Author Topic: Investing guidance  (Read 1105 times)

BFive55

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Investing guidance
« on: February 11, 2017, 11:31:03 AM »
Hi! I recently came upon this site (about 3 weeks ago) and have really enjoyed reading a lot about what people can accomplish. It's pretty cool.

So I posted on Bogleheads but wanted to just get a little more feedback.

I'm allocating about $50,000 I've saved up into a few index funds. I have a Roth at Vanguard and have maxed it for the year. I also have a taxable account.

I put everything into VTSAX so far. It's simple, tax efficient based on how Vanguard structures their mutual funds from what I understand, and does pretty decent historically.

I have enough money left over to do a few things and wasn't sure: buy the minimum for an international funds, a small value fund, and a bond fund. Or some other combination involving two of those and putting the left over into VTSAX (in my taxable account). OR option 3, sell some of the mutual funds from BlackRock (high fees) and use those to buy bonds in my Roth and the left over to buy the other two plus VTSAX.

I also plan on doing $500/month into VTSAX at the moment and have that set up into my brokerage (will change to Roth in January next year and change up the automatic investment allocation). I want to increase that as I get pay raises and do a twice yearly "extra money" beyond my emergency fund and X amount in my checking into investments.

I'm a government worker. I live in a high cost of living (and the commute would be terrible if I moved someone more reasonable, telework is impossible). I like the concept of FIRE but I don't think it will be quite possible... a lot of money is locked up in or pensions, approximately 12% of our salary goes to pension payments (the pension will be great and be close to 85%).

But I want to save like the pension may get reduced at some point... know how well managed (LOLOL) public pension systems are.... sigh. I wonder why our pension system just can't be placed in a place like Vanguard.... ugh. They apparently paid like 400 MILLION in fees two years ago (I don't have current numbers).

My risk tolerance is pretty high. I had investments during 2008/9 and held onto them. It wasn't much so with the stock market rise it really didn't add to be all that much.

There is ICMA through work but I'm not really impressed with the fees they charge for management.

Any advice is appreciated! :)
« Last Edit: February 11, 2017, 11:39:07 AM by BFive55 »

MDM

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Re: Investing guidance
« Reply #1 on: February 11, 2017, 04:39:32 PM »
But I want to save like the pension may get reduced at some point...
Based on that, why Roth instead of traditional?

MustacheAndaHalf

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Re: Investing guidance
« Reply #2 on: February 11, 2017, 09:02:17 PM »
That's quite the wall of text, but I gathered this:
* you're 100% Vanguard Total Stock Market right now
* investing $500/mo in taxable brokerage which will become an IRA

For now it sounds reasonable to put $5500/year into an IRA and buy Vanguard Total Stock Market with it.

It would be better to allocate 1/5th to international, which is the level Vanguard considers the best "bang for the buck".  That ensures the highest chance of benefiting from holding both international and US.  It's legit to have higher allocations, but 20% is a good starting point for someone who is scared of any international.

At Vanguard international works pretty much the same way as US: it's thousands of stocks purchased by the fund.  But being international means some characteristics are different - they might be more value oriented than US stocks, for example.  And that varies over time.  Some decades US will outperform, some decades international will be higher.  Nobody knows in advance, so diversification let's you grab more of the overall performance.