Advice on 401k and Roth IRA allocation

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Topic Author
khk50
Posts: 47
Joined: Sun Dec 05, 2021 8:57 pm

Advice on 401k and Roth IRA allocation

Post by khk50 »

[** REVISED ON 12/6/2021 **] - THANK YOU TO EVERYONE WHO PROVIDED ADVICE ON WHAT INFO TO UPDATE HERE

Hi Bogle - I'm new to this forum, but after having spent almost all day on this site, I had to join and ask the below; appreciate your insights and help in advance!

I've been saving into my retirement accounts for about 5 years now, but I've never thought about/come across the 3 fund portfolio way of investing. Upon further reading, I do understand its appeal and effectiveness. Just wanted to see if, given the below, it made sense to shift my approach?

Currently, I have the below retirement/tax advantaged accounts with a variety of holdings (laid out below)

1. PRIOR EMPLOYER 401K (Fidelity)
-JPMCB SR DRE 2055 CF (no separate ticker; target date fund - ER of 0.54%) (75% of holdings)
-FXAIX (ER 0.015%) (25% of holdings)
-rollover into current employer 401K allowed
-approx $115K balance
-offerings in prior employer plan other than the above I've invested in:

(a) Fidelity Contrafund // FCNTX // ER 0.86%
(b) Harbor Capital Appreciation Fund Institutional Class // HACAX // ER 0.72%
(c) T. Rowe Price Price Equity Income Fund // PRFDX // ER 0.65%
(d) Fidelity Small Cap Index Fund // FSSNX // ER 0.025%
(e) Rothschild U.S. Small-Cap Core CIT Fund Class 1 // NO TICKER // ER 0.85%
(f) American Funds EuroPacific Growth Fund® Class R-6 // RERGX // ER 0.46%
(g) Vanguard Real Estate Index Fund Admiral Shares // VGSLX // ER 0.12%
(h) Fidelity Emerging Markets Index Fund // FPADX // ER 0.075%
(i) JOHCM Emerging Markets Opportunities Fund Institutional Shares // JOEMX // ER 1.04%
(j) Principal Diversified Real Asset Fund Institutional Class // PDRDX // ER 0.94%
(k) Fidelity Intermediate Government Income Fund // FSTGX // ER 0.45%
(l) Fidelity U.S. Bond Index Fund // FXNAX // ER 0.025%

2. CURRENT EMPLOYER 401K (Fidelity)
-FIAM BLEND TD2055 R (no separate ticker; target date fund - ER of 0.30%) (60% of holdings)
-FXAIX (ER 0.015%) (40% of holdings)
-approx $21K balance
-offerings in current plan other than the above I've invested in:

(a) Fidelity Contrafund® Commingled Pool // NO TICKER // ER 0.43%
(b) Fidelity Total Market Index Fund // FSKAX // ER 0.015%
(c) Diamond Hill Large Cap Fund Class Y // DHLYX // ER 0.55%
(d) Fidelity Extended Market Index Fund // FSMAX // ER 0.035%
(e) Fidelity Diversified International K6 Fund // FKIDX // ER 0.6%
(f) Fidelity Total International Index Fund // FTIHX // ER 0.06%
(g) Fidelity Real Estate Investment Portfolio // FRESX // ER 0.73%
(h) Invesco Developing Markets Fund Class R6 // ODVIX // ER 0.82%
(i) BlackRock Total Return Fund Class K Shares // MPHQX // ER 0.38%
(j) Fidelity U.S. Bond Index Fund // FXNAX // ER 0.025%
(k) Vanguard Intermediate-Term Investment-Grade Fund Admiral Shares // VFIDX // ER 0.1%
(l) BNYM Mellon Stable Value Fund Class M // NO TICKER // ER 0.34%

3. PROSPECTIVE EMPLOYER 401K (Fidelity) - I'll be starting in a week
(a) US All Cap Equity Fund // NO TICKER // ER 0.3%
(b) US Large Cap Equity Index Fund // NO TICKER // ER 0.0537%
(c) US Small/Mid-Cap Equity Index Fund // NO TICKER // ER 0.059%
(d) Non-US Equity Fund // NO TICKER // ER 0.49%
(e) Non-US Equity Index Fund // NO TICKER // ER 0.09%
(f) Diversified Real Asset Fund // NO TICKER // ER 0.39%
(g) US Core Fixed Income Index Fund // NO TICKER // ER 0.0516%
(h) US Core Plus Fixed Income Fund // NO TICKER // ER 0.17%
(i) Birth Date Fund: 1990 Fund // NO TICKER // ER 0.31%

I'm thinking of divvying up my contributions accordingly: 25% in (b) // 25% in (c) // 10% in (e) // 15% in (i) above.

I also have access to a BROKERAGELINK account within my 401K here (where I can trade ETFs and certain mutual funds w/o fees) - I was thinking of 25% allocation for this nested brokerage account within my 401K.

4. ROTH IRA (Schwab Intelligent Portfolio)
-Schwab Intelligent Portfolio (variety of holdings determined by my risk profile - current set up is 74% stocks (US ~60%; international ~15%), 17% bonds, 9% cash)
-approx $17.5K balance

5. HSA (Fidelity)
-a smattering of ETFs (low volatility+high dividend ETFs, FXAIX and ITOT) and a handful of tech stocks
-approx $20K balance

6. Some other details about me:
AGE: 33 (in a month)
DEBT: $330K in mortgage (primary; interest rate 2.5%)
STATE RESIDENCY: New Jersey
TAX FILING STATUS: MARRIED + JOINT
FED TAX BRACKET: 24%
STATE TAX BRACKET: 6.37%
EMERGENCY CASH: $100K
CONTRIBUTION TO ACCOUNTS:
(a) I max out my 401K and plan to do so in 2022
(b) I plan to max out my Roth IRA in 2021 and in 2022 (assuming it's still around in 2022)
(c) I maxed out my HSA this year, but am switching to a non-HSA-eligible medical plan, so will stop contributing
(d) I otherwise contribute 1-4K per month into the market, depending on expenses/monthly circumstances

Am I too concentrated in my 401Ks? Are there any areas/types of holdings/assets I should be looking into acquiring? Am I trying too hard to diversify by thinking of investing in several ETFs, or would it be better from a returns perspective to focus on a core 2-3 ETFs in my retirement accounts?

Should I even stick with Intelligent Portfolios for my Roth IRA? I've read to some extent the back and forth on people's thoughts on Schwab Intelligent Portfolios on this forum, but would appreciate any updated/more recent experiences/insights people may have.

Is it bad to invest in some stocks in my HSA account (almost like a brokerage account)? Should I just rely on the 3 portfolio method here to be safe?

Any allocation tips in and across different accounts?

My old employer's and my new employer's 401k target date fund hasn't been doing well this year, so am thinking of putting very little towards that (ie. rebalancing what's there) and lean more heavily towards total stock market funds or other index-tracking funds. Any issues with that thinking?

Thank you so much for all your time and insights, in advance!
Last edited by khk50 on Mon Dec 06, 2021 9:31 pm, edited 1 time in total.
tashnewbie
Posts: 4284
Joined: Thu Apr 23, 2020 12:44 pm

Re: Advice on 401k and Roth IRA allocation

Post by tashnewbie »

khk50 wrote: Sun Dec 05, 2021 9:26 pm Hi Bogle - I'm new to this forum, but after having spent almost all day on this site, I had to join and ask the below; appreciate your insights and help in advance!

I've been saving into my retirement accounts for about 5 years now, but I've never thought about/come across the 3 fund portfolio way of investing. Upon further reading, I do understand its appeal and effectiveness. Just wanted to see if, given the below, it made sense to shift my approach?

Currently, I have the below retirement/tax advantaged accounts with a variety of holdings (laid out below):

1. PRIOR EMPLOYER 401K
-JPMCB SR DRE 2055 CF (target date fund - ER of 0.54%) (75% of holdings)
-FXAIX (ER 0.015%) (25% of holdings)

2. CURRENT EMPLOTER 401K
-FIAM BLEND TD2055 R (target date fund - ER of 0.30%) (60% of holdings)
-FXAIX (ER 0.015%) (40% of holdings)

3. ROTH IRA
-Schwab Intelligent Portfolio (variety of holdings determined by my risk profile - current set up is 74% stocks (US ~60%; international ~15%), 17% bonds, 9% cash)

4. HSA
-a smattering of ETFs (low volatility+high dividends, FXAIX and ITOT) and a handful of tech stocks

Am I too concentrated in my 401Ks? Are there any areas/types of holdings/assets I should be looking into acquiring?

Should I even stick with Intelligent Portfolios for my Roth IRA? I've read to some extent the back and forth on people's thoughts on Schwab Intelligent Portfolios on this forum, but would appreciate any updated/more recent experiences/insights people may have.

Is it bad to invest in some stocks in my HSA account (almost like a brokerage account)? Should I just rely on the 3 portfolio method here to be safe?

Thank you so much for all your time and insights, in advance!
Welcome to the forum!

To get more informed advice, I recommend updating your original post (use pencil edit button) to add the information in this "Asking Portfolio Questions" suggested format: link.

For example, what is your desired asset allocation (percentage of stocks and bonds)? What are all the options available in your former and current 401ks?

It's impossible to tell if you're "too concentrated" in your 401ks without knowing those things. Target date funds can be excellent tools and generally get you a mix of stocks and bonds.

I wouldn't use the Schwab advisor service in the Roth IRA. It's easy enough to use a Total US Stock Market Index Fund and International Index Fund, as desired, in this account.
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ruralavalon
Posts: 26353
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: Advice on 401k and Roth IRA allocation

Post by ruralavalon »

Welcome to the forum :) .

khk50 wrote: Sun Dec 05, 2021 9:26 pm Hi Bogle - I'm new to this forum, but after having spent almost all day on this site, I had to join and ask the below; appreciate your insights and help in advance!

I've been saving into my retirement accounts for about 5 years now, but I've never thought about/come across the 3 fund portfolio way of investing. Upon further reading, I do understand its appeal and effectiveness. Just wanted to see if, given the below, it made sense to shift my approach?

Currently, I have the below retirement/tax advantaged accounts with a variety of holdings (laid out below):

1. PRIOR EMPLOYER 401K
-JPMCB SR DRE 2055 CF (target date fund - ER of 0.54%) (75% of holdings)
-FXAIX (ER 0.015%) (25% of holdings)

2. CURRENT EMPLOTER 401K
-FIAM BLEND TD2055 R (target date fund - ER of 0.30%) (60% of holdings)
-FXAIX (ER 0.015%) (40% of holdings)
Will your current employer's 401k plan accept a rollover from your old 401k account?

Is so consider a rollover to simplify and to get a lower expense ratio in the target date fund.

What is the ticker symbol of the target date fund you currently use in your current employer's plan? What is the ticker symbol of the target date fund you currently use in your former employer's plan?

What funds are offered in your current employer's plan? Please give fund names, tickers and expense ratios.

What is your age?

Do you have any debt? If so what types, amounts, and interest rates?

What is your tax bracket, both federal and state? What is your tax filing status?

How much (in dollars) do you currently contribute annually to each of your accounts?

Please simply add this 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.

Please see this for format: "Asking Portfolio Questions".


khk50 wrote: Sun Dec 05, 2021 9:26 pm3. ROTH IRA
-Schwab Intelligent Portfolio (variety of holdings determined by my risk profile - current set up is 74% stocks (US ~60%; international ~15%), 17% bonds, 9% cash)

4. HSA
-a smattering of ETFs (low volatility+high dividends, FXAIX and ITOT) and a handful of tech stocks
A target date fund in all accounts may be better and the simplest solution, depending on what funds are offered in your current employer's plan.

Using an allocation fund seems to inoculate the investor against behavioral errors and so produce higher investor returns,. Morningstar (8/15/2019), "Mind the Gap 2019".

khk50 wrote: Sun Dec 05, 2021 9:26 pmAm I too concentrated in my 401Ks? Are there any areas/types of holdings/assets I should be looking into acquiring?
No, you are not too concentrated in your 401k accounts. In each 401k account you are using very broadly diversified funds.

It may be best to make maximum annual employee contributions to your employer's 401k plan if good funds with low expense ratios are offered in that plan.

Wiki article, "Prioritizing Investments". "If the company plan offers good, low-cost funds, it may be preferable to contribute to the company plan before contributing to an IRA".


khk50 wrote: Sun Dec 05, 2021 9:26 pmShould I even stick with Intelligent Portfolios for my Roth IRA? I've read to some extent the back and forth on people's thoughts on Schwab Intelligent Portfolios on this forum, but would appreciate any updated/more recent experiences/insights people may have.
In suggest NOT using Schwab Intelligent Portfolios in your Roth IRA.

A target date fund in all accounts may be better and the simplest solution. Otherwise use a three-fund type portfolio, all depending on what funds are offered in your current employer's plan.


khk50 wrote: Sun Dec 05, 2021 9:26 pmIs it bad to invest in some stocks in my HSA account (almost like a brokerage account)? Should I just rely on the 3 portfolio method here to be safe?
A target date fund in all accounts may be better and the simplest solution. Otherwise use a three-fund type portfolio, all depending on what funds are offered in your current employer's plan.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Topic Author
khk50
Posts: 47
Joined: Sun Dec 05, 2021 8:57 pm

Re: Advice on 401k and Roth IRA allocation

Post by khk50 »

ruralavalon wrote: Mon Dec 06, 2021 9:57 am Welcome to the forum :) .

khk50 wrote: Sun Dec 05, 2021 9:26 pm Hi Bogle - I'm new to this forum, but after having spent almost all day on this site, I had to join and ask the below; appreciate your insights and help in advance!

I've been saving into my retirement accounts for about 5 years now, but I've never thought about/come across the 3 fund portfolio way of investing. Upon further reading, I do understand its appeal and effectiveness. Just wanted to see if, given the below, it made sense to shift my approach?

Currently, I have the below retirement/tax advantaged accounts with a variety of holdings (laid out below):

1. PRIOR EMPLOYER 401K
-JPMCB SR DRE 2055 CF (target date fund - ER of 0.54%) (75% of holdings)
-FXAIX (ER 0.015%) (25% of holdings)

2. CURRENT EMPLOTER 401K
-FIAM BLEND TD2055 R (target date fund - ER of 0.30%) (60% of holdings)
-FXAIX (ER 0.015%) (40% of holdings)
Will your current employer's 401k plan accept a rollover from your old 401k account?

Is so consider a rollover to simplify and to get a lower expense ratio in the target date fund.

What is the ticker symbol of the target date fund you currently use in your current employer's plan? What is the ticker symbol of the target date fund you currently use in your former employer's plan?

What funds are offered in your current employer's plan? Please give fund names, tickers and expense ratios.

What is your age?

Do you have any debt? If so what types, amounts, and interest rates?

What is your tax bracket, both federal and state? What is your tax filing status?

How much (in dollars) do you currently contribute annually to each of your accounts?

Please simply add this 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.

Please see this for format: "Asking Portfolio Questions".


khk50 wrote: Sun Dec 05, 2021 9:26 pm3. ROTH IRA
-Schwab Intelligent Portfolio (variety of holdings determined by my risk profile - current set up is 74% stocks (US ~60%; international ~15%), 17% bonds, 9% cash)

4. HSA
-a smattering of ETFs (low volatility+high dividends, FXAIX and ITOT) and a handful of tech stocks
A target date fund in all accounts may be better and the simplest solution, depending on what funds are offered in your current employer's plan.

Using an allocation fund seems to inoculate the investor against behavioral errors and so produce higher investor returns,. Morningstar (8/15/2019), "Mind the Gap 2019".

khk50 wrote: Sun Dec 05, 2021 9:26 pmAm I too concentrated in my 401Ks? Are there any areas/types of holdings/assets I should be looking into acquiring?
No, you are not too concentrated in your 401k accounts. In each 401k account you are using very broadly diversified funds.

It may be best to make maximum annual employee contributions to your employer's 401k plan if good funds with low expense ratios are offered in that plan.

Wiki article, "Prioritizing Investments". "If the company plan offers good, low-cost funds, it may be preferable to contribute to the company plan before contributing to an IRA".


khk50 wrote: Sun Dec 05, 2021 9:26 pmShould I even stick with Intelligent Portfolios for my Roth IRA? I've read to some extent the back and forth on people's thoughts on Schwab Intelligent Portfolios on this forum, but would appreciate any updated/more recent experiences/insights people may have.
In suggest NOT using Schwab Intelligent Portfolios in your Roth IRA.

A target date fund in all accounts may be better and the simplest solution. Otherwise use a three-fund type portfolio, all depending on what funds are offered in your current employer's plan.


khk50 wrote: Sun Dec 05, 2021 9:26 pmIs it bad to invest in some stocks in my HSA account (almost like a brokerage account)? Should I just rely on the 3 portfolio method here to be safe?
A target date fund in all accounts may be better and the simplest solution. Otherwise use a three-fund type portfolio, all depending on what funds are offered in your current employer's plan.
Hi ruralavalon - please see the revised post, and would appreciate any insights you may have; thank you!
Topic Author
khk50
Posts: 47
Joined: Sun Dec 05, 2021 8:57 pm

Re: Advice on 401k and Roth IRA allocation

Post by khk50 »

tashnewbie wrote: Mon Dec 06, 2021 9:21 am
khk50 wrote: Sun Dec 05, 2021 9:26 pm Hi Bogle - I'm new to this forum, but after having spent almost all day on this site, I had to join and ask the below; appreciate your insights and help in advance!

I've been saving into my retirement accounts for about 5 years now, but I've never thought about/come across the 3 fund portfolio way of investing. Upon further reading, I do understand its appeal and effectiveness. Just wanted to see if, given the below, it made sense to shift my approach?

Currently, I have the below retirement/tax advantaged accounts with a variety of holdings (laid out below):

1. PRIOR EMPLOYER 401K
-JPMCB SR DRE 2055 CF (target date fund - ER of 0.54%) (75% of holdings)
-FXAIX (ER 0.015%) (25% of holdings)

2. CURRENT EMPLOTER 401K
-FIAM BLEND TD2055 R (target date fund - ER of 0.30%) (60% of holdings)
-FXAIX (ER 0.015%) (40% of holdings)

3. ROTH IRA
-Schwab Intelligent Portfolio (variety of holdings determined by my risk profile - current set up is 74% stocks (US ~60%; international ~15%), 17% bonds, 9% cash)

4. HSA
-a smattering of ETFs (low volatility+high dividends, FXAIX and ITOT) and a handful of tech stocks

Am I too concentrated in my 401Ks? Are there any areas/types of holdings/assets I should be looking into acquiring?

Should I even stick with Intelligent Portfolios for my Roth IRA? I've read to some extent the back and forth on people's thoughts on Schwab Intelligent Portfolios on this forum, but would appreciate any updated/more recent experiences/insights people may have.

Is it bad to invest in some stocks in my HSA account (almost like a brokerage account)? Should I just rely on the 3 portfolio method here to be safe?

Thank you so much for all your time and insights, in advance!
Welcome to the forum!

To get more informed advice, I recommend updating your original post (use pencil edit button) to add the information in this "Asking Portfolio Questions" suggested format: link.

For example, what is your desired asset allocation (percentage of stocks and bonds)? What are all the options available in your former and current 401ks?

It's impossible to tell if you're "too concentrated" in your 401ks without knowing those things. Target date funds can be excellent tools and generally get you a mix of stocks and bonds.

I wouldn't use the Schwab advisor service in the Roth IRA. It's easy enough to use a Total US Stock Market Index Fund and International Index Fund, as desired, in this account.
Hi tashnewbie - i've revised my original post with the more fulsome information; would appreciate any insight you may have. thank you!
User avatar
ruralavalon
Posts: 26353
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: Advice on 401k and Roth IRA allocation

Post by ruralavalon »

khk50 wrote: Sun Dec 05, 2021 9:26 pm3. PROSPECTIVE EMPLOYER 401K (Fidelity) - I'll be starting in a week
(a) US All Cap Equity Fund // NO TICKER // ER 0.3%
(b) US Large Cap Equity Index Fund // NO TICKER // ER 0.0537%
(c) US Small/Mid-Cap Equity Index Fund // NO TICKER // ER 0.059%
(d) Non-US Equity Fund // NO TICKER // ER 0.49%
(e) Non-US Equity Index Fund // NO TICKER // ER 0.09%
(f) Diversified Real Asset Fund // NO TICKER // ER 0.39%
(g) US Core Fixed Income Index Fund // NO TICKER // ER 0.0516%
(h) US Core Plus Fixed Income Fund // NO TICKER // ER 0.17%
(i) Birth Date Fund: 1990 Fund // NO TICKER // ER 0.31%

I'm thinking of divvying up my contributions accordingly: 25% in (b) // 25% in (c) // 10% in (e) // 15% in (i) above.

I also have access to a BROKERAGELINK account within my 401K here (where I can trade ETFs and certain mutual funds w/o fees) - I was thinking of 25% allocation for this nested brokerage account within my 401K.
The funds with no ticker symbols are probably Collective Investment Trusts (CITS). In your 401k materials or on the 401k website there will be a short fact sheet for each CIT which states: 1) the index used; 2) the identity of the fund company (like Vanguard, Fidelity, BlackRock, State Street, Northern Trust) managing the fund managing the CIT; and 3) a comparison of the fund's performance compared to the index (the difference should be about the amount of the expense ratio).

Can you please post links to the fact sheets for these CITs? If not please add to your post the name of the fund company operating the CIT and index used for each of these:
(b) US Large Cap Equity Index Fund // NO TICKER // ER 0.0537%
(c) US Small/Mid-Cap Equity Index Fund // NO TICKER // ER 0.059%
(e) Non-US Equity Index Fund // NO TICKER // ER 0.09%
(g) US Core Fixed Income Index Fund // NO TICKER // ER 0.0516%
(i) Birth Date Fund: 1990 Fund // NO TICKER // ER 0.31%.

Also what is the asset allocation (percentage in U.S. stocks/international stocks/fixed income) in the "Birth Date Fund: 1990 Fund"?

All three of the 401k plans (former, current and future). appear to offer good funds wIth low expense ratios. It may be a good idea to consolidate and simplify by rolling over your former and current 401k accounts into your future soon to be 401k account.

Is there some particular fund or type of fund not available in the your next employer's basic 401k plan which you wish to gain access to by using the BrokerageLink? If so what is that?

A target date fund is intended to be a simple, very diversified, all-in-one fund to be used by itself. It's main advantage is that such a one-fund portfolio needs absolutely no attention or management by the Investor. It is not often used with other funds.

khk50 wrote: Sun Dec 05, 2021 9:26 pmSTATE RESIDENCY: New Jersey
TAX FILING STATUS: MARRIED + JOINT
FED TAX BRACKET: 24%
STATE TAX BRACKET: 6.37%
. . . . .
CONTRIBUTION TO ACCOUNTS:
(a) I max out my 401K and plan to do so in 2022
(b) I plan to max out my Roth IRA in 2021 and in 2022 (assuming it's still around in 2022)
(c) I maxed out my HSA this year, but am switching to a non-HSA-eligible medical plan, so will stop contributing
(d) I otherwise contribute 1-4K per month into the market, depending on expenses/monthly circumstances
It is good to see that you make maximum annual contributions to available tax-advantaged accounts.

Does your spouse have any accounts?

What type of account do you use for "(d) I otherwise contribute 1-4K per month into the market . . ."? How large is that account, and what investments do you have in it? What fund firm or brokerage is that account wIth? If you have a taxable brokerage account for long-term investing then it is probably better to coordinate investments among all accounts and use a few very diversified index funds rather than target date funds.

Wiki article, "Tax-efficient fund placement".

What percentage of the total portfolio is in each of your accounts?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Topic Author
khk50
Posts: 47
Joined: Sun Dec 05, 2021 8:57 pm

Re: Advice on 401k and Roth IRA allocation

Post by khk50 »

ruralavalon wrote: Tue Dec 07, 2021 6:37 pm
khk50 wrote: Sun Dec 05, 2021 9:26 pm3. PROSPECTIVE EMPLOYER 401K (Fidelity) - I'll be starting in a week
(a) US All Cap Equity Fund // NO TICKER // ER 0.3%
(b) US Large Cap Equity Index Fund // NO TICKER // ER 0.0537%
(c) US Small/Mid-Cap Equity Index Fund // NO TICKER // ER 0.059%
(d) Non-US Equity Fund // NO TICKER // ER 0.49%
(e) Non-US Equity Index Fund // NO TICKER // ER 0.09%
(f) Diversified Real Asset Fund // NO TICKER // ER 0.39%
(g) US Core Fixed Income Index Fund // NO TICKER // ER 0.0516%
(h) US Core Plus Fixed Income Fund // NO TICKER // ER 0.17%
(i) Birth Date Fund: 1990 Fund // NO TICKER // ER 0.31%

I'm thinking of divvying up my contributions accordingly: 25% in (b) // 25% in (c) // 10% in (e) // 15% in (i) above.

I also have access to a BROKERAGELINK account within my 401K here (where I can trade ETFs and certain mutual funds w/o fees) - I was thinking of 25% allocation for this nested brokerage account within my 401K.
The funds with no ticker symbols are probably Collective Investment Trusts (CITS). In your 401k materials or on the 401k website there will be a short fact sheet for each CIT which states: 1) the index used; 2) the identity of the fund company (like Vanguard, Fidelity, BlackRock, State Street, Northern Trust) managing the fund managing the CIT; and 3) a comparison of the fund's performance compared to the index (the difference should be about the amount of the expense ratio).

Can you please post links to the fact sheets for these CITs? If not please add to your post the name of the fund company operating the CIT and index used for each of these:
(b) US Large Cap Equity Index Fund // NO TICKER // ER 0.0537%
(c) US Small/Mid-Cap Equity Index Fund // NO TICKER // ER 0.059%
(e) Non-US Equity Index Fund // NO TICKER // ER 0.09%
(g) US Core Fixed Income Index Fund // NO TICKER // ER 0.0516%
(i) Birth Date Fund: 1990 Fund // NO TICKER // ER 0.31%.
Hi ruralavalon; yes, you're right. These are all CITs. and sure thing! Please see the info below:

(b) US Large Cap Equity Index Fund // NO TICKER // ER 0.0537% -- tracks Russell 1000 index; managed by BLACKROCK
(c) US Small/Mid-Cap Equity Index Fund // NO TICKER // ER 0.059% -- tracks Russell 2500 index; managed by BLACKROCK
(e) Non-US Equity Index Fund // NO TICKER // ER 0.09% -- tracks MSCI All Country World Index ex-U.S. Index; managed by BLACKROCK
(g) US Core Fixed Income Index Fund // NO TICKER // ER 0.0516% -- tracks Bloomberg U.S. Aggregate Bond Index; managed by BLACKROCK
(i) Birth Date Fund: 1990 Fund // NO TICKER // ER 0.31% -- maintained by Mercer Trust Company
ruralavalon wrote: Tue Dec 07, 2021 6:37 pm Also what is the asset allocation (percentage in U.S. stocks/international stocks/fixed income) in the "Birth Date Fund: 1990 Fund"?
Allocation is as follows:
US stock - 51%
Foreign stock - 31%
Domestic bonds - 7%
Foreign bonds - 2%
Cash - 1%
Other - 7%
Convertibles and preferred stock - remainder
ruralavalon wrote: Tue Dec 07, 2021 6:37 pm All three of the 401k plans (former, current and future). appear to offer good funds wIth low expense ratios. It may be a good idea to consolidate and simplify by rolling over your former and current 401k accounts into your future soon to be 401k account.
Is there a particular reason for consolidation, other than simply consolidating accounts? I'm only considering consolidating my current employer's 401k into my prospective employer's 401k to avoid a pesky recordkeeping fee that's charged every quarter. My prior employer's 401k doesn't have that, and its birth date fund has been doing pretty well, so I was thinking of just keeping that intact.
ruralavalon wrote: Tue Dec 07, 2021 6:37 pm Is there some particular fund or type of fund not available in the your next employer's basic 401k plan which you wish to gain access to by using the BrokerageLink? If so what is that?

A target date fund is intended to be a simple, very diversified, all-in-one fund to be used by itself. It's main advantage is that such a one-fund portfolio needs absolutely no attention or management by the Investor. It is not often used with other funds.
I wanted to have access to even lower ER total stock/domestic stock/foreign stock/bond ETFs. I'm re-considering now, whether to just put 20% into the birth date fund and the remainder into the BrokerageLink to prioritize these lower ER ETFs.
ruralavalon wrote: Tue Dec 07, 2021 6:37 pm
khk50 wrote: Sun Dec 05, 2021 9:26 pmCONTRIBUTION TO ACCOUNTS:
(a) I max out my 401K and plan to do so in 2022
(b) I plan to max out my Roth IRA in 2021 and in 2022 (assuming it's still around in 2022)
(c) I maxed out my HSA this year, but am switching to a non-HSA-eligible medical plan, so will stop contributing
(d) I otherwise contribute 1-4K per month into the market, depending on expenses/monthly circumstances
It is good to see that you make maximum annual contributions to available tax-advantaged accounts.

Does your spouse have any accounts?
She is no longer working, so she moved her employer 401k into a Vanguard IRA.
ruralavalon wrote: Tue Dec 07, 2021 6:37 pm What type of account do you use for "(d) I otherwise contribute 1-4K per month into the market . . ."? How large is that account? What fund firm or brokerage is that account wIth? If you have a taxable brokerage account for long-term investing then it is probably better to coordinate investments among all accounts and use a few very diversified index funds rather than target date funds.

Wiki article, "Tax-efficient fund placement".
My other market investments are just through a regular brokerage account held in my name (Schwab) and my own individual robo brokerage account (Wealthfront - just wanted to try this out a couple of years ago). To introduce my wife to investing, I opened a jointly held brokerage account (Schwab Intelligent Portfolio) that we occasionally invest into together from my earnings/what we can afford from our savings. All accounts together hold about 50K.
ruralavalon wrote: Tue Dec 07, 2021 6:37 pm What percentage of the total portfolio is in each of your accounts?
401k (when taken together) - 60%
HSA - 6%
Brokerage accounts (when taken together) - 23%
Roth IRA - 8%
(rough calculations and rounding leads to math not adding up to 100%)
tashnewbie
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Joined: Thu Apr 23, 2020 12:44 pm

Re: Advice on 401k and Roth IRA allocation

Post by tashnewbie »

I would consolidate accounts to reduce the numbers of accounts you have and thereby simplify your overall portfolio. The only reason I would keep one of the old 401ks is if it provided access to a fund that I couldn't access in my current 401k or the expenses in the old 401k were a lot lower than the current one.

I wouldn't worry about using Brokerage Link in your prospective (soon to be) employer 401k. The expense ratios you've listed are very low, and any difference with lower expense ETFs/mutual funds would be negligible, in my opinion. There's often a fee to use Brokerage Link, so confirm if you would have one, before you use it, if you decide to go that way.

I don't think you need robo advisors (Wealthfront or Schwab Intelligent Portfolio) to manage your taxable accounts. You didn't list what funds you're using in those accounts. But as @ruralavalon said, if you're investing in those accounts for the long-term, then you should consider them as part of your overall portfolio and coordinate the funds you use in taxable with your other accounts to maintain your desired asset allocation (not an exact science; close is good enough).

I think these are the best funds in your 401k plans. If you'll incur a fee to stay in the current (soon to be former) 401k, then I would move it into the prospective (soon to be current) 401k.

1. PRIOR EMPLOYER 401K (Fidelity)
-Fidelity S&P 500 Index Fund // FXAIX // (ER 0.015%) - I think this is sufficient by itself for US stock exposure; if you want to try to replicate the total stock market, you can do a 4:1 mix of this and FSSNX.
(h) Fidelity Emerging Markets Index Fund // FPADX // ER 0.075%
(l) Fidelity U.S. Bond Index Fund // FXNAX // ER 0.025%

2. CURRENT EMPLOYER 401K (Fidelity)
(b) Fidelity Total Market Index Fund // FSKAX // ER 0.015%
(f) Fidelity Total International Index Fund // FTIHX // ER 0.06%
(j) Fidelity U.S. Bond Index Fund // FXNAX // ER 0.025%

3. PROSPECTIVE EMPLOYER 401K (Fidelity) - I'll be starting in a week
(b) US Large Cap Equity Index Fund // NO TICKER // ER 0.0537%
(e) Non-US Equity Index Fund // NO TICKER // ER 0.09%
(g) US Core Fixed Income Index Fund // NO TICKER // ER 0.0516%

In general, it usually doesn't make sense to use a target date fund in conjunction with a separate fund. There are rare situations where it makes sense, for example if someone wants to dilute the international holdings in a TDF, so they also use a separate US stock fund, or maybe they're using a TDF as a bond proxy in a plan that doesn't have a good pure bond fund option, in addition to separate stock funds. I don't think either of those applies to you.

Why do you want to use a TDF in conjunction with separate funds?

FYI, the TDF in your prior employer 401k has probably been doing well because US stock market performance has been great over the past few years (bull market for at least the past decade), and the TDF is probably mostly stock (probably no more than 10% bonds/fixed income). There's nothing magical about the TDF in that plan compared to other TDFs with a similar asset allocation and fees.
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ruralavalon
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Location: Illinois

Re: Advice on 401k and Roth IRA allocation

Post by ruralavalon »

khk50 wrote: Tue Dec 07, 2021 8:09 pm
ruralavalon wrote: Tue Dec 07, 2021 6:37 pm
khk50 wrote: Sun Dec 05, 2021 9:26 pm3. PROSPECTIVE EMPLOYER 401K (Fidelity) - I'll be starting in a week
(a) US All Cap Equity Fund // NO TICKER // ER 0.3%
(b) US Large Cap Equity Index Fund // NO TICKER // ER 0.0537%
(c) US Small/Mid-Cap Equity Index Fund // NO TICKER // ER 0.059%
(d) Non-US Equity Fund // NO TICKER // ER 0.49%
(e) Non-US Equity Index Fund // NO TICKER // ER 0.09%
(f) Diversified Real Asset Fund // NO TICKER // ER 0.39%
(g) US Core Fixed Income Index Fund // NO TICKER // ER 0.0516%
(h) US Core Plus Fixed Income Fund // NO TICKER // ER 0.17%
(i) Birth Date Fund: 1990 Fund // NO TICKER // ER 0.31%

I'm thinking of divvying up my contributions accordingly: 25% in (b) // 25% in (c) // 10% in (e) // 15% in (i) above.

I also have access to a BROKERAGELINK account within my 401K here (where I can trade ETFs and certain mutual funds w/o fees) - I was thinking of 25% allocation for this nested brokerage account within my 401K.
The funds with no ticker symbols are probably Collective Investment Trusts (CITS). In your 401k materials or on the 401k website there will be a short fact sheet for each CIT which states: 1) the index used; 2) the identity of the fund company (like Vanguard, Fidelity, BlackRock, State Street, Northern Trust) managing the fund managing the CIT; and 3) a comparison of the fund's performance compared to the index (the difference should be about the amount of the expense ratio).

Can you please post links to the fact sheets for these CITs? If not please add to your post the name of the fund company operating the CIT and index used for each of these:
(b) US Large Cap Equity Index Fund // NO TICKER // ER 0.0537%
(c) US Small/Mid-Cap Equity Index Fund // NO TICKER // ER 0.059%
(e) Non-US Equity Index Fund // NO TICKER // ER 0.09%
(g) US Core Fixed Income Index Fund // NO TICKER // ER 0.0516%
(i) Birth Date Fund: 1990 Fund // NO TICKER // ER 0.31%.
Hi ruralavalon; yes, you're right. These are all CITs. and sure thing! Please see the info below:

(b) US Large Cap Equity Index Fund // NO TICKER // ER 0.0537% -- tracks Russell 1000 index; managed by BLACKROCK
(c) US Small/Mid-Cap Equity Index Fund // NO TICKER // ER 0.059% -- tracks Russell 2500 index; managed by BLACKROCK
(e) Non-US Equity Index Fund // NO TICKER // ER 0.09% -- tracks MSCI All Country World Index ex-U.S. Index; managed by BLACKROCK
(g) US Core Fixed Income Index Fund // NO TICKER // ER 0.0516% -- tracks Bloomberg U.S. Aggregate Bond Index; managed by BLACKROCK
(i) Birth Date Fund: 1990 Fund // NO TICKER // ER 0.31% -- maintained by Mercer Trust Company
BlackRock is an excellent fund company, it is the largest asset manager in the entire world, ADV Ratings.

I suggest using BlackRock US Large Cap Equity Index Fund (Russell 1000 index) ER 0.0537% by itself for investing in U.S. stocks. "The Russell 1000 index comprises about 92% of the total market cap of all listed stocks in the U.S. equity market." Investopedia, "Russell 1000 Index".

I also suggest using BlackRock Non-US Equity Index Fund (MSCI ACWI ex-U.S. Index, a total international stock fund) ER 0.09%, and

BlackRock US Core Fixed Income Index Fund (Bloomberg Barclays U.S. Aggregate Bond Index, a total bond market index fund) ER 0.0516%.


khk50 wrote: Tue Dec 07, 2021 8:09 pm
ruralavalon wrote: Tue Dec 07, 2021 6:37 pm All three of the 401k plans (former, current and future). appear to offer good funds wIth low expense ratios. It may be a good idea to consolidate and simplify by rolling over your former and current 401k accounts into your future soon to be 401k account.
Is there a particular reason for consolidation, other than simply consolidating accounts? I'm only considering consolidating my current employer's 401k into my prospective employer's 401k to avoid a pesky recordkeeping fee that's charged every quarter. My prior employer's 401k doesn't have that, and its birth date fund has been doing pretty well, so I was thinking of just keeping that intact.
If you had only tax-advantaged accounts I would suggest using target date funds in each account.

Because a large part of your portfolio (23%) is in taxable brokerage accounts with large ongoing contributions ($1-4k per month), and because of your "FED TAX BRACKET: 24%, STATE TAX BRACKET: 6.37%", I suggest using individual index funds to be able to have good tax efficiency.

Your new employer's basic 401k plan offers excellent, very diversified, index funds with very low expense ratios such as:
1) I suggest using BlackRock US Large Cap Equity Index Fund (Russell 1000 index, 92% of U.S.stock market) ER 0.0537%;
2) BlackRock Non-US Equity Index Fund (MSCI ACWI ex-U.S. Index, a total international stock index fund) ER 0.09%;
3) BlackRock US Core Fixed Income Index Fund (Bloomberg Barclays U.S. Aggregate Bond Index, a total bond market index fund) ER 0.0516%.

Those funds are just as good as or better than the funds offered in the other 401k plans. Overall you get a little better funds in your next employer's plan.

Consolidating the 401k accounts will simplify your portfolio and make it easier to manage your investments.


khk50 wrote: Tue Dec 07, 2021 8:09 pm
ruralavalon wrote: Tue Dec 07, 2021 6:37 pm Is there some particular fund or type of fund not available in the your next employer's basic 401k plan which you wish to gain access to by using the BrokerageLink? If so what is that?

A target date fund is intended to be a simple, very diversified, all-in-one fund to be used by itself. It's main advantage is that such a one-fund portfolio needs absolutely no attention or management by the Investor. It is not often used with other funds.
I wanted to have access to even lower ER total stock/domestic stock/foreign stock/bond ETFs. I'm re-considering now, whether to just put 20% into the birth date fund and the remainder into the BrokerageLink to prioritize these lower ER ETFs.
If you had only tax-advantaged accounts I would suggest using target date funds in each account.

Because a large part of your portfolio (23%) is in taxable brokerage accounts with large ongoing contributions ($1-4k per month), and because of your "FED TAX BRACKET: 24%, STATE TAX BRACKET: 6.37%", I suggest using individual index funds to be able to have good tax efficiency.

Wiki article, "Tax-efficient Fund Placement" .

The slightly lower expense ratio of individual index exchange traded funds (ETFs) is so small that it will not make a real difference. I suggest NOT bothering with the BrokerageLink.

khk50 wrote: Tue Dec 07, 2021 4:57 pm
ruralavalon wrote: Tue Dec 07, 2021 6:37 pm
khk50 wrote: Sun Dec 05, 2021 9:26 pmCONTRIBUTION TO ACCOUNTS:
(a) I max out my 401K and plan to do so in 2022
(b) I plan to max out my Roth IRA in 2021 and in 2022 (assuming it's still around in 2022)
(c) I maxed out my HSA this year, but am switching to a non-HSA-eligible medical plan, so will stop contributing
(d) I otherwise contribute 1-4K per month into the market, depending on expenses/monthly circumstances
It is good to see that you make maximum annual contributions to available tax-advantaged accounts.

Does your spouse have any accounts?
She is no longer working, so she moved her employer 401k into a Vanguard IRA.
In general it's better to coordinate investments among all accounts of a married couple.

What investments does she use in her rollover IRA at Vanguard?

Because your tax filing status is married filing jointly she is eligible to have a Roth IRA and contribute $6k annually based on your income. I suggest starting a Roth IRA for her, and contributing the annual maximum.



khk50 wrote: Tue Dec 07, 2021 8:09 pm
ruralavalon wrote: Tue Dec 07, 2021 6:37 pm What type of account do you use for "(d) I otherwise contribute 1-4K per month into the market . . ."? How large is that account? What fund firm or brokerage is that account wIth? If you have a taxable brokerage account for long-term investing then it is probably better to coordinate investments among all accounts and use a few very diversified index funds rather than target date funds.

Wiki article, "Tax-efficient fund placement".
My other market investments are just through a regular brokerage account held in my name (Schwab) and my own individual robo brokerage account (Wealthfront - just wanted to try this out a couple of years ago). To introduce my wife to investing, I opened a jointly held brokerage account (Schwab Intelligent Portfolio) that we occasionally invest into together from my earnings/what we can afford from our savings. All accounts together hold about 50K.
ruralavalon wrote: Tue Dec 07, 2021 6:37 pm What percentage of the total portfolio is in each of your accounts?
401k (when taken together) - 60%
HSA - 6%
Brokerage accounts (when taken together) - 23%
Roth IRA - 8%
(rough calculations and rounding leads to math not adding up to 100%)
If you factor in her rollover IRA at Vanguard, then what percentage of the total portfolio is in each account?

If you had only tax-advantaged accounts I would suggest using target date funds in each account.

Because a large part of your portfolio (23%) is in taxable brokerage accounts with large ongoing contributions ($1-4k per month), and because of your "FED TAX BRACKET: 24%, STATE TAX BRACKET: 6.37%", I suggest using individual index funds to be able to have good tax efficiency.

In general it's better to use only very tax-efficient stock index funds in a taxable brokerage account. Stock index funds are also suitable for any type of account.

In general it's best if bond funds are held in tax-advantaged accounts preferably in traditional tax-deferred accounts.

Wiki article, "Tax-efficient Fund Placement" .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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