New and looking for advice on funds

[jimy]

I'm new to the forum (but have been lurking for about a year)

I have just "fired" my financial advisor and am in the process of moving that money from AssetMark to Vanguard. About half of it is an IRA which I plan to put into VTTVX Vanguard Target Retirement 2025 Fund. That should be pretty close to what I need and it can certainly be adjusted as time goes on without tax implications.

I'm more concerned with the non IRA money which is about 169K. I am trying to simplify things by going to Vanguard and of course lower my costs as well. I am 51 and getting pretty tired of my 30 year software career at megacorp. If I leave megacorp sooner rather than later I may have to tap into my taxable savings, but would prefer to switch to a lower paying job I enjoy and cut costs until the IRA's kick in. I am unlikely to stay at megacorp more than 5 years. Essentially I'm looking to park this money somewhere and it is hard to predict when I might need it.

Keeping things simple, this money could go into VTTVX or perhaps a mix of index funds (such as I have below for my other taxable savings). Is there anything else I might consider?

If I am missing anything, please ask any questions you like...

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Here are my details:

I'm 51, DW is 49. No debt. Our home is paid for and worth perhaps 200k. No kids. Net worth about 1M excluding home.

---IRA assets---
64K IRA VTTVX Vanguard Target Retirement 2025 Fund
200K IRA VTTVX (PLANNED TRANSFER FROM ASSETMARK)
400K MEGACORP 401K (also a fund targeting retirement in 2025)

---TAXABLE assets---
100K in Vanguard with below allocation
24% VBTLX Vanguard Total Bond Market Index Fund Admiral Shares
17% VTIAX Vanguard Total International Stock Index Fund Admiral Shares
59% VTSAX Vanguard Total Stock Market Index Fund Admiral Shares

30K cash
169K THIS IS LEAVING ASSETMARK AND IS WHAT I AM LOOKING FOR ADVICE ON

thanks,

Jim

[MasterBlaster]

Jimy:

Your plan seems reasonable.

Some people think that you should keep bonds in the IRA/401K accounts. These people like to have only equities in the taxable accounts. Bond interest in those taxable accounts is taxed at marginal income tax rates rather than capital gains. However with interest rates so low lately this concept is somewhat questionable.


What your "extra" money should do is complete your portfolio such that the entire portfolio is very close to what your intended asset allocation should be. I would use a tool like the Morningstar instant X-ray tool (http://portfolio.morningstar.com/Rtp...RayDEntry.aspx) to see what your entire portfolio looks like. Then add (from your extra money) mixes of domestic equity, international equity, and bonds until your overall allocation is what you want.


For suggested overall portfolio allocation, perhaps the Vanguard tool could help https://personal.vanguard.com/us/fun...recommendation

[target2019]

Jimy : maybe earmark some of the 169K for Roth IRA contributions for the next few years.

[ERD50]

Sounds pretty good.

Depending on your planned expenses (including taxes), and offsets from SS and pensions - $1M might be a little light to fund your retirement? Most of us conservative types plan on ~ 3.5% inflation adjusted withdraw, so that's ~ $35,000. Is that enough for you?

Is there any tax consequence to moving the AssetMark funds? You might be able to do a 'like kind' exchange, but often their funds are not available at other places. So consider the tax implications (you need to know the cost basis for those funds).

-ERD50

[jimy]

Yes, $1M would be pretty light for us. Probably doable and we'd probably enjoy a great simple life riding our bicycles, paddling, hiking, etc. But my preference is to let that grow until I could draw from my IRA's. (and hopefully the funds would actually grow!)

If I leave megacorp I envision that those "in between" years would be spent with both of us working part time and living on minimal or no withdrawals until I'm 59 1/2. Of course, real plans are required rather than just envisioning :-)

Yes, there are tax consequences moving the AssetMark funds. I'd rather deal with that now while I have the income to cover the taxes.

thanks,

Jim

[utrecht]

Your plan isnt exactly what I would do, but I see nothing wrong with it.

[Whisper66]

Jimy - Everyone is different. Given the fact that you may want to use this $169k of taxable funds within the next couple years, I might consider dumping it into your bond fund VBTLX for now. And then when / if another market correction came along, move it to the Total Stock fund VTSAX. I don't really spend much time trying to "time" buys / sells but I do try to avoid making a large buy when the market is fairly high and then having to sell at a loss within a short time.