Author Topic: Asset Allocation Advice  (Read 4593 times)

Yinzer

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Asset Allocation Advice
« on: April 16, 2016, 03:57:25 PM »
Not really new here, but realized it would be a good idea to change my handle due to wanting to post more specifics on my situation. My other handle would be recognizable by close friends and co-workers.

I've been considering expanding or changing my elected funds in these accounts, and would like any details anyone feels they can provide. I am 36 and comfortable with more aggressive investing due to a somewhat late start. Also, I'm a commissioned employee and my income can range from $50K (likely for this year) to $115K (last year). I am currently contributing 10% bimonthly to the 401(k) and 200/monthly to the taxable account while saving cash for a home purchase. 

Cash: $20K

Current 401(k) w/ America's Best:
Vanguard Total Stock Mkt Idx Adm (VTSAX):   $7,427    20% current election
Vanguard Growth Index Adm (VIGAX):      $29,412    80% current election

Fidelity 401(k) from previous employer:
FID Growth – Class K (FGCKX):      $6,320
FID Freedom Idx 2045 (FFOLX):      $5,541
*I have debated rolling this over to my current employer but it has done well and the ex-employee admin charges are about $5/year. Also, Fidelity offers more options with less fees than my current 401(k) provider.

IRA (traditional):
Vanguard Target Ret. 2040 (VFORX):   $1,438

Taxable:
Fidelity Spartan 500 Idx –Investor class (FUSEX): $5,971


Would you leave as-is or am I missing the mark somehow? Obviously I'm a far way off from FIRE. TIA


whodidntante

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Re: Asset Allocation Advice
« Reply #1 on: April 16, 2016, 04:35:08 PM »
It's great that you have started now.  Better "late" than never.  I've made some comments below for your consideration. 

Max your 401k if you can. 

You've got a growth stock tilt and it's rather extreme.  Consider a value tilt or a blend.  If you are new to investing, "growth" might not mean what you think it means. 

Consider owning an ex-US fund.  I use IXUS but there are many. 

Light on bonds, but that's OK if it is compatible with your risk tolerance.

You can do a little better than FUSEX in taxable (though it's not terrible).  I believe it just distributed a capital gain.  Consider ITOT or IVV if you want to stay with Fidelity.  My preference is for ITOT.  I also have more international stock funds in taxable to take advantage of the foreign tax credit.   


Yinzer

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Re: Asset Allocation Advice
« Reply #2 on: April 17, 2016, 07:42:52 AM »
Thanks! That is good advice and insight. I adjusted my 401k elections going forward to a much more conservative-moderate set of elections. It is a pre-fabricated list that America's Best suggests but includes almost all Vanguard funds and the fees seem very low.

I don't mind the exposure with the growth type of accounts but admit I wasn't 100% correct in thinking I knew exactly what they were. I mostly picked it because it had done well historically which is probably a pretty stupid thing to do. I should be able to up my election to 15% and over the next year add a fair level of diversification to the 401k. I also think I will stop contributing to the same taxable account election, and look for other funds to buy into with Fidelity.

 

NoStacheOhio

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Re: Asset Allocation Advice
« Reply #3 on: April 18, 2016, 06:56:42 AM »
You could probably roll that Fidelity 401k into an IRA and keep it at Fidelity with no maintenance fees. They have plenty of fee-free, low cost index options (Spartan, iShares).

Yinzer

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Re: Asset Allocation Advice
« Reply #4 on: April 19, 2016, 06:46:55 AM »
You could probably roll that Fidelity 401k into an IRA and keep it at Fidelity with no maintenance fees. They have plenty of fee-free, low cost index options (Spartan, iShares).

Thank you for this. I have a small IRA with Vanguard but would need to open another with Fidelity to keep the account there. Is there a general preference for one company over the other? Everything I've read seems to be case-specific.

Thanks!

Seppia

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Re: Asset Allocation Advice
« Reply #5 on: April 19, 2016, 07:10:57 AM »
Definitely put all in 401k till you reach the limit, unless the funds available are absolutely terrible (if you have vanguard that's perfect).
I would definitely add some international diversification, and for what concerns the USA, I would go with total market or s&p500.
I would not try get too fancy with growth, value, etc. just own everything
My 2 cents

NoStacheOhio

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Re: Asset Allocation Advice
« Reply #6 on: April 19, 2016, 07:27:47 AM »
You could probably roll that Fidelity 401k into an IRA and keep it at Fidelity with no maintenance fees. They have plenty of fee-free, low cost index options (Spartan, iShares).

Thank you for this. I have a small IRA with Vanguard but would need to open another with Fidelity to keep the account there. Is there a general preference for one company over the other? Everything I've read seems to be case-specific.

Thanks!

You can open a Fidelity account with your phone, it's super easy. You can have as many IRA accounts as you like, as long as you don't go over the annual contribution limit (that limit applies to you as an individual, not to the accounts).

Both companies are good, both have low cost index funds. Some people prefer one-stop shopping, and keep all of their accounts with one institution, some don't. From a simplicity standpoint, it's going to be easier and quicker to roll a Fidelity 401k into a Fidelity IRA. I have all my stuff at Fidelity because that's where my current employer plan is. I'm mostly in ITOT for my IRAs, and VINIX, VIEIX and VTIAX in my workplace accounts.

Yinzer

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Re: Asset Allocation Advice
« Reply #7 on: April 19, 2016, 07:43:59 AM »
Definitely put all in 401k till you reach the limit, unless the funds available are absolutely terrible (if you have vanguard that's perfect).
I would definitely add some international diversification, and for what concerns the USA, I would go with total market or s&p500.
I would not try get too fancy with growth, value, etc. just own everything
My 2 cents

I was able to max my 401k last year for the first time ever (quite easily actually due to my higher than typical earnings), but we still have some student loan debt that we're back and forth on which is why I lowered it this year (that and upping our cash savings). I would like to up my contribution back to an amount that will result in maxing the account out and need to visit that topic soon.

NoStacheOhio

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Re: Asset Allocation Advice
« Reply #8 on: April 19, 2016, 08:25:14 AM »
I was able to max my 401k last year for the first time ever (quite easily actually due to my higher than typical earnings), but we still have some student loan debt that we're back and forth on which is why I lowered it this year (that and upping our cash savings). I would like to up my contribution back to an amount that will result in maxing the account out and need to visit that topic soon.

Depending on your specifics (balance, interest rate, repayment plan, forgiveness eligibility, other life factors), you may be better off continuing to max the 401k.