The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: LearningMustachian72 on January 09, 2019, 10:07:03 AM
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Hey!
I am 30 years old, have roughly $70k in my 401k and just started contributing the max in 2019.
I am looking to optimize my portfolio until I will begin making penalty free withdrawals...
Based on the research I have done, it seems the best way to do this will be to set up a brokerage account through Vanguard, select low fee funds across different classes such as below and link this to my 401k.
50% (Large US)
15% (Mid US)
15% (Small US)
10% (Developed Countries)
5% (Emerging Markets)
5% (Bonds)
Does this sound like a decent strategy? Any tips/recommendations on this or which Vanguard funds to select?
FYI, I plan to start investing outside of 401k once I stabilize my lifestyle/budget after contributing the 401k max. Next step here would be to contribute the max to an IRA, correct?
Thank you in advance!
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UPDATE:
Was thinking of this allocation instead...
Vanguard 500 Index (VFINX) - 30%
Vanguard Small-Cap Index (NAESX) - 30%
Vanguard Total International Stock Index (VGTSX) - 30%
Vanguard Total Bond Market Index (VBMFX) - 10%
Thoughts?
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They are both fine asset allocations. The question is more are they right for you, your risk tolerance, timeline, and goals?
Yes, max out all tax-advantaged space before moving to a taxable account. So 401k (do you have the mega backdoor Roth option?), IRA, HSA, etc. first before taxable. You’ve seen the Investment Order sticky thread, yes?
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Thank you for the note.
I am not familiar with the mega roth backdoor option.
If you would not mind sharing the investment order thread, I would appreciate it!
I have the option to link a brokerage account to my 401k and would like to do so as my 401k only offers one index fee with a fee of 0.11% while all the other options are actively managed and with the next lowest fee being 0.42% ranging up to 0.9%.
As I am relatively young, I like the idea of linking a brokerage with diversified index funds that offer low fees. However, I have never had a brokerage account and am wondering if there are any nuances to linking one to your 401k.
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Thank you for the note.
I am not familiar with the mega roth backdoor option.
If you would not mind sharing the investment order thread, I would appreciate it!
I have the option to link a brokerage account to my 401k and would like to do so as my 401k only offers one index fee with a fee of 0.11% while all the other options are actively managed and with the next lowest fee being 0.42% ranging up to 0.9%.
As I am relatively young, I like the idea of linking a brokerage with diversified index funds that offer low fees. However, I have never had a brokerage account and am wondering if there are any nuances to linking one to your 401k.
Who is the provider of your 401(k)? I ask because the fine details will be very specific to that provider, and it's likely someone here has had experience with them.
I am guessing it is Fidelity since they have a product called "BrokerageLink." Most 401(k) providers don't have anything like this - you have access to a list of funds, and you get what you get. So, be thankful you have the option!
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Appears here are the available funds...
https://www.alightfinancialsolutions.com/pdf/NTF_Fund_List_AFS_1-1-2018%20.pdf
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Read this https://forum.mrmoneymustache.com/investor-alley/investment-order/
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Mega backdoor Roth:
https://www.madfientist.com/after-tax-contributions/
Note that if your plan allows this you may be able to either Roth-ify your after-tax contributions and keep the money in your plan or roll it over into a Roth IRA. It just depends on what the plan has set up.