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My post is very lengthy, so I want to apologize for that first.
As my username implies, I am a late beginner and just recently start thinking about investment. I just started my attending job within the past year, but the challenge is I am already 40 and only have $15k in a previous 403b, and have no other savings or investments. My wife stays home taking care of our two small children, 3 and 6. Job wise I am salaried at around $400k/year (just started), and my practice provides both 403b/401k and 457b (organizational). The company matches about 2% of my salary if I contribute 4% or more (says IRS max salary rule applies, I don’t quite understand how); in addition, the company provides employer-sponsored pension plan at a pension factor of 1.5%, to which I myself don’t need to contribute any. I am hoping to work for this practice for many years and retire there between 65-70. I have fair confidence of my job stability.
Given the good pension plan, as long as the practice keeps running well and I can keep my job, I shouldn’t need to worry too much about future. But no one knows what is going to happen in the next 20-30 years, and the safest thing is to accumulate my own wealth besides the pension plan. On the other hand, because of the pension plan I figure I should have better risk tolerance and take a little more risk in investing. So here is my immature plan after reading the WCI book and some Bogleheads posts for a couple of months. Any suggestions will be greatly appreciated, please be harsh.
Planned Portfolio AA:
1. 401k: long term growth over 20 years, aggressive 100% equity ($18000+$6000 match=$24,000/year):
Vanguard Total Stock Market Index or equivalent (VTSAX or VTI in ETF): 50%
Vanguard Small-Cap Value Index or equivalent (VSIAX or VBR in ETF): 25%
Vanguard FTSE All-World Ex-US Index or equivalent (VFWAX or VEU in ETF): 20%
Vanguard Emerging Markets Stock Index or equivalent (VEMAX or VWO in ETF): 5%
2. 457b: long term growth over 20 years, aggressive 100% equity, ($18,000/year):
same as 401k
3. HSA: long term growth over 20 years, aggressive 100% equity, ($6,750/year):
Same as 401k
4. Roth IRA: Traditional IRAs, one for me and one for my wife (spousal IRA), max out with backdoor conversion into Roth ($11,000/year), long term growth over 20 years, back-up for liquidity, moderate 75% equity and 25% bonds:
Vanguard Total Stock Market Index or equivalent (VTSAX or VTI in ETF): 40%
Vanguard Small-Cap Value Index or equivalent (VSIAX or VBR in ETF): 15%
Vanguard FTSE All-World Ex-US Index or equivalent (VFWAX or VEU in ETF): 15%
Vanguard Emerging Markets Stock Index or equivalent (VEMAX or VWO in ETF): 5%
Vanguard Total Bond Market Index Fund Investor shares or equivalent (VBMFX): 25%
5. 529: 13-year plan, planning to use Vanguard 529 aggressive growth ($12,000/year/kid, so $24,000 total/year), which starts out from 100% equity with gradual transition into mostly bonds.
6. Taxable account ($20,000/year): 70% equity (similar to Roth IRA equity allocation without Emerging Markets Stock Index) /30% tax-exempt bonds (Vanguard Intermediate-Term Tax-Exempt Fund Investor Shares VWITX or Fidelity Intermediate Municipal Income Fund, FLTMX)
7. Emergency fund tier 2: high APY (slightly over 1%) saving online bank ($10,000/year)
8. Emergency fund tier 1: checking account, no interest ($10,000/year)
9. Additional: real estate crowdfunding (no specific plan or experience yet, $10,000/year)
I am carrying a 15-year house loan, just started. I need to pay about $5,500 every month to cover P&I, property tax, home insurance and HOA. So I need about $11,000-$12,000/month for routine including house expenses. This makes our emergency funds look a bit thin, but I am thinking the job safety can give me some reassurance. In addition, I am hoping the money from planned taxable account and crowdfund investment can be the backup, while Roth IRA money and 529 plan can be used if we are truly in financial trouble.
Please let me know if there is any major defect with above plan, thank you all so much for your suggestions in advance!
As my username implies, I am a late beginner and just recently start thinking about investment. I just started my attending job within the past year, but the challenge is I am already 40 and only have $15k in a previous 403b, and have no other savings or investments. My wife stays home taking care of our two small children, 3 and 6. Job wise I am salaried at around $400k/year (just started), and my practice provides both 403b/401k and 457b (organizational). The company matches about 2% of my salary if I contribute 4% or more (says IRS max salary rule applies, I don’t quite understand how); in addition, the company provides employer-sponsored pension plan at a pension factor of 1.5%, to which I myself don’t need to contribute any. I am hoping to work for this practice for many years and retire there between 65-70. I have fair confidence of my job stability.
Given the good pension plan, as long as the practice keeps running well and I can keep my job, I shouldn’t need to worry too much about future. But no one knows what is going to happen in the next 20-30 years, and the safest thing is to accumulate my own wealth besides the pension plan. On the other hand, because of the pension plan I figure I should have better risk tolerance and take a little more risk in investing. So here is my immature plan after reading the WCI book and some Bogleheads posts for a couple of months. Any suggestions will be greatly appreciated, please be harsh.
Planned Portfolio AA:
1. 401k: long term growth over 20 years, aggressive 100% equity ($18000+$6000 match=$24,000/year):
Vanguard Total Stock Market Index or equivalent (VTSAX or VTI in ETF): 50%
Vanguard Small-Cap Value Index or equivalent (VSIAX or VBR in ETF): 25%
Vanguard FTSE All-World Ex-US Index or equivalent (VFWAX or VEU in ETF): 20%
Vanguard Emerging Markets Stock Index or equivalent (VEMAX or VWO in ETF): 5%
2. 457b: long term growth over 20 years, aggressive 100% equity, ($18,000/year):
same as 401k
3. HSA: long term growth over 20 years, aggressive 100% equity, ($6,750/year):
Same as 401k
4. Roth IRA: Traditional IRAs, one for me and one for my wife (spousal IRA), max out with backdoor conversion into Roth ($11,000/year), long term growth over 20 years, back-up for liquidity, moderate 75% equity and 25% bonds:
Vanguard Total Stock Market Index or equivalent (VTSAX or VTI in ETF): 40%
Vanguard Small-Cap Value Index or equivalent (VSIAX or VBR in ETF): 15%
Vanguard FTSE All-World Ex-US Index or equivalent (VFWAX or VEU in ETF): 15%
Vanguard Emerging Markets Stock Index or equivalent (VEMAX or VWO in ETF): 5%
Vanguard Total Bond Market Index Fund Investor shares or equivalent (VBMFX): 25%
5. 529: 13-year plan, planning to use Vanguard 529 aggressive growth ($12,000/year/kid, so $24,000 total/year), which starts out from 100% equity with gradual transition into mostly bonds.
6. Taxable account ($20,000/year): 70% equity (similar to Roth IRA equity allocation without Emerging Markets Stock Index) /30% tax-exempt bonds (Vanguard Intermediate-Term Tax-Exempt Fund Investor Shares VWITX or Fidelity Intermediate Municipal Income Fund, FLTMX)
7. Emergency fund tier 2: high APY (slightly over 1%) saving online bank ($10,000/year)
8. Emergency fund tier 1: checking account, no interest ($10,000/year)
9. Additional: real estate crowdfunding (no specific plan or experience yet, $10,000/year)
I am carrying a 15-year house loan, just started. I need to pay about $5,500 every month to cover P&I, property tax, home insurance and HOA. So I need about $11,000-$12,000/month for routine including house expenses. This makes our emergency funds look a bit thin, but I am thinking the job safety can give me some reassurance. In addition, I am hoping the money from planned taxable account and crowdfund investment can be the backup, while Roth IRA money and 529 plan can be used if we are truly in financial trouble.
Please let me know if there is any major defect with above plan, thank you all so much for your suggestions in advance!
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