Hi All, I’ve followed the Bogleheads forums for years but could use some advice on my portfolio. Perhaps there are other things I could be doing that I haven’t considered. I’m a saver and usually save at least 50% of my take-home salary and invest in index funds. I’m going to be married next year and we’re looking to buy a house but home prices have been insane (multiple offers and $100k over asking) and I’m sitting on lots of cash at the moment for a down-payment on a SFH in a HCOL area. Besides moving some money out of cash, any other suggestions?
Tax Filing Status: Single (but recently engaged)
Tax Rate: 32% Federal, 6% State
State of Residence: NYC Area
Age: 35
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 20% of stocks
Portfolio Size: ~1.5M
Emergency funds: 12 months of expenses in my savings account
Debt: Mortgage $187k @ 2.5% 30 year refinanced recently; Condo valued at $430k; Will rent the condo out when I purchase a single family home.
21% Cash – Down-payment for a house; I probably only need half this amount for a down-payment. I’ve been dollar cost averaging into vanguard index funds in my taxable on a monthly basis.
Taxable Brokerage
3% Vanguard Total Bond Market Index Fund Admiral – VBTLX
1% Vanguard Real Estate Index Fund Admiral – VGSLX
2% Vanguard Total International Stock Index Fund Admiral – VTIAX
6% Vanguard Total Stock Market Index Fund Admiral – VTSAX
2% Stock Automatic Data Processing – ADP (significant capital gains)
1% Stock Johnson & Johnson – JNJ (significant capital gains)
1% Stock Altria Group – MO (significant capital gains)
6% Various individual stocks with significant capital gains
His Thrift Plan (about 50%-50% allocation ROTH 401k and Traditional 401k)
4% Bond Index (0.025%)
12% Equity Index (0.011%)
7% Small Company Equity Index (0.008%)
8% International Equity Index (0.048%)
5% Emerging Markets Equity Index (0.088%)
2% Real Estate Index (0.10%)
7% dollar for dollar company match
His previous 401k at Voya
Still keep this active due to the ultra low expense ratios rather than roll over into my current thrift plan
1% Aggregate Bond Index (0.02%)
3% Large Cap Stock Index Fund(0.01%)
2% Small-Mid Cap Index Fund (0.02%)
2% International ACWI Ex-US Index Fund (0.03%)
His Roth IRA at Vanguard
1% Vanguard Real Estate ETF (VNQ) (0.12%)
4% Vanguard Total Stock Market ETF (VTI) (0.03%)
2% Vanguard Total International Stock ETF (VXUS)(0.08%)
1% Cash
His HSA
1% VTI
Pension but 2 more years until fully vested.
My fiancée doesn’t have much savings/investment yet but I’m teaching her the Bogleheads ways. She opened a Roth IRA last year.
Her Roth IRA
$6000 VT
Her 401k
$40k in a vanguard target fund
Contributions
New annual Contributions
$19,500 his 401k in addition to 7% employer match (~$12,500)
Recently contributed $26k to do a Mega Backdoor Roth
$6000 his Roth IRA via Backdoor Roth
$48000 to $84000 annual contribution to his taxable using the core 4 approach
$6000 her Roth IRA
$4000 to her 401k up to employer match
Another note: My parents were also savers and depending on changes in the law, I may inherit ~$1M over the next 10 years. I don’t include this in my personal analysis but it is something to consider.
Thanks in advance for any help or guidance!
Portfolio Analysis for 35 year old in NYC area
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- retired@50
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Re: Portfolio Analysis for 35 year old in NYC area
Welcome to the forum.jackryan86 wrote: ↑Thu Sep 16, 2021 4:26 pm Hi All, I’ve followed the Bogleheads forums for years but could use some advice on my portfolio.
Taxable Brokerage
3% Vanguard Total Bond Market Index Fund Admiral – VBTLX
1% Vanguard Real Estate Index Fund Admiral – VGSLX
2% Vanguard Total International Stock Index Fund Admiral – VTIAX
6% Vanguard Total Stock Market Index Fund Admiral – VTSAX
2% Stock Automatic Data Processing – ADP (significant capital gains)
1% Stock Johnson & Johnson – JNJ (significant capital gains)
1% Stock Altria Group – MO (significant capital gains)
6% Various individual stocks with significant capital gains
Thanks in advance for any help or guidance!
In your tax bracket, I'd eliminate the taxable bond fund and the REIT Index fund in the taxable account.
You should hold your bonds and other tax inefficient assets (like REITs) in a tax-deferred account.
See link about tax efficient fund placement: https://www.bogleheads.org/wiki/Tax-eff ... _placement
Otherwise, things look good.
Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Re: Portfolio Analysis for 35 year old in NYC area
You might also hold NY munis in your taxable account. These avoid not only federal and state tax, but also the 3.8% Net Investment Income Tax, which further increases your tax rate on stock dividends.retired@50 wrote: ↑Thu Sep 16, 2021 7:38 pm In your tax bracket, I'd eliminate the taxable bond fund and the REIT Index fund in the taxable account.
You should hold your bonds and other tax inefficient assets (like REITs) in a tax-deferred account.
See link about tax efficient fund placement: https://www.bogleheads.org/wiki/Tax-eff ... _placement
However, you mention "Thrift Plan." If this is the federal governments Thrift Savings Plan, there is a non-tax reason to hold all your bonds there; the TSP G fund has the return of an interemediate-term bond fund with no interest-rate risk.
- retired@50
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Re: Portfolio Analysis for 35 year old in NYC area
Thanks for mentioning the NY Muni fund as an option to consider. It slipped my mind in the moment I was writing my post.grabiner wrote: ↑Thu Sep 16, 2021 8:33 pmYou might also hold NY munis in your taxable account. These avoid not only federal and state tax, but also the 3.8% Net Investment Income Tax, which further increases your tax rate on stock dividends.retired@50 wrote: ↑Thu Sep 16, 2021 7:38 pm In your tax bracket, I'd eliminate the taxable bond fund and the REIT Index fund in the taxable account.
You should hold your bonds and other tax inefficient assets (like REITs) in a tax-deferred account.
See link about tax efficient fund placement: https://www.bogleheads.org/wiki/Tax-eff ... _placement
However, you mention "Thrift Plan." If this is the federal governments Thrift Savings Plan, there is a non-tax reason to hold all your bonds there; the TSP G fund has the return of an interemediate-term bond fund with no interest-rate risk.
Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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- Joined: Thu Sep 16, 2021 2:25 pm
Re: Portfolio Analysis for 35 year old in NYC area
Thank you for the suggestion to hold munis in my taxable. Would the Vanguard New York Long-Term Tax-Exempt Fund Admiral (VNYUX) fit this profile? I haven't purchased munis in the past.grabiner wrote: ↑Thu Sep 16, 2021 8:33 pmYou might also hold NY munis in your taxable account. These avoid not only federal and state tax, but also the 3.8% Net Investment Income Tax, which further increases your tax rate on stock dividends.retired@50 wrote: ↑Thu Sep 16, 2021 7:38 pm In your tax bracket, I'd eliminate the taxable bond fund and the REIT Index fund in the taxable account.
You should hold your bonds and other tax inefficient assets (like REITs) in a tax-deferred account.
See link about tax efficient fund placement: https://www.bogleheads.org/wiki/Tax-eff ... _placement
Re: Portfolio Analysis for 35 year old in NYC area
Yes, that fund would be a natural choice. If you don't want to take too much interest-rate risk, you can hold that fund in your taxable account, and shorter-term bond funds in your tax-deferred account. In particular, if you have the TSP, you might split between the NY long-term fund which has a lot of interest-rate risk, and the TSP G fund which has none.jackryan86 wrote: ↑Fri Sep 17, 2021 9:24 amThank you for the suggestion to hold munis in my taxable. Would the Vanguard New York Long-Term Tax-Exempt Fund Admiral (VNYUX) fit this profile? I haven't purchased munis in the past.grabiner wrote: ↑Thu Sep 16, 2021 8:33 pmYou might also hold NY munis in your taxable account. These avoid not only federal and state tax, but also the 3.8% Net Investment Income Tax, which further increases your tax rate on stock dividends.retired@50 wrote: ↑Thu Sep 16, 2021 7:38 pm In your tax bracket, I'd eliminate the taxable bond fund and the REIT Index fund in the taxable account.
You should hold your bonds and other tax inefficient assets (like REITs) in a tax-deferred account.
See link about tax efficient fund placement: https://www.bogleheads.org/wiki/Tax-eff ... _placement
Another alternative would be to hold all your bonds in taxable, splitting between Vanguard Limited-Term Tax-Exempt and NY Long-Term Tax-Exempt for an overall intermediate-term duration. This puts only half your bonds in NY for better diversification, but with more than half the bond interest exempt from NY tax.