The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: tophdna on November 02, 2016, 12:40:48 PM
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I'm 30 year old male that works for the state government (I have a pension). Investing I am currently max contributing to:
State Deferred Comp Plan: Blackrock LifePath Index 2050 Fund http://www.morningstar.com/funds/XNAS/LIPKX/quote.html (http://www.morningstar.com/funds/XNAS/LIPKX/quote.html)
Max contributions ($1,500/month) and my employer currently matches only $50/month (increases with time served).
and I have a personal
Roth IRA: VTSAX (100%)
Max contributions ($5,500/year) in VTSAX.
I'm currently rolling with this. I'm possibly interested in eventually putting 10% into bonds and running at 90/10 from reading on these forums. Also, I'm toying with the idea of diversifying a little bit into International.
I just wanted to see if anybody had any criticism or insight to what I'm currently investing in.
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LIPKX is 55% US Stock, 27% International, 18% REIT. It's a target fund so it will start adding bonds in few years and grow the allocation as you near retirement. I would VSMAX instead of VTSAX in your roth to round out your portfolio to include more small caps as VTSAX and LIPKX have very few.
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2050? Are you saying you're planning to work to 64?? Wrong forum for that!
But seriously, looks good. I'm not a huge fan of the target date funds as its like active management - don't really know what they are doing over time. For instance, I'm not sure you want 18% in REITs right now, but maybe you do, either way you don't get to make that call in this type of fund. If there are Vanguard or really cheap index options, personally I'd use those. Hopefully as soon as the pension kicks in you're out.
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Looks good, pretty much set and forget. If you want to add bonds, I would do so in the deferred comp plan since they have lower expected returns than stocks over the long haul. You want the most growth in your Roth account since you won't have to pay taxes on any growth.
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2050? Are you saying you're planning to work to 64?? Wrong forum for that!
But seriously, looks good. I'm not a huge fan of the target date funds as its like active management - don't really know what they are doing over time. For instance, I'm not sure you want 18% in REITs right now, but maybe you do, either way you don't get to make that call in this type of fund. If there are Vanguard or really cheap index options, personally I'd use those. Hopefully as soon as the pension kicks in you're out.
The reasoning behind choosing a target date fund that has its actual target date really far out (much farther than you'd ever plan on retiring) is that it stays weighted heavier in equities (and therefore more growth) than in the bonds. So I agree it's a decent choice.
It's a relatively low expense ratio, low turnover and has decent diversity.
I wouldn't personally change up anything if I was as young as you are, but I am not you. We have no way of knowing what your plans are, what your comfort levels with risk or any other factors that could effect how you set up your asset allocation. ;)
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2050? Are you saying you're planning to work to 64?? Wrong forum for that!
I agree with Frankies Girl. If you plan to retire today at age 30, and choose the 2016 target date fund, you'll end up in something like 70% bonds. Way too much for an early retiree. When you plan on retiring early, don't focus on the "Target date", focus on the "How old am I right now"
(https://i.sli.mg/7HaR0B.png)
(https://i.sli.mg/7rhf5y.png)
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Looks like a decent plan. Don't be afraid to save even more in a taxable account if you can though!
International isn't really necessary if you're holding VTSAX you've got a good diversification of international companies right there.
I concur. Looks like a solid plan - if you're comfortable with it, I don't see any glaring reason to change it dramatically.
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I think more important than your age is how close you are to retiring. I would only go 100% stocks right now if I was 15+ years from retiring.
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You might consider a Traditional IRA rather than a Roth IRA so as to lower your tax bill now, and invest that savings.