This reply is so long it needed subsections. I hope I covered everything and that this helps, let me know if you have any questions.
Let me make sure I have this straight. You have $66k in cash in IRAs and a "savings plan", as well as $190k in cash elsewhere, as well as $110k in "stocks" (is this individual stocks? a fund somewhere?). You're INCREDIBLY cash-rich and you need to invest the majority of that cash ASAP. With that being said, you're almost at the 500k mark. Without knowing your age I don't know how "good" or "bad" this actually is, though.
I would put all of this money in a low-cost index fund like VTSAX and a low-cost bond fund like VBTLX, according to your desired asset allocation. You can add other funds for more diversification if you desire. Check out
Bogleheads' "Lazy Portfolios" page. It's perfect for you!
Fidelity v. VanguardYou will likely incur a cost for closing your Fidelity accounts (you'd have to check with them to be sure). Fidelity does offer index funds that have decently low expense ratios, but Vanguard is king. For example, Fidelity's total market index has an expense ratio of 0.06% for their admiral shares, but Vanguard's is even better at 0.05%.
I think you'd be okay with Fidelity or Vanguard as long as you STOP letting your workers lounge around on the beach and put them to work in an index fund. Personally I'd eat the transaction costs and go to Vanguard. Even 0.01% is worth it if you're investing long-term. It might also help you to roll them over as a symbol of your fresh start as a new Mustachian! Welcome, by the way.
Roth v. Traditional:Have you been maxing a Roth or a Traditional? From this point on you should be using only Traditional IRAs. You can recharacterize last year's (2013) Roth IRA contribution to a Traditional contribution (if you made one) as long as you do it by October of 2014. If you've contributed to a Roth for 2014, re-characterize it as well.
For the rest of the Roth stuff, you'll have to leave it as a Roth. I would not roll over any Traditional IRA funds to a Roth since you'll pay very high taxes on these rollovers. Therefore you'll need to open both a Roth IRA and a Traditional IRA with Vanguard and roll your accounts over appropriately. You may be able to do this first, then deal with the recharacterization, but you could probably knock them both out at once if you did indeed have a Roth contribution last year or this year. I'd call Fidelity and/or Vanguard and ask them what's easiest.
Also, yes open your wife an IRA and max it every year. She doesn't have to have income at all, you can fund it, but it has to be in her name.
Lastly, I'm not sure what a "Savings PLAN" is. Is this a 529 plan? Just a savings account?
401(k)As for the 401(k)...shame on you! Let me break this down for you. Here are the expense ratios for the funds you're investing in:
- PTRRX - 1.10%
- FSGRX - 1.35%
- RITCX - 1.01%
- OIGNX - 1.40%
- NYVRX - 1.18%
- JGRTX - 1.18%
Weighted by the %s you provided, you're paying a total of 1.178% of your $132k in expenses each year. That's $1,554.96. If you maintained your 401(k)'s asset allocation (50/50) using VTSAX and VBTLX instead then you'd pay only $132 in expenses each year, or 0.075%.
So being a lazy procrastinator is costing you $1422.96 EVERY YEAR! You really do need a punch to the face.
Now...it may be that your 401(k) options are bad. Do you have access to Vanguard funds or any other low-cost index funds via your 401(k)? If not, go to your HR representative and give THEM a punch in a face (metaphorically, of course. Please don't get yourself fired). Talk to them seriously and see if they can help you. If not, call your 401(k) provider and talk to them about it. Or do that anyway. If neither can help you, talk to your colleagues and get everyone to STRIKE until they offer a 401(k) plan with better options! Or something. Part of HR's job is to review their options for benefits each year. Companies will literally
hound HR people to try and get them to switch to using them as the *insert service here* provider. And if you don't ask them about the 401(k) they'll just stay with what they've got.
If you do have access to Vanguard funds, convert them immediately. Right now. Literally stop reading and go do it. It will take you 5 minutes online or on the phone.
Asset AllocationA 50/50 stock/bond mix (your current 401(k) setup) is very conservative. Including your $110k in "stocks" you're at a 73/27 mix. How old are you? How close to retirement are you? I'm personally shooting for a 90/10 mix, which is
highly aggressive, but I'm 25 so I have lots of time to handle large variation in the market. I will probably never go down to 50/50 even once retired, but this is a personal decision that you'll need to make on your own.
Taxable accounts, 529s, HSAsOnce you roll over your IRAs into fancy new Vanguard IRAs, once you max your 401(k) out for the year, once you max your IRA
and your wife's new IRA, then you will want to consider other investment vehicles. At 120k/yr you should have PLENTY of money left over even after two IRAs, a 401(k), and your expenses.
First thing: do you have an HSA?
The HSA is a terrific retirement vehicle and you should max this every year if it's available to you.
After that, do you have kids? If so,
a 529 plan may be beneficial to you, especially if you happen to live in a state where the 529 plan is tax-free for state taxes.
Lastly, yes, a taxable account with Vanguard is a fine investment option, but it should only be considered once all other tax-advantaged accounts are either eliminated or maxed out. Since you've got so much cash lying around you'll be unable to use it all up even if you do have an HSA and a 529 plan (which is limited to $14k/year before the gift tax kicks in). So I'd put whatever is left over (minus your emergency fund) into a taxable account.
If you made it this far then you're not as lazy as you say you are. Good job! Just being here and posting is an accomplishment, but don't stop now! Let me know if you have any questions.
edit: I forgot to mention the home-buying thing. A 300-400k home is around the median price in Boston, according to Trulia, so it's good that you're not buying a ridiculous house, but living in a smallish home at 280k instead will save you
so much money. Homes are terrible financial investments, but worth it if you want a family, kids, yard, etc. This decision is too personal for some guy on the internet to appropriately advise you, so just keep in mind why you're buying the home and don't let yourself get trapped with a huge mortgage payment. Best of luck.
edit2: bonus! If you get over $50k or over $500k invested in Vanguard then you'll gain access to
some sweet benefits.