities in Roth IRAs for highest expected growth, tax free.
4. His Traditional IRA - convert this very small balance to Roth IRA so you can do a backdoor Roth without being impacted by the pro rata rule. Do a $6k backdoor Roth for 2019.
This. I will follow through with #1 & #3. I'll see what I can do with #2 - this is a company-sponsored after-tax account that I can't withdraw from, but I can reallocate as needed. I do #4 every now and then - the balance in there is from a recent 401k rollover. Thanks for the input!

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