Author Topic: portfolio review time  (Read 9514 times)

Frankies Girl

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portfolio review time
« on: August 10, 2013, 09:35:06 PM »

I'm finally posting all the nitty-gritty details of what I've got and I'm kind of freaked out putting all this out there, but I also need someone that is better at this than I am to give it a once over. I will be pleasantly surprised if I get more than a few (or any) responses as it seems like information overload to me, but I'm hopefully some nice folks here that know what they're doing might slog through this all.

AA that I'm shooting for is 75% stock, 25% bonds/REIT, and probably holding some small percentage of cash in a savings account for general usage. Portfolio totals somewhere in the neighborhood of $700K with what I have now and what is still to come. I'm kind of dizzy just typing that out, actually.


Cash from inheritance & my own savings/mm
~200K

Need to roll 99% that into something else - Roth IRA, add to existing Fidelity taxable account, something. I'm interested in the Lending Club, not interested in real estate investing at all.  I am not that scared of risk. I'd say on a scale of 1-10, with 1 being cash stuffed into the mattress, I'm a pretty comfortable 7. 


Fidelity IRA (inherited, MANAGED acct)
Total: 220K
42% domestic stocks
24% foreign stocks
34% bonds, short term, other

Invested in: ARDNX, BXMMX, FAUDX, FCSAX, FILFX, FNSXX, FPCIX, FPIOX, FSAMX, FSCFX, the list goes on for a while.  I'm paying in the neighborhood of 0.60% for the management fees, but they discount the other fees involved (no 12b-1 fees and such). This was the first account I inherited right after my dad's death, and I do plan to switch it to a self-managed soon, but I was feeling pretty overwhelmed up until now what with losing my dad and getting all of this.


IRA (inherited, with UBS)
Total: 27K
2 five year CDs, one maturing in Dec, one next Dec. Earning 2.75% and 3%.
Will be rolling them to the Fidelity as soon as they mature. Don't like UBS.

Both of the inherited IRAs  I have to take mandatory distributions on, but I'm taking the minimum, and will be rolling the amounts into the taxable Fidelity account starting in 2014.


Taxable brokerage acct (Fidelity)
Total: 175K
Cash: 100K
the rest in: FHIGX, FSAGX, MERFX, PATAX, SHYTX

Do not like any of the selections in here - they all appear to be dogs as far as I can tell. 


401K (Fidelity, my workplace fund)
Total: 70K
FSTVX

Just pared this down since I discovered the idea of index funds, and that my plan offered the Spartan total market index fund. But my plan selections for bonds are as follows: Blends like Fidelity Freedom target date funds (there's like 20 or more of those), FTHRX, FBNDX, FSHBX, FRTXX, and some other blends: FFFAX and FPURX. That's it other than a bunch of stock funds, so I'm inclined to do the bond/REIT in the larger IRA where I'm not restricted on selection.


IRAs (2 American Funds, one Fidelity)
Total: under 9K
Three old converted 401Ks - one is mine, two are husband's -  from previous jobs. Need to roll over the AF to Fidelity.


I think from what I've learned so far that I should sell off everything in the taxable account (minimal short term trade fee and capital gains as far as I can tell) and buy into the Spartan total market index FSTVX, and maybe some of the Spartan Global ex US Index FSGDX.

With the big inherited IRA, take it out of management and move it over to contain the bond/REIT part of my AA. I'll be needing around $175K to hit the 25% bond/REIT portion. Looking at FSITX and FSRVX with the rest in FSTVX maybe since the whole thing doesn't need to be bond/REIT. 

What about the cash - open a Roth IRA for each of us and then roll the rest to the taxable account?  Then I could take the required distributions and roll them into the Roths and also transfer from savings.

So tell me if I'm on the right track and any other ideas you might have. I'm very interested to see what if any suggestions come in. Thanks in advance if you actually got through all that to make a comment. :)




Frankies Girl

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Re: portfolio review time
« Reply #1 on: August 12, 2013, 01:17:30 PM »
I thought this would happen, but wow, 200+ views and not one comment? :D


I've already put in an order for FSTVX in the brokerage/taxable account to suck up the cash that is just sitting there, and I need to put in a sell order on the rest of the dogs it is currently holding.

I'm expecting tomorrow to get the small American Fund IRAs rolled over to the existing Fidelity accounts and will discuss what the costs will be to sell off the rest of the funds in the taxable.

Still can't make myself pull the trigger on dropping the management off of the big IRA, but I figure it's not going to kill me to let it go another week or two until I get more comfortable with the idea.

yolfer

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Re: portfolio review time
« Reply #2 on: August 12, 2013, 01:39:50 PM »
Can't speak for the other 199 people but this is too complicated for me to comment on! 3 IRAs!? I can't even figure out your total AA across all accounts... Can you?

brewer12345

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Re: portfolio review time
« Reply #3 on: August 12, 2013, 01:50:41 PM »
FG, it looks like you have a real jumble of accounts and several of them contain investments you did not make (inherited stuff).  You know where you want to be as far as a total asset allocation of 75/25.  I would first work on fleshing that out a bit (which equities?  which bonds?  etc.) and then I would start doing to portfolio rejigger.  Like you, I have several accounts across DW and my assets and I at first found it hard to see my total asset allocation.  I developed a spreadsheet where each account has its own tab and then everything is added up on a summary sheet.  On the summary sheet I calculate the AA for the total combined portfolio as well as calculate net worth.  Something like that would probably hep you see where you are now and keep track of things once you rework the whole portfolio.

aj_yooper

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Re: portfolio review time
« Reply #4 on: August 12, 2013, 02:05:33 PM »
Congratulations on your bravery!

A thought regarding your cash and taxable accounts.  If you retire in 5-10 years, I would fund Roths for yourself and husband (assuming you are both eligible); if you both are eligible, that would be $55k to $110k put into accounts that increase in value tax free.  Use your cash for this first.  So that reduces your cash and taxable to $320 or $265 depending on how long you do the Roths.  This way you are basically 're-title-ing' the cash accounts so taxes won't affect the accounts.

With regards to yourself and DH, do you keep your money separate from each other or do you commingle all the income and accounts?  In our state, an inheritance is not a part of community property, but every state does it a little differently.  So you would have to decide how you title the accounts or how you use the inherited cash and taxable accounts.  I am not trying to be unpleasant or difficult on this.  My wife and I commingle everything, including what we inherited, but every couple has their own plan. 

Does your husband also have a 401k or Roth or is he eligible for a regular IRA or SEP?  Since you have a nice stash already, I would do whatever is possible to protect income from taxes at this time.  If you co-mingle funds, I would consider his stash to be a part of the portfolio and apply the asset allocation to his assets.

I would totally max the 401k s until you early retire, again in 5-10 years, so that is $175 to $350k.  That will decrease your taxes, if you are not maxing out the 401k s now, but it might impinge on your take home pay.  I would use some of your cash to fund that, but being careful not to live larger.  Thus, you would be tucking money away tax free, but, hopefully, not tapping in too hard with the available cash.  Similarly, if you and yours have HSA max them out too.  The excess in the HSA is then like another IRA.  This strategy decreases your taxes now, but it may stress your monthly income.  The funds you put into the 401k s would then follow your asset allocation and rebalance it, if needed, without doing stuff in the taxable account. 

You may be able to roll over the UBS IRA to Fidelity now, rather than waiting for the CDs to mature.  I would call Fidelity on that.

For the time being, let the managed Fidelity IRA be until you are ready to tackle that.

I like your idea of using equity index funds in your Fidelity 401k and using the other IRAs to handle any bond index funds that you may need to get to your asset allocation of 70/30.  Your costs are thus reduced and you will be buying equities on a monthly basis to average out the cost of the equities.

I agree you should rollover the old 401k s to Fidelity.  So do that.

In the taxable account, I would sell the bond funds so you will have a bunch of cash there, but that is not a bad thing. 

Then, you have to decide how to invest in your taxable fund.  Bogleheads has very good advice on this.  I would look at their lazy portfolio ideas first.  http://www.bogleheads.org/wiki/Lazy_Portfolios  Since your AA is 70/30 and you have plenty of room in your IRAs and 401k s for bonds or REITS, that is where I would keep them, not in the taxable.  You did not comment on how much, if any, international exposure you want in your portfolio so you need to think about that. 

Best wishes.









Frankies Girl

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Re: portfolio review time
« Reply #5 on: August 12, 2013, 03:13:36 PM »
LOL! I was wondering if it was just me, or if this stuff really WAS overwhelming... glad it's NOT just me! ;)
(and honestly, I think the last 10 years or so, my dad stopped paying attention to his money and turned it all over to be professionally managed. They didn't do terrible, but I think he could have done better. But his health was slipping so I do understand it. Just confused about why he had certain accounts like the UBS at all...)

I did sit down and figure out the stock/bond allocations as they stand (it's close to a 50/50 split so a "balanced" AA) and what I actually want them to be, and will have to sell off and move quite a bit of these around.


Already talked to my guy at Fidelity, and he did tell me that while I could roll the UBS over now, it's kind of a pain (he didn't say this, but he said there wasn't a pressing reason to do so if they are maturing soon), so I don't mind waiting. The CDs mature this year and next, so it's not that long and mostly I'm going to just keep an eye on them and set a reminder so I don't forget to roll them.

Husband has no retirement plans whatsoever at his current job, so will be creating a Roth for him to cover that,  and for myself to catch the overflows. We make waaaaay under the cutoffs for opening a Roth, so no problems there.

We technically do co-mingle, but the inherited stuff is a one account holder only, so he's a beneficiary and/or named on the TOD account. My state is a community property state, but inheritances, as long as they are not placed in shared accounts, aren't counted as shared assets... not that it really matters, but was discussed with me when I received them.

Will be maxing out my 401K for the remainder of my working path. We live on less than my salary alone right now, and don't have a problem with lifestyle inflation.

What are the advantages of having international exposure? From what I've read so far, outside the U.S., the index funds aren't as profitable as the regular ol' total US index fund, so not sure why I'd want to be going into it. Open to
« Last Edit: August 12, 2013, 03:19:32 PM by Frankies Girl »

GreenGuava

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Re: portfolio review time
« Reply #6 on: August 12, 2013, 03:40:36 PM »
I thought this would happen, but wow, 200+ views and not one comment? :D

Sorry, I've been gone for a few days.

It looks like your total portfolio is around $700K - nice, by the way!  It also looks like everything either is at Fidelity or is something you're planning to move to Fidelity.   It also looks like you intend to treat your entire portfolio as one large portfolio instead of separating tax-advantaged accounts (a move I agree with, by the way).  If this is wrong, let me know and I'll give a fresh response with that difference in mind.

(BTW, I suspect you're happy at Fidelity, but it's worth noting:  if you had this at Vanguard, you could get an annual, complimentary financial planning session from a good CFP as part of their services;  however, your assets' total value and spread makes this not as difficult as it may have seemed at first)

At 25% bonds, that's $175k ;  that fits cleanly into your pre-tax IRA.  Get $175K worth of your preferred bond fund there.

At 75% stocks, if you don't want explicit international exposure, it's as simple as going to the Spartan Total (U.S.) market fund everywhere else (fortunately, it's available in your workplace plan). 

In tax-advantaged accounts, that's easy:  sell the other things and buy this fund.  In taxable, I'd turn off dividend reinvesting on all others (and buy no more of them), wait for all the gains to reach long-term status (one year since last purchase unless you're identifying distinct lots), then sell and invest the proceeds in this fund.

If you do want international exposure, it should fit cleanly into your taxable portion (this also gets you the foreign tax credit, for what that's worth).   Fidelity's total international spartan fund is actually less expensive than Vanguard's equivalent, last I checked - by four basis points, so this isn't a huge deal, but it's pretty neat.  How long this will last, I don't know - it could be a loss leader for them, as their funds aren't always operated at-cost.


What are the advantages of having international exposure? From what I've read so far, outside the U.S., the index funds aren't as profitable as the regular ol' total US index fund, so not sure why I'd want to be going into it. Open to

This is often debated, even among people who otherwise agree on most investing things.  Even Jack Bogle doesn't believe you should use market weights for US vs non-US stocks.   You'll have international market exposure through most U.S.-based companies anyway.  FWIW, I'm at 30% international in my stock allocation.

Check out the Bogleheads' Wiki on this topic for more on the debate.

brewer12345

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Re: portfolio review time
« Reply #7 on: August 12, 2013, 03:55:31 PM »
There are some truly great world class businesses no in the US indicies.  I want soem international exposure also because there is more to the world than the US (shocking, I know).  A bit under half my equity exposure is international as a result. 

Frankies Girl

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Re: portfolio review time
« Reply #8 on: August 12, 2013, 04:13:43 PM »
Sorry, I've been gone for a few days.

It looks like your total portfolio is around $700K - nice, by the way!  It also looks like everything either is at Fidelity or is something you're planning to move to Fidelity.   It also looks like you intend to treat your entire portfolio as one large portfolio instead of separating tax-advantaged accounts (a move I agree with, by the way).  If this is wrong, let me know and I'll give a fresh response with that difference in mind.


Yes, all one big portfolio as far as I am concerned. Just unfortunate that I can't squish all those accounts down into one to make it easier, but I think I'm getting the hang of it. And most of that is from my dad, which is very humbling to me.

(BTW, I suspect you're happy at Fidelity, but it's worth noting:  if you had this at Vanguard, you could get an annual, complimentary financial planning session from a good CFP as part of their services;  however, your assets' total value and spread makes this not as difficult as it may have seemed at first)

I've been quite happy with Fidelity so far. Did think about opening an account with the cash over at Vanguard, but I do like having all the accounts in one spot to be able to track and compare, and their site is VERY easy to navigate and do comparisons. I've also have my own personal adviser that is the gatekeeper for all of my accounts, and he will never change unless I request it, so I do at least get to bug him whenever I want. Not quite the same, but he's really cool with me asking lots of questions, and I'm aware he's got the company angle to work.  So while the CFP would be VERY cool, I think I'm okay with staying with Fidelity.




At 25% bonds, that's $175k ;  that fits cleanly into your pre-tax IRA.  Get $175K worth of your preferred bond fund there.

At 75% stocks, if you don't want explicit international exposure, it's as simple as going to the Spartan Total (U.S.) market fund everywhere else (fortunately, it's available in your workplace plan). 

In tax-advantaged accounts, that's easy:  sell the other things and buy this fund.  In taxable, I'd turn off dividend reinvesting on all others (and buy no more of them), wait for all the gains to reach long-term status (one year since last purchase unless you're identifying distinct lots), then sell and invest the proceeds in this fund.

If you do want international exposure, it should fit cleanly into your taxable portion (this also gets you the foreign tax credit, for what that's worth).   Fidelity's total international spartan fund is actually less expensive than Vanguard's equivalent, last I checked - by four basis points, so this isn't a huge deal, but it's pretty neat.  How long this will last, I don't know - it could be a loss leader for them, as their funds aren't always operated at-cost.

That's super! I was pretty much planning exactly what you've laid out here. I wasn't aware that you can turn off the dividend reinvesting, so that is very good to know (again, total noob up until a few months ago).



What are the advantages of having international exposure? From what I've read so far, outside the U.S., the index funds aren't as profitable as the regular ol' total US index fund, so not sure why I'd want to be going into it. Open to

This is often debated, even among people who otherwise agree on most investing things.  Even Jack Bogle doesn't believe you should use market weights for US vs non-US stocks.   You'll have international market exposure through most U.S.-based companies anyway.  FWIW, I'm at 30% international in my stock allocation.

Check out the Bogleheads' Wiki on this topic for more on the debate.


There are some truly great world class businesses no in the US indicies.  I want soem international exposure also because there is more to the world than the US (shocking, I know).  A bit under half my equity exposure is international as a result.

I was looking at FSGDX and will probably add in a bit of that to the overall stock allocation. I did read that the US market technically covers international investing through the companies that do work outside of the US, but I'd forgotten that until GreenGuava mentioned it! But this fund seems to be a solid one with lower expenses and I see no harm in adding it into my fund mix since I'm technically going to only be holding about 4 anyway.


This has been really great all of you - it has been very humbling and intimidating for me to take on all of this as I'm still a relative novice but I've learned so much in a very short period of time thanks to all of the insightful commentary offered. Really, really awesome!

grantmeaname

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Re: portfolio review time
« Reply #9 on: August 12, 2013, 04:30:04 PM »
So you have 5 IRAs, two taxable accounts, and a 401k? I'd put all the IRA money but the UBS CDs into one account now, and then move the UBS CD money to that one account, as you're planning, when each matures. I'd also move your savings into your taxable account - you can always just leave them in a money market fund like this until you know how you want to deploy them. It'll be easier for you to see all your holdings holistically if they're in three or four accounts rather than 8.

Do you really get $1200/year of value out of having the $200K IRA managed for you? All your advisor is doing is putting you in funds that cost fucktons of money for that .6%! Not to be too much of a Vanguard fanboy - the Fidelity Spartan funds are really good - but there's no reason to pay more than 20 or 30 basis points for mutual funds with a portfolio of that size. You're just throwing your returns away!

aj_yooper

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Re: portfolio review time
« Reply #10 on: August 12, 2013, 04:39:05 PM »
For you each year, I would definitely do a Roth.  You simply re-title the cash/taxable account money over time. That is a sweet wrinkle for you. 

Your husband might do better with a traditional IRA as it decreases your taxes on the $5,500 contribution, but that depends on your tax rate now and where you will be tax wise when you ER.  So, if you are at the 15% tax rate now and expect to to be at that rate in ER, then you need to decide if it would be better to pay income taxes on the $5,500 going to a Roth or save 15% of the $5,500 in taxes and pay that rate when you take the money out at 60 years of age.  I would lean to the Roth for him then too as you would only be paying the tax on the $5,500 and not on the money that it accumulates to by his age of 60, but YMMV.

http://www.forbes.com/sites/moneybuilder/2013/01/05/updated-2013-federal-income-tax-brackets-and-marginal-rates/

Rate   Single Filers   Married Joint Filers   Head of Household Filers
10%   $0 to $8,925   $0 to $17,850   $0 to $12,750
15%   $8,925 to $36,250   $17,850 to $72,500   $12,750 to $48,600
25%   $36,250 to $87,850   $72,500 to $146,400   $48,600 to $125,450
28%   $87,850 to $183,250   $146,400 to $223,050   $125,450 to $203,150

GreenGuava makes excellent points.  I also much prefer Vanguard, but Fidelity is very good.  Maybe Fidelity has freebies too; it doesn't hurt to ask.  You could get the Vanguard CFP review of your assets and that is a good thing, but you could do that later and not fuss about doing that now. 

You have $375k in cash and in your taxable account.  In your taxable, I agree with GreenGuava to buy the total market index.  It will create very few taxable events for you as it is basically everything, no need for stock turnovers.  I would not buy it all in an afternoon, but spread the purchases over say 3-6 months, buying some every week or so.  Others may have better ideas of how to do that; I just wouldn't do it all tomorrow, if you get what I mean.  (Your AA indicates 75/25 so that means $525/$175; moving all that $ will take planning) 

So that leaves $200k in cash.  I would recommend an adequate emergency fund, if you don't have one already, of say 3-12 months expenses.  You could place some in checking, savings, and possibly EE bonds.  (EE bonds are another learning experience-purchased from US Treasury.)  That should help you feel quite secure.  See Bogleheads for further information about personal finance at:  http://www.bogleheads.org/wiki/Bogleheads_personal_finance_planning_start-up_kit

Buying bonds, I think, will take more thinking on your part.  I would start reading the information about the various index funds with Fidelity and make sure you understand how they work.  Take your time.

Maxing the 401k, HSA, and Roths will take up $28.5k per year.  If you can do that with your current income, that is great so then you need to have a plan for the cash you have.  If you need to use cash to do the Roths, etc., that is just re-title-ing in a very good way.  Again, you would invest it according to your asset allocation.  When do you anticipate FI?

Do you have a mortgage?  If it is a higher rate mortgage, you could re-finance or pay it off, if you want to live in ER where you are now.  If you plan to move at ER and buy a house, you might want to hold some cash (or near cash) out, especially if ER is coming pretty soon.  What I am saying is to have a clear picture of your future plans and how the cash could be useful to you then.  If you put in into stocks, the values fluctuate and that might not work for you.

Excellent progress!  Take your time and review everyone's ideas with your needs and wants in mind. 

Best wishes.







Frankies Girl

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Re: portfolio review time
« Reply #11 on: August 12, 2013, 05:37:26 PM »
So you have 5 IRAs, two taxable accounts, and a 401k? I'd put all the IRA money but the UBS CDs into one account now, and then move the UBS CD money to that one account, as you're planning, when each matures. I'd also move your savings into your taxable account - you can always just leave them in a money market fund like this until you know how you want to deploy them. It'll be easier for you to see all your holdings holistically if they're in three or four accounts rather than 8.

Do you really get $1200/year of value out of having the $200K IRA managed for you? All your advisor is doing is putting you in funds that cost fucktons of money for that .6%! Not to be too much of a Vanguard fanboy - the Fidelity Spartan funds are really good - but there's no reason to pay more than 20 or 30 basis points for mutual funds with a portfolio of that size. You're just throwing your returns away!

Can't roll all the IRAs into one, as two of them are inherited (the biggie and the UBS CD ones) and can't be combined with "regular" IRAs/401Ks. Will be combining those two eventually, and will be rolling the three small regular ones together tho. Husband will end up with one and I'll end up with one. I agree there are too damn many accounts!

And I agree that the managed account fees aren't something I want to pay forever.  I left it alone as my dad had it set up, and plan to take it out of professional management as soon as I figured out my game plan, which is what all of this stuff is about. I don't plan on leaving it in managed format too much longer, let alone a year. :)

I'm not ruling out opening a Vanguard account, but once I switch everything over to basically be about 3-4 index funds, I think sticking with Fidelity is going to be the same cost (as someone pointed out upthread, some of the Spartan has cheaper expense ratios than Vanguard).

grantmeaname

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Re: portfolio review time
« Reply #12 on: August 12, 2013, 05:45:09 PM »
And I agree that the managed account fees aren't something I want to pay forever.  I left it alone as my dad had it set up, and plan to take it out of professional management as soon as I figured out my game plan, which is what all of this stuff is about. I don't plan on leaving it in managed format too much longer, let alone a year. :)
Ah, sorry, I must have missed that part. If you're looking for a general how-to on asset allocation, you should check out The Intelligent Asset Allocator (first couple of chapters available in full at that link, FWIW) or snoop around the Bogleheads website.

Frankies Girl

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Re: portfolio review time
« Reply #13 on: August 12, 2013, 06:07:25 PM »
For you each year, I would definitely do a Roth.  You simply re-title the cash/taxable account money over time. That is a sweet wrinkle for you. 

Your husband might do better with a traditional IRA as it decreases your taxes on the $5,500 contribution, but that depends on your tax rate now and where you will be tax wise when you ER.  So, if you are at the 15% tax rate now and expect to to be at that rate in ER, then you need to decide if it would be better to pay income taxes on the $5,500 going to a Roth or save 15% of the $5,500 in taxes and pay that rate when you take the money out at 60 years of age.  I would lean to the Roth for him then too as you would only be paying the tax on the $5,500 and not on the money that it accumulates to by his age of 60, but YMMV.

http://www.forbes.com/sites/moneybuilder/2013/01/05/updated-2013-federal-income-tax-brackets-and-marginal-rates/

Rate   Single Filers   Married Joint Filers   Head of Household Filers
10%   $0 to $8,925   $0 to $17,850   $0 to $12,750
15%   $8,925 to $36,250   $17,850 to $72,500   $12,750 to $48,600
25%   $36,250 to $87,850   $72,500 to $146,400   $48,600 to $125,450
28%   $87,850 to $183,250   $146,400 to $223,050   $125,450 to $203,150

GreenGuava makes excellent points.  I also much prefer Vanguard, but Fidelity is very good.  Maybe Fidelity has freebies too; it doesn't hurt to ask.  You could get the Vanguard CFP review of your assets and that is a good thing, but you could do that later and not fuss about doing that now. 

You have $375k in cash and in your taxable account.  In your taxable, I agree with GreenGuava to buy the total market index.  It will create very few taxable events for you as it is basically everything, no need for stock turnovers.  I would not buy it all in an afternoon, but spread the purchases over say 3-6 months, buying some every week or so.  Others may have better ideas of how to do that; I just wouldn't do it all tomorrow, if you get what I mean.  (Your AA indicates 75/25 so that means $525/$175; moving all that $ will take planning) 

So that leaves $200k in cash.  I would recommend an adequate emergency fund, if you don't have one already, of say 3-12 months expenses.  You could place some in checking, savings, and possibly EE bonds.  (EE bonds are another learning experience-purchased from US Treasury.)  That should help you feel quite secure.  See Bogleheads for further information about personal finance at:  http://www.bogleheads.org/wiki/Bogleheads_personal_finance_planning_start-up_kit

Buying bonds, I think, will take more thinking on your part.  I would start reading the information about the various index funds with Fidelity and make sure you understand how they work.  Take your time.

Maxing the 401k, HSA, and Roths will take up $28.5k per year.  If you can do that with your current income, that is great so then you need to have a plan for the cash you have.  If you need to use cash to do the Roths, etc., that is just re-title-ing in a very good way.  Again, you would invest it according to your asset allocation.  When do you anticipate FI?

Do you have a mortgage?  If it is a higher rate mortgage, you could re-finance or pay it off, if you want to live in ER where you are now.  If you plan to move at ER and buy a house, you might want to hold some cash (or near cash) out, especially if ER is coming pretty soon.  What I am saying is to have a clear picture of your future plans and how the cash could be useful to you then.  If you put in into stocks, the values fluctuate and that might not work for you.

Excellent progress!  Take your time and review everyone's ideas with your needs and wants in mind. 

Best wishes.


We are currently and will be 15% tax rate in retirement. Will be holding out about 15K for emergency funds. Retirement in approximately 5 years for me, a bit longer for husband. Will be maxing the 401k and the Roths. Not familiar with the HSA, so I'll need to do some more reading on that.

We have a mortgage and refinanced last year to 3.75%. We'll be paying it off in a year or two with our future savings (we live on about 50% of our takehome). Don't know exactly where we'll ultimately end up retiring to (husband has no input other than "that sounds nice"... sigh), but we'll be looking at similar housing costs in a equal or lower COL area.

It's really scary how all of this is coming together... I still am in awe about the fact that we're technically FI, and I'll be able to quit my day job in 5 years or less. And the fact that I'm actually understanding all of this (mostly) is pretty great too.


GreenGuava

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Re: portfolio review time
« Reply #14 on: August 13, 2013, 11:28:05 AM »
(BTW, I suspect you're happy at Fidelity, but it's worth noting:  if you had this at Vanguard, you could get an annual, complimentary financial planning session from a good CFP as part of their services;  however, your assets' total value and spread makes this not as difficult as it may have seemed at first)

I've been quite happy with Fidelity so far. Did think about opening an account with the cash over at Vanguard, but I do like having all the accounts in one spot to be able to track and compare, and their site is VERY easy to navigate and do comparisons. I've also have my own personal adviser that is the gatekeeper for all of my accounts, and he will never change unless I request it, so I do at least get to bug him whenever I want. Not quite the same, but he's really cool with me asking lots of questions, and I'm aware he's got the company angle to work.  So while the CFP would be VERY cool, I think I'm okay with staying with Fidelity.

Very good reasons for staying at Fidelity.  And there are ways to get a no-conflict CFP if you ever need one anyway.



At 25% bonds, that's $175k ;  that fits cleanly into your pre-tax IRA.  Get $175K worth of your preferred bond fund there.

At 75% stocks, if you don't want explicit international exposure, it's as simple as going to the Spartan Total (U.S.) market fund everywhere else (fortunately, it's available in your workplace plan). 

In tax-advantaged accounts, that's easy:  sell the other things and buy this fund.  In taxable, I'd turn off dividend reinvesting on all others (and buy no more of them), wait for all the gains to reach long-term status (one year since last purchase unless you're identifying distinct lots), then sell and invest the proceeds in this fund.

If you do want international exposure, it should fit cleanly into your taxable portion (this also gets you the foreign tax credit, for what that's worth).   Fidelity's total international spartan fund is actually less expensive than Vanguard's equivalent, last I checked - by four basis points, so this isn't a huge deal, but it's pretty neat.  How long this will last, I don't know - it could be a loss leader for them, as their funds aren't always operated at-cost.

That's super! I was pretty much planning exactly what you've laid out here. I wasn't aware that you can turn off the dividend reinvesting, so that is very good to know (again, total noob up until a few months ago).

Glad I could help. 




What are the advantages of having international exposure? From what I've read so far, outside the U.S., the index funds aren't as profitable as the regular ol' total US index fund, so not sure why I'd want to be going into it. Open to

This is often debated, even among people who otherwise agree on most investing things.  Even Jack Bogle doesn't believe you should use market weights for US vs non-US stocks.   You'll have international market exposure through most U.S.-based companies anyway.  FWIW, I'm at 30% international in my stock allocation.

Check out the Bogleheads' Wiki on this topic for more on the debate.


There are some truly great world class businesses no in the US indicies.  I want soem international exposure also because there is more to the world than the US (shocking, I know).  A bit under half my equity exposure is international as a result.

I was looking at FSGDX and will probably add in a bit of that to the overall stock allocation. I did read that the US market technically covers international investing through the companies that do work outside of the US, but I'd forgotten that until GreenGuava mentioned it! But this fund seems to be a solid one with lower expenses and I see no harm in adding it into my fund mix since I'm technically going to only be holding about 4 anyway.

Look also at FSIVX - it's a total international index and has a lower expense ratio.  But both are fine funds.  Remember to include this in the taxable section to maximize your benefit - if it's held in a tax-advantaged account, you don't get the foreign tax credit.

This has been really great all of you - it has been very humbling and intimidating for me to take on all of this as I'm still a relative novice but I've learned so much in a very short period of time thanks to all of the insightful commentary offered. Really, really awesome!

Let us know if there are any other questions we can help you with.

Frankies Girl

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Re: portfolio review time
« Reply #15 on: August 13, 2013, 07:20:12 PM »
Spoke with my Fidelity guy today and he confirmed that he is a CFP, and available to me no matter what (if I drop the managed account to self-manage). For free. :)


brewer12345

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Re: portfolio review time
« Reply #16 on: August 13, 2013, 08:40:16 PM »
Well, FG, I am a CFA and would be happy to offer thoughts on your portfolio here for nothing as well.

Frankies Girl

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Re: portfolio review time
« Reply #17 on: August 14, 2013, 09:48:29 AM »
Well, FG, I am a CFA and would be happy to offer thoughts on your portfolio here for nothing as well.

Awesome! Would love to hear your suggestions as well - the more information I can get, the better able to understand all of this. Thank you for any input you'd like to offer!


I figured (rightly it seems) that there were quite a few very savvy financial gurus on the forum, but it's kind of nice knowing that even though my funds aren't at Vanguard, Fidelity isn't too shabby with their offerings either. (It was mentioned upthread that Vanguard gives you free CFP sessions)


brewer12345

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Re: portfolio review time
« Reply #18 on: August 14, 2013, 02:48:48 PM »
Well, FG, I am a CFA and would be happy to offer thoughts on your portfolio here for nothing as well.

Awesome! Would love to hear your suggestions as well - the more information I can get, the better able to understand all of this. Thank you for any input you'd like to offer!


I figured (rightly it seems) that there were quite a few very savvy financial gurus on the forum, but it's kind of nice knowing that even though my funds aren't at Vanguard, Fidelity isn't too shabby with their offerings either. (It was mentioned upthread that Vanguard gives you free CFP sessions)

Like I said, I think you want to figure out a portfolio allocation and then spread it across the various accounts based on tax efficiency.  I would stick with index funds and index ETFs, and if you have sufficient risk tolerance and a long timeline (ER portfolio) I would look for an equity allocation of 60% or more given all the research suggesting as much.  In addition to foreign and domestic equity and fixed income, I would also suggest evaluating a 5 to 10% allocation to merger arbitrage funds (I use MERFX and ARBFX).

grantmeaname

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Re: portfolio review time
« Reply #19 on: August 14, 2013, 03:06:23 PM »
Why do you recommend merfx and arbfx? They have no history of doing much of anything, and your stance on indices suggests you believe the market is basically efficient.

brewer12345

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Re: portfolio review time
« Reply #20 on: August 14, 2013, 03:10:24 PM »
Why do you recommend merfx and arbfx? They have no history of doing much of anything, and your stance on indices suggests you believe the market is basically efficient.

They are a stand in for something like a 1 to 3 year maturity piece of fixed income with the possibility of some outsized gains if we get into a merger frenzy yet again.  Portfolio ballast and a volatility reducer and minimal correlation to anything else.

aj_yooper

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Re: portfolio review time
« Reply #21 on: August 15, 2013, 07:11:11 AM »
All About Asset Allocation  (2010) by Richard Ferri is a very good introduction to asset allocation.  His advisory firm has over $1B in assets under management and he is well regarded by Bogleheads.  His recommendations are to simply use index funds.