Author Topic: Reallocation? Where to put more money?  (Read 5752 times)

MM_MG

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Reallocation? Where to put more money?
« on: May 08, 2015, 11:28:24 AM »
Hey everyone. 

First post on here...the wife and I have been reading as much MMM as we can since finding it a few months back.  Love the information we find here and the inspiration to improve all aspects of our lives.   We are about to contribute more money to our future and I thought I'd see if we should do anything differently with our retirement savings.

Current total retirement savings:  $560,658.61

MM_MG ($347,241.21)

Roth IRA:  Vanguard STAR FUND (VGSTX)  $34,946.56
401K:  Target Retirement 2040 Trust II  $244,147.93  (maxed with 6% employer contribution)
            Vanguard Retirement Savings Trust III  $10,146.72  (this was an old rollover that I parked here and never moved (facepunch) and need to do so)
Defined benefit/pension:   ~$58,000  (4% employer only contribution, no options to manage)

Mrs_MM_MG ($213,417.40)

Roth IRA:  Vanguard Wellington Fund Investor Shares (VWELX)  $58,801.47
403b: $154,615.93  (can no longer contribute to this account)
     Eaton Vance Atlanta Capital SMID-Cap Fund Class I    $16,330.00
     Vanguard 500 Index Fund Investor Shares                  $60,359.29
     Vanguard International Growth Fund Investor Shares  $12,703.53
     Vanguard PRIMECAP Fund Investor Shares                 $35,999.98
     Vanguard Target Retirement 2040 Fund                       $569.33
     Vanguard Windsor II Fund Investor Shares                  $28,653.42

Not necessarily looking to retire early, just seeking to be financially independent as soon as possible.
I don't actively manage my accounts, just want to save and not worry about it.

Thinking about contributing $11,000 to backdoor Roth IRAs now.  Have another ~$30K+ we can invest.  We are thinking about just opening up a taxable account and starting to dump surplus money (now that we've cut our spending!) in there each month.  Rational:  we can access this later if we want to invest in real estate, emergency fund, or need it for kids education expenses 10+ years down the road.

1) Should any of the above be allocated to different funds?
2) If we put money into another account at Vanguard, where is the best place to put it?

I'm sure I'm missing a ton of information, but I'd love to hear some input from the MMM community.

Thanks!



MM_MG

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Re: Reallocation? Where to put more money?
« Reply #1 on: May 08, 2015, 03:07:37 PM »
Nobody?

Did I ask a bad question?

Keekster

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Re: Reallocation? Where to put more money?
« Reply #2 on: May 08, 2015, 03:12:49 PM »
VTSAX (Total US) and VTIAX (Total International) are two funds that will simplify your portfolio yet cover the entire stock market in a low cost manner. Most people allocate between 20-40% in the international fund and the rest to the US index fund.

30French

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Re: Reallocation? Where to put more money?
« Reply #3 on: May 08, 2015, 03:32:45 PM »
In order to know where to put the money you need to know your target asset allocation.

Maybe start here?
https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_philosophy

MM_MG

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Re: Reallocation? Where to put more money?
« Reply #4 on: May 08, 2015, 11:35:53 PM »
VTSAX (Total US) and VTIAX (Total International) are two funds that will simplify your portfolio yet cover the entire stock market in a low cost manner. Most people allocate between 20-40% in the international fund and the rest to the US index fund.

Thanks for the reply.  Our balance was (at least of 1/31):
Cash 1.47%
US Stocks 69.34%
Non-US Stocks 17.94
Bonds 10.69
Other 0.56

I don't necessarily need it simpler, I just want to make sure our assets are properly positioned.  If I swapped the cash to non-US stocks it would bring that % up a bit.  But I agree we should move to ~30% international. 

MM_MG

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Re: Reallocation? Where to put more money?
« Reply #5 on: May 08, 2015, 11:39:11 PM »
In order to know where to put the money you need to know your target asset allocation.

Maybe start here?
https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_philosophy

Thanks for the link.

MM_MG

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Re: Reallocation? Where to put more money?
« Reply #6 on: May 08, 2015, 11:39:59 PM »
Anybody else? 

130+ views and only 2 replies? 

Dodge

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Re: Reallocation? Where to put more money?
« Reply #7 on: May 08, 2015, 11:51:29 PM »
Anybody else? 

130+ views and only 2 replies?

Can't say why the others didn't reply, but the first few times I clicked your thread, the big block of text scared me off.  "I don't have time to go through all those numbers/funds right now (especially since the fees aren't listed)", and "What's the question again?" are what I kept thinking.

In any case, I don't see any drastic mistakes here.  I'd personally consolidate everything down to the Three Fund portfolio, as it seems a bit all over the place.  Why have so many different type of balanced funds, sometimes in the same account as normal funds?  Do you have a defined Asset Allocation?  Like 48/32/20 US/International/Bonds ?

All you really need is:

Total US Stock Market - 3796 Stocks - 0.05% fee
Total Bond Market - 7477 Bonds - 0.07% fee
Total International Stocks - 5905 Stocks - 0.14% fee

Or just a single balanced fund, replicated across all your accounts.  You seem partial to the Target Retirement 2040 fund, which I think would be a great choice :)

MM_MG

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Re: Reallocation? Where to put more money?
« Reply #8 on: May 09, 2015, 12:04:11 AM »
Anybody else? 

130+ views and only 2 replies?

Can't say why the others didn't reply, but the first few times I clicked your thread, the big block of text scared me off.  "I don't have time to go through all those numbers/funds right now (especially since the fees aren't listed)", and "What's the question again?" are what I kept thinking.

In any case, I don't see any drastic mistakes here.  I'd personally consolidate everything down to the Three Fund portfolio, as it seems a bit all over the place.  Why have so many different type of balanced funds, sometimes in the same account as normal funds?  Do you have a defined Asset Allocation?  Like 48/32/20 US/International/Bonds ?

All you really need is:

Total US Stock Market - 3796 Stocks - 0.05% fee
Total Bond Market - 7477 Bonds - 0.07% fee
Total International Stocks - 5905 Stocks - 0.14% fee

Or just a single balanced fund, replicated across all your accounts.  You seem partial to the Target Retirement 2040 fund, which I think would be a great choice :)

Thanks Dodge.  Much appreciated.

Yeah, when I typed it up I thought it might be too much.  But I hit "post" nonetheless. 

Funny the allocation on my wife's account was done by none other than Bill Bengen himself years ago (long story).  We've never really bothered to reallocate since then.  Like I said, we really take a "hands off" approach to investing, but now that we've started paying more attention it seemed like we might need to make some changes, hence the original post.  Thanks again!

Dodge

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Re: Reallocation? Where to put more money?
« Reply #9 on: May 09, 2015, 12:12:01 AM »
Anybody else? 

130+ views and only 2 replies?

Can't say why the others didn't reply, but the first few times I clicked your thread, the big block of text scared me off.  "I don't have time to go through all those numbers/funds right now (especially since the fees aren't listed)", and "What's the question again?" are what I kept thinking.

In any case, I don't see any drastic mistakes here.  I'd personally consolidate everything down to the Three Fund portfolio, as it seems a bit all over the place.  Why have so many different type of balanced funds, sometimes in the same account as normal funds?  Do you have a defined Asset Allocation?  Like 48/32/20 US/International/Bonds ?

All you really need is:

Total US Stock Market - 3796 Stocks - 0.05% fee
Total Bond Market - 7477 Bonds - 0.07% fee
Total International Stocks - 5905 Stocks - 0.14% fee

Or just a single balanced fund, replicated across all your accounts.  You seem partial to the Target Retirement 2040 fund, which I think would be a great choice :)

Thanks Dodge.  Much appreciated.

Yeah, when I typed it up I thought it might be too much.  But I hit "post" nonetheless. 

Funny the allocation on my wife's account was done by none other than Bill Bengen himself years ago (long story).  We've never really bothered to reallocate since then.  Like I said, we really take a "hands off" approach to investing, but now that we've started paying more attention it seemed like we might need to make some changes, hence the original post.  Thanks again!

No problem.  If this is your idea of "hands off" approach to investing, I think you'll be just fine :)  Even if you kept as things are going, and changed nothing, you'll be fine, as long as you don't panic sell during a crash...and since it doesn't seem like you have a defined plan, that's probably your biggest risk factor right now.

MM_MG

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Re: Reallocation? Where to put more money?
« Reply #10 on: May 09, 2015, 12:16:07 AM »
No problem.  If this is your idea of "hands off" approach to investing, I think you'll be just fine :)  Even if you kept as things are going, and changed nothing, you'll be fine, as long as you don't panic sell during a crash...and since it doesn't seem like you have a defined plan, that's probably your biggest risk factor right now.

LOL! Thanks.

Is it bad to "secretly" wish for another crash so I can take advantage of the sale?

Yeah, agreed…a more defined plan is needed. 

Heckler

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Re: Reallocation? Where to put more money?
« Reply #11 on: May 10, 2015, 03:16:37 AM »
In order to know where to put the money you need to know your target asset allocation.

Maybe start here?
https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_philosophy

This, and all the associated info therein will help you more than a few more replies here will.


Start at the startline though.

http://www.bogleheads.org/wiki/Getting_started

Workinghard

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Re: Reallocation? Where to put more money?
« Reply #12 on: May 10, 2015, 04:13:25 AM »
I don't have any specific advice but I'm also a big fan of the 3 index fund approach. I also like having investments in a mix of accounts, 401k/tIRAs, Roth IRAs, and taxable accounts. It allows a lot more flexibility as you start transitioning to retirement and doing rollovers to Roths before taking SS and RMDs kick in.

thedayisbrave

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Re: Reallocation? Where to put more money?
« Reply #13 on: May 10, 2015, 08:33:03 AM »
You're not in a bad spot, but you could do some more simplification in some accounts to make it even easier on yourself.  For example, the Windsor Fund and Target Retirement fund both have overlap with what you already have in MRS_MM_MG's 403b.  And get the heck out of that Eaton Vance fund with the 0.98% expense ratio.  You've got the 500 fund and an international fund... are you offered any low expense bond funds? If so I'd take the Windsor, Target retirement, and Eaton Vance fund proceeds and roll them into more of a 3 fund portfolio.  Easy to manage (just re-balance yearly) and way less overlap.

Also, you have more than $50K in VWELX in your Roth which should qualify you for Admiral shares - 0.26% ER vs 0.18% ER for the same exact fund.  I know there are some limitations with share classes regarding tax advantaged employee accounts but I don't believe a Roth is one of them... check on that!