32 Yrs old just married please review our portfolio

[Hardatit]

I'm 32 and my wife is 28. We were just married earlier this year. We opened her Roth this year and I'm trying to determine if we should invest in the same funds as mine.
What do you guys think about our progress so far, any recommendations or things we could improve on?

We rent, and we're debt free with no kids and together we are able to save around $44K annually. Here is our current portfolio.

Our current allocation is 55% US, 25% Int, and 15% bonds.

Mine

Thrift Savings plan
C fund S&P 500
S fund Small caps
F fund Fixed income/bonds

Roth
VG total Stock market VTSAX
VG total Int VTIAX

Taxable
VG total int VTIAX
VG 500 index VFIAX

Hers

Thrift Savings plan
C fund S&P 500
S fund Small caps
I International funds

Roth
Still undecided but looking at either doing the same as mine or splitting the $5500 annually between these two funds. Any thoughts?

Vanguard total stock market and Vanguard total Bond market

 

[Travelwanted]

Hi Hardatit...have you visited Bogleheads.org?

They are a great resource for questions such as this.

 

[Senator]

Still undecided but looking at either doing the same as mine or splitting the $5500 annually between these two funds. Any thoughts?

Vanguard total stock market and Vanguard total Bond market

You are still young. I would be higher in equities in the Roth and 401K. You have at least 20 year horizon for these accounts. 100% equities at this age would not be unreasonable.

I would also stick with something like the S&P. The US market, large caps, typically outperforms foreign markets over a 10-20 year period. That is the benchmark many people compare to.

 

[panacea]

Another thought would be to diversify a bit more. How about some Vanguard REIT Index?

 

[hnzw_rui]

US 55 + Intl 25 + Bond 15 = 95

How do you have the other 5% allocated? Is that for her Roth?

I wouldn't bother with bond funds in her Roth. Just go full VTSMX or VFINX or use an allocation similar to your Roth. Roth is tax free growth so you want your higher return assets in there.

The TSP G fund is probably an excellent alternative to bond funds so perhaps just keep your fixed income allocation at TSP.

 

[DrRoy]

I personally do not like international at present, but both VTSMX and VFINX are very broad indexes and to the extent that is where you want to be then you do not need to pick different funds for the other account.

 

[Hardatit]

Hi Hardatit...have you visited Bogleheads.org?

They are a great resource for questions such as this.

I just posted over at Bogleheads, great site along with this one!

You are still young. I would be higher in equities in the Roth and 401K. You have at least 20 year horizon for these accounts. 100% equities at this age would not be unreasonable.

I would also stick with something like the S&P. The US market, large caps, typically outperforms foreign markets over a 10-20 year period. That is the benchmark many people compare to.

I could stand to go a little heavier on the equities. I'll have an inflation protected/COLA'd retirement in about 6 years. I have right at 35% of my total portfolio in the S&P 500 right now. I'm not sure if that is too heavy or just about right. I'm still learning and trying to do the best I can with the money I do have.

US 55 + Intl 25 + Bond 15 = 95

How do you have the other 5% allocated? Is that for her Roth?



I wouldn't bother with bond funds in her Roth. Just go full VTSMX or VFINX or use an allocation similar to your Roth. Roth is tax free growth so you want your higher return assets in there.



The TSP G fund is probably an excellent alternative to bond funds so perhaps just keep your fixed income allocation at TSP.

Yes the other 5% is sitting idle waiting to be put into her Roth and my SEP IRA.

Yes I thought of just allotting the money in here Roth into VTSMX, total stock market since I already have 35% in 500 index and only 7% in Total stock market. After figuring it up, I have 24% of my total portfolio in international so I wouldn't think I need anymore there.

 

[hnzw_rui]

Yes I thought of just allotting the money in here Roth into VTSMX, total stock market since I already have 35% in 500 index and only 7% in Total stock market. After figuring it up, I have 24% of my total portfolio in international so I wouldn't think I need anymore there.

Note, VTSMX is around 85% S&P 500 and 15% Small/Mid Cap.

 

[Hardatit]

Note, VTSMX is around 85% S&P 500 and 15% Small/Mid Cap.

I didn't realize that until now. I did more reading and researching and I think I've decided to put the wife's Roth into Vanguard Total Stock market and my SEP IRA in the Vanguard REIT fund keeping the REIT around 5% of my total portfolio. Any thoughts or recommendations?
If I'm thinking correctly my total portfolio would look something like this..

International funds (TSP I fund, VG Total Int) 21%
Total Stock market ( Almost 4 to 1 TSP C and S fund and VG TSM) 58%
Vanguard REIT index 5%
TSP F fund 16%

 

[FI by 2024]

I could stand to go a little heavier on the equities. I'll have an inflation protected/COLA'd retirement in about 6 years.

This is what I was wondering when I read your post. I'm guessing military enlisted based on your age? Will you work after retirement or move straight to the easy life?

Personally, I am nearly 100% equities because I am working towards that pension myself. At retirement one could make the argument that due to the value and stability of that pension it will essentially equate to having ~60% of my "portfolio" in an annuity (as if I had a larger portfolio and took money to purchase an immediate COLA'd annuity), so I can afford to be aggressive with the rest. Of course, this is based on my personal numbers and risk tolerance. You'll need to decide for yourself how you see things.



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[surlymtb]

A couple thoughts:
The expense ratio of the I fund is about 1/5th of that of vtiax, therefore I recommend holding all of your international exposure there.

The f fund exposes you to a lot of interest rate risk for (lately) about equivalent returns to the g fund. The g fund never loses principal, and has an effective duration of 0 (no interest rate risk). In a rising rate environment I much prefer the g fund.

My and my wife's IRAs & taxable accounts are in 100% vtsax, all my bond and international holdings in the tsp G and I funds, respectively. I also hold C and S in the tsp, once my international and bond allocations are taken care of. I think this would be a bit more optimal for you as well.

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[Hardatit]

It makes sense for sure the way you are doing it, there is nothing at all wrong with it. I made the decision to go VTIAX years ago after much research and reading. The difference is like dancing around on pin head in my situation. VTIAX is a tax effiicient fund and the foreign tax credit helps circumvent the expense rate difference. I plan on rolling my tsp into roth at Vanguard in less than 10 years because I'll be retired and in the lowest tax bracket of my life.

I've been tossing around a 50/50 split between the g and f fund, the g fund after all is kind of like a free lunch. I appreciate your reply.

 

[surlymtb]

I fund vs vtiax is a bit like splitting hairs with a less than 10 year horizon. I plan to stick with the TSP for 30+more years, so it makes more of a difference to me. I also like the simplicity of only buying vtsax outside of the TSP.

Either way sounds like you are doing well!

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[zesty]

I personally do not like international at present, but both VTSMX and VFINX are very broad indexes and to the extent that is where you want to be then you do not need to pick different funds for the other account.

Why not? As the US dollar gets stronger, international stocks get cheaper. That's great if you're buying.

And most of the international PE ratios are quite a bit lower than the US.