Portfolio Analysis for 35 year old in NYC area

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jackryan86
Posts: 2
Joined: Thu Sep 16, 2021 2:25 pm

Portfolio Analysis for 35 year old in NYC area

Post by jackryan86 »

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!
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retired@50
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Location: Living in the U.S.A.

Re: Portfolio Analysis for 35 year old in NYC area

Post by retired@50 »

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!
Welcome to the forum. :happy

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
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grabiner
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Location: Columbia, MD

Re: Portfolio Analysis for 35 year old in NYC area

Post by grabiner »

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
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.

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.
Wiki David Grabiner
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retired@50
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Location: Living in the U.S.A.

Re: Portfolio Analysis for 35 year old in NYC area

Post by retired@50 »

grabiner wrote: Thu Sep 16, 2021 8:33 pm
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
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.

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.
Thanks for mentioning the NY Muni fund as an option to consider. It slipped my mind in the moment I was writing my post.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Topic Author
jackryan86
Posts: 2
Joined: Thu Sep 16, 2021 2:25 pm

Re: Portfolio Analysis for 35 year old in NYC area

Post by jackryan86 »

grabiner wrote: Thu Sep 16, 2021 8:33 pm
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
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.
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.
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grabiner
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Location: Columbia, MD

Re: Portfolio Analysis for 35 year old in NYC area

Post by grabiner »

jackryan86 wrote: Fri Sep 17, 2021 9:24 am
grabiner wrote: Thu Sep 16, 2021 8:33 pm
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
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.
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.
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.

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.
Wiki David Grabiner
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