Portfolio Analysis
-
- Posts: 5
- Joined: Sat May 14, 2022 11:22 am
Portfolio Analysis
Updating Post with added info - 5/27
I'm looking to rebalance my 401K, lower my expense ratios.
Me: 35
Wife: 32
No Kids
No liabilities
Tax Filing Status: Filed Separately this year, but thinking about filing jointly in 2023
Both Federal Tax Bracket: 24% (Base Salaries).
State: Illinois (4.95% flat rate)
Total Assets: $760K, 65/15/20 (Stocks/Bonds/Cash)
Combined Expenses: $63K / year
Desired Asset Allocation: 70/30 (Stocks/bonds)
Desired Asset Allocation w/Cash: 60/30/10
Initially, we had more Cash for a future Home deposit, but we are changing our approach, and will continue renting for a while.
Me:
Taxable
Vanguard Total International Index Fund VTIAX (.17 exp ratio) - $74K
Vanguard Total Stock Market Index Fund VTSAX (.04 exp ratio) - $101K
Vanguard Intermediate Tax Exempt Fund VWIUX (.17 exp ratio) - $56K
Vanguard Roth IRA Target Retirement 2050 Fund VFIFX - $32K
Corporate Equity Grants
MorganStanley Stock Plan (Vested)- $6K
MorganStanley Stock (RSU)- $32K
Bank Savings (Cash) - $50k
Bank Checking (Cash)- $10k
TreasuryDirect iBond - $10k
401K (Have been contributing $20.5k/annually)
Employer Corporate Stock - $19k (want to exchange to another fund)
Fidelity Global Exch FSGGX (.055 exp ratio) - 25K
Fidelity 500 Index FXAIX (.015 exp ratio) - $66K
Fidelity Freedom Index 2050 FIPFX (.12 ratio) - $44K
401k Brokerage Roth
Fidelity US Bond Index FSKAX (.02) - $7K
Fidelity Total Market Index FXNAX (.02) - $10K
*Most Funds are available in my Fidelity Brokerage account, however here are the funds available in employer's core 401k plan -
AF AMER Mutual R6 (RMFGX) - 0.27
FID 500 INDEX (FXAIX) - 0.15%
BLKRK Midcap Grwth (CMGIX) - 0.8%
FID Extd MKT IDX (FSMAX) - 0.035%
MFS Midcap Value R6 (MVCKX) - 0.64%
AM Cent Small cap - 0.82%
FID Small Cap IDX (FSSNX) - 0.025%
Vang Explorer ADM (VEXRX) - 0.29%
FID GLB Ex US IDX (FSGGX) - 0.055%
FID INTL Small Cap OPP (FSCOX) - 1.23%
TRP Overseas Stock (TROIX) - 0.66%
AC Ultra SEP Acct - 0.377%
TRP Retire 2005 to 2065 B - 0.36%
AM CENT Govt Bond (ABTIX) - 0.27%
FID US BOND IDX (FXNAX) - 0.025%
WA Core BOND IS (WACSX) - 0.43%
Wife:
eTrade account Corp stock - $10K vested, $40K RSU
ESOP - $20K (Looking to exchange to another low exp fund)
401K (Lately starting to max out contributions)
Fidelity 401K Target 2055 Fund - $77K
Most Funds are available in her 401k account
Vanguard 500 Index Fund Admiral Shares (.04 exp ratio) - $4K
Vanguard Midcap growth Index Fund (.07 exp ratio) - $5k
Bank Savings (Cash) - $65K
I'm looking to rebalance my 401K, lower my expense ratios.
Me: 35
Wife: 32
No Kids
No liabilities
Tax Filing Status: Filed Separately this year, but thinking about filing jointly in 2023
Both Federal Tax Bracket: 24% (Base Salaries).
State: Illinois (4.95% flat rate)
Total Assets: $760K, 65/15/20 (Stocks/Bonds/Cash)
Combined Expenses: $63K / year
Desired Asset Allocation: 70/30 (Stocks/bonds)
Desired Asset Allocation w/Cash: 60/30/10
Initially, we had more Cash for a future Home deposit, but we are changing our approach, and will continue renting for a while.
Me:
Taxable
Vanguard Total International Index Fund VTIAX (.17 exp ratio) - $74K
Vanguard Total Stock Market Index Fund VTSAX (.04 exp ratio) - $101K
Vanguard Intermediate Tax Exempt Fund VWIUX (.17 exp ratio) - $56K
Vanguard Roth IRA Target Retirement 2050 Fund VFIFX - $32K
Corporate Equity Grants
MorganStanley Stock Plan (Vested)- $6K
MorganStanley Stock (RSU)- $32K
Bank Savings (Cash) - $50k
Bank Checking (Cash)- $10k
TreasuryDirect iBond - $10k
401K (Have been contributing $20.5k/annually)
Employer Corporate Stock - $19k (want to exchange to another fund)
Fidelity Global Exch FSGGX (.055 exp ratio) - 25K
Fidelity 500 Index FXAIX (.015 exp ratio) - $66K
Fidelity Freedom Index 2050 FIPFX (.12 ratio) - $44K
401k Brokerage Roth
Fidelity US Bond Index FSKAX (.02) - $7K
Fidelity Total Market Index FXNAX (.02) - $10K
*Most Funds are available in my Fidelity Brokerage account, however here are the funds available in employer's core 401k plan -
AF AMER Mutual R6 (RMFGX) - 0.27
FID 500 INDEX (FXAIX) - 0.15%
BLKRK Midcap Grwth (CMGIX) - 0.8%
FID Extd MKT IDX (FSMAX) - 0.035%
MFS Midcap Value R6 (MVCKX) - 0.64%
AM Cent Small cap - 0.82%
FID Small Cap IDX (FSSNX) - 0.025%
Vang Explorer ADM (VEXRX) - 0.29%
FID GLB Ex US IDX (FSGGX) - 0.055%
FID INTL Small Cap OPP (FSCOX) - 1.23%
TRP Overseas Stock (TROIX) - 0.66%
AC Ultra SEP Acct - 0.377%
TRP Retire 2005 to 2065 B - 0.36%
AM CENT Govt Bond (ABTIX) - 0.27%
FID US BOND IDX (FXNAX) - 0.025%
WA Core BOND IS (WACSX) - 0.43%
Wife:
eTrade account Corp stock - $10K vested, $40K RSU
ESOP - $20K (Looking to exchange to another low exp fund)
401K (Lately starting to max out contributions)
Fidelity 401K Target 2055 Fund - $77K
Most Funds are available in her 401k account
Vanguard 500 Index Fund Admiral Shares (.04 exp ratio) - $4K
Vanguard Midcap growth Index Fund (.07 exp ratio) - $5k
Bank Savings (Cash) - $65K
Last edited by SurfMonkey00 on Mon May 30, 2022 6:25 pm, edited 4 times in total.
- HMSVictory
- Posts: 1710
- Joined: Sun Nov 01, 2020 6:02 am
- Location: Lower Gun Deck
Re: Portfolio Analysis
Hello and welcome to the forum!
Do not adjust your portfolio or AA based upon market trends. Crete an IPS which lets you invest through all of the market cycles.
One thing I can point out is you are trying to hold your AA in all of your accounts (I did this at first as well). I would consolidate the holdings down to 1-2 funds per account max. I like the 3 fund portfolio for its simplicity and ease of management (you own everything). I would sell all of your individual stocks. I would separate your cash emergency fund from your portfolio and not include it in your AA. So then you are just looking at a stock to bond allocation. I think you are too conservative but if you like it and can stay the course with it then its fine.
I would simplify your portfolio into the following groups:
Taxable: US Stock Funds and International Stock Funds (VTI and VXUS)
401k (which I assume is all pre-tax and not Roth): Any bonds you want to hold should be in here with the rest in equities. (BND and VTI)
Roth: US Stock funds and maybe some international (VTI and VXUS)
Your wifes holdings can be simplified as well into a similar pattern and I would sell the Etrade stock as well. I don't prefer target date funds but if she wants to stick with it then its fine. I like to be able to control my AA and I don't like glidepath AA adjustments but its not a huge deal.
Do not adjust your portfolio or AA based upon market trends. Crete an IPS which lets you invest through all of the market cycles.
One thing I can point out is you are trying to hold your AA in all of your accounts (I did this at first as well). I would consolidate the holdings down to 1-2 funds per account max. I like the 3 fund portfolio for its simplicity and ease of management (you own everything). I would sell all of your individual stocks. I would separate your cash emergency fund from your portfolio and not include it in your AA. So then you are just looking at a stock to bond allocation. I think you are too conservative but if you like it and can stay the course with it then its fine.
I would simplify your portfolio into the following groups:
Taxable: US Stock Funds and International Stock Funds (VTI and VXUS)
401k (which I assume is all pre-tax and not Roth): Any bonds you want to hold should be in here with the rest in equities. (BND and VTI)
Roth: US Stock funds and maybe some international (VTI and VXUS)
Your wifes holdings can be simplified as well into a similar pattern and I would sell the Etrade stock as well. I don't prefer target date funds but if she wants to stick with it then its fine. I like to be able to control my AA and I don't like glidepath AA adjustments but its not a huge deal.
Stay the course!
- ruralavalon
- Posts: 26297
- Joined: Sat Feb 02, 2008 9:29 am
- Location: Illinois
Re: Portfolio Analysis
Welcome to the forum .
Congratulations on being debt free. It's good to see that you are using tax-advantaged as an primarily investing in very diversified index funds wIth very low expense ratios.I
At little more diversified information will be useful, please see my questions below.
Please simply add any new information to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
What is your desired asset allocation?
Why $90k in cash?
A tax-exempt bond fund is not usually a good idea unless in a very high tax bracket.
I recommend NOT using a target date fund In a taxable brokerage account. It's not very tax-efficient.
Wiki article Tax-efficient fund placement.
In general it's better to make maximum annual contributions to all available tax-advantaged accounts as a priority ahead contributions to a taxable brokerage account.
Wiki article Prioritizing investments.
About how much do you currently contribute annually to taxable investing? The maximum annual employee contribution is $20.5k.
In general it's best to have only stock funds with their higher expected growth, not bond funds, in a Roth account.
What other funds are offered in your employer's 401k plan? Please give fund names, tickers and expense ratios. We can't suggest possible improvements without knowing what the choices are.
How much (in dollars) do you contribute annually to the 401k account?
How much (in dollars) does she contribute annually to her 401k account?
Congratulations on being debt free. It's good to see that you are using tax-advantaged as an primarily investing in very diversified index funds wIth very low expense ratios.I
At little more diversified information will be useful, please see my questions below.
Please simply add any new information to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
What is your tax bracket, both federal and state? What state do you pay any State income taxes to?SurfMonkey00 wrote: ↑Sun May 15, 2022 10:57 am Heard great things about this blog. First time posting and would love some insight on our portfolio. Can make adjustments if needed.
I'm looking to rebalance my 401K, lower my expense ratios, and adjust based on market trends.
Me: 35
Wife: 32
No Kids
No liabilities
Tax Filing Status: Filed Separately this year, but thinking about filing jointly in 2023
What is your desired asset allocation?
,SurfMonkey00 wrote: ↑Sun May 15, 2022 10:57 amTotal Assets: $760K, 65/15/20 (Stocks/Bonds/Cash)
Combined Expenses: $63K / year
Me:
Taxable
Vanguard Total International Index Fund (.17 exp ratio) - $43K
Vanguard Total Stock Market Index Fund (.04 exp ratio) - $101K
Vanguard Intermediate Tax Exempt Fund (.17 exp ratio) - $56K
Vanguard Federal Money Market Fund - $20K
Vanguard Roth Target Retirement 2050 Fund - $32K
MorganStanley Stock Plan (Vested)- $6K
MorganStanley Stock (RSU)- $32K
Bank Savings (Cash) - $60k
Bank Checking (Cash)- $10k
TreasuryDirect iBond - $10k
Why $90k in cash?
A tax-exempt bond fund is not usually a good idea unless in a very high tax bracket.
I recommend NOT using a target date fund In a taxable brokerage account. It's not very tax-efficient.
Wiki article Tax-efficient fund placement.
In general it's better to make maximum annual contributions to all available tax-advantaged accounts as a priority ahead contributions to a taxable brokerage account.
Wiki article Prioritizing investments.
About how much do you currently contribute annually to taxable investing? The maximum annual employee contribution is $20.5k.
,SurfMonkey00 wrote: ↑Sun May 15, 2022 10:57 am401K
Employer Corporate Stock - $19k
Fidelity Extended Market Index (.035 exp ratio) - $17K
Fidelity 500 Index (.015 exp ratio) - $27K
TRP Overseas Stock (.66 exp ratio) - $19K
Fidelity Freedom Index 2050 (.12 ratio) - $44K
401k Roth
Fidelity US Bond Index (.02) - $6K
Fidelity Total Market Index (.02) - $9K
In general it's best to have only stock funds with their higher expected growth, not bond funds, in a Roth account.
What other funds are offered in your employer's 401k plan? Please give fund names, tickers and expense ratios. We can't suggest possible improvements without knowing what the choices are.
How much (in dollars) do you contribute annually to the 401k account?
What other funds are offered in her employer's 401k plan? Please give fund names, tickers and expense ratios. We can't suggest possible improvements without knowing what the choices are.SurfMonkey00 wrote: ↑Sun May 15, 2022 10:57 amWife:
eTrade account Corp stock - $10K vested, $40K RSU
ESOP - $20K
401K
Fidelity 401K Target 2055 Fund - $77K
Vanguard 500 Index Fund Admiral Shares (.04 exp ratio) - $4K
Vanguard Midcap growth Index Fund (.07 exp ratio) - $5k
Bank Savings (Cash) - $65K
How much (in dollars) does she contribute annually to her 401k account?
Last edited by ruralavalon on Sun May 15, 2022 11:32 am, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: Portfolio Analysis
You may wish to follow the suggested format for asking portfolio questions: https://www.bogleheads.org/wiki/Asking_ ... _questions
In particular, percentages are used and they come FIRST on each line while dollar amounts tend to be avoided.
In particular, percentages are used and they come FIRST on each line while dollar amounts tend to be avoided.
- PhinanceMD
- Posts: 438
- Joined: Fri Apr 12, 2019 3:33 pm
- Location: PNW
Re: Portfolio Analysis
Great job OP (original poster), you guys are debt free at 35/32 which is a remarkable achievement
Investing is about maximizing returns but also minimizing risk. What is you and your wife’s risk threshold? Do you feel that your current AA (asset allocation) fits your risk tolerance? If not, adjust it accordingly.
I would consider:
-converting all single stocks (MorganStanley?) and high expense mutual funds into low expense fee mutual funds
-as a first step, use cash in Vanguard Money Market to increase your international total market
-write down your AA target
-simplify your array of mutual funds into a simlified exposure of Total US Market, Total International Market, and a Total or Intermediate Bond Fund (typically best as I’m learning in your 401Ks, but tax-exempt Muni + IBonds are also good)
Congrats, keep up the strong work.
Investing is about maximizing returns but also minimizing risk. What is you and your wife’s risk threshold? Do you feel that your current AA (asset allocation) fits your risk tolerance? If not, adjust it accordingly.
I would consider:
-converting all single stocks (MorganStanley?) and high expense mutual funds into low expense fee mutual funds
-as a first step, use cash in Vanguard Money Market to increase your international total market
-write down your AA target
-simplify your array of mutual funds into a simlified exposure of Total US Market, Total International Market, and a Total or Intermediate Bond Fund (typically best as I’m learning in your 401Ks, but tax-exempt Muni + IBonds are also good)
Congrats, keep up the strong work.
60/30/10
-
- Posts: 5
- Joined: Sat May 14, 2022 11:22 am
Re: Portfolio Analysis
Thank you all for the great feedback. I will make some adjustments and update the original post.
@HMSVictory - Is it fine to move current funds (in 401K) to US Stock Funds and International Stock Funds even if I'm currently down on some of those?
I also have a Brokerage Roth account in my 401k, which includes Fidelity Total Market Index (FSKAX) and Fidelity US Bond Index (FXNAX).
Employer provides Associate stock purchase plan at 15% discount on stock, but selling those and keeping it simple makes sense.
@HMSVictory - Is it fine to move current funds (in 401K) to US Stock Funds and International Stock Funds even if I'm currently down on some of those?
I also have a Brokerage Roth account in my 401k, which includes Fidelity Total Market Index (FSKAX) and Fidelity US Bond Index (FXNAX).
Employer provides Associate stock purchase plan at 15% discount on stock, but selling those and keeping it simple makes sense.
- PhinanceMD
- Posts: 438
- Joined: Fri Apr 12, 2019 3:33 pm
- Location: PNW
- ruralavalon
- Posts: 26297
- Joined: Sat Feb 02, 2008 9:29 am
- Location: Illinois
Re: Portfolio Analysis
Which fund firm or brokerage is your taxable brokerage account with? About how much do you contribute annually to the taxable brokerage account?
Do either of you have any IRAs?
"Most Funds are available in my 401k/Brokerage account." It sounds like there is a Fidelity Brokerage available in your employers' 401k plan. Is that correct? If so what fees if any are charged for using the BrokerageLink?
What funds are offered in your employer's core 401k plan? Please give fund names, tickers and expense ratios.
Why do you make Roth contributions to the Brokerage account in your 401k? For most people without a pension traditional tax-deductible contributions are likely to be better. Most people will likely be in a lower tax bracket in retirement.
Will You be eligible for both a significant pension and Social Security benefits?
Do either of you have any IRAs?
"Most Funds are available in my 401k/Brokerage account." It sounds like there is a Fidelity Brokerage available in your employers' 401k plan. Is that correct? If so what fees if any are charged for using the BrokerageLink?
What funds are offered in your employer's core 401k plan? Please give fund names, tickers and expense ratios.
Why do you make Roth contributions to the Brokerage account in your 401k? For most people without a pension traditional tax-deductible contributions are likely to be better. Most people will likely be in a lower tax bracket in retirement.
Will You be eligible for both a significant pension and Social Security benefits?
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
-
- Posts: 5
- Joined: Sat May 14, 2022 11:22 am
Re: Portfolio Analysis
-Not sure, looking into it.ruralavalon wrote: ↑Sun May 29, 2022 2:14 pm Which fund firm or brokerage is your taxable brokerage account with? About how much do you contribute annually to the taxable brokerage account?
-Fidelity - 401K and Vanguard for Taxable accounts.
Do either of you have any IRAs?
-Yes, I have a Roth IRA in Vanguard. I currently have a Target date fund in my Roth IRA. Should I switch to Total Market and Bond instead?
"Most Funds are available in my 401k/Brokerage account." It sounds like there is a Fidelity Brokerage available in your employers' 401k plan. Is that correct? If so what fees if any are charged for using the BrokerageLink?
Yes, it's a Fidelity Brokerage account. I started using it 6 years ago since there werent many options in my employer's core plan. It was $0 to open a Brokerage account through Fidelity, but I am not aware of any additional fees. I'm looking into it.
What funds are offered in your employer's core 401k plan? Please give fund names, tickers and expense ratios.
-The orginal post is updated with those funds.
Why do you make Roth contributions to the Brokerage account in your 401k? For most people without a pension traditional tax-deductible contributions are likely to be better. Most people will likely be in a lower tax bracket in retirement.
-Good point, I figured it would be better to grow that Roth tax free. So is it better to contribute more to PreTax 401k rather than Roth 401k?
Will You be eligible for both a significant pension and Social Security benefits?
- ruralavalon
- Posts: 26297
- Joined: Sat Feb 02, 2008 9:29 am
- Location: Illinois
Re: Portfolio Analysis
In selecting funds to use strive for a combination of both broad diversification (to decrease your risk) and low expense ratios (to increase your net returns). Consider a Three-fund portfolio.SurfMonkey00 wrote: ↑Mon May 30, 2022 6:31 pm-Not sure, looking into it.ruralavalon wrote: ↑Sun May 29, 2022 2:14 pm Which fund firm or brokerage is your taxable brokerage account with? About how much do you contribute annually to the taxable brokerage account?
-Fidelity - 401K and Vanguard for Taxable accounts.
Do either of you have any IRAs?
-Yes, I have a Roth IRA in Vanguard. I currently have a Target date fund in my Roth IRA. Should I switch to Total Market and Bond instead?
"Most Funds are available in my 401k/Brokerage account." It sounds like there is a Fidelity Brokerage available in your employers' 401k plan. Is that correct? If so what fees if any are charged for using the BrokerageLink?
Yes, it's a Fidelity Brokerage account. I started using it 6 years ago since there werent many options in my employer's core plan. It was $0 to open a Brokerage account through Fidelity, but I am not aware of any additional fees. I'm looking into it.
What funds are offered in your employer's core 401k plan? Please give fund names, tickers and expense ratios.
-The orginal post is updated with those funds.
Why do you make Roth contributions to the Brokerage account in your 401k? For most people without a pension traditional tax-deductible contributions are likely to be better. Most people will likely be in a lower tax bracket in retirement.
-Good point, I figured it would be better to grow that Roth tax free. So is it better to contribute more to PreTax 401k rather than Roth 401k?
Will You be eligible for both a significant pension and Social Security benefits?
Your 401k
In my opinion the best funds to consider using in your employer's 401k plan include:
1) FID 500 INDEX (80% of U.S. stock market) (FXAIX) - 0.15%;
2) FID GLB Ex US IDX (both developed and emerging markets) (FSGGX) - 0.055%; and
3) FID US BOND IDX (total U.S. bond market) (FXNAX) - 0.025%.
Those funds are more than good enough, without having to bother with the BrokerageLink.
Are there any per transaction fees or annual fees for using the Fidelity BrokerageLink in your employer's plan?
Traditional versus Roth.
In my opinion (24% federal tax bracket) it's probably best to make traditional tax-deductible contributions to your 401k rather than Roth contributions, unless you are eligible for both a significant pension and Social Security benefits.
In Illinois distributions from retirement accounts are not subject to state income tax.
Contributions and priority.
Establishing a high rate of contributions is the most important investing decision you can make, forum discussion.
It's good to see that you are making the maximum annual employee contributions to your employer's 401k plan.
How much does she contribute annually to her employer's 401k plan? Are all Fidelity funds offered in her plan? Is there an employer match offered?
How much do you contribute annually to your Roth IRA at Vanguard?
How much is contributed annually to the taxable brokerage account at Vanguard?
Wiki article Prioritizing investments. In general it is usually better to make maximum annual contributions to all available tax-advantaged accounts as a priority ahead of contributions to a taxable brokerage account.
Is there a reason she does not use an IRA?
Fund selection and placement.
Bond funds are not very tax-efficient and ordinarily should be held in tax-advantaged accounts, preferably traditional tax-deferred accounts.
Wiki article Tax-efficient fund placement.
Tax-exempt bond funds are not useful unless in a very high tax bracket. So I suggest not using Vanguard Intermediate Tax Exempt Fund VWIUX (.17 exp ratio) - $56K in your taxable brokerage account. The total stock market and total international stock funds you are using are very tax-efficient, and good choices for that taxable brokerage account.
I also suggest using the total stock market and total international stock funds in your Roth IRA at Vanguard.
Asset allocation.
What percentage of stocks do you wish to have in international stocks?SurfMonkey00 wrote: ↑Sun May 15, 2022 10:57 amTotal Assets: $760K, 65/15/20 (Stocks/Bonds/Cash)
Combined Expenses: $63K / year
Desired Asset Allocation: 70/30 (Stocks/bonds)
Desired Asset Allocation w/Cash: 60/30/10
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
-
- Posts: 5
- Joined: Sat May 14, 2022 11:22 am
Re: Portfolio Analysis
[/quote]
In selecting funds to use strive for a combination of both broad diversification (to decrease your risk) and low expense ratios (to increase your net returns). Consider a Three-fund portfolio.
Your 401k
In my opinion the best funds to consider using in your employer's 401k plan include:
1) FID 500 INDEX (80% of U.S. stock market) (FXAIX) - 0.15%;
2) FID GLB Ex US IDX (both developed and emerging markets) (FSGGX) - 0.055%; and
3) FID US BOND IDX (total U.S. bond market) (FXNAX) - 0.025%.
Those funds are more than good enough, without having to bother with the BrokerageLink.
Are there any per transaction fees or annual fees for using the Fidelity BrokerageLink in your employer's plan?
There is no annual fee to setup or have the Fidelity Brokeragelink. Also, there are no transaction fees for Fidelity funds or stocks. However, there may be a transaction fee for non-Fidelity funds.
I am seeing zero expense ratio funds available through my brokeragelink account. Would it be more beneficial to exchange to these?
-Fidelity ZERO Total Market Index Fund (FZROX)
-Fidelity ZERO International Index Fund (FZILX)
Traditional versus Roth.
In my opinion (24% federal tax bracket) it's probably best to make traditional tax-deductible contributions to your 401k rather than Roth contributions, unless you are eligible for both a significant pension and Social Security benefits.
In Illinois distributions from retirement accounts are not subject to state income tax.
Great insight, I will make some adjustments to contribute more into 401K rather than Roth. Can I just keep the Roth and not contribute to it?
Contributions and priority.
Establishing a high rate of contributions is the most important investing decision you can make, forum discussion.
It's good to see that you are making the maximum annual employee contributions to your employer's 401k plan.
How much does she contribute annually to her employer's 401k plan? Are all Fidelity funds offered in her plan? Is there an employer match offered?
She starting to contribute the max amount each year towards 401k plan. I will update her Fidelity funds on the original post. 6% is her employer match.
How much do you contribute annually to your Roth IRA at Vanguard?
I have been contributing the max amount. So $6000 this year.
How much is contributed annually to the taxable brokerage account at Vanguard?
Automatic contributions are setup for $500/each month to all three Vanguard Funds. I'm trying to contribute an additional $20k annually to all three funds. This number fluctuates depending on my bonus.
Wiki article Prioritizing investments. In general it is usually better to make maximum annual contributions to all available tax-advantaged accounts as a priority ahead of contributions to a taxable brokerage account.
Is there a reason she does not use an IRA?
No specific reason, we are working on setting up an IRA for her.
Fund selection and placement.
Bond funds are not very tax-efficient and ordinarily should be held in tax-advantaged accounts, preferably traditional tax-deferred accounts.
Wiki article Tax-efficient fund placement.
Tax-exempt bond funds are not useful unless in a very high tax bracket. So I suggest not using Vanguard Intermediate Tax Exempt Fund VWIUX (.17 exp ratio) - $56K in your taxable brokerage account. The total stock market and total international stock funds you are using are very tax-efficient, and good choices for that taxable brokerage account.
I also suggest using the total stock market and total international stock funds in your Roth IRA at Vanguard.
What Bond funds do you suggest I invest in my Vanguard brokerage account? Or are you saying stick to international and total stock market funds?
Asset allocation.
[/quote]
Probably 60/40 US to International.
In selecting funds to use strive for a combination of both broad diversification (to decrease your risk) and low expense ratios (to increase your net returns). Consider a Three-fund portfolio.
Your 401k
In my opinion the best funds to consider using in your employer's 401k plan include:
1) FID 500 INDEX (80% of U.S. stock market) (FXAIX) - 0.15%;
2) FID GLB Ex US IDX (both developed and emerging markets) (FSGGX) - 0.055%; and
3) FID US BOND IDX (total U.S. bond market) (FXNAX) - 0.025%.
Those funds are more than good enough, without having to bother with the BrokerageLink.
Are there any per transaction fees or annual fees for using the Fidelity BrokerageLink in your employer's plan?
There is no annual fee to setup or have the Fidelity Brokeragelink. Also, there are no transaction fees for Fidelity funds or stocks. However, there may be a transaction fee for non-Fidelity funds.
I am seeing zero expense ratio funds available through my brokeragelink account. Would it be more beneficial to exchange to these?
-Fidelity ZERO Total Market Index Fund (FZROX)
-Fidelity ZERO International Index Fund (FZILX)
Traditional versus Roth.
In my opinion (24% federal tax bracket) it's probably best to make traditional tax-deductible contributions to your 401k rather than Roth contributions, unless you are eligible for both a significant pension and Social Security benefits.
In Illinois distributions from retirement accounts are not subject to state income tax.
Great insight, I will make some adjustments to contribute more into 401K rather than Roth. Can I just keep the Roth and not contribute to it?
Contributions and priority.
Establishing a high rate of contributions is the most important investing decision you can make, forum discussion.
It's good to see that you are making the maximum annual employee contributions to your employer's 401k plan.
How much does she contribute annually to her employer's 401k plan? Are all Fidelity funds offered in her plan? Is there an employer match offered?
She starting to contribute the max amount each year towards 401k plan. I will update her Fidelity funds on the original post. 6% is her employer match.
How much do you contribute annually to your Roth IRA at Vanguard?
I have been contributing the max amount. So $6000 this year.
How much is contributed annually to the taxable brokerage account at Vanguard?
Automatic contributions are setup for $500/each month to all three Vanguard Funds. I'm trying to contribute an additional $20k annually to all three funds. This number fluctuates depending on my bonus.
Wiki article Prioritizing investments. In general it is usually better to make maximum annual contributions to all available tax-advantaged accounts as a priority ahead of contributions to a taxable brokerage account.
Is there a reason she does not use an IRA?
No specific reason, we are working on setting up an IRA for her.
Fund selection and placement.
Bond funds are not very tax-efficient and ordinarily should be held in tax-advantaged accounts, preferably traditional tax-deferred accounts.
Wiki article Tax-efficient fund placement.
Tax-exempt bond funds are not useful unless in a very high tax bracket. So I suggest not using Vanguard Intermediate Tax Exempt Fund VWIUX (.17 exp ratio) - $56K in your taxable brokerage account. The total stock market and total international stock funds you are using are very tax-efficient, and good choices for that taxable brokerage account.
I also suggest using the total stock market and total international stock funds in your Roth IRA at Vanguard.
What Bond funds do you suggest I invest in my Vanguard brokerage account? Or are you saying stick to international and total stock market funds?
Asset allocation.
What percentage of stocks do you wish to have in international stocks?SurfMonkey00 wrote: ↑Sun May 15, 2022 10:57 amTotal Assets: $760K, 65/15/20 (Stocks/Bonds/Cash)
Combined Expenses: $63K / year
Desired Asset Allocation: 70/30 (Stocks/bonds)
Desired Asset Allocation w/Cash: 60/30/10
[/quote]
Probably 60/40 US to International.
- ruralavalon
- Posts: 26297
- Joined: Sat Feb 02, 2008 9:29 am
- Location: Illinois
Re: Portfolio Analysis
No. In my opinion the regular Fidelity index funds are fine.SurfMonkey00 wrote: ↑Thu Jun 09, 2022 2:58 pmI am seeing zero expense ratio funds available through my brokeragelink account. Would it be more beneficial to exchange to these?
-Fidelity ZERO Total Market Index Fund (FZROX)
-Fidelity ZERO International Index Fund (FZILX)
Yes you can keep the Roth 401k sub-account as is, and make no further contributions.SurfMonkey00 wrote: ↑Thu Jun 09, 2022 2:58 pmGreat insight, I will make some adjustments to contribute more into 401K rather than Roth. Can I just keep the Roth and not contribute to it?
Will you be eligible for both a significant pension and Social Security benefits? This is a big factor in the traditional versus Roth decision.
It's great to see that she will make maximum annual employee contributions to her employer's 401k plan, and that you make maximum annual contributions to your IRA.SurfMonkey00 wrote: ↑Thu Jun 09, 2022 2:58 pmShe starting to contribute the max amount each year towards 401k plan. I will update her Fidelity funds on the original post. 6% is her employer match.
How much do you contribute annually to your Roth IRA at Vanguard?
I have been contributing the max amount. So $6000 this year.
How much is contributed annually to the taxable brokerage account at Vanguard?
Automatic contributions are setup for $500/each month to all three Vanguard Funds. I'm trying to contribute an additional $20k annually to all three funds. This number fluctuates depending on my bonus.
No specific reason, we are working on setting up an IRA for her.
I suggest stopping contributions to the taxable account and using that money to fund maximum annual contributions to an IRA for her.
In the taxable brokerage account stick with very tax-efficient total stock index funds.SurfMonkey00 wrote: ↑Thu Jun 09, 2022 2:58 pmWhat Bond funds do you suggest I invest in my Vanguard brokerage account? Or are you saying stick to international and total stock market funds?
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
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- Posts: 5
- Joined: Sat May 14, 2022 11:22 am
Re: Portfolio Analysis
Will you be eligible for both a significant pension and Social Security benefits? This is a big factor in the traditional versus Roth decision.
No, we are not eligible for significant pension/SS benefits. Assuming traditional makes more sense then?
Back to your comment about the Vanguard Intermediate Tax Exempt Fund VWIUX. If I choose to exchange this to something more efficient, will I be taxed? Are there penalties to do so?
Thanks again for all your help. This is mind blowing!
No, we are not eligible for significant pension/SS benefits. Assuming traditional makes more sense then?
Back to your comment about the Vanguard Intermediate Tax Exempt Fund VWIUX. If I choose to exchange this to something more efficient, will I be taxed? Are there penalties to do so?
Thanks again for all your help. This is mind blowing!
- ruralavalon
- Posts: 26297
- Joined: Sat Feb 02, 2008 9:29 am
- Location: Illinois
Re: Portfolio Analysis
Yes, traditional 401k contributions make more sense.SurfMonkey00 wrote: ↑Thu Jun 09, 2022 4:08 pm Will you be eligible for both a significant pension and Social Security benefits? This is a big factor in the traditional versus Roth decision.
No, we are not eligible for significant pension/SS benefits. Assuming traditional makes more sense then?
What is your UNrealized capital gain or loss in Vanguard Intermediate Tax Exempt Fund (VWIUX)?SurfMonkey00 wrote: ↑Thu Jun 09, 2022 4:08 pmBack to your comment about the Vanguard Intermediate Tax Exempt Fund VWIUX. If I choose to exchange this to something more efficient, will I be taxed? Are there penalties to do so?
Thanks again for all your help. This is mind blowing!
What was your "taxable income" as shown in your most recent federal tax return? What is your tax filing status?
You might owe income tax on a sale of that fund, or might not.
Yahoo, The 2022 Capital Gains Tax Rate.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
- PhinanceMD
- Posts: 438
- Joined: Fri Apr 12, 2019 3:33 pm
- Location: PNW
Re: Portfolio Analysis
Keep up the great work. There is no "tax" on losses (if you sell a portion of your bond fund VWIUX in taxable account and buy more of your Total US or Total International Stock Fund). When you sell it just be sure to select the appropriate lots than have losses (should be set to SpecID) and don't buy the same fund for 30 days (careful of auto-investing and dividends)
Make sure to keep contributing 6K to each of your Roth IRAs yearly, remember that backdoor Roth is necessary if your combined income (adjusted gross income) is >=204K, I'm assuming you guys are married filing jointly with income surpassing that.
Make sure to keep contributing 6K to each of your Roth IRAs yearly, remember that backdoor Roth is necessary if your combined income (adjusted gross income) is >=204K, I'm assuming you guys are married filing jointly with income surpassing that.
60/30/10