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Learning, Sharing, and Teaching => Investor Alley => Topic started by: mrgrump on January 23, 2014, 08:34:37 AM

Title: Correct allocation?
Post by: mrgrump on January 23, 2014, 08:34:37 AM
Hello mustachians. I went through earlier this week and took my face punches on expenses and if we should pay off PMI or invest. Now it's time to get face punched a few more times.

Currently my wife and I each have a 401k. I have a small brokerage account and she has profit sharing. About 6 months ago I lost my job, the 401k is still with that employer. I plan on moving it some point this year either to an ira at vanguard or a new employer. Which would guys recommend? We are 100% vested in all accounts.

My wife's profit sharing is 75% common stock and 25% preferred. I am of the understanding we can not do much to diversify this approximate $ this true? We also don't actively invest into it...the company puts a % of her salary into it above and beyond her normal paycheck?? Essentially it's free money.

My wife's 401k is handled through chase and broken down as follows
5% bond index
50% large cap index
30% world index
15% small cap index

I am unsure of the tickers at this time...but we currently invest $850/month allocated based off the percentages.

My 401k is...
20% Veirx vanguard equity index fund
30% vifsx vanguard 500 index
20% vsisx vanguard small cap index
25% rergx american euro pacific fund r6
5% vgrsx vanguard REIT fund

I also have 2 small positions in Ford (F) and the mutual fund Bcsix. This money accounts for approx. $30k. No current contributions being made.

We don't currently hold many bond funds...thinking being they kinda stink right now and our extra mortgage payments is a bit of guaranteed return.

Looking it over we seem pretty heavy in world funds and small cap but I am not sure. What do you guys think?

We are about 35 years from normal retirement age. We would like to be retired and free on tax day 2026.
Title: Re: Correct allocation?
Post by: AlanStache on January 23, 2014, 08:43:56 AM
Could you save us the time of looking up what your 401k symbols represent?  Expense ratio of Bcsix is a bit high, is it just a small cap fund?  What is the ratio of profit sharing stock to 401k, ie are 90% of her assets tied to her compay?
Title: Re: Correct allocation?
Post by: mrgrump on January 23, 2014, 08:55:31 AM
Alanstache, I updated the symbols in the OP. Bcsix is just a small cap growth fund. About 40% of my wife's total retirement bundle is in the profit sharing and makes up about 26% if you total us together.
Title: Re: Correct allocation?
Post by: AlanStache on January 23, 2014, 09:46:47 AM
Only thing I would note is the large percent dependent on your wife's employer.  But probably hard to do anything about that, other than cut expenses and invest the difference after PMI.  Did not read your face punch expense post, but yeah PMI is a pure expense to be gotten rid of.  You have no cash allocations in any accounts?

"(no bonds)... thinking being they kinda stink right now " careful this type of thinking does not turn into attempts to time the market as that results in buying high and selling low.  Have not read anything about mortgage payments replacing bond investments.
Title: Re: Correct allocation?
Post by: mrgrump on January 23, 2014, 10:35:14 AM
Alanstache, it is not a ploy to time the markets. With the returns on bonds low right now I think I stand to make more / save more by investing that portion of money by paying down my mortgage..which is a sure fire 4.25% + getting rid of PMI. Once out of PMI we will be adding more to our investments and in turn the percentage of weight the profit sharing holds will decrease over time.
Title: Re: Correct allocation?
Post by: AlanStache on January 23, 2014, 10:48:58 AM
Yep removing PMI is probably the smart move for you, was just point out how that sentence came across.  Are you close to 20% equity and the ability to refinance w/o PMI, could you make some sales and write the check?  If close might be worth doing some math, expected return from the market vs interest/PMI.  I know is hard to see your portfolio balance decrease even if the math makes sense.