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Follower ○○

Retirement Investment Options Help!

Hello Everyone,

Need Help figuring this out! Thank you for any help!

Emergency funds: Yes
Debt: None
Tax Filing Status: Single
Tax Rate: 22% Federal, 4.75% State
Income: `$85,000 Yr
State of Residence: MD
Age: 26

Desired Asset allocation: 90 % stocks / 10 % bonds
Desired International allocation: 25% of stocks

Taxable Account: None (Want to Add) Need Suggestions

Retirement Assets;

Vanguard Roth IRA ($45,000)
28% VTSAX Vanguard Total Stock Market Index Fund Admiral Shares
25% VTIAX Vanguard Total International Stock Index Fund Admiral Shares
*Contributing the max every year

Work 401K `$41,000.00

10% FTBRX Fidelity Advisor® Limited Term Bond Fund Class M 0.76%
37% MITHX MFS Massachusetts Investors Trust Class R3 0.71%
*Contributing $6,750.00 a year - NO MATCH

Portfolio: 65% U.S Stocks, 25% International Stocks, 10% Bonds

Questions;

  1. Should I add any other options in the Work 401K? Not sure I will be able to keep this AA for long with Contribution limits. Another International Fund maybe?

  2. Is this a good portfolio? am I diverse enough with these funds?

Greatly appreciate any thoughts / advice.

Thank you for looking!

Other Work 401K options:

0.71% MITHX Large Cap U.S. Stock MFS Massachusetts Investors Tr R3

0.73% MIGHX Large Cap U.S. Stock MFS Massachusetts Investors Gr Stk R3

0.74% MSFHX Balanced MFS Total Return R3

0.76% FTBRX Diversified Bond Fidelity Advisor Limited Term Bond M

0.81% MUETX Large Cap U.S. Stock MFS Blended Research Core Equity R3

0.82% MEIHX Large Cap U.S. Stock MFS Value R3

0.97% FISRX Balanced Franklin Income R

0.98% FSIAX Diversified Bond Fidelity Advisor Strategic Income M

1.00% DIFFX Balanced MFS Diversified Income R3

1.08% MVCHX Mid Cap U.S. Stock MFS Mid Cap Value R3

1.09% FGSRX Large Cap U.S. Stock Franklin Growth R

1.09% FRURX Specialty U.S. Stock Franklin Utilities Series R

1.09% OPBNX Diversified Bond Invesco Oppy Total Return Bond R

1.09% OTCHX Mid Cap U.S. Stock MFS Mid Cap Growth R3

1.11% FAIGX Balanced Fidelity Advisor Balanced M

1.12% MDIHX International Stock MFS International Diversification R3

1.14% MFWHX Balanced MFS Global Total Return R3

1.16% MWEHX International Stock MFS Global Equity R3

1.17% CGRNX Large Cap U.S. Stock Invesco Oppy Value R

1.17% FTRRX Diversified Bond Franklin Total Return R

1.18% FALGX Large Cap U.S. Stock Fidelity Advisor Large Cap M

1.19% MTCHX Specialty U.S. Stock MFS Technology R3

1.20% FSCTX Small Cap U.S. Stock Fidelity Advisor Small Cap M

1.26% CSNXX Capital Preservation Invesco Oppy Govt Cash Reserves R

1.26% FTSDX Balanced Fidelity Advisor Strategic Div & Inc M

1.27% FGBRX Diversified Bond Templeton Global Bond R

1.27% ONRDX Large Cap U.S. Stock Invesco Oppy Rising Dividends R

1.27% TESRX Balanced Franklin Mutual Shares R

1.28% MRDVX Large Cap U.S. Stock BlackRock Equity Dividend R

1.30% FNITX Large Cap U.S. Stock Fidelity Advisor New Insights M

1.30% MIDHX International Stock MFS International New Discovery R3

1.30% ONCIX Balanced Invesco Oppy Portfolio: Conv Inv R

1.30% OSINX Diversified Bond Invesco Oppy Global Strategic Inc R

1.30% OTCNX Large Cap U.S. Stock Invesco Oppy Capital Apprec R

1.31% ONMIX Balanced Invesco Oppy Portfolio: Mod Inv R

1.32% FVFRX Small Cap U.S. Stock Franklin Small Cap Value R

1.33% OGLNX International Stock Invesco Oppy Global R

1.35% ODINX Small Cap U.S. Stock Invesco Oppy Discovery R

1.36% RBFBX Diversified Bond American Funds Bond Fund of Amer R2

1.36% RIDBX Balanced American Funds Inc Fund of Amer R2

1.37% RWMBX Large Cap U.S. Stock American Funds Washington Mutual R2

1.38% RMFBX Large Cap U.S. Stock American Funds American Mutual R2

1.39% DVRJX Alternative MFS Global Alternative Strategy R3

1.39% RICBX Large Cap U.S. Stock American Funds Invmt Co of Amer R2

1.40% TEFRX International Stock Templeton Foreign R

1.41% ONAIX Balanced Invesco Oppy Portfolio: Growth Inv R

1.41% RBCTX Target Date American Funds Trgt Date Ret 2020 R2

1.42% FRRGX Diversified Bond Templeton Global Total Return R

1.44% QSCNX Mid Cap U.S. Stock Invesco Oppy Mid Cap Value R

1.45% OAANX Balanced Invesco Oppy Portfolio: Active Alloc R

1.45% RBABX Balanced American Funds Mod Growth and Inc R2

1.46% BHSRX Specialty U.S. Stock BlackRock Health Sciences Opp Port R

1.46% RAFBX Large Cap U.S. Stock American Funds AMCAP R2

1.47% 88019R773 Balanced Templeton Global Balanced R

1.48% MRLOX Balanced BlackRock Global Allocation R

1.48% RBETX Target Date American Funds Trgt Date Ret 2030 R2

1.50% RBKTX Target Date American Funds Trgt Date Ret 2040 R2

1.51% RBITX Target Date American Funds Trgt Date Ret 2050 R2

1.52% OIDNX International Stock Invesco Oppy Intl Diversified R

1.52% RNPBX International Stock American Funds New Perspective R2

1.55% RWIBX International Stock American Funds Cap World Gr & Inc R2

1.56% BMRRX Mid Cap U.S. Stock BlackRock Mid-Cap Growth Equity R

1.56% RNGBX Large Cap U.S. Stock American Funds New Economy R2

1.58% RGBBX Balanced American Funds Global Balanced R2

1.59% RERBX International Stock American Funds EuroPacific Gr R2

1.64% RCWBX Diversified Bond American Funds Capital World Bond R2

1.64% TGVRX International Stock Thornburg International Value R3

1.68% BGSRX Specialty U.S. Stock BlackRock Technology Opport R

1.70% RNWBX International Stock American Funds New World R2

1.77% TDMRX International Stock Templeton Developing Markets R

1.78% MRGSX International Stock BlackRock Advantage Global R

1.78% RSLBX International Stock American Funds SMALLCAP World R2

1.79% TIBRX Balanced Thornburg Investment Income Builder R3

1.98% TIGVX International Stock Thornburg International Growth R3

2.14% TSRIX Diversified Bond Thornburg Strategic Income R4

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24 Replies
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Participant ○○○

Re: Retirement Investment Options Help!

I think you are off to a great start. It looks like you've chosen the simplest, cheapest options in a less than optimal, expensive 401k plan.

For future taxable, I like VT or VTWAX (Total World ETF or Total World Index Fund) over another international fund. There is negligible turnover, so very tax efficient and any taxes paid by the fund on foreign dividends become deductible on your tax return. Then use your 401k or Roth to adjust to your desired allocations.

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Frequent Contributor

Re: Retirement Investment Options Help!

Roth IRA covers lots of bases via indexes. Total stock market includes mostly LC but also some MC/SC. Total international covers Europe, Asia, EMs.

Poor 401k. So many choices are misleading as they are quite expensive. You have chosen a LC stock fund and a limited-term bond fund [to deploy in stocks later?] with reasonable ERs. OK to max with those. Is there match for 401k? 

Do open a taxable brokerage a/c. You can count emergency fund as part of it too [online savings, CDs, short-term bond funds]. Check out Fidelity and Schwab with nearby branches, or Vanguard that is accessible only online or via phone [on business days only] - you already have Roth IRA there.

YBB
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Follower ○○

Re: Retirement Investment Options Help!

Hello - Thank you for the reply!

limited-term bond fund [to deploy in stocks later?]  

    1. Does this bond make sense to keep and slowly increase in a few years? 10% now 15% in a few years ect..

 

No Match on the 401K just profit sharing which is usually around $3-5K a year.

 

2.  What would be the best option for a Vanguard Taxable account? I have about $10,000 that i would like to invest that does not include my emergency fund ect.. 

VTWAX 

VFIAX 

OR 

VTSAX and VTIAX  (This way I have better control over my AA % in international, I feel the Roth space may not be enough to balance out with the 401K in a few months / year.

 

Thank you all!

 

 

 

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Contributor ○○○

Re: Retirement Investment Options Help!

If the bond fund allocation is to put in equities at a lower level OK, but a 26 year old needs 0% bond allocation IMHO.

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Frequent Contributor

Re: Retirement Investment Options Help!

I do not favor international coverage these days.  

Those are a pretty bad set of 401K options.  

Early start is always good.

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Participant ○○○

Re: Retirement Investment Options Help!

Total World or a combination of individual components will work fine. Pick the one you feel will be easiest to manage long term, and that you can stick with. 

Honestly, having no debt and an interest in saving puts you miles ahead of your peers. Whatever you decide will work.

 

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Follower ○○

Re: Retirement Investment Options Help!

VTSAX and VTIAX would be a combination of total world right? I think this would be the easiest to manage long term for me to try and maintain my AA across all accounts. I plan on buying and holding for a long time, would having the same funds in a taxable and Roth Ira ever cause any issues? Wash Sale maybe?

Thanks for all the Feed back!

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Frequent Contributor

Re: Retirement Investment Options Help!

 

Hi Zach.

Sorry I'm going to be as brief as possible.

You are doing great in saving money for the future...and participating in tax-advantaged investment plans.

However (yes, always a however), the more I look at your investing portfolio and makeup, the more I consider it as terrible.

You are 26 years old, with a lifetime of investing ahead of you, yet you own virtually none of the fastest growing growth stocks...think FAANG stocks...or Tesla...or Zoom...or on and on.  Here are my comments:

--Do not own any bond funds until you have at least $150,000 saved.  Allocation goal should be 100/0; OK at times to hold money on bond funds awaiting deployment.

--Stop any further Roth IRA investing.  Put it in Trad IRAs.  You are in a 27% tax bracket...take the annual fed and local tax savings from Trad, and invest it.  It will get you to retirement much faster.  

--Your 401.K is a terrible selection...too high expense ratios.  Suggest invest in it up to max company match.  Then put in IRAs up to limit.  Then if more saved, you could add to 401.K...OR PUT IN TAXABLE AND INVEST IN ETFs, which have no annual cap gains.  And if you invest in low dividend funds in taxable, you have little tax going forward.  Like, a great fund for taxable growth is IHI, medical devices...for the long term.

--I can't review all funds in your 401.K, but it appears that the holdings of FGSRX have many of the large cap growth stocks such as FAANG, AAPLE etc.  Contribute to this fund.

--25% int'l is OK...but decide whether you get better int'l stocks funds in taxable or IRA, (where you control the selection) versus the poor 401.K choices.  Like, you could own fund ARTYX in an IRA...check it out.  Consider some Asia and Emerging market funds in your portfolio.

--I dislike total stock market index funds.  Long story...Perhaps just me.  Next decade to be like the last: a complete transformation from old companies to new ones; why own JC Penney, et al,  in total stock market?  You're a young dude...get with it...own the newly formed growing companies.  Think cloud, artificial intelligence, age of the robots, 5G, etc.

--Run ALL of your 401.K funds on compare charts from a previous stock market low point. (like march of this year).  The one with highest (Best) past six months performance should be accumulated biweekly for the next six months.  Rinse and repeat every six months.  Keep buying the best performer to offset the high ERs...as well as do best.

--Yes, I would open a taxable account at Vanguard (get their ETFs easily) and low cost reasons.  I would keep balance between 402.K and taxable, given the poor selection of your 401.K choices.

-------------------------------------------------------------------------------------

Bottom line....keep saving.  Stop the Roth, use Traditional; invest the annual tax savings; get into growth stock funds; use MOMENTUM to your advantage, by not selling winners, and keep investing in them.

And when you retire early, have a glass of champagne on me!

Best wishes...

R48

 

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Frequent Contributor

Re: Retirement Investment Options Help!

Definitely put enough in your company's 401k to get 100% of the match.  That is free money.  Then put any additional in a T-IRA.  I agree that at 26 you should be 100% stock... unless you are saving for reasons other than retirement such as a down payment on a house.  You don't want to lose 25-35% of your down payment just before closing.  If saving for retirement then you don't need to get more conservative until you are approaching your retirement date.  Some say the stock portion of your portfolio should be 100 minus your age.  I don't believe that.  I think it should be 10-20 points higher.  But that depends on how tolerant you are to risk.

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Follower ○○

Re: Retirement Investment Options Help!

Any thoughts on this?

 

What would be the best option for a Vanguard Taxable account? I have about $10,000 that i would like to invest that does not include my emergency fund ect.. 

VTWAX 

VFIAX 

OR 

VTSAX and VTIAX  (This way I have better control over my AA % in international, I feel the Roth space may not be enough to balance out with the 401K in a few months / year. NOTE I already have VTSAX and VTIAX in my Roth Ira account. 

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Participant ○○○

Re: Retirement Investment Options Help!

It's time to start a grassroots movement with other employees to get a better 401k program.  My son is 28 and his options are better and his expense ratios are better than I can get as an individual.   Assuming that your company is not tiny, whomever is in charge of this internally should be tossed to the curb. 

ctyankee

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Follower ○○

Re: Retirement Investment Options Help!

Yes hopefully it will get better eventually. For now I am just trying to make the best of what I have. Thank you

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Participant ○

Re: Retirement Investment Options Help!

One of my financial regrets is that I did not start Roth conversion as soon as it became available.   I think tax diversification is a great way to go (Roth + tax deferred).   If you plan to retire early, however, going tax-deferred exclusively may be better.

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Frequent Contributor

Re: Retirement Investment Options Help!


@Saratoga wrote:

One of my financial regrets is that I did not start Roth conversion as soon as it became available.   I think tax diversification is a great way to go (Roth + tax deferred).   If you plan to retire early, however, going tax-deferred exclusively may be better.


What was your marginal tax rate during those times?  ...or, if you earned one more dollar, at what rate would it be taxed at.

OP is at 27% rate.  Thus this formula applies:

TRAD IRA plus 27% tax savings, invested together... is always greater growth than a ROTH only, in final outcome.  And yes, one reaches a comfortable retirement age earlier.

Another way to look at this is:  Take your 27% annual tax savings, invest in taxable account, and you will eventually have your down payment for a home...thus negating having to touch your portfolio.

The fed is giving you a huge tax break now...take it now, rather than the promise of a future positive benefit.  We already see the rules changed eliminating the stretch IRA benefits to heirs.  Expect IRAs to be taxed in some form in the future.

R48

 

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Frequent Contributor

Re: Retirement Investment Options Help!


@Zach2020 wrote:

Any thoughts on this?

 

What would be the best option for a Vanguard Taxable account? I have about $10,000 that i would like to invest that does not include my emergency fund ect.. 

VTWAX 

VFIAX 

OR 

VTSAX and VTIAX  (This way I have better control over my AA % in international, I feel the Roth space may not be enough to balance out with the 401K in a few months / year. NOTE I already have VTSAX and VTIAX in my Roth Ira account. 


Also look at LC-growth VIGAX/VUG. If VG brokerage, look at some active international. There us no advantage in duplicating same things in different accounts.

YBB
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Follower ○○

Re: Retirement Investment Options Help!

Thank you! Any thoughts on what funds to choose in a taxable account? should i just use VTSAX and VTIAX even though i already have them in my Roth?

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Participant ○○○

Re: Retirement Investment Options Help!


@retiredat48 wrote:

 

Hi Zach.

Sorry I'm going to be as brief as possible.

You are doing great in saving money for the future...and participating in tax-advantaged investment plans.

snip... 

--Stop any further Roth IRA investing.  Put it in Trad IRAs.  You are in a 27% tax bracket...take the annual fed and local tax savings from Trad, and invest it.  It will get you to retirement much faster.  

snip ...

Bottom line....keep saving.  Stop the Roth, use Traditional; invest the annual tax savings; get into growth stock funds; use MOMENTUM to your advantage, by not selling winners, and keep investing in them.

And when you retire early, have a glass of champagne on me!

Best wishes...

R48

 


@retiredat48 

@Zach2020 

R48,

If you participate in a company-sponsored retirement plan, T-IRA deductions in 2020 phase out at $65,000 (MAGI) and are completely gone at $75,000 for a single.  

Zach makes $85,000 and contributes to a company 401K program.  

ctyankee

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Frequent Contributor

Re: Retirement Investment Options Help!

OP has mentioned that there is no employer match. 

From bad 401k, he/she has chosen funds with reasonable ERs and can max 401k using those.

Note that there is also LC-growth MIGHX with reasonable ER.

LC blend MITHX is a class of MITTX that is among the oldest mutual funds [inception 1924]. MFS is now owned by Sun Life of Canada [SLF].

YBB
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Frequent Contributor

Re: Retirement Investment Options Help!


@yogibearbull wrote:

OP has mentioned that there is no employer match. 

From bad 401k, he/she has chosen funds with reasonable ERs and can max 401k using those.

Note that there is also LC-growth MIGHX with reasonable ER.

LC blend MITHX is a class of MITTX that is among the oldest mutual funds [inception 1924]. MFS is now owned by Sun Life of Canada [SLF].


Wow, with no match, I'm not sure I would participate in this Companies high-expense 401.K

Again, in taxable one can own ETFs of growth stock type funds, with smaller dividend yields (keep taxes down) and almost zero cap gains distributions.  Money in taxable account allows from choosing among 10,000+ funds, many at less than 0.15% ERs.

Question: If one LEAVES A COMPANY, can the 401.K be rolled over into a Trad IRA??  Same income limits apply?  This could be a backdoor way of getting more into IRAs.

Lastly, ctyankee...thanks for refresher on income limits to using Trad.  It's been about 28 years since I put monies into an IRA!  Didn't realize it was that low.

Zach , you're making too much money!!:-)

R48

 

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