Investment Check-Up; 401k Fund Selection Help

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Topic Author
pf747
Posts: 4
Joined: Fri Jan 14, 2022 12:34 am

Investment Check-Up; 401k Fund Selection Help

Post by pf747 »

Emergency funds: $18,000

Debt: $0

Tax Filing Status: Single

Tax Rate: 22% Federal, 5.75% State

State of Residence: VA

Age: 30

Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: 20% of stocks

Current retirement assets

Total: low six figures

Taxable: 15%
11.25% (of portfolio) 75% (of taxable) Cash
3.75% (of portfolio) 25% (of taxable) (VTSAX) (0.15%)

401k TIAA: 61.5%
6.3% (of total portfolio) 10.24% (of 401k) CREF Bond Market R2 (QCBMPX)(0.26%)
18.63% (of total portfolio) 30.29%(of 401k) CREF Global Equities R2 (QCGLPX)(0.27%)
0.79% (of total portfolio) 1.29% (of 401k) CREF Inflation-Linked Bond R2 (QCILPX)(0.23%)
8.93% (of total portfolio) 14.52% (of 401k) CREF Stock R2 (QCSTPX)(0.29%)
3.42% (of total portfolio) 5.56% (of 401k) TIAA Real Estate (QREARX)(0.87%)
1.99% (of total portfolio) 3.24% (of 401k) TIAA Traditional Annuity
2.48% (of total portfolio) 4.03% (of 401k) TIAA-CREF International Equity Fund - Retirement Class (TRERX)(0.73%)
6.64% (of total portfolio) 10.80% (of 401k) TIAA-CREF Large-Cap Value Fund - Retirement Class (TRLCX)(0.66%)
8.78% (of total portfolio) 14.28% (of 401k) TIAA-CREF Mid-Cap Value Fund - Retirement Class (TRVRX)(0.71%)
3.54% (of total portfolio) 5.76% (of 401k) TIAA-CREF Quant Small-Cap Equity Retirement (TRSEX)(0.68%)
Company match = 9%

Roth IRA at Vanguard 23.5%
23.5% (of portfolio) 100% (of Roth IRA) Vanguard Target Retirement 2055 Fund (VFFVX) ( 0.10%)
_______________________________________________________________
Contributions

New annual Contributions
$7418.16 401k (Plus an additional $7418.16 from employer; $14,836.32 total)
$6000 Roth IRA
$1000 taxable

Available funds

Funds available in 401(k)
TIAA Traditional Annuity - Group Retirement Annuity
TIAA Traditional Annuity - Group Supplemental Retirement Annuity
CREF Bond Market Account (R2)(QCBMPX) 0.26%
CREF Equity Index Account (R2)(QCEQPX) 0.22%
CREF Global Equities Account (R2)(QCGLPX) 0.27%
CREF Growth Account (R2)(QCGRPX) 0.24%
CREF Inflation-Linked Bond Account (R2)(QCILPX) 0.23%
CREF Money Market Account (R2)(QCMMPX) 0.24%
CREF Social Choice Account (R2)(QCSCPX) 0.25%
CREF Stock Account (R2)(QCSTPX) 0.29%
TIAA Real Estate Account(QREARX) 0.87%
TIAA-CREF International Equity Fund (Retirement)(TRERX) 0.73% / 0.73%
TIAA-CREF Large-Cap Value Fund (Retirement)(TRLCX) 0.66% / 0.66%
TIAA-CREF Lifecycle 2010 Fund (Retirement)(TCLEX) 0.62% / 0.77%
TIAA-CREF Lifecycle 2015 Fund (Retirement)(TCLIX) 0.63% / 0.78%
TIAA-CREF Lifecycle 2020 Fund (Retirement)(TCLTX) 0.64% / 0.78%
TIAA-CREF Lifecycle 2025 Fund (Retirement)(TCLFX) 0.66% / 0.81%
TIAA-CREF Lifecycle 2030 Fund (Retirement)(TCLNX) 0.67% / 0.83%
TIAA-CREF Lifecycle 2035 Fund (Retirement)(TCLRX) 0.68% / 0.85%
TIAA-CREF Lifecycle 2040 Fund (Retirement)(TCLOX) 0.69% / 0.87%
TIAA-CREF Lifecycle 2045 Fund (Retirement)(TTFRX) 0.70% / 0.89%
TIAA-CREF Lifecycle 2050 Fund (Retirement)(TLFRX) 0.70% / 0.90%
TIAA-CREF Lifecycle 2055 Fund (Retirement)(TTRLX) 0.70% / 0.91%
TIAA-CREF Lifecycle 2060 Fund (Retirement)(TLXRX) 0.70% / 0.96%
TIAA-CREF Lifecycle Retirement Income Fund (Retirement)(TLIRX) 0.62% / 0.78%
TIAA-CREF Mid-Cap Growth Fund (Retirement)(TRGMX) 0.73% / 0.73%
TIAA-CREF Mid-Cap Value Fund (Retirement)(TRVRX) 0.71% / 0.71%
TIAA-CREF Quant Small-Cap Equity Fund (Retirement)(TRSEX) 0.68% / 0.68%
Vanguard 500 Index Fund Admiral(VFIAX) 0.04% / 0.04%
Vanguard Short-Term Investment Grade Fund Admiral(VFSUX) 0.10% / 0.10%
Vanguard Treasury Money Market Fund Investor(VUSXX) 0.09% / 0.09%

Questions:
1. How am I doing at age 30?

2. What would be a better fund selection in my 401k?

Thanks for all of your help, I really appreciate it. Just an average guy looking to retire comfortably at 65.
Last edited by pf747 on Mon Jan 24, 2022 9:31 am, edited 1 time in total.
Nate7out
Posts: 410
Joined: Wed Jan 16, 2008 1:06 pm

Re: Investment Check-Up; 401k Fund Selection Help

Post by Nate7out »

Note: It's easier to analyze if the percentages for each investment represent percentages of your portfolio, rather than % of the account.

1) You appear to be doing well. Based on tax bracket you appear to be saving about 20-30% of income. Housing would be an open question - renting or planning to buy?

2) Generally, you should build your portfolio around your 401k fund choices with an eye on cost.

The lowest cost fund in your 401k is VFIAX. I don't know the exact status of your TIAA Trad, but it often has a higher yield than an AGG bond fund. I kept the TIAA RE Fund as it seems to be desirable here, I have no exp. with it. I use VNQ.

You want 20% of stocks (.2 * .9 = 18%) in Int. and 10% in bonds. 72% US, 18% Int, 10% Bonds

I assume the 11% in cash in taxable is separate from your EF. I will list % of portfolio first. Then you can add up percentages and see that the 9.5% in taxable plus the 8.5% in Roth of INT is 18%. Bonds 7.5% in TIAA Trad plus the 2.5% from Roth make 10%. The remainder is US stocks with the small amount of RE taken out of the US allocation. You have to decide what you want to put into RE or if you want to delete it. If you delete it, it would be added to VFIAX. My suggestion is shown below. You don't have to make any change in Roth, you just need to invest your cash in taxable and change your 401k around to consolidate. Use taxable and Roth to get up to your INT exposure, and use 401k and Roth to get to your bond allocation. You will need a spreadsheet that adds it all up and tells you how far off you are of each asset class, and then you can rebalance occasionally.

Taxable:
VTSAX 5.5% (37% of taxable)
VTIAX 9.5% (63% of taxable) - Vanguard Total International

401k:
VFIAX - 51% (83% of 401k) Vanguard S&P 500.
TIAA Trad - 7.5% (12% of 401k) Bond
TIAA RE - 3% (5% of 401k) - Real Estate

Roth IRA:
Target Retirement 2055
US - 12.5% (54% of Roth)
INT - 8.5% (36% of Roth)
Bond - 2.5% (10% of Roth)

ETA: Since your taxable contributions are low, and your Roth allocation is a fixed % in International - you might find that you need to add an international fund in your 401k soon.
tashnewbie
Posts: 4284
Joined: Thu Apr 23, 2020 12:44 pm

Re: Investment Check-Up; 401k Fund Selection Help

Post by tashnewbie »

pf747 wrote: Sun Jan 23, 2022 10:47 pm Questions:
1. How am I doing at age 30?

2. What would be a better fund selection in my 401k?
Welcome to the forum!

I think you're doing well.

A few questions:

1. I assume the cash in taxable is separate from your emergency fund. Are you saving for a particular short-term purpose such as a house down payment? If not, then I would invest that cash according to your desired asset allocation. You could increase your 401k contributions and live off the cash if your paychecks become too small to cover regular expenses.

2. Instead of investing $1k/year into taxable, I would increase the 401k contributions. This is assuming the taxable savings isn't for short-term spending. [If it is for short-term spending, then you probably shouldn't be investing the money.] Related to this is that you should capture the full employer match in the 401k. Your employer has a very generous match and appears to match dollar for dollar up to a certain amount/percentage of your income. I would increase the 401k contributions to capture the full match, if you're not already.

3. I think you could just use these funds in the 401k:

Vanguard 500 Index Fund Admiral(VFIAX) 0.04% / 0.04% -- sufficient for US stock exposure
CREF Bond Market Account (R2)(QCBMPX) 0.26% -- I would use this for bond exposure, unless one of the TIAA Trad options is the good one that is paying 3-ish%

You could use the Roth IRA for international stock (either through the target date fund or a separate fund such as VTIAX).
Topic Author
pf747
Posts: 4
Joined: Fri Jan 14, 2022 12:34 am

Re: Investment Check-Up; 401k Fund Selection Help

Post by pf747 »

Nate7out wrote: Mon Jan 24, 2022 8:39 am Note: It's easier to analyze if the percentages for each investment represent percentages of your portfolio, rather than % of the account.

1) You appear to be doing well. Based on tax bracket you appear to be saving about 20-30% of income. Housing would be an open question - renting or planning to buy?

2) Generally, you should build your portfolio around your 401k fund choices with an eye on cost.

Taxable:
VTSAX 5.5% (37% of taxable)
VTIAX 9.5% (63% of taxable) - Vanguard Total International

401k:
VFIAX - 51% (83% of 401k) Vanguard S&P 500.
TIAA Trad - 7.5% (12% of 401k) Bond
TIAA RE - 3% (5% of 401k) - Real Estate

Roth IRA:
Target Retirement 2055
US - 12.5% (54% of Roth)
INT - 8.5% (36% of Roth)
Bond - 2.5% (10% of Roth)
Thanks for taking the time. I have edited my post to include my whole portfolio percentages.

To answer your question on housing, I am currently renting and planning to buy. I have saved for a down payment and I am currently looking for a home. The housing market has been tough though, so I'm taking things slow.

Looks like VFIAX is the way to go in the 401k.
Topic Author
pf747
Posts: 4
Joined: Fri Jan 14, 2022 12:34 am

Re: Investment Check-Up; 401k Fund Selection Help

Post by pf747 »

tashnewbie wrote: Mon Jan 24, 2022 9:28 am Questions:

1. I assume the cash in taxable is separate from your emergency fund. Are you saving for a particular short-term purpose such as a house down payment? If not, then I would invest that cash according to your desired asset allocation. You could increase your 401k contributions and live off the cash if your paychecks become too small to cover regular expenses.

2. Instead of investing $1k/year into taxable, I would increase the 401k contributions. This is assuming the taxable savings isn't for short-term spending. [If it is for short-term spending, then you probably shouldn't be investing the money.] Related to this is that you should capture the full employer match in the 401k. Your employer has a very generous match and appears to match dollar for dollar up to a certain amount/percentage of your income. I would increase the 401k contributions to capture the full match, if you're not already.

3. I think you could just use these funds in the 401k:

Vanguard 500 Index Fund Admiral(VFIAX) 0.04% / 0.04% -- sufficient for US stock exposure
CREF Bond Market Account (R2)(QCBMPX) 0.26% -- I would use this for bond exposure, unless one of the TIAA Trad options is the good one that is paying 3-ish%

You could use the Roth IRA for international stock (either through the target date fund or a separate fund such as VTIAX).
Thanks for the response.

1. Indeed, the cash in taxable is separate from my emergency fund. My plan was to invest the cash, I just wasn't sure where. I like your advice of increasing my 401k contributions. I'll look into what I need to do with my employer to make that happen. I've never changed my contribution percentage outside of the open enrollment period.

2. Maxing out my tax advantaged accounts is a goal. I currently contribute 9% and get 9% from my employer. I also plan on purchasing a home this year. I've been hesitant to increase my contributions due to wanting a larger cash reserve for the home. Outside of my emergency fund, I have been saving for things that will likely be needed for the house (furniture, appliances, repairs, etc.) I've been saving for five years both in the taxable account and in a high yield savings account.

3. Thanks for the recommendation. That makes two people who have recommended VFIAX. What are your thoughts on CREF Bond Market Account (R2)(QCBMPX) 0.26% VS TIAA Traditional Annuity?

Here are the two offered:

TIAA Traditional Annuity - Group Retirement Annuity - TIAA Fixed Annuity - Min Guaranteed 3.00% Current Rate 3.25%
TIAA Traditional Annuity - Group Supplemental Retirement Annuity - TIAA Fixed Annuity - Min Guaranteed 3.00% Current Rate 3.00%
tashnewbie
Posts: 4284
Joined: Thu Apr 23, 2020 12:44 pm

Re: Investment Check-Up; 401k Fund Selection Help

Post by tashnewbie »

pf747 wrote: Mon Jan 24, 2022 10:16 am 3. Thanks for the recommendation. That makes two people who have recommended VFIAX. What are your thoughts on CREF Bond Market Account (R2)(QCBMPX) 0.26% VS TIAA Traditional Annuity?

Here are the two offered:

TIAA Traditional Annuity - Group Retirement Annuity - TIAA Fixed Annuity - Min Guaranteed 3.00% Current Rate 3.25%
TIAA Traditional Annuity - Group Supplemental Retirement Annuity - TIAA Fixed Annuity - Min Guaranteed 3.00% Current Rate 3.00%
I'm not familiar with TIAA products, but I would probably be happy to use one of these TIAA Traditional options. I would explore the prospectuses and other paperwork of each more thoroughly to help me decide which to use. Be aware of any sales restrictions (may limit how much can be sold at any given time). Hopefully forum members who are more familiar with these products will respond.
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