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need help with portfolio and asset location

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  • need help with portfolio and asset location

    Hi Everyone

    I am new to this forum.
    I am trying to get my financial house in order and would love to get your feedback on my portfolio and the location of the assets

    so far i have been using the fidelity freedom funds 2045 fund (FFKGX) (ER 0.64) in my 401k and 457 at fidelity.

    I also have roth IRA account for myself and my wife, plus a taxable account at Vanguard. I use the Vanguard personal advisory service for the vanguard accounts (they charge 0.3%). Unfortunately they dont help much with the non-vanguard accounts.

    I want to take the money out of the Fidelity freedom funds and use the low cost index funds

    Age: 40

    Desired Asset allocation: 75% stocks / 25% bonds

    Desired International allocation: 33% of total stocks

    I would like the following allocation

    REIT Vanguard REIT index fund 10%

    Remaining 65% of stocks are divided as follows

    US stocks 43% of total portfolio

    33% Vanguard total stock market index fund

    10% iShares S&P SmallCap 600 Value Idx (ETF)

    22% international stocks will be invested in Vanguard Total international stock market index fund

    For 25% Bonds I would like to divide it between an index bond fund and TIPS.

    12.5% Vanguard total Bond market index fund (available in 401k) or some other bond fund (I am open to suggestions)

    12.5% in TIPS

    Now regarding the location of the different funds in different accounts, here is what I am thinking

    REIT index fund goes in the ROTH IRAs

    Extra REIT amount which did not fit into ROTH IRA goes into 401K ( I can use fidelity brokerage link to access fidelity REIT index fund)

    401 K and 457 will also hold the following funds

    – iShares S&P SmallCap 600 Value Idx (ETF)

    – Vanguard total Bond market index fund (available in 401k)

    – TIPS (suggestions welcome for a fidelity fund)

    Taxable Account

    -Vanguard Total Stock Market index fund

    -Vanguard Total International stock market index Fund

    I would really appreciate any feedback . I am open to suggestions if you think there is a better way to locate these funds or if there any suggestions to improve the portfolio.

    Thanks a lot

  • #2
    You've clearly done your homework, and I see no holes in your logic regarding asset allocation and location.

    I like REIT in Roth and 401(k).

    I also like international in taxable for the tax credit, and I like the fact that you don't duplicate the funds held in taxable anywhere else. That will make tax loss harvesting easier without having to worry about inadvertent wash sales.

    Fidelity's TSM and Int'l funds are a tiny bit cheaper than Vanguard's at the moment. If you're comfortable, I would consider dropping the Vanguard advisory service. If you know enough to put this plan together, I don't think you're getting much value for that 0.3%.