Hello all,
I have started taking a serious interest in my future financial situation, and need some advice to see if I'm on the right track. I'm 26, 3 years out of college, and have a good job that will certainly turn into a great career. I am currently in the 25% tax bracket.
I have about $90k in savings account right now, earning 1%. I have been saving up for a down-payment on a house for the last year, so that is why I have so much stocked away. I've been waiting for the housing bubble to burst around here, as I believe it is artifically high. In the meantime, I want to start putting my money into something else that has a higher interest rate (more on that later).
My employer offers both a 401(k) and Roth 401(k). I put away 10% (5% in each) of my income in that. My previous employer had a 401k through the same company, but I rolled that over into a Rollover IRA. Both the 401k and Roth 401k use the same asset allocation, as follows:
Stocks: 85%
Bonds: 10%
Money Market: 5%
50% of my contribution goes to a target retirement fund, with the rest being 30% equities, 15% Vanguard Index, and 5% Vanguard Bond fund. Is this good? How should I rebalance?
My IRA is really messed up, probably a consequence of my rollover. It shows 90% of it in stocks, although I have 30% in stocks, 30% in Real Estate, and 30% in short term bonds. I am assuming the 90% number is not entirely true, as the 30% invested in Real Estate is the equity securities of real estate companies. The bond fund is giving me no returns and I want to switch that money over to the real estate fund is which is absolutely killing.
So is this sufficient? Should I start putting my savings more into the IRA, or contribute more to my 401k? Please keep in mind I have no debt, but if I buy a house, my monthly income will go more towards that mortgage.