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Learning, Sharing, and Teaching => Investor Alley => Topic started by: Sebastian on June 10, 2019, 06:03:24 AM

Title: It's been awhile and need some help with asset allocation
Post by: Sebastian on June 10, 2019, 06:03:24 AM

Hi Fam!

It's been quite sometime since I've been on these forums. I've mostly taken the set it and forget it method when it comes to my investments (started with a negative net worth before I saw this site 6 years ago), but I just got a new job and when I was about to sign up for my 401k it made me think I should reevaluate where I am and what I should be investing in at this time.

Here are my current financial figures:

Age: 32 and married
Investments = 114k
- Old employer's 401k = $45k this is all going towards an S&P 500 Index Fund
- Roth IRA = $45K Vanguard's VTTSX 2060 Retirement fund
- Rollover IRA = $24k Vanguard's VTSAX Share

A couple questions:

1) Should I take my old employer's 401k and dump it into my already existing rollover IRA or is it better to create another rollover IRA?
2) When dealing with AA should I look at the % based across all accounts? This one kind of confuses me because the Roth IRA already has a preset AA and it automatically shifts over to bonds as I get older. So how should I take that into consideration with my other accounts? 6 years ago I was hardcore aggressive and wanted everything in stocks, but now that I'm getting older I feel like I should start prioritizing AA.

Thanks for any help and insight!!

Title: Re: It's been awhile and need some help with asset allocation
Post by: RWD on June 10, 2019, 07:57:51 AM

1) Moving the old 401k to the existing rollover IRA should be fine.
2) You should be considering your portfolio as a whole. So yes, you need to take into account whatever percentage of bonds VTTSX is currently holding. At age 32 and only $114k in investments I think you should still be quite aggressive in your asset allocation.

Title: Re: It's been awhile and need some help with asset allocation
Post by: Abe Froman on June 10, 2019, 08:13:59 AM

Hi Sebastian - as always when reading info on the internet - take it with a grain of salt - and gather a wide range of ideas.

If I were in your shoes I would:

• Review your old 401K offerings: It may be that they offer access to funds that you may not be able to get through your own Vanguard accounts (access to DFA for example). If you don't mind having two accounts you can just as well leave it there. I did this with my old 401K at Fidelity - I left it there and have dividends auto-buy into those 2 new zero-expense funds.
• Review your whole asset allocation across all accounts. If you are in a target date fund (these are infamous for being bond heavy early) it may be wise to focus 401K to be more equity heavy. But to answer the HOW - you need to decide on what is appropriate for your situation - that is - how much equity vs how much fixed income/bonds. A good article that guided me is here. https://paulmerriman.com/how-much-investment-risk-should-you-take/ (https://paulmerriman.com/how-much-investment-risk-should-you-take/)
  

Title: Re: It's been awhile and need some help with asset allocation
Post by: MDM on June 10, 2019, 09:46:35 AM

Quote from: Sebastian on June 10, 2019, 06:03:24 AM

1) Should I take my old employer's 401k and dump it into my already existing rollover IRA or is it better to create another rollover IRA?
2) When dealing with AA should I look at the % based across all accounts?

1. Depends to some extent on whether you might need to use the backdoor Roth process (https://www.bogleheads.org/wiki/Backdoor_Roth), and the investment options and fees in the old and new 401k plans.
2. Yes