Personal Investments • Portfolio Review - Investor with High Anxiety

Hi. Thanks for the help again.

a) With everyone's recommendation, I have changed my Desired Asset Allocation:

Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: 30% of stocks

That is a big change. An AA of 80:20 is within reason based on just your age, but I wonder if it may be a step too far for you. You were at the conservative AA before. Why did you pick 60:40 in the past? Has something changed? Should you go to 70:30 for awhile?

I picked AA 60/40 before because I thought that is Bogleheads recommendation; "Your Age In Bonds". I am ok with AA 80/20 if that is the recommendation from the forum for someone my age (40yo), and planning to retire in 15 (wishful) to 20 years (most likely). Since I have started investing approx. 17 years ago, I have not panic sold during the downturn. I plan to change my AA at the age of 50yo to 70/30. And then every year afterward, I would update my AA by 1 into bond until I reach the age of 60, and then my final AA would be 60/40.

1) His 401k contribution is currently set for RSP US Gov Bond Index_(n/a)(0.0079%) every month. This would unbalance my Asset Allocation more on the bond side if I contribute to it $3k+ every month. What should I be aware of with my 401k contribution? Is there another investment I should consider in my 401K account also if the Bond AA is too high, and if so, which one?

Again, you have me confused about your 401k plan. How are you contributing $3k every month? That is more than the allowed elective deferral. So some must be going to after-tax....what are you then doing with this after-tax money? Are you leaving it in the 401k plan?

Correct, my employer offers After-tax 401k. My current contribution is listed below (His Annual Salary=$206k):
After-tax = $69k- His $23k pre-tax - His Employee Match ($12,360)
Pre-tax = $23k
Employee 401k Match (6%)= $206k x 0.06 = $12,360
IRS Max allowable After-tax contribution =$69k-$23k-$12,360 = $33,640
His 401k plan allows max 20% contribution = $41,200, therefore I will contribute $18,200 to After-tax
$23k+$12,360+$18,200=$53,560 = Annual 401k contribution
$53,560/12months = $4,463 Monthly 401k contribution

After my pre-tax 401k is maxed out ($23k), I will start contributing to my After-tax 401k ($18,200). With my After-tax 401k, I can do an in-plan Roth conversion (Mega Backdoor Roth). I would have to call Fidelity monthly, and have them move my After-tax contributions into my Roth IRA.

Plus, I will contribute $14k ($7k each) to His and Her Roth IRA via backdoor Roth annually.

I am assuming if I allocate as shown below, my bond allocation will be higher in the long run. And since my 401k only has one the bond investment, will I need to add a new (stock) investment in there too?
$23k in His 401k (RSP US Gov Bond Index)
$18,200 in His Roth (either FXAIX or FZILX)
$7k in His Roth (either FXAIX or FZILX)
$7k in Her Roth (FXAIX)

Sorry for the confusion...

Statistics: Posted by SacramentoInvestor — Tue Sep 10, 2024 1:18 am — Replies 61 — Views 9325

---