Author Topic: Newbie's Allocations - advice please :)  (Read 9268 times)

dorkus619

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Newbie's Allocations - advice please :)
« on: October 23, 2013, 10:48:07 AM »
I'm 25 from MD, USA. My conservative goal is FI in 20 years, if I can hit it sooner, good. But my income isn't too high/my mortgage is. My personality is very indecisive/conservative, but typical advice is to start out aggressive/risky. So I am okay with following pro advice. :)

I'm looking for advice on my portfolio - is this a good allocation? What changes would you make? Do you need more info?

I have 2 accounts:
Prudential 401k thru work (~$2200)
Vanguard Roth IRA (VTIVX) (~$1200) - Until I get to $3k, I have limited choices, just their Target funds I believe

My allocations according to Personal Capital are approximately:
89.6% Stocks
  8.8% Bonds
  1.2% "Alternatives>Other"
    .4% Cash

dorkus619

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Re: Newbie's Allocations - advice please :)
« Reply #1 on: October 23, 2013, 01:37:46 PM »
anyone? please? :)

From other research I'm doing, it seems I need more diversity but on the other hand, I would like to be aggressive at the same time.

El Gringo

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Re: Newbie's Allocations - advice please :)
« Reply #2 on: October 23, 2013, 01:40:27 PM »
What is your selection within your 401k?

dorkus619

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Re: Newbie's Allocations - advice please :)
« Reply #3 on: October 23, 2013, 02:00:49 PM »
Good question. I'm more looking for a general asset allocation %s but if you want to go further and suggest funds I'll gladly post what's available!

My Allocations within my Prudential 401k, performance since inception, and exp ratios:
35% Dreyfus Small Cap Index DISSX   -   10.67%  /  .51
35% Dreyfus Midcap Index PESPX       -   10.54%  /  .51
20% Lord Abbett Fund Equity A LDFVX-   9.25%   /   1.09
10% Core Plus Bond/PIMCO Fund       -   5.36%   /   .88


Others Available to me:
Guaranteed income fund
BlackRock Global MDLOX
American Century Equity Large Cap Sock Value
Prudential Stock Index Lg Cap Blend PSIAX
MFS Mass Inv Gr Stk R2 MIRGX
T Rowe Price Mid Cap Value RRMVX
Hartford Midcap R3 HFMRX
Franklin Sm Cap FRVLX
Invesco Sm Cap Growth GTSAX
American Funds EuroPac Grow R3 RERCX
Mutual Global Disc TEDRX

El Gringo

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Re: Newbie's Allocations - advice please :)
« Reply #4 on: October 23, 2013, 02:23:27 PM »
If you're asking about general AA of stocks-bonds, I personally wouldn't be too concerned about your AA allocation. It's aggressive, but you're 25. I'm 26 and I have zero bonds. Until yesterday I was 100% in stocks. I'm in the process of buying some REITs (5-10%) to diversify a little, but I'm not at all thinking about bonds right now. We're young! And interest rates suck. Unless you think you would freak out in the case of a stock market crash and sell your equity, then I wouldn't worry. If you do think you'll freak out, then you should go more conservative. As for me, the stock market could crash 75% and I wouldn't panic, because I have plenty of time to gain it back again.

matchewed

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Re: Newbie's Allocations - advice please :)
« Reply #5 on: October 23, 2013, 03:17:25 PM »
The reason why you'll hear crickets when calling out for AA advice is because for each person it is different. You've already self identified as a conservative/indecisive person yet you have nearly 90% stocks, are you comfortable with that? Your AA will be whatever you are comfortable enough with that you will not panic and "Sell Sell Sell!" at a drop.

That being said whatever your AA and how you distribute that amongst your various investment vehicles is up to you. You can go for tax efficiency if you need to, but if your investments are quite simple as they probably are when starting out I wouldn't worry about this too much and focus on minimizing fees, minimizing expenses, and maximizing education of investments.

*Edit for poor proof reading*
« Last Edit: October 24, 2013, 06:18:40 AM by matchewed »

pom

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Re: Newbie's Allocations - advice please :)
« Reply #6 on: October 24, 2013, 05:15:18 AM »
I would advise that you get out of any fund that charges you more than 1% in fees.

As for AA, I think that you are young enough that you can have 100% in equity, as long as you are not a trigger-happy person.

aj_yooper

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Re: Newbie's Allocations - advice please :)
« Reply #7 on: October 24, 2013, 05:49:25 AM »
I'm 25 from MD, USA. My conservative goal is FI in 20 years, if I can hit it sooner, good. But my income isn't too high/my mortgage is. My personality is very indecisive/conservative, but typical advice is to start out aggressive/risky. So I am okay with following pro advice. :)

I'm looking for advice on my portfolio - is this a good allocation? What changes would you make? Do you need more info?

I have 2 accounts:
Prudential 401k thru work (~$2200)
Vanguard Roth IRA (VTIVX) (~$1200) - Until I get to $3k, I have limited choices, just their Target funds I believe

My allocations according to Personal Capital are approximately:
89.6% Stocks
  8.8% Bonds
  1.2% "Alternatives>Other"
    .4% Cash

In your Vanguard Roth you could also purchase ETFs, which do not have a $3000 minimum.  You will need to establish a brokerage account within the Roth though; just financial paperwork that is easily done.  mat chewed gives good advice: minimize your expenses above all.  Equity wise, you could just buy the total market index.  Very easy to do.

dorkus619

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Re: Newbie's Allocations - advice please :)
« Reply #8 on: October 24, 2013, 06:43:48 AM »
Your AA will be whatever you are comfortable enough with that you will not panic and "Sell Sell Sell!" at a drop.

... focus on minimizing fees, minimizing expenses, and maximizing education of investments.

I would advise that you get out of any fund that charges you more than 1% in fees.

As for AA, I think that you are young enough that you can have 100% in equity, as long as you are not a trigger-happy person.

Thanks for this advice everyone. These are my main take-aways I think.

I was just not sure because I see lots of suggested allocations based on age AND/OR years until retirement. I was hoping to get some advice on this forum because we are the few exceptions to the rule that age 25=40+ more working years. I was wondering if people here invest somewhat conservatively - what with many of us planning to retire soon/asap regardless of age.

matchewed

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Re: Newbie's Allocations - advice please :)
« Reply #9 on: October 24, 2013, 06:51:48 AM »
Your AA will be whatever you are comfortable enough with that you will not panic and "Sell Sell Sell!" at a drop.

... focus on minimizing fees, minimizing expenses, and maximizing education of investments.

I would advise that you get out of any fund that charges you more than 1% in fees.

As for AA, I think that you are young enough that you can have 100% in equity, as long as you are not a trigger-happy person.

Thanks for this advice everyone. These are my main take-aways I think.

I was just not sure because I see lots of suggested allocations based on age AND/OR years until retirement. I was hoping to get some advice on this forum because we are the few exceptions to the rule that age 25=40+ more working years. I was wondering if people here invest somewhat conservatively - what with many of us planning to retire soon/asap regardless of age.

That's the thing. The main driver behind FIRE success isn't your AA but your Savings Rate. That's why we focus more on an ability to optimize your spending.

dorkus619

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Re: Newbie's Allocations - advice please :)
« Reply #10 on: October 25, 2013, 07:31:48 AM »
Welp, I was gonna try to drop the LDFVX @ 1.09 expense ratio, but my other options suck too. Very few options have an expense ratio less than 1!

Quick advice: What's the trade off here? Does a higher historical return justify a higher expense ratio?

Fund           10 yr or inception          Expense Ratio
LDFVX              9.20%                             1.09
PSIAX               7.05%                              .77

aj_yooper

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Re: Newbie's Allocations - advice please :)
« Reply #11 on: October 25, 2013, 08:00:24 AM »
This is a little out of the box:

If your income is  in the 25% taxable rate (over $36,250  See:  http://www.forbes.com/sites/moneybuilder/2013/01/05/updated-2013-federal-income-tax-brackets-and-marginal-rates/), IMO, you should use a tax deferred fund (401k or traditional IRA) to get you into the 15% tax rate.  If you do not receive an employer contribution to your 401k, IMO, use the traditional IRA of $5500 to put you in the 15% range, if that is enough to get you under the $36,500 level.  You can do that with Vanguard.  (If the IRA is not enough, the 401k would be my choice, but the choices in your 401k are not very appealing to me.)  Then, put your extra savings in a taxable account at a low cost vendor like Vanguard. There you have great index choices.  Read up on investment choices here at Bogleheads:  http://www.bogleheads.org/wiki/Bogleheads_investing_start-up_kit

You also have a mortgage so you may be able to benefit from itemizing your deductions on your tax return and save some more money. 

This method saves on taxes and avoids the fees of your 401k.  The taxable account gives you flexibility and tax savings on capital gains.  Read the Bogleheads' advice on how to do the funds in a taxable.

Best wishes!





dorkus619

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Re: Newbie's Allocations - advice please :)
« Reply #12 on: October 25, 2013, 09:41:31 AM »
Thank you for those thoughts aj. I was just doing some calculations this morning looking at my recent paycheck and it looks like I am going to be right on the cusp of the 25% level eeps. My IRA at Vanguard is a ROTH, so that's after tax - not helping lower my taxable income (right?)

*sigh* I really like the concept of the 401k right out of my paycheck, it's easy - out of sight out of mind. I never see the money in the first place to miss it and I don't have to do any planning or button clicking to get it there. But now that I've really investigated my fund options I see that they are not favorable when compared to Vanguard.

Possible good news is that my company was recently acquired by another company, so maybe my 401k will change for next year. We are having an HR presentation on benefits next week so we'll learn our options then as long as the presentation doesn't solely focus on healthcare.

I usually do itemize deductions when filing - usually works out better.

I guess I will have to look into a Vanguard traditional IRA and perhaps only use my company 401k just enough to get the match? This is getting more and more confusing the more accounts I accumulate!

El Gringo

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Re: Newbie's Allocations - advice please :)
« Reply #13 on: October 25, 2013, 09:53:17 AM »
Yeah, you could open up a traditional IRA and fund that instead of your Roth. Just realize that the $5,500 limit is between the two of them.

For my 401k, I had a diverse portfolio of funds that I was using, until I realized that the large majority of them had an ER of over 1%. Once I realized that, I transferred everything over the S&P500 index fund, which had the lowest ER of all the funds available to me. I then started using my Vanguard Roth IRA to diversify with international equity, small-cap, etc.

aj_yooper

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Re: Newbie's Allocations - advice please :)
« Reply #14 on: October 25, 2013, 10:06:44 AM »
Thank you for those thoughts aj. I was just doing some calculations this morning looking at my recent paycheck and it looks like I am going to be right on the cusp of the 25% level eeps. My IRA at Vanguard is a ROTH, so that's after tax - not helping lower my taxable income (right?)

*sigh* I really like the concept of the 401k right out of my paycheck, it's easy - out of sight out of mind. I never see the money in the first place to miss it and I don't have to do any planning or button clicking to get it there. But now that I've really investigated my fund options I see that they are not favorable when compared to Vanguard.

Possible good news is that my company was recently acquired by another company, so maybe my 401k will change for next year. We are having an HR presentation on benefits next week so we'll learn our options then as long as the presentation doesn't solely focus on healthcare.

I usually do itemize deductions when filing - usually works out better.

I guess I will have to look into a Vanguard traditional IRA and perhaps only use my company 401k just enough to get the match? This is getting more and more confusing the more accounts I accumulate!

It is learning to work the levers of the tax laws.  It's like a video game, really.

If you can do a HSA or Health Savings Account, pay close attention.  It saves taxes like a traditional IRA and also saves on Social Security tax.  It is a sweet spot in the tax deferred area.  You might consider doing a posting of optimizing your taxes.  That might be very beneficial to you.

Good luck.

dorkus619

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Re: Newbie's Allocations - advice please :)
« Reply #15 on: October 25, 2013, 12:12:14 PM »
Thanks. I do have an HSA. I never thought outside of the box with that account. I just signed up to put in more than I thought I would spend on medical expenses. Open enrollment is coming up, and this year I do plan to contribute more $ to that account.

Good idea to get feedback on asking awesome Mustachians to help optimize taxes. It is really a strategy game!

imbros

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Re: Newbie's Allocations - advice please :)
« Reply #16 on: October 25, 2013, 12:51:27 PM »
Don't go 100% stocks. A good rule of thumb is having "your age-5" as your bond allocation.

You are young and you have never experienced a market crash. You may think you can handle it but many people who thought the same couldn't in the last crash.

Your 401k fund selection doesn't look good though. You could do Small and Midcap in 401k, and Large Cap, Intl and Bonds in Vanguard Roth IRA or HSA.

dorkus619

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Re: Newbie's Allocations - advice please :)
« Reply #17 on: October 25, 2013, 12:56:50 PM »
I just learned something and then checked my 401k. I didn't realize what "vested" meant - and that my employer's match really isn't even mine yet.

Anyway, so far this year I have contributed $1200 to a Roth IRA at Vanguard.
I have contributed $1600 to my work 401k account, I have $1800 "vested" in that account.

So if I wanted to lower my fees, better diversify, and lower my taxable income:
- I could rollover say $1500 to a Vangaurd Traditional IRA
- Increase 401k and Traditional IRA savings until I'm below $36,000 limit
- And further savings could be contributed to either my online savings account (underfunded emergency fund) or Roth IRA (up to total $5500 between both IRAs), or into my sorta lame 401k.

Don't go 100% stocks. A good rule of thumb is having "your age-5" as your bond allocation.

You are young and you have never experienced a market crash. You may think you can handle it but many people who thought the same couldn't in the last crash.

Your 401k fund selection doesn't look good though. You could do Small and Midcap in 401k, and Large Cap, Intl and Bonds in Vanguard Roth IRA or HSA.

Thanks for the advice. I have heard similar "rules of thumb" like your age = bond allocation or half your age = bond allocation. Either way...with all those rules I'm too low on the bonds I guess.

I probably would be very upset about a market crash. I would venture to say I have experienced a crash - I purchased my first house in Aug 2007 and right now I have lost 40% on it. I was panicking and considering bankruptcy until arebelspy and others on the forums talked me down. ha! I know I'd FLIP if I took a 40% hit on my retirement fund.


*so much to think about*

>.<

aj_yooper

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Re: Newbie's Allocations - advice please :)
« Reply #18 on: October 25, 2013, 02:27:34 PM »
Sorry to hear about your house, but you are among many others still feeling it.  However, you only lose the money when you sell so you have a technical loss in your home value. 

It is very important to protect yourself financially so "atta girl" on building up your emergency fund.  I think this fund is even more important than your retirement accounts.  You will sleep better and worry less.

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Re: Newbie's Allocations - advice please :)
« Reply #19 on: October 25, 2013, 02:57:20 PM »
My advice to you would be to do as much of the following as you can afford, in order:
1) Contribute to your 401(k) enough to get the maximum employer match.
2) Max out your HSA.
3) Max out a traditional IRA.
4) Max out the 401(k).

I would wait on the taxable accounts until you've exhausted all the other tax shelters. Even though your 401(k) plan options aren't the greatest, remember that you can roll all of that money over to an IRA the next time you change jobs and invest it in whatever you want. The long-term benefit of having larger amounts of money in tax-deferred accounts outweighs the short-term downside of being forced to invest that money in subpar funds for as long as you keep your current job.

dorkus619

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Re: Newbie's Allocations - advice please :)
« Reply #20 on: October 25, 2013, 05:12:09 PM »
My advice to you would be to do as much of the following as you can afford, in order:
1) Contribute to your 401(k) enough to get the maximum employer match.
2) Max out your HSA.
3) Max out a traditional IRA.
4) Max out the 401(k).
Does the Roth IRA I just opened fit in here or should I just let my baby egg there alone?
Hopefully the HSA remains an option for next year. We'll see! Open enrollment soon.
Thanks for the tips

I would wait on the taxable accounts until you've exhausted all the other tax shelters. Even though your 401(k) plan options aren't the greatest, remember that you can roll all of that money over to an IRA the next time you change jobs and invest it in whatever you want. The long-term benefit of having larger amounts of money in tax-deferred accounts outweighs the short-term downside of being forced to invest that money in subpar funds for as long as you keep your current job.
Thanks

dorkus619

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Re: Newbie's Allocations - advice please :)
« Reply #21 on: October 26, 2013, 11:34:08 AM »
If your income is  in the 25% taxable rate (over $36,250  See:  http://www.forbes.com/sites/moneybuilder/2013/01/05/updated-2013-federal-income-tax-brackets-and-marginal-rates/), IMO, you should use a tax deferred fund (401k or traditional IRA) to get you into the 15% tax rate.
...
You also have a mortgage so you may be able to benefit from itemizing your deductions on your tax return and save some more money. 

Further research and reading another thread about optimizing taxes, it looks like I'm going to have a LOT of deductions and stuff bringing my taxable income well below the $36k mark.
About $8400 deductable based on the house - prop taxes, PMI, and interest!

Thanks for your help!


I'm still not sure about the Vanguard Trad. IRA. Can I rollover [some] funds from my 401k if I'm still working at the job & currently using it? Otherwise I'm going to need to come up with $1000 cash to start that account.... (which would be plausible, esp if I raid my baby $500 emergency savings I just started....but probably shouldn't do that, right?  >.<  )

aj_yooper

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Re: Newbie's Allocations - advice please :)
« Reply #22 on: October 26, 2013, 12:28:40 PM »
If you are in the 15% marginal tax rate level,personally, I don't think a traditional IRA is needed.  If you want to do an IRA, just keep funding your Roth IRA. 

El Gringo

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Re: Newbie's Allocations - advice please :)
« Reply #23 on: October 26, 2013, 01:20:59 PM »
Can I rollover [some] funds from my 401k if I'm still working at the job & currently using it? Otherwise I'm going to need to come up with $1000 cash to start that account.... (which would be plausible, esp if I raid my baby $500 emergency savings I just started....but probably shouldn't do that, right?  >.<  )

No you can't. Just purchase an ETF instead of a mutual fund. It's cheaper anyways!

Reepekg

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Re: Newbie's Allocations - advice please :)
« Reply #24 on: October 27, 2013, 01:18:14 PM »
Your asset allocation is fine, especially considering you have the house going on as well.

I know I'd FLIP if I took a 40% hit on my retirement fund.

I hope you mean do backflips. This is the best possible thing that could happen to you. You don't have a lot invested relative to your lifetime earnings, and you'd be buying crazy amounts of stock on sale in your mid-20s and be living large when it goes back up in the next 1-2 decades.

Finally unless I'm missing one, your 401k options are terrible. I mean terrible enough that you should march down to HR and give them an earful. There isn't a single fund under 0.5% ER? Go up to any match, use IRAs and HSAs, and become an activist in your company to get an index fund at like 0.15% ER so you can max that thing out. 

And get earning and saving! Good luck.

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Re: Newbie's Allocations - advice please :)
« Reply #25 on: October 27, 2013, 07:48:15 PM »
If you are in the 15% marginal tax rate level,personally, I don't think a traditional IRA is needed.  If you want to do an IRA, just keep funding your Roth IRA.

Agreed.

I haven't had a lot of 401(k) options available to my spouse and I, but all the 401(k)'s we've ever met were terrible -- they never had funds we found ideal. So, we just contributed to the max and put the rest in our IRA's. It sucks that your $$ isn't where you want it, but you are earning 100% return by matching immediately so it is what it is. Maybe you will find a fund in your 401(k) that will help you diversify -- it's not the fund you'd pick, but it's a conservative fund that would make you feel more comfortable.

FWIW, I don't follow the your age + 5 rule. That would mean that we should put 40% of our investments in bonds? No way! I have a much higher risk tolerance for that. Although, I didn't start our IRAs until November, 2008, so granted I have yet to feel a market tank but I would like to think that I would hold tight on our indexed investments, if not buy more of them, in a severe downturn. 

dorkus619

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Re: Newbie's Allocations - advice please :)
« Reply #26 on: October 29, 2013, 09:37:03 AM »
Your asset allocation is fine, especially considering you have the house going on as well.

I know I'd FLIP if I took a 40% hit on my retirement fund.

I hope you mean do backflips. This is the best possible thing that could happen to you. You don't have a lot invested relative to your lifetime earnings, and you'd be buying crazy amounts of stock on sale in your mid-20s and be living large when it goes back up in the next 1-2 decades.

Finally unless I'm missing one, your 401k options are terrible. I mean terrible enough that you should march down to HR and give them an earful. There isn't a single fund under 0.5% ER? Go up to any match, use IRAs and HSAs, and become an activist in your company to get an index fund at like 0.15% ER so you can max that thing out. 

And get earning and saving! Good luck.
Thank you for this perspective. I guess I would be concerned that it won't go back up or won't recover in a timely fashion. I know that's probably ridiculous when you look at history.
But from my point of view, I'm in the middle of a crash with my house. I am afraid it will never recover to the price I paid because I was young and naive and that house was WAY WAY overpriced/inflated. I'm down like $55k. Now that I really think about it, I just can't imagine that house is anywhere close to worth what I paid.
And I can't buy more now that real estate is on sale; unlike my retirement fund.

And with my 401k - NO you're not missing anything. The lowest fee options are the two .51 funds. The next best is .65 for the Guaranteed Income Fund at a whopping 2.14% since inception. Next best after that is .77 for PSIAX.


---

If you are in the 15% marginal tax rate level,personally, I don't think a traditional IRA is needed.  If you want to do an IRA, just keep funding your Roth IRA.

Agreed.

I haven't had a lot of 401(k) options available to my spouse and I, but all the 401(k)'s we've ever met were terrible -- they never had funds we found ideal. So, we just contributed to the max and put the rest in our IRA's..... 

Okay, that simplifies things. No Traditional IRA - Thanks AJ and Stan!
So I will reduce my 401k contributions just to get the match and then explore other options.

I had another idea of paying extra on the mortgage. I am torn on the idea of paying it off early vs investing. BUT in my case, I'm paying PMI (Mortgage insurance because I put $0 down...) to the tune of $121/month. So I'm thinking I should throw extra payments at it until I get to 78% Loan to Value and then the PMI will stop. After that I will be able to save/invest that extra $121/month!
Thoughts?

BroncoRon

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Re: Newbie's Allocations - advice please :)
« Reply #27 on: October 29, 2013, 09:39:13 PM »
My advice to you would be to do as much of the following as you can afford, in order:
1) Contribute to your 401(k) enough to get the maximum employer match.
2) Max out your HSA.
3) Max out a traditional IRA.
4) Max out the 401(k).
Does the Roth IRA I just opened fit in here or should I just let my baby egg there alone?
Hopefully the HSA remains an option for next year. We'll see! Open enrollment soon.
Thanks for the tips

I would wait on the taxable accounts until you've exhausted all the other tax shelters. Even though your 401(k) plan options aren't the greatest, remember that you can roll all of that money over to an IRA the next time you change jobs and invest it in whatever you want. The long-term benefit of having larger amounts of money in tax-deferred accounts outweighs the short-term downside of being forced to invest that money in subpar funds for as long as you keep your current job.
Thanks

What is the logic behind maxing our your HSA and Traditional IRA over your 401k if all three are tax deferred/tax-sheltered?  I've been maxing out my 401k for the last few years, but I have not opened up a traditional IRA or HSA...

Open Enrollment for 2014 ends tomorrow so I'll be sure to allocate the full $3,300 for the HSA and enroll in the high deductible health plan which in itself will be a significant savings.  I'm 27, single, and in good health so there is really no point paying for a low deductible plan.

Thanks, Ron
« Last Edit: October 29, 2013, 10:21:51 PM by BroncoRon »

Will

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Re: Newbie's Allocations - advice please :)
« Reply #28 on: October 29, 2013, 11:07:08 PM »
I would recommend reading http://jlcollinsnh.com/2011/06/08/how-i-failed-my-daughter-and-a-simple-path-to-wealth/

Lots of good stuff on his site!  But this post seems perfect for you.

BroncoRon

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Re: Newbie's Allocations - advice please :)
« Reply #29 on: October 30, 2013, 12:09:32 AM »
What a great read.  Thanks!

rockstache

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Re: Newbie's Allocations - advice please :)
« Reply #30 on: October 30, 2013, 07:32:54 AM »
I would recommend reading http://jlcollinsnh.com/2011/06/08/how-i-failed-my-daughter-and-a-simple-path-to-wealth/

Lots of good stuff on his site!  But this post seems perfect for you.

+1

I love his stock series SO much.

dorkus619

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Re: Newbie's Allocations - advice please :)
« Reply #31 on: November 05, 2013, 07:10:20 AM »
What is the logic behind maxing our your HSA and Traditional IRA over your 401k if all three are tax deferred/tax-sheltered?  I've been maxing out my 401k for the last few years, but I have not opened up a traditional IRA or HSA...

Open Enrollment for 2014 ends tomorrow so I'll be sure to allocate the full $3,300 for the HSA and enroll in the high deductible health plan which in itself will be a significant savings.  I'm 27, single, and in good health so there is really no point paying for a low deductible plan.

Thanks, Ron

Ron, I think they were making suggestions like that because my 401k options are just terrible. The 2 lowest options are alright at .51 expense ratio, but everything else is just ridiculous, most being well over 1. My Roth IRA is in Vanguard, so it's very low cost and will probably do much better for me in the long run.

I would recommend reading http://jlcollinsnh.com/2011/06/08/how-i-failed-my-daughter-and-a-simple-path-to-wealth/

Lots of good stuff on his site!  But this post seems perfect for you.

+1

I love his stock series SO much.

Thanks for this link and +1 vote. I read this article and liked it a lot. I should pass it on to my 18 year old brother! It really does make me step back and realize I'm probably over complicating everything. Sometimes I get caught up in the details so much so that I can't see the big picture.

Thank you