What should I do with this over-diversified Roth I took back from an adviser?

[greenjb]

Hey gang,

Inspired by this board, I recently liberated a Roth IRA worth about $39K from an investment adviser who was charging 1% to manage it and (amazingly, to me) had it spread across 14 different funds. I moved it over to Vanguard, but now I need advice on what to do with it: should I liquidate it and reinvest in Vanguard funds? If so, which ones? Or should I keep the funds with low expense ratios and only liquidate and reinvest the expensive ones? Advice would be greatly appreciated. I've included an attachment that I hope will display the 14 funds in which the money is currently invested, along with expense ratios, etc.

As for me: 44, married, 2 kids, not planning to retire early, have an additional $350K in a 401(k) that's split 70-30 between traditional IRA and Roth. I'm not expecting to need the money in the $39K Roth till I'm 70 or so, so I'm looking at a 25 year or so investment horizon. Eager to hear what the Mustachian hive mind recommends.

[Morning Glory]

I recently transferred a Roth and a taxable account from Wealthfront to Vanguard. I sold the ones with shitty expense ratios and bought VTSMX. I kept the ones with good expense ratios. Vanguard charges a $7 commission for each non-Vanguard fund you sell.

[MustacheAndaHalf]

It could even be more expensive for mutual funds from other companies.  Here's the overview page on Vanguard:
https://investor.vanguard.com/investing/investment-fees

I'd favor selling the 1.4% and 0.7% expense ratio funds solely based on expense ratio.

The "banks" fund assumes knowledge of banks doing better than the broad market.  Not recommended, and with a 0.44% expense ratio might be a good choice for selling.

Do you prefer an "all in one fund", like a target retirement fund?  They cost a little bit more, but rebalance automatically as retirement approaches.  You could start there.

Later you can split your retirement investments into US market, international market, and bonds as you see fit.  It saves a little on expense ratios and lets you have more control.

[greenjb]

Do you prefer an "all in one fund", like a target retirement fund?  They cost a little bit more, but rebalance automatically as retirement approaches.  You could start there.

I thought about a target date fund -- but given that I'm not really counting on this money for retirement (I have other retirement savings, most in target date funs), it struck me that maybe I don't want all my savings shifting into more conservative investments as I approach 65. I gather that's the whole appeal of target date funds, no?

If I do apportion the funds myself, what Vanguard funds would you recommend? Some combination of total US stock market, total int'l stock market, and US bonds? I don't mind doing the minimal extra work to save a bit on expense ratios. Thanks!

[Radagast]

First, come up with an overall plan that applies to all of your accounts. The three "total" funds are a good starting point for something like 45% total US, 30% total international, 25% total bond. After that match all your accounts to the plan, using the best available fund in each. For example an employer account might only have an S&P 500 fund which is good, so use that for part the US portion.

Personally I would sell all of those. $90 is worth it to not have 13 loose ends dangling around with fractionally higher expense ratios. The mutual fund has a higher sell fee but also a higher expense ratio so dump it. The only one you might consider keeping is SCHB, but I would sell that too for simplicity.

[Car Jack]

*My* standard is that until you hit $100k, you don't need to diversify into bonds or international.  Buy all Total US Stock admiral.  It gives you the best diversification, cost and return at the expense of some volatility.  When you hit $100k, add bond (% of your age or age-10 or age-20), and international at your desired % of stock (anywhere from 0-40%).

The end.

[moof]

I'd suggest selling the apparently random selection of funds that your "advisor" put you in and putting it 100% in VTSAX or possibly add in some low cost international developed and/or emerging markets indexes, too.

This.  If you don't want to do a bunch of research and want the internet to tell you financial advise, just stick it all in VTSAX.  Once you are within ~10 years of retiring you should take the time to figure out a simple 2-4 fund portfolio that fits your volatility tolerance level.  But for just $39k, this is not a huge amount of your final picture.  Stick it in a low cost broad fund (i.e. VTSAX) and don't look back.

[greenjb]

Putting it all in VTSAX is actually an interesting idea -- I'm so habituated to balancing between US, in'l and bonds, but given that I have that stuff in my other retirement accounts, there's really no reason not to (as you put it) swing for the fences. What's the downside? Obviously, increased volatility in not having bonds to balance out the stocks...but if it's really a 20-25 years buy-and-hold investment, that shouldn't matter...right?

[Radagast]

Putting it all in VTSAX is actually an interesting idea -- I'm so habituated to balancing between US, in'l and bonds, but given that I have that stuff in my other retirement accounts, there's really no reason not to (as you put it) swing for the fences. What's the downside? Obviously, increased volatility in not having bonds to balance out the stocks...but if it's really a 20-25 years buy-and-hold investment, that shouldn't matter...right?

I missed where you said you have 25 years left. With all the $$$,$$$ I figured you were down to five years or so. With 25 years I agree, 100% stocks is good.