Author Topic: Repatriating: Starting Off on the Right Foot  (Read 1824 times)

9ft5wt

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Repatriating: Starting Off on the Right Foot
« on: April 21, 2015, 01:40:23 PM »
Hello Investor Mustachians,

My wife and I are moving back to the US in June and we want to make sure that we're investing in the best possible funds now that tax-deferred accounts are available to us for the first time. We hope to achieve a nicely diversified portfolio, and to retire, best case scenario, in 15 years.

I am new to any understanding of personal finance, and have been learning as much as possible over the past 8 months. I have learned a huge amount from this forum and MMM, but this learning has mainly served to illuminate how much I don't know about personal finance. Any help or advice you could give is greatly appreciated.

Current Details:

We are both 31 years old, no kids, no debt.

Cash: 80k. This was originally intended as a big down payment, but will now not be used for that.

Investments: Taxable Vanguard VASGX: 75k.

Salaries:
Her: 85k with additional 9% annual non-elective contribution into pension plan, fully-vested after 3 years.
Me: 85k with 6% employer match.

Investment Options:
We are offered a "Tax Deferred Annuity 403b" and a "Pension Plan" for my wife's 9% non-elective contribution through TIAA-Cref, with a range of funds. Is there anything that I need to be aware of regarding this Tax Deferred Annuity 403b or does it function essentially the same as a 401k? Looks like the 9% non-elective is taxable.

Fund Options include Equities as either Variable Annuities or Mutual Funds, 'Fixed Income' as either Variable Annuities or Mutual Funds, Money Markets as Variable Annuities, and also Guaranteed Annuity and a Multi-Asset Variable Annuity. In my limited understanding of investments, I've narrowed those choices down to the Vanguard Mutual Funds within the Equities Category, because I haven't heard many good things about annuities. The expense ratios on the funds there are pretty gnarly, except for Vanguard REIT Index Fund-Admiral (VGSLX) at .1% and the Vanguard Small-Cap Index Fund-Admiral (VSMAX) at .09%.

The total list of choices within the Equities Category is as follows:

Variable Annuities
CREF Equity Index Account QCEQRX @ .39%
CREF Growth Account QCGRRX @ .42%
CREF Stock Account QCSTRX @ .46%
Mutual Funds
American Funds SMALLCAP World Fund R6 RLLGX @ .71%
Nuveen Mid-Cap Index FIMEX @ .56%
Vanguard Equity Index Fund-Admiral VEIRX @ .20%
Vanguard REIT Index Fund-Admiral VGSLX at .1%
Vanguard Small-Cap Index Fund-Admiral VSMAX at .09%
Wells Fargo Advantage Emerging Markets EMGNX @ 1.22%

My current understanding is pointing me towards the Vanguard Funds for both our 403b's and my wife's 9% non-elective. Does anyone concur or not concur?

With 75k in a taxable VASGX account already, where do you think the best allocation of our tax-deferred contributions should go among these funds? Should it be diversified in any way?

Should we continue contributing all leftover savings into our VASGX taxable account?

And finally, we should dump most of that 80k in cash into our taxable account too, right?

If there are any other words of wisdom regarding how we can set ourselves up properly as we wade into the US investing ecosystem for the first time, please let me know.

THANK YOU

boulder3381

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Re: Repatriating: Starting Off on the Right Foot
« Reply #1 on: April 21, 2015, 02:09:53 PM »
Without specifically addressing all your questions.  Yes, put money in whatever has the lowest cost for investments and is working for you. 


As for putting more money into a taxable account,  have you maxed all your tax deductions?


http://www.madfientist.com/after-tax-contributions/


http://www.madfientist.com/front-loading/


http://www.madfientist.com/ultimate-retirement-account/

forummm

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Re: Repatriating: Starting Off on the Right Foot
« Reply #2 on: April 21, 2015, 02:38:58 PM »
The only thing I've seen with lower expenses than Vanguard is the TSP for federal employees. I always recommend Vanguard.

9ft5wt

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Re: Repatriating: Starting Off on the Right Foot
« Reply #3 on: April 23, 2015, 01:04:50 PM »
Thanks for the replies. I know Vanguard is always what is most recommended. We have 75-80k already in a taxable VASGX which is comprised of these funds at these percentages:
Vanguard Total Stock Market Index - Investor Shares 55.8%
Vanguard Total International - Investor Shares 24.1%
Vanguard Total Bond Market II Investor Shares 16.1%
Vanguard Total International Bond Market Investor Shares 4%

Based on my readings, it seems as though we'd want no more than 10% in the REIT VGSLX, if anything at all if we listen to JCollins. But, if we're going to do it, the tax-advantaged 403b is the way to go. Also, we wouldn't want much more than 5% in the small-cap VSMAX, especially since we hold some small-cap stocks within our VASGX fund.

Our Vanguard options for the 403b and pension are these three:

Vanguard Equity Index Fund-Admiral VEIRX
Vanguard REIT Index Fund-Admiral VGSLX
Vanguard Small-Cap Index Fund-Admiral VSMAX

What are your thoughts on investing the 403b maximum in the Equity Index Fund, and investing the pension amount ($7650/yr) in VSMAX?

As I am super new to this, I'm having a hard time understanding how the Equity Index Fund differs from a straight Index Fund.

Again, thanks for all of your help.