First off, thanks for taking the time to read my post. And now to the goods...
Backstory: Started really attempting to save money when I was 26 (I'm 31 now). Opened a Roth at my credit union, but was only earning savings-account level interest. Moved my money to wife's family's financial advisor of many years (in addition to his many other clients...he works for a financial services company in New England). I've met him a few times to discuss savings strategy and goals and he has been nothing but encouraging and informative, trying to get us to save as much as possible, giving us new savings goals to hit each year. He's been great, we've earned good returns, and yet...
My Concerns: I've been taking steps towards FIRE since MMM was featured in the
Washington Post, but have mostly focused on reducing spending and debt. A few months ago I started reading up on investment philosophy and took a closer look at the investments my advisor set up for me, as well as his recommendations for my 401k. I am now confused.
Here's my Roth IRA (invested through American Funds). The expense ratios are absurdly high compared to Vanguard and I'm not really sure why I'm invested in such a wide range of funds:
Fund | Percentage of My Portfolio | Expense Ratio | Allocation |
AMCAP Fund | 16% | 1.51% | U.S. Equities 78.9% Non-U.S. Equities 5.7% Cash & Equivalents 15.4% |
American Balanced Fund | 8% | 1.41% | U.S. Equities 60.9% Non-U.S. Equities 6.0% U.S. Bonds 24.9% Non-U.S. Bonds 2.9% Cash & Equivalents 5.3% |
American High-Income Trust | 7% | 1.46% | U.S. Equities 2.8% Non-U.S. Equities 0.6% U.S. Bonds 71.0% Non-U.S. Bonds 20.8% Cash & Equivalents 4.8% |
The Bond Fund of America | 7% | 1.41% | U.S. Equities 0.1% U.S. Bonds 83.6% Non-U.S. Bonds 12.6% Cash & Equivalents 3.7% |
Capital World Bond Fund | 7% | 1.70% | U.S. Bonds 40.9% Non-U.S. Bonds 54.9% Cash & Equivalents 4.2% |
Capital World Growth and Income Fund | 8% | 1.60% | U.S. Equities 40.7% Non-U.S. Equities 53.3% U.S. Bonds 0.3% Non-U.S. Bonds 0.5% Cash & Equivalents 5.2% |
EuroPacific Growth Fund | 1% | 1.62% | U.S. Equities 2.1% Non-U.S. Equities 85.5% U.S. Bonds 0.5% Non-U.S. Bonds 0.1% Cash & Equivalents 11.8% |
The Growth Fund of America | 8% | 1.45% | U.S. Equities 80.8% Non-U.S. Equities 10.2% U.S. Bonds 0.2% Cash & Equivalents 8.8% |
New Perspective Fund | 6% | 1.55% | U.S. Equities 47.4% Non-U.S. Equities 44.8% U.S. Bonds 0.2% Cash & Equivalents 7.6% |
New World Fund | 5% | 1.84% | U.S. Equities 12.5% Non-U.S. Equities 66.3% U.S. Bonds 0.7% Non-U.S. Bonds 9.6% Cash & Equivalents 10.9% |
SMALLCAP World Fund | 1% | 1.87% | U.S. Equities 49.9% Non-U.S. Equities 44.0% U.S. Bonds 0.3% Cash & Equivalents 5.8% |
U.S. Government Securities Fund | 7% | 1.43% | U.S. Bonds 96.5% Cash & Equivalents 3.5% |
Washington Mutual Investors Fund | 16% | 1.39% | U.S. Equities 89.6%, Non-U.S. Equities 6.7%, Cash & Equivalents 3.7% |
Here's my 401k. He recommended some index funds with low expenses, which I thought was the way to go, so I don't really understand why he would suggest the others:
Fund | Percentage of My Portfolio | Expense Ratio(%) | Allocation |
BlackRock US Debt Index-W | 15% | 0.05 | Bonds 83.8 Cash 16.1 |
BlackRock Russell 1000 Index-M | 15% | 0.02 | U.S. Stocks 98.5 Non-U.S. Stocks 1.0 |
BlackRock Russell 2000 Index-M | 15% | 0.06 | U.S. Stocks 93.6 Non-U.S. Stocks 1.1 Cash 4.2 Other 1.1 |
PIMCO Global Bond (Unhedged)-Inst | 10% | 0.56 | Cash 49.7 Stocks 0.0 Bonds 44.1 Other 6.2 |
T Rowe Price Blue Chip Growth Trust-T2 | 15% | 0.45 | U.S. Stocks 92.7 Non-U.S. Stocks 7.3 |
DFA U.S. Small Cap-I | 10% | 0.37 | Cash 1.1 Stocks 98.8 Foreign Stocks 0.6 |
American Funds New Perspective-R6 | 5% | 0.45 | Cash 8.1 Stocks 91.7 Bonds 0.2 Foreign Stocks 49.1 |
Thornburg International Equity | 15% | 0.6 | U.S. Stocks 7.8 Non-U.S. Stocks 87.6 Cash 4.6 |
Templeton International Smaller Companies-A2 | 5% | 0.95 | U.S. Stocks 2.7 Non-U.S. Stocks 87.1 Cash 5.2 Other 5.1 |
If you've made it this far, thanks again. Now, if you'd be so kind...I'd like to know your opinion of the situation.
My initial thought is that I'd be better off taking my money from the advisor and putting it into a Vanguard index fund, then re-allocating my 401k into the Russell 1000 and/or 2000.
How would you proceed?