Author Topic: 57 y/o: FINALLY going with Vanguard - Please help w/Allocation  (Read 2956 times)

MinimalistMoustache

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Hello Fellow M's!

I would greatly appreciate any suggestions with my plan to move over to Vanguard; My questions are below in bold type. I've been reading jhcollinsnh blog, and decided to transfer funds to following allocation:

VTSAX 50%   $60,000
VBTLX 25%   $30,000
VGSLX 25%   $30,000
Cash 8%       $10,000 (Also have small savings in local accounts)

1) Does this allocation (above) appear reasonable for 57 y/o?

2) Fidelity 401 with employer ($8,500 current balance) = FFKDX (96.6% allocation); FFKVX = 3.40% allocation). Employer match is 25% of the first 4% contributed.
    a) Okay splitting equally, 50%/50% between FFKDX and FFKVX?
    b) Should more salary be deposited to 401 to lower adj tax income and take advantage of pre-tax dollars? 
    (currently deposit $400 monthly of pre-tax pay to 401)
    c) If answer you answered "no" to question 3b, should just the minimum (approx $160 month) be deposited to meet the employer match (which is up to 4%) with the remaining surplus plowed back into Vanguard funds?

    My initial post from 3/8/14 that triggered these questions:
    "Reader Case Study: Too old for ER, but going for the gusto Advice Please" posted to "Ask a Mustachian"

    THANK YOU!!!!

    Minimalist Moustache[/list]

    marty998

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    Re: 57 y/o: FINALLY going with Vanguard - Please help w/Allocation
    « Reply #1 on: March 29, 2014, 03:57:59 PM »
    1) Allocation really depends on what your risk tolerance is. Age is not the sole determining factor.

    2a) no opinion
    2b) anyone over 45 should be taking maximum advantage of tax concessions for retirement accounts.
    2c) Always take advantage of any "free" money whenever you can.






    MDM

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    Re: 57 y/o: FINALLY going with Vanguard - Please help w/Allocation
    « Reply #2 on: March 29, 2014, 04:08:10 PM »
    1)  I'm not optimistic about bond funds so I wouldn't go into VBTLX - and money-back guarantee on what you are paying for that ;).  How to split that 25% between Total Stock Market index (VTSAX) vs. a REIT index (VGSLX) - up to you.

    2a) Sure, that's as good a guess as any.
    2b) Yes.  But see http://www.mrmoneymustache.com/forum/investor-alley/differing-schools-of-thought-invest-up-to-match-or-max-out/ for more details on the 401k/Roth question, in case your situation doesn't fit the kneejerk answer.

    You have identified a group of decent investment choices.  The only way to know for sure which is best is to put on your hindsight glasses....

    Just curious: did you ever get a definitive answer on your 401?  There was some question about 401a vs 401k and maximum contribution limits.

    soccerluvof4

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    Re: 57 y/o: FINALLY going with Vanguard - Please help w/Allocation
    « Reply #3 on: March 29, 2014, 04:52:03 PM »
    Im basically 50 and I am in

    VTSAX
    VBTLX
    VTABX so i have some international Bond Exposure
    VTIAX International Exposure
    VGSLX for REIT Exposure

    I disagree on not having any bond Exposure but I also hedge it through TBF on my trading account.

    I think you should have some exposure to Reits and International Stocks as well but some people put it all in just one like the VTSAX.

    You can adjust your portfolio so dont be afraid to do that with whats beaten down either.



    TomTX

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    Re: 57 y/o: FINALLY going with Vanguard - Please help w/Allocation
    « Reply #4 on: March 30, 2014, 09:23:12 AM »
    Instead of a bond "fund" - I have an I-bond, to largely eliminate interest-rate risk.

    soccerluvof4

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    Re: 57 y/o: FINALLY going with Vanguard - Please help w/Allocation
    « Reply #5 on: March 31, 2014, 07:28:45 AM »
    Started a position as well in there VGENX to be overweight energy a bit. The really only crossover is XOM . Mind you  a small % but unless you believe we wont be using alot more fuel..etc. in the future like i said i would rather be a bit overweight the sector

    MinimalistMoustache

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    Re: 57 y/o: FINALLY going with Vanguard - Please help w/Allocation
    « Reply #6 on: March 31, 2014, 08:37:22 PM »
    Thanks everyone for your feedback. I've got more studying to do regarding the amount of 401a contributions.

    MDM, thanks for the link and your question. From what I understand from my employer, there isn't much difference (in my case) between the 401a or 401k. The basics are the same; the 401a guarantees some amount contributed by employer whether I were to contribute or not. They also deposit a profit-sharing contribution -- so far, each year. :-)