Need advice simplifying portfolio - newbie investor and aggressive saver

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flowerpower
Posts: 4
Joined: Mon Oct 30, 2017 8:28 am

Need advice simplifying portfolio - newbie investor and aggressive saver

Post by flowerpower » Mon Oct 30, 2017 10:09 am

Hi all, first time poster, but long time lurker. After aggressively paying down student debt of over $75,000 with very high interest rates, I am now on my second year of aggressively saving :D . However, I have a bad habit of wafting on decisions and did not want to wait too long before deciding where to invest. I have read "If you can" and most of the major topics on the wikis, and still feel a bit overwhelmed about how to apply it to my portfolio. Over the past two years, I have put my investments into a few different index funds and now would like to thoughtfully simplify and re-adjust my investments to create a well-balanced, holistic portfolio. I could use your help and appreciate any input!

Emergency funds: 6 months
Debt: 0; don't own a car or house and no plans to do so in foreseeable future
Tax rate: 21% federal, 5.6% state
Age: late 20s
Residence: DC/NoVa/MD area
Desired Asset Allocation: 90% stocks / 10% bonds
Salary: low 6 figures

401k: $45,000 in Vanguard Target Retirement 2055 Trust Select
Maxed out this year and last year. My employer unfortunately does not offer the Mega Backdoor Roth option.

Roth IRA: $13,500.
  • $6,000 in Vanguard Total International Stock Index Fund Investor Shares
  • $7,500 in Vanguard Total Stock Market Index Fund Investor Shares
Maxed out the last 2 years. Have not contributed to it yet this year but intend on maxing it out. I anticipate I will have another year before I reach income limits before going the backdoor route to contribute.

Employer pension: $10,500. Pretty hands off with this one.

HSA: ~$6,000
Maxed out last year and on track to max it out this year through payroll deductions. My employer does not offer good investment options, so I plan on opening a new HSA account sometime next year to do a one-time transfer to a different HSA provider with better investment options.

Taxable account: $15,000.
  • $10k in Vanguard Total Stock Market Index Fund Admiral Shares
  • $5k in Vanguard Small Capitalization Value Index Fund Investor Shares
Had too much money sitting around in my checking account and made a quick decision to just move it into these funds. :confused

Questions:
1. How can I re-adjust and simplify my portfolio?
2. Where should I invest in bonds for the best tax benefits?
3. I am looking to fund about 4 months of travel during summer 2019 and would be unemployed at that time. If I invest $10,000 in the next few months, where would the wisest / safest place to do so?
4. In regards to financial goals, I am interested in aggressively saving as much as I can to retire a decade early. What are the things I should be thinking about now to make sure I have cash flow before I am able to tap into my retirement money?

Beensabu
Posts: 105
Joined: Sun Aug 14, 2016 3:22 pm

Re: Need advice simplifying portfolio - newbie investor and aggressive saver

Post by Beensabu » Sat Nov 04, 2017 9:22 pm

Bump.

Plus questionable advice:
flowerpower wrote:1. How can I re-adjust and simplify my portfolio?

It looks fine. If you post the options available in your 401k, along with expense ratios, someone helpful will likely come along and suggest reasonable alternatives to the target date fund. They'll probably also ask you some other questions to better help.

2. Where should I invest in bonds for the best tax benefits?

Anywhere but taxable as long as you can. Probably the 401k. It's helpful for rebalancing to hold some of each asset class or sub asset in your portfolio in one tax advantaged account.

3. I am looking to fund about 4 months of travel during summer 2019 and would be unemployed at that time. If I invest $10,000 in the next few months, where would the wisest / safest place to do so?

A high yield savings account or appropriately short term CD(s).

4. In regards to financial goals, I am interested in aggressively saving as much as I can to retire a decade early. What are the things I should be thinking about now to make sure I have cash flow before I am able to tap into my retirement money?

No clue. But good for you.
I have very basic knowledge. But a good track record of helping people be saved from my attempt at advice. Hopefully, someone stops by soon.
I think. I do not know.

DoDad
Posts: 5
Joined: Sun Nov 05, 2017 9:34 am

Re: Need advice simplifying portfolio - newbie investor and aggressive saver

Post by DoDad » Sun Nov 05, 2017 1:13 pm

You are off to a great start and I don't see any need to simplify, as you are already making good use of index funds and a fund-of-funds, both of which were designed for simplicity.

windycityheat
Posts: 16
Joined: Sat Oct 14, 2017 4:45 pm

Re: Need advice simplifying portfolio - newbie investor and aggressive saver

Post by windycityheat » Sun Nov 05, 2017 8:04 pm

flowerpower wrote:
Mon Oct 30, 2017 10:09 am
3. I am looking to fund about 4 months of travel during summer 2019 and would be unemployed at that time. If I invest $10,000 in the next few months, where would the wisest / safest place to do so?
Investing this in the market would be too risky and would open yourself up to a loss if stocks fall or stagnate and you end up paying capital gains tax. I second what Beensabu says and would recommend a CD or Online Saving account. Although due to the amount you're investingand the short time span, you'd only be looking at making $100-$200 interest assuming a 1.2%-1.7% interest rate. If you go this route, I'd recommend Discover Bank for the CD or online savings account. Their rates are competitive and the customer service is stellar.

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Sandtrap
Posts: 2364
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii😀 Northern AZ.😳

Re: Need advice simplifying portfolio - newbie investor and aggressive saver

Post by Sandtrap » Sun Nov 05, 2017 8:38 pm

Why not Vanguard Total Stock Market Investor VTSMX then as you add to that you'll be taking advantage of the lower ER of the Admiral shares VTSAX? Also, Total Stock already has small cap so you might consider simplifying the overlap to one. What I would do but one option amongst many.

As others will suggest, put the $10k in a high yield account until your well earned summer travels are done with. As you will be unemployed, anything can happen and it would be prudent to have it, "just in case". And, it is a short timeline to "invest it".

Some random thoughts.
Great job on paying down that huge student debt!
Congratulations on being on such a strong and informed financial path.
:sharebeer

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