You should go back and add fund names to the tickers.We recently moved from the mid-west to the Bay area. We joined the workforce late due to graduate studies, hence our 401k assets may look smaller than typical. Learnt about investing pretty late and therefore compensating for lost years/opportunities by aggressively focusing on wealth accumulation via taxable and tax deferred accounts. We don't own a house and don't plan to buy a house for the next 5 years. Instead of buying a house in the Bay area, we decided to use our cash inflows of $70k/year into investments (taxable and other investment vehicles). Below is a snapshot of our financial health.
Emergency funds: six months of expenses in HYSA
Debt: Zero
Tax Filing Status: Married Filing Jointly
Tax Rate: 37% Federal, 13% State
State of Residence: CA (recently moved from the mid-west)
Age: 39 (his) and 37 (her)
Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: 10% of stocks
Combined total portfolio (brokerage, IRAs, and 401k): $490k. We plan to keep our portfolio simple, hence only buying index funds such as VTSAX and similar products on Fidelity for taxable and tax-advantage accounts.
1. Total T-bills: $80k (using this as a substitute for Bond funds such as BND; don't plan to add more to T-bills)
2. I-bonds: $30k (the plan is to load more with time and use this as emergency funds; will load $10k+$10k each year)
3. Taxable: $250k (contributing aggressively $4k/month with the hope that this grows to a $1 M in the next 7-8 years).
10% cash in VUSXX (ready for investing) -- needs advice here: whether to buy VTSAX or VXUS for international exposure?
40% VTSAX (expense ratio=0.04%)
10% VIGAX (expense ratio=0.04%)
4. His 401k: $60k (currently maxing out 401k w/ company match of $3k)
100% FXAIX (expense ratio=0.02%)
5. His Roth IRA at Vanguard: $15k (contributing $7k/year to IRA and doing a ROTH conversion every year)
100% VTSAX (expense ratio=0.04%)
6. His Rollover IRA at TIAA from previous job: $50k
100% TISPX (expense ratio=0.05%)
7. Her 401k: $55k (currently maxing out 401k w/ company match of $8k)
100% FXAIX (expense ratio=0.02%)
8. Her Roth IRA at Vanguard: $15k (contributing $7k/year to IRA and doing a ROTH conversion every year)
100% VTSAX (expense ratio=0.04%)
9. Combined HSA in Fidelity: $10k (contributing $3k/year)
100% FXAIX (expense ratio=0.02%)
10. 529 plan: $30k (no kids yet; planning for kids). Don't plan to contribute for the next 2 years.
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New annual Contributions: maxing out both of our 401(k) plans and contribute $7k each year towards IRA and immediate ROTH conversion.
$20k taxable (for retirement)
$30k taxable (for mid-term goal of house purchase)
Questions:
1. Instead of buying a house, we decided to use our cash inflows of $70k/year into investments. Can you please suggest potential investment options and % AA in them?
2. Is a taxable account a good vehicle for a future (5 years or later) home purchase or other big-ticket item purchases?
3. Not sure of where to invest $40k, we are holding it in VUSXX. We need your advice on whether to buy VTSAX or VXUS for international exposure?
Any additional and critical feedback on our portfolio is highly appreciated! Thanks in advance!
VXUS is a total international which includes emerging markets. VTSAX is a mutual fund to approximate the entire US stock market. So VXUS is the only one appropriate for international exposure. It makes no sense to consider VTSAX for international diversification.
VXUS will give you geographic and political diversification relative to the US and diversification against the US dollar also. VTSAX will not provide that diversification.
Statistics: Posted by BitTooAggressive — Fri Apr 05, 2024 1:21 am — Replies 3 — Views 237