Starting the New Year Off Right...Hopefully

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Topic Author
Rkoa63
Posts: 20
Joined: Sat Jan 03, 2015 11:31 am

Starting the New Year Off Right...Hopefully

Post by Rkoa63 »

Hi Everyone! I figured I'd try to start the upcoming new year off on the right foot. I tried to follow the posting template as closely as possible so let me know if we’re missing anything.

Cash in Savings Accounts: Approximately 20-24 months of living expenses
Debt: Mortgage - $485k-ish ($975k FMV) - 30yr fixed @ 2.875%. Car Loan #1 - $11k @2.9%, Car Loan #2- $19,XXX @ 1.9%
Filing Status: MFJ
Tax Rate: Fed -24%, 17% Effective, State - 9.3%, 5.6% Effective
Resident State: CA
Age: Both 38 & 39
Desired Asset Allocation: 75-85% Stocks, 15%-25% Bonds
Desired International Allocation: 15-25%
Investment Portfolio - ~$625k

Taxable Account: 13% of portfolio
Current Contributions: $800/month
These are all in a Schwab Intelligent Portfolio.
CS US REIT (SCHH) – 2%
Invesco CA (PWZ) - <1%
Invesco FTSE RAFI (PXH) – 7%
Invesco FTSE RAFI US (PRF) – 7%
Invesco FTSE RAFI US(PRFZ) – 6%
IShares CA Muni (CMF) – 13%
IShares Gold ETF (IAU) – 2%
Schwab Emerging Markets (SCHE) – 5%
Schwab Fundamental INL (FNDF) – 8%
Schwab Fundamental INTL(FNDC) – 4%
Schwab Fundamental US (FNDX) - <1%
Schwab International (SCHF) – 4%
Schwab International Small (SCHC) – 3%
Schwab US TIPS ETF (SCHP) – 10%
SPDR BLMBRG (EBND) - <1%
SPDR Portfolio (SPIP) - <1%
Vanguard S&P 500 (VOO) – 10%
Vanguard Small Cap (VB) – 7%
Xtrackers Inter Real EST (HAUZ) – 2%
Cash – 8%

I wanted to try this out for a year and see how things went. I liked the auto-balancing and tax-loss harvesting but am not a fan of the large % of cash you’re required to hold.

Company ESPP: ~7% of portfolio
Ability to purchase company stock at 15% below FMV on date of purchase. Purchases are made quarterly. Must be held for two years to qualify for LTCG treatment. I’m currently contributing the max based on my salary which is about $17k/yr. I currently have my account setup to automatically sell the shares as soon as the trading window opens. As of the date of this post it’s currently trading around $130/sh. Here are my current holdings, all of which qualify for LTCG treatment:
98 shares @ $26.65/sh = $2,611
114 shares @$26.54/sh = $3,026
150 shares @ $20.14/sh = $3,021
54 shares @$20.14/sh = $1,087
Market value is around $45k. I’m holding these shares because I believe the company has good long-term growth potential. All current and future purchases are sold automatically.

His 401(k) – ~47% of portfolio:
Contributions: $19.5k, going to $20.5k in 2022, all pre-tax, employer match 100% up to 5%.

Current Holdings:
Vanguard Institutional Index (VIIX) – 62%
PIMCO Total Return (PTTRX) – 19%
Vanguard Developed Markets (VTMNX) – 19%

His Roth IRA – ~3% of portfolio
Contributions - $6k/yr via backdoor Roth conversion

Current Holdings:
SWISX – 21%
SWPPX – 58%
SWSSX – 21%

This is through Charles Schwab so the available funds to invest in are broad.

Her 401(k) – ~25% of portfolio:
Contributions: $0 – she left the company and is no longer contributing to the plan, but I haven’t rolled over because the investment options aren’t very robust in her 457b.
Current Holdings:
Vanguard 500 (VFINX) – 41%
Vanguard Small Cap (NAESX) – 5%
Vanguard Extended Market (VEXMX) – 13%
Vanguard International Value (VTRIX) – 21%
Invesco Core Bond R6 (OPBIX) – 20%

Her 457b - <1% of portfolio:
Contributions: $20.5k/yr in 2022, no employer match. She just started the job two weeks ago.
Current Holdings:
MissionSquare 500 Stock Idx R5 – 50%
MissionSquare Core Bond Idx R5 – 15%
MissionSquare International R5 – 20%
MissionSquare Mid/Sm Co Idx R5 – 15%

Her Roth IRA – ~2% of portfolio
Contributions - $6k/yr via backdoor Roth conversion

Current Holdings:
SWISX – 21%
SWPPX – 58%
SWSSX – 21%

This is through Charles Schwab so the available funds to invest in are broad.

Pension – Hers
2% @ 62. Based on her current age and current salary, if she stays until she’s 62, this will be ~ $46k/yr. I imagine there will be raises and promotions (hopefully) in the next 23 years but I’m using her current salary to be conservative.

Other: 529 Plan for child ~1% of portfolio
We just started this last year and are currently contributing $400/mo. We’re basing it off in-state tuition estimates when they turn 18 in 2032.

Available Funds in 401(k) - His - including ticker and expense ratio
Invesco Stable Value Trust Fund
American Century Investments Inflation Adjusted Bond Fund - AIANX .29%
PIMCO Total Return Fund – PTTRX, .46%
State Street Moderate Strategic Balanced Fund - .17%
State Street S&P 500 Flagship Fund - .03%
State Street S&P Mid Cap Index Fund - .06%
State Street EAFE Index Fund - .09%
Columbia Small Cap Value Fund II – CRRYX, .89%
Vanguard Small Cap Index Adm – VSMAX, .1%
BlackRock Small Cap Growth Fund – PSGIX, .78%
Oppenheimer International Growth Fund – OIGIX, .7%
American Funds Growth Fund of America – RGAGX, .34%
TROWE Price Blue Chip Growth Fund – TBCIX, .62%
Vanguard Target Retirement Funds - 2015 - 2050, expense rations from .17-.21%
Vanguard Equity Income Admiral Shares – VEIRX, .17%

Available Funds in 401(k) - Hers - including ticker and expense ratio
Vanguard Instl Target Retirement Funds - 2015 - 2060, expense ratio for all is .09%
Vanguard 500 Index Inv – VFINX - .14
Goldman Sachs Small/Mid Cap Growth R6 – GTMUX - .93
Vanguard Extended Market Index Inv – VEXMX - .19
Vanguard Small-Cap Index Inv- NAESX - .17
Invesco Global R6 – OGLIX - .68
DFA Large Cap International Port Inst – DFALX - .18
Invesco Core Bond R6 – OPBIX - .41
BlackRock High Yield Bond Instl – BHYIX - .63
Vanguard International Value Inv – VTRIX - .35
MFS Mid Cap Value R6 – MVCKX - .68
Vanguard Small-Cap Index Adm – VSMAX - .05
Vanguard Cash Reserves Federal MM Adm – VMRXX - .10
JPMorgan Growth Advantage R6 – JGVVX - .64
American Funds American Mutual R6 – RMFGX - .27

Available Funds in 457b – Hers
MissionSquare PLUS Fund – Stable Value - .78%
MSQ Cash Management Fund – Cash Management - .45%
MissionSquare Core Bond Index Fund – Intermediate Bond - .19%
MSQ Western Asset Core Plus Bond Fund – Intermediate Bond - .52%
MissionSquare Inflation Focused Fund – Inflation Protected Bond - .6%
MSQ Pimco High Yield Fund – High Yield Bonds - .81%
MissionSquare Retirement Income Advantage Fund – 1.67%
MissionSquare Retirement Target Funds – 2015 – 2060, expense ratios range from .72% - .87%
MissionSquare Model Portfolio Conservative Growth - .74%
MissionSquare Model Portfolio Traditional Growth - .76%
MissionSquare Model Portfolio – Long-Term Growth - .76%
MissionSquare Model Portfolio – Global Equity Growth - .79%
MSQ Puritan Fund - .52%
MissionSquare Equity Income Fund – Large Value - .73%
MSQ Invesco Diversified Dividend Fund – Large Value - .59%
MSQ MFS Value Fund – Large Value - .58%
MissionSquare 500 Stock Index – Large Blend - .19%
MissionSquare Broad Market Index – Large Blend - .2%
MissionSquare Growth & Income Fund – Large Blend - .59%
MSQ Parnassus Core Equity – Large Blend - .84%
MSQ Invesco Main Street – Large Blend - .6%
MissionSquare Growth Fund – Large Growth - .76%
MSQ Contrafund – Large Growth - .86%
MSQ T Rowe Price Growth Stock – Large Growth - .92%
MissionSquare Select Value Fund – Mid-Cap - .81%
MSQ Victory Sycamore Established Value – Mid Cap - .63%
MissionSquare Mid/Small Company Index – Small Blend - .20%
MissionSquare Aggressive Opportunities Fund – Mid-Cap Growth - .84%
MSQ AMG Times Square Mid Cap Growth – Mid Cap Growth – 1.18%
MSQ Carillon Eagle Mid Cap Growth – Mid-Cap Growth - .73%
MSQ LSV Small Cap Value Fund – Small Value – 1.09%
MissionSquare Small Cap Discovery Fund – Small Blend - .8%
MSQ Invesco Discovery Fund – Small Growth - .83%
MissionSquare International – Foreign Large Blend - .95%
MissionSquare Overseas Equity – Foreign Large Blend - .26%
MSQ Diversified International – Foreign Large Blend – 1.05%
MissionSquare Emerging Markets Fund – 1.03%
MSQ Nuveen Real Estate Securities Fund – Real Estate – 1.05%

Questions:
1. Based on our desired investment allocations, what funds should we be investing in our 401k’s?

2. How are we looking overall for our age?

3. How are we looking overall from a future retirement perspective? I’m estimating a need/want of $10k/mo (in today’s dollars) for retirement.

4. I don’t believe we need as large of an emergency fund as we currently have. Since my wife recently joined the public-service sector, her current job situation should be more stable than her previous employer(s).

5. What other options can we explore for college/future savings for our child other than the 529 plan? While we’re fully planning on them attending college, we don’t want to lock up a large sum in the 529 plan just in case things don’t work out.

6. Any other suggestions or questions, please don’t hesitate.

Thank you all for taking the time to read this extremely long post!
Topic Author
Rkoa63
Posts: 20
Joined: Sat Jan 03, 2015 11:31 am

Re: Starting the New Year Off Right...Hopefully

Post by Rkoa63 »

Bumpity Bump
Makefile
Posts: 2657
Joined: Fri Apr 22, 2016 11:03 pm

Re: Starting the New Year Off Right...Hopefully

Post by Makefile »

The ESPP part seems a bit contradictory. If it's sold automatically then how are you holding $45,000 in company stock?

Read up on the ESPP rules, I have to re-read them every time, it isn't just a blanket "all gains are long term if held for two years". I believe in a disqualifying disposition, the difference between acquisition price and FMV on the day of purchase is ordinary income, while in a qualifying disposition, only the difference between acquisition price and the (lower) price on the first day of offering period is ordinary income. So there is some ordinary income regardless. Still, if the stock rockets from $20 to $130/share it will indeed be almost all LTCG and therefore it would have been advantageous to hold. But I believe if the stock treads water or goes down during the offering period, there is no advantage to a qualifying disposition.

The Schwab Intelligent Portfolios looks awfully complex for $80000 or so.

I didn't do the math to add up the total asset allocation, but the choice of funds otherwise seems reasonable.
SnowBog
Posts: 4678
Joined: Fri Dec 21, 2018 10:21 pm

Re: Starting the New Year Off Right...Hopefully

Post by SnowBog »

Rkoa63 wrote: Sat Dec 04, 2021 12:19 pm Questions:
1. Based on our desired investment allocations, what funds should we be investing in our 401k’s?
Admittedly, I didn't go through all of your current/possible funds (hard to do so from my phone). But I'll offer a few thoughts/observations/recommendations.
  • For my two cents, you have way too many funds. There's a strong case to be made for simplicity, which could range from a default recommendation of target date fund for a "set it and forget it" approach to a simple 3-fund approach. https://www.bogleheads.org/wiki/Three-fund_portfolio
  • By a similar notion, I'm not a fan of robo advisors - especially ones that seemingly create an overally complicated portfolio (presumably for the purpose of making you think "more is better" - it isn't...). They can also create potential issues as they may buy or sell funds you have in other accounts (which they don't know about) which could add complications with things like "wash sale" rules.
  • Wisdom on using low cost, broadly diversified funds can be found in places like https://www.bogleheads.org/wiki/Boglehe ... philosophy
  • You don't need to have everything in every account. Ideally you'll follow tax efficient fund placement: https://www.bogleheads.org/wiki/Tax-eff ... _placement. But as you look at your options, you might find that some accounts have better options at certain things than others - so you might do more (or all) of that particular asset in the account(s) with the best options. (For example, let's say the best "international" funds are in spouses account, maybe they hold the majority [or all] of that asset if other accounts have better options for other things [and bad options for international].
Rkoa63 wrote: Sat Dec 04, 2021 12:19 pm 2. How are we looking overall for our age?
Personally, I wouldn't be worried about where others are/aren't... The main thing is that you on track for where you need to be. Which is more #3...
Rkoa63 wrote: Sat Dec 04, 2021 12:19 pm 3. How are we looking overall from a future retirement perspective? I’m estimating a need/want of $10k/mo (in today’s dollars) for retirement.
Unless I missed it, not enough info to say for sure...

Would make a big difference if you plan to retire at 50 vs. 70.

Plus, presumably one (or both) of you will get social security.

And would need to know if your $120k is inclusive of taxes, medical coverage (which can be expensive if you retire early), etc.

But for a "normal" retirement at say 67, a good target estimate is 25 times your expenses after subtracting any income (pensions, social security, etc.). Quick math, 25 x ($120,000 - $46,000 -?? Social Security??) = $1.85M.

With $625k already saved, you could be roughly 1/3 of the way there.

So if your numbers are right, I'd say you are in a great spot. (Unless you wanted to retire next year... :wink:)
Rkoa63 wrote: Sat Dec 04, 2021 12:19 pm 4. I don’t believe we need as large of an emergency fund as we currently have. Since my wife recently joined the public-service sector, her current job situation should be more stable than her previous employer(s).
I'd agree. The typical recommendation is 6 - 12 months. Some would even argue that as your portfolio gets larger, that replaces the need for an EF.

But ultimately, much like your asset allocation, this is one of those personal "what do I need to sleep at night" considerations. For me personally, we sleep better with about 1 year of expenses on hand.

You may also want to check out I Bonds. Start with the I Bond Manifesto viewtopic.php?t=358732.
Rkoa63 wrote: Sat Dec 04, 2021 12:19 pm 5. What other options can we explore for college/future savings for our child other than the 529 plan? While we’re fully planning on them attending college, we don’t want to lock up a large sum in the 529 plan just in case things don’t work out.
I Bonds in your and/or spouses names could be used tax-free (depending on your income at the time redeemed).

We also setup a UTMA for our child, funded it with appreciated shares of funds we didn't want anymore, sold and replaced with better funds. You'll want to understand "kiddie taxes", as the amount of "gains" you can have are minimal (before you start paying your tax rate). You'll also want to be mindful that this is your child's money, you can't get it back, and if not spent when they turn "the age of majority" (which differs between states) they gain access to the money. As such, the general recommendation is to not let a UTMA get too large that it could end up being detrimental to the child.

Obviously, if you were planning on financial aid, you'd want to pay attention to the impact of the above.

For what it's worth, we make the maximum 529 for state tax benefits (which isn't much in our state), the rest is in a UTMA. Currently it's about 50/50 between the two, but we won't contribute more to the UTMA as its likely going to be more then we'd have preferred. This gives us a little more flexibility if child opts to go to a tradesmen route, or needs to cover expenses unrelated to school.
Rkoa63 wrote: Sat Dec 04, 2021 12:19 pm 6. Any other suggestions or questions, please don’t hesitate.
As your income/savings allows, don't forget about options like IRA's (potentially Backdoor Roths if you make to much for deductible traditional contributions), and if your employer plan(s) allow it "after-tax" contributions converted to Roth (the so called "Mega Backdoor Roth"). These can really help supercharge tax-advantaged savings.

Try not to sweat the small stuff... Establish a retirement plan, get your investments where you want them, check in regularly to make sure nothing fell off the rails, but there is no need to tinker or optimize. Let a good plan work!

More specifically, the main things you need to do right are live below your means (saving the difference), set and maintain long term plans (don't panic sell, don't attempt to time the market, use low cost broadly diversified passive index funds, etc.), and enjoy life along the way! (None of us are guaranteed tomorrow. So you need to balance today with your future - don't be exclusively in either.)
tashnewbie
Posts: 4230
Joined: Thu Apr 23, 2020 12:44 pm

Re: Starting the New Year Off Right...Hopefully

Post by tashnewbie »

Rkoa63 wrote: Sat Dec 04, 2021 12:19 pm Questions:
1. Based on our desired investment allocations, what funds should we be investing in our 401k’s?

4. I don’t believe we need as large of an emergency fund as we currently have. Since my wife recently joined the public-service sector, her current job situation should be more stable than her previous employer(s).
In general, I agree that it would be advisable to streamline the number of holdings in each account.

I would stop using the advisor service at Schwab. The taxable account is unnecessarily complicated and there's a lot of overlap. You're smart enough to handle the taxable account on your own, and it shouldn't take much time to self-manage this account. All you really need are broad market index funds/ETFs, such as Total US Stock Market and Total International Stock Market.

I've never had access to an ESPP and know relatively little about them, so take that into consideration with my advice. I would sell the ESPP shares as soon as you're allowed. There should be little (or no) capital gains if you sell at the first available opportunity, (ETA: assuming you can sell the day after the grant). 7% is a decent chunk of your overall portfolio. I wouldn't want a sizeable percentage of my portfolio tied to my employer. To each their own though.

1. I think these are the best funds in the workplace plans:

His 401k
State Street S&P 500 Flagship Fund - .03%
Vanguard Small Cap Index Adm – VSMAX, .1%
State Street EAFE Index Fund - .09%
Invesco Stable Value Trust Fund -- maybe, depending on what rate is currently being paid and what if any is guaranteed
Vanguard Target Retirement Funds - 2015 - 2050, expense ratios from .17-.21%

Her 401k
Vanguard Instl Target Retirement Funds - 2015 - 2060, expense ratio for all is .09%
Vanguard 500 Index Inv – VFINX - .14
Vanguard Extended Market Index Inv – VEXMX - .19
DFA Large Cap International Port Inst – DFALX - .18 -- appears to be an actively managed fund, but it is low cost and has tracked its benchmark index well in the recent past (MSCI World ex USA Index which is just Developed Markets)

Her 457
MissionSquare Core Bond Index Fund – Intermediate Bond - .19%
MissionSquare Broad Market Index – Large Blend - .2% -- This sounds like a Total US Stock Market Index Fund.
MissionSquare Overseas Equity – Foreign Large Blend - .26%

You can just use the 500 Index funds for US stock market exposure or you can combine the 500 index with Extended Market or small cap index funds in a ratio of approximately 4:1 to replicate the Total US Stock Market (see wiki article about approximating total stock market for more information).

View the portfolio across all your accounts as one big portfolio and coordinate your desired asset allocation across those accounts. Use the best fund options in each plan based on your desired asset allocation.

2. I would just use Schwab's Total Stock Market Index Fund (SWTSX) in the Roth IRA, in addition to the total international fund, if your desired international allocation doesn't fit in the other accounts. SWTSX is simpler than using the 500 index fund and a small cap fund.

3. That is a huge emergency fund. General rule of thumb recommendation is 3-6 months, and some people go up to 12 months, depending on personal risk tolerance. I wouldn't hold more than 12 months. You have to decide what you're comfortable with.

4. I'd probably take some of that excess emergency fund and pay off the $11k car loan at 2.9% (maybe even the 1.9% loan). That's a very good return for cash nowadays and it probably beats whatever rate you're getting on it.
Last edited by tashnewbie on Mon Dec 06, 2021 2:09 pm, edited 1 time in total.
JnyVuko
Posts: 135
Joined: Wed Sep 02, 2020 11:29 am

Re: Starting the New Year Off Right...Hopefully

Post by JnyVuko »

Rkoa63 wrote: Sat Dec 04, 2021 12:19 pm Hi Everyone! I figured I'd try to start the upcoming new year off on the right foot. I tried to follow the posting template as closely as possible so let me know if we’re missing anything.

Cash in Savings Accounts: Approximately 20-24 months of living expenses
Debt: Mortgage - $485k-ish ($975k FMV) - 30yr fixed @ 2.875%. Car Loan #1 - $11k @2.9%, Car Loan #2- $19,XXX @ 1.9%
Filing Status: MFJ
Tax Rate: Fed -24%, 17% Effective, State - 9.3%, 5.6% Effective
Resident State: CA
Age: Both 38 & 39
Desired Asset Allocation: 75-85% Stocks, 15%-25% Bonds
Desired International Allocation: 15-25%
Investment Portfolio - ~$625k

Taxable Account: 13% of portfolio
Current Contributions: $800/month
These are all in a Schwab Intelligent Portfolio.
CS US REIT (SCHH) – 2%
Invesco CA (PWZ) - <1%
Invesco FTSE RAFI (PXH) – 7%
Invesco FTSE RAFI US (PRF) – 7%
Invesco FTSE RAFI US(PRFZ) – 6%
IShares CA Muni (CMF) – 13%
IShares Gold ETF (IAU) – 2%
Schwab Emerging Markets (SCHE) – 5%
Schwab Fundamental INL (FNDF) – 8%
Schwab Fundamental INTL(FNDC) – 4%
Schwab Fundamental US (FNDX) - <1%
Schwab International (SCHF) – 4%
Schwab International Small (SCHC) – 3%
Schwab US TIPS ETF (SCHP) – 10%
SPDR BLMBRG (EBND) - <1%
SPDR Portfolio (SPIP) - <1%
Vanguard S&P 500 (VOO) – 10%
Vanguard Small Cap (VB) – 7%
Xtrackers Inter Real EST (HAUZ) – 2%
Cash – 8%

I wanted to try this out for a year and see how things went. I liked the auto-balancing and tax-loss harvesting but am not a fan of the large % of cash you’re required to hold.

Company ESPP: ~7% of portfolio
Ability to purchase company stock at 15% below FMV on date of purchase. Purchases are made quarterly. Must be held for two years to qualify for LTCG treatment. I’m currently contributing the max based on my salary which is about $17k/yr. I currently have my account setup to automatically sell the shares as soon as the trading window opens. As of the date of this post it’s currently trading around $130/sh. Here are my current holdings, all of which qualify for LTCG treatment:
98 shares @ $26.65/sh = $2,611
114 shares @$26.54/sh = $3,026
150 shares @ $20.14/sh = $3,021
54 shares @$20.14/sh = $1,087
Market value is around $45k. I’m holding these shares because I believe the company has good long-term growth potential. All current and future purchases are sold automatically.

His 401(k) – ~47% of portfolio:
Contributions: $19.5k, going to $20.5k in 2022, all pre-tax, employer match 100% up to 5%.

Current Holdings:
Vanguard Institutional Index (VIIX) – 62%
PIMCO Total Return (PTTRX) – 19%
Vanguard Developed Markets (VTMNX) – 19%

His Roth IRA – ~3% of portfolio
Contributions - $6k/yr via backdoor Roth conversion

Current Holdings:
SWISX – 21%
SWPPX – 58%
SWSSX – 21%

This is through Charles Schwab so the available funds to invest in are broad.

Her 401(k) – ~25% of portfolio:
Contributions: $0 – she left the company and is no longer contributing to the plan, but I haven’t rolled over because the investment options aren’t very robust in her 457b.
Current Holdings:
Vanguard 500 (VFINX) – 41%
Vanguard Small Cap (NAESX) – 5%
Vanguard Extended Market (VEXMX) – 13%
Vanguard International Value (VTRIX) – 21%
Invesco Core Bond R6 (OPBIX) – 20%

Her 457b - <1% of portfolio:
Contributions: $20.5k/yr in 2022, no employer match. She just started the job two weeks ago.
Current Holdings:
MissionSquare 500 Stock Idx R5 – 50%
MissionSquare Core Bond Idx R5 – 15%
MissionSquare International R5 – 20%
MissionSquare Mid/Sm Co Idx R5 – 15%

Her Roth IRA – ~2% of portfolio
Contributions - $6k/yr via backdoor Roth conversion

Current Holdings:
SWISX – 21%
SWPPX – 58%
SWSSX – 21%

This is through Charles Schwab so the available funds to invest in are broad.

Pension – Hers
2% @ 62. Based on her current age and current salary, if she stays until she’s 62, this will be ~ $46k/yr. I imagine there will be raises and promotions (hopefully) in the next 23 years but I’m using her current salary to be conservative.

Other: 529 Plan for child ~1% of portfolio
We just started this last year and are currently contributing $400/mo. We’re basing it off in-state tuition estimates when they turn 18 in 2032.

Available Funds in 401(k) - His - including ticker and expense ratio
Invesco Stable Value Trust Fund
American Century Investments Inflation Adjusted Bond Fund - AIANX .29%
PIMCO Total Return Fund – PTTRX, .46%
State Street Moderate Strategic Balanced Fund - .17%
State Street S&P 500 Flagship Fund - .03%
State Street S&P Mid Cap Index Fund - .06%
State Street EAFE Index Fund - .09%
Columbia Small Cap Value Fund II – CRRYX, .89%
Vanguard Small Cap Index Adm – VSMAX, .1%
BlackRock Small Cap Growth Fund – PSGIX, .78%
Oppenheimer International Growth Fund – OIGIX, .7%
American Funds Growth Fund of America – RGAGX, .34%
TROWE Price Blue Chip Growth Fund – TBCIX, .62%
Vanguard Target Retirement Funds - 2015 - 2050, expense rations from .17-.21%
Vanguard Equity Income Admiral Shares – VEIRX, .17%

Available Funds in 401(k) - Hers - including ticker and expense ratio
Vanguard Instl Target Retirement Funds - 2015 - 2060, expense ratio for all is .09%
Vanguard 500 Index Inv – VFINX - .14
Goldman Sachs Small/Mid Cap Growth R6 – GTMUX - .93
Vanguard Extended Market Index Inv – VEXMX - .19
Vanguard Small-Cap Index Inv- NAESX - .17
Invesco Global R6 – OGLIX - .68
DFA Large Cap International Port Inst – DFALX - .18
Invesco Core Bond R6 – OPBIX - .41
BlackRock High Yield Bond Instl – BHYIX - .63
Vanguard International Value Inv – VTRIX - .35
MFS Mid Cap Value R6 – MVCKX - .68
Vanguard Small-Cap Index Adm – VSMAX - .05
Vanguard Cash Reserves Federal MM Adm – VMRXX - .10
JPMorgan Growth Advantage R6 – JGVVX - .64
American Funds American Mutual R6 – RMFGX - .27

Available Funds in 457b – Hers
MissionSquare PLUS Fund – Stable Value - .78%
MSQ Cash Management Fund – Cash Management - .45%
MissionSquare Core Bond Index Fund – Intermediate Bond - .19%
MSQ Western Asset Core Plus Bond Fund – Intermediate Bond - .52%
MissionSquare Inflation Focused Fund – Inflation Protected Bond - .6%
MSQ Pimco High Yield Fund – High Yield Bonds - .81%
MissionSquare Retirement Income Advantage Fund – 1.67%
MissionSquare Retirement Target Funds – 2015 – 2060, expense ratios range from .72% - .87%
MissionSquare Model Portfolio Conservative Growth - .74%
MissionSquare Model Portfolio Traditional Growth - .76%
MissionSquare Model Portfolio – Long-Term Growth - .76%
MissionSquare Model Portfolio – Global Equity Growth - .79%
MSQ Puritan Fund - .52%
MissionSquare Equity Income Fund – Large Value - .73%
MSQ Invesco Diversified Dividend Fund – Large Value - .59%
MSQ MFS Value Fund – Large Value - .58%
MissionSquare 500 Stock Index – Large Blend - .19%
MissionSquare Broad Market Index – Large Blend - .2%
MissionSquare Growth & Income Fund – Large Blend - .59%
MSQ Parnassus Core Equity – Large Blend - .84%
MSQ Invesco Main Street – Large Blend - .6%
MissionSquare Growth Fund – Large Growth - .76%
MSQ Contrafund – Large Growth - .86%
MSQ T Rowe Price Growth Stock – Large Growth - .92%
MissionSquare Select Value Fund – Mid-Cap - .81%
MSQ Victory Sycamore Established Value – Mid Cap - .63%
MissionSquare Mid/Small Company Index – Small Blend - .20%
MissionSquare Aggressive Opportunities Fund – Mid-Cap Growth - .84%
MSQ AMG Times Square Mid Cap Growth – Mid Cap Growth – 1.18%
MSQ Carillon Eagle Mid Cap Growth – Mid-Cap Growth - .73%
MSQ LSV Small Cap Value Fund – Small Value – 1.09%
MissionSquare Small Cap Discovery Fund – Small Blend - .8%
MSQ Invesco Discovery Fund – Small Growth - .83%
MissionSquare International – Foreign Large Blend - .95%
MissionSquare Overseas Equity – Foreign Large Blend - .26%
MSQ Diversified International – Foreign Large Blend – 1.05%
MissionSquare Emerging Markets Fund – 1.03%
MSQ Nuveen Real Estate Securities Fund – Real Estate – 1.05%

Questions:
1. Based on our desired investment allocations, what funds should we be investing in our 401k’s?

2. How are we looking overall for our age?

3. How are we looking overall from a future retirement perspective? I’m estimating a need/want of $10k/mo (in today’s dollars) for retirement.

4. I don’t believe we need as large of an emergency fund as we currently have. Since my wife recently joined the public-service sector, her current job situation should be more stable than her previous employer(s).

5. What other options can we explore for college/future savings for our child other than the 529 plan? While we’re fully planning on them attending college, we don’t want to lock up a large sum in the 529 plan just in case things don’t work out.

6. Any other suggestions or questions, please don’t hesitate.

Thank you all for taking the time to read this extremely long post!
To each their own, but one of the 1st things I did when I got "Bogelized" was to simplify our investments by moving the many different investments into total index funds (total stock, total bond). I like Vanguard for the low costs, but found comparable index funds in our employer's 401(k) accounts. It makes it so much easier to manage.
DidItMyWay
Posts: 287
Joined: Sun Feb 13, 2011 4:19 pm

Re: Starting the New Year Off Right...Hopefully

Post by DidItMyWay »

IMHO you are in very good shape for your age.

My 2 cents for what it's worth:

I think the amount in your emergency fund is fine if it makes you and your wife feel secure.

Regarding college costs, if you feel like you want to contribute extra there, maybe look into whether your state has a pre-paid tution plan. (Even if yours end up going out-of-state, it still may be a good investment because some states will let you use what's in there towards out-of-state tution.)

7% of your portfolio in one stock is more than what I would want to have for diversification purposes, but then again you are getting the 15% discount. So it sounds like you may have a good system there. Just something you may want to keep an eye on and consider for the future.

Only thing I would do differently would be to consolidate all the various funds (since there are so many) for simplicity sake and get the cars paid off.
Slow and steady wins the race.
Topic Author
Rkoa63
Posts: 20
Joined: Sat Jan 03, 2015 11:31 am

Re: Starting the New Year Off Right...Hopefully

Post by Rkoa63 »

[*] You don't need to have everything in every account. Ideally you'll follow tax efficient fund placement: https://www.bogleheads.org/wiki/Tax-eff ... _placement. But as you look at your options, you might find that some accounts have better options at certain things than others - so you might do more (or all) of that particular asset in the account(s) with the best options. (For example, let's say the best "international" funds are in spouses account, maybe they hold the majority [or all] of that asset if other accounts have better options for other things [and bad options for international].
I never really thought about it that way. Historically, I've tried to maintain a 3-4 fund portfolio in all our retirement accounts. Admittedly, it would make me nervous to have 100% of some allocation in one account but I need to just shake that mindset and look at the whole picture rather than that individual account.
Rkoa63 wrote: Sat Dec 04, 2021 12:19 pm 3. How are we looking overall from a future retirement perspective? I’m estimating a need/want of $10k/mo (in today’s dollars) for retirement.
Unless I missed it, not enough info to say for sure...

Would make a big difference if you plan to retire at 50 vs. 70.

Plus, presumably one (or both) of you will get social security.

And would need to know if your $120k is inclusive of taxes, medical coverage (which can be expensive if you retire early), etc.

But for a "normal" retirement at say 67, a good target estimate is 25 times your expenses after subtracting any income (pensions, social security, etc.). Quick math, 25 x ($120,000 - $46,000 -?? Social Security??) = $1.85M.

With $625k already saved, you could be roughly 1/3 of the way there.

So if your numbers are right, I'd say you are in a great spot. (Unless you wanted to retire next year... :wink:)
Ideally, I'd like to retire at 60 and the wife at 62. The $120k/yr is all-inclusive of all costs. My wife's job contributes approximately $200/mo into some sort of retirement HSA to help with healthcare costs in retirement. Hopefully that will help offset some costs because god only knows where they're be in 20+ years.

The last time I checked my SSA account, I'd receive around $39k/yr if I wait till 67, $26.6k if I start at 62. My wife will also receive some SS but it will be reduced because of the Windfall Elimination Provision I believe.
Rkoa63 wrote: Sat Dec 04, 2021 12:19 pm 4. I don’t believe we need as large of an emergency fund as we currently have. Since my wife recently joined the public-service sector, her current job situation should be more stable than her previous employer(s).

I'd agree. The typical recommendation is 6 - 12 months. Some would even argue that as your portfolio gets larger, that replaces the need for an EF.

But ultimately, much like your asset allocation, this is one of those personal "what do I need to sleep at night" considerations. For me personally, we sleep better with about 1 year of expenses on hand.

You may also want to check out I Bonds. Start with the I Bond Manifesto viewtopic.php?t=358732.
I feel comfortable with 12 months of savings. Thankfully, I'm in a pretty stable, in-demand profession, so while it might not be a job I'd want, I know I could find one. If it were illness/accident related, we both have ST & LT disability insurance that's pretty healthy (assuming they actually pay ;) )

I'll definitely look into I Bonds. Thanks for the suggestion!
DidItMyWay wrote: Mon Dec 06, 2021 2:01 pm IMHO you are in very good shape for your age.

My 2 cents for what it's worth:

I think the amount in your emergency fund is fine if it makes you and your wife feel secure.

Regarding college costs, if you feel like you want to contribute extra there, maybe look into whether your state has a pre-paid tution plan. (Even if yours end up going out-of-state, it still may be a good investment because some states will let you use what's in there towards out-of-state tution.)

7% of your portfolio in one stock is more than what I would want to have for diversification purposes, but then again you are getting the 15% discount. So it sounds like you may have a good system there. Just something you may want to keep an eye on and consider for the future.

Only thing I would do differently would be to consolidate all the various funds (since there are so many) for simplicity sake and get the cars paid off.
Unfortunately, it doesn't look like CA has a pre-paid tuition plan. It appears as though there's a national pre-paid tuition plan for private universities. I'll need to look into the details to see how it all works and if it can be transferred to a public university in case our child decides to go that route.

Part of the reason for the large emergency fund/cash balance was because a group of us were looking to buy a multi-family rental. Ultimately, we decided not overcomplicate our lives and go that route. I was going to either invest the excess or pay off the cars. If the choice is to leave in savings vs. pay off the cars, I'd probably pay them off. If the choice is invest vs. pay them off, I'd probably invest.
Makefile wrote: Sun Dec 05, 2021 11:30 pm The ESPP part seems a bit contradictory. If it's sold automatically then how are you holding $45,000 in company stock?
I've held onto those blocks of purchases from when I first started at the company. All quarterly purchases from that point on have been sold as soon as the trading window opens.
The Schwab Intelligent Portfolios looks awfully complex for $80000 or so.
I agree! I wanted to give it a try to see how things went for a year but am planning on getting rid of it here shortly.
SnowBog
Posts: 4678
Joined: Fri Dec 21, 2018 10:21 pm

Re: Starting the New Year Off Right...Hopefully

Post by SnowBog »

Rkoa63 wrote: Tue Dec 07, 2021 11:54 am The last time I checked my SSA account, I'd receive around $39k/yr if I wait till 67, $26.6k if I start at 62. My wife will also receive some SS but it will be reduced because of the Windfall Elimination Provision I believe.
If you haven't yet, recommend checking out https://ssa.tools to get a better understanding of your potential SS benefits. It will walk you through entering - ideally copying/pasting - your SS earnings history, and then you can explore the impacts of when you stop working and when you claim benefits.

This gives more accurate results then the default statements provided by SSA.gov, which typically assume you'll continue to work at a similar income until you retire/claim benefits in the same year. So if you retire at 60, you'll have 7 less years of earnings reported to SS, and will likely have less benefits than what is shown by default for 67. Ssa.tools can help slow your details and does a great job at explaining things.
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