Retirement Accounts are a Mess... Help

Add the pictures and I will black box your face for you.

$20,000 in my current federal employee retirement account.

100%-L2030 (target date retirement fund)A 2030 target fund seems quite conservative to me.14,000 in an old 403(b).

20%-TRIRX (large cap growth)
40%-TRCVX (large cap value)
6%-TRRSX (REIT)
14%-TRBIX (small cap balanced)
20%-TIQRX (Equity index)This one seems to resemble your 2030 target fund above12,000 in a Roth

31%-STHBX (Short-term investment bonds)
20%-VTI (Total US mkt ETF)
20%-JAGIX (growth & income MF)
14%-VEU (Total non-US ETF)
8%-EEM (emmerging mkts ETF)
7%-IBM (first stock I ever bought)good for you for choosing ETFs - they are very inexpensive.5,800 in another Roth
100%-PRGFX (TRowe Growth MF)this one seems relatively aggressive.

My advice is to use the portfolio X-ray from Morningstar. You can enter these holdings to get a good picture of the blend of these investments and then, if necessary, make adjustments.

linky for X-Ray

Good luck!

Biancadonk said: I got referred here by a friend who won't tell me what his user name is

His username is TripleB and he did you a favor by not disclosing it - nobody would have helped if they knew you were referred by him (despite the promise of a future pic).............

Jackcrawfish did a good job point out the 2030 as being too conservative.
Can you post all of the expenses for each of those accounts?
Unfortunately you have virtually no chance to be a CNN America Hero.
Being in your late 20s and having ~52K saved for retirement and another 5K coming from a new IRa, you're in very good shape. Keep it up. For the most part, you'll get some advice on similar funds or etfs to what you have but with lower fees. Everyone's portfolio is different, and you can't really argue that one is better then another until much later.

Good luck, Greyrabbit.
By the way, would you mind answering these few questions? (don't worry, these are only for research purposes....)
Is your friend:

1) Currently going to grad school?
2) A Lawyer
3) Someone who inherited a lot of money?
4) A student living on a millionaire's budget?
5) A landlord?

5) Male or Female?
6) Asian or Indian?

Dont have anything to add to what folks have said about investments. But congrats on amassing over 50k in retirement funds at this age. The US needs more of your kind!

I would actually roll more into the Federal Thrift Savings Plan. The expense ratios are lower than Vanguard and the Government has strong oversight to make sure plan expenses are the bare minimum possible. For example, the L series funds expense ratio was 0.06%. Try getting that at Vanguard. You can roll the 403(b) into the TSP as an in-service transaction. Fill out the form at http://www.tsp.gov/forms/tsp-60.pdf and mail it in. I agree that at your age L2030 is a bit conservative, and L2040 would be appropriate because the bond and cash allocation is lower (25% for L2030 vs. 15% for L2030). You can use lower expense ratios in your Roth. If you want to keep it simple, I would roll the Roths over to Vanguard and put it all into the Target 2040 or Target 2045 fund. Although not as low as the L series in the TSP, the Vanguard funds have a 0.20% expense ratio and automatically rebalance.

If you want to do more thorough research, posting your portfolio on Bogleheads would be useful, as would reading the books Boglehead's Guide to Investing and the Coffeehouse Investor. Both of them are at most libraries and bookstores.

calwatch said: I would actually roll more into the Federal Thrift Savings Plan. The expense ratios are lower than Vanguard and the Government has strong oversight to make sure plan expenses are the bare minimum possible. For example, the L series funds expense ratio was 0.06%. Try getting that at Vanguard. You can roll the 403(b) into the TSP as an in-service transaction. Fill out the form at http://www.tsp.gov/forms/tsp-60.pdf and mail it in. I agree that at your age L2030 is a bit conservative, and L2040 would be appropriate because the bond and cash allocation is lower (25% for L2030 vs. 15% for L2030). You can use lower expense ratios in your Roth. If you want to keep it simple, I would roll the Roths over to Vanguard and put it all into the Target 2040 or Target 2045 fund. Although not as low as the L series in the TSP, the Vanguard funds have a 0.20% expense ratio and automatically rebalance.

If you want to do more thorough research, posting your portfolio on Bogleheads would be useful, as would reading the books Boglehead's Guide to Investing and the Coffeehouse Investor. Both of them are at most libraries and bookstores.

What he said.

Okay, still feel dumb, but I guess I got advice so I'll have to post a picture.

In review, I actually had my whole TSP in L2040, not 2030. I changed that last spring and forgot about it.

So these are my final questions...

For my 403(b)... should I roll that into my TSP... or should I convert it to a couple Roths (I know I'd need to pay taxes).

For my existing Roths... where should I combine them? Everybody seems to like Vanguard... but I can't figure out why, trades seem expensive. I see their MFs are lower cost, but not sure why I should open an account with them. How about a Fidelity account with the free trades on certain ETFs?

As far as allocation, thanks for that stock screen thing. I've seen them before, but never had all my information handy. I'd say I should invest more abroad since I seem to be very US heavy.

As far as ETFs vs. MFs... I always get conflicting advice so I just ended up buying both. Based on that, I am guessing it probably won't matter one way or another for me.

I'm reading the bogleheads site, but I really don't follow most of it. I don't really care if I'm not doing everything perfectly, I am more concerned that I am not doing anything wrong.

And for my friend who referred me, he claims he doesn't check this site very often anymore, but that could be a lie and he could be laughing at me now. To answer Greyrabbits questions, the answer is no to everything, except of course he is male.

In the pic, are you trying to escape from TripleB's basement dungeon?

Biancadonk said:

For my existing Roths... where should I combine them? Everybody seems to like Vanguard... but I can't figure out why, trades seem expensive. I see their MFs are lower cost, but not sure why I should open an account with them. How about a Fidelity account with the free trades on certain ETFs?


Fidelity is a good option; also check out Schwab (free trades for their MFs and ETFs). Most people with Vanguard trade only in their mutual funds.

 

Biancadonk said: I'm reading the bogleheads site, but I really don't follow most of it. I don't really care if I'm not doing everything perfectly, I am more concerned that I am not doing anything wrong.

I agree with those who said you'll get better allocation advice at bogleheads. You almost have their required information for portfolio analysis already. Since you're still very young, whatever you don't do as perfectly as possible now could have major implications by the time you retire. That's not to say that bogleheads will give you perfect advice, but they might give you more information to make informed decisions.

Biancadonk said: For my existing Roths... where should I combine them?I don't like Fidelity in principle because they had high fees for everything. They're cleaning up their act and matching the competition better now, but I still don't like them. I have my Roth at Scottrade (no maintenance fees, can trade stocks and ETFs for $7/trade).As far as ETFs vs. MFs... I always get conflicting advice so I just ended up buying both. Based on that, I am guessing it probably won't matter one way or another for me.ETFs have lower maintenance fees than MFs. And if you find a MF and an ETF that track the same index, the ETF will outperform in the long run because of lower fees. Simple math.

Bianca... these are the steps I would take.

1. Your FED retirement account... since I guess you are still employed by the gov't I would
say leave the 20K there, unless you can find better investment choices somewhere else and would
not take a penalty for rolling money out (or it might be you cannot take the money out at all
until your employment terminates).

2. The 14K in the 403(b) may be rollable into a Traditional IRA without tax penalty, check with the plan
administrators.

3. 12,000 in a Roth 5,800 in another Roth - if these are true Roths then you can combine them into one
account without tax penalty as they have already been taxed, then make additional payments to it as you wish.

Do NOT commingle taxed and non-taxed funds. You will then have a tax nightmare later on if you do.

4. As to ETF vs MF, although you should take advice, nobody should tell you what to do... its very much a
personal choice based on risk vs return and what you are comfortable with. But I would SUGGEST
the following...

You are young, and self-admittedly do not know the best investment choices.. so I would,
if I were you... invest in primarily equity-based (i.e. stocks) mutual funds, concentrating on
value and index funds (S&P, DJ) at this time.

You may also wish, to hedge volatility, purchase a percentage of bond funds at this time as they
are at a discount as compared to the rest of the market. The market in general is in a state
of flux because of the economy... it can go up or it can go back down again... it all depends.
Right now I would hedge volatility and push for diversification. I would not fool with individual
stocks... let the experts do the investing through your MFs.

I would also drop REITs with the intent of picking them up at a discount later on... as the
residential real estate market is still in a massive slump, and there is talk of a commercial
real estate bubble as well on the horizon. Wait till the next bubble bursts and then pick up
some REIT funds on the cheap.

I recommend Vanguard Funds. They are solidly managed and have very low fees. I keep my
two IRAs there. The people who work there are VERY helpful.

First off, I've seen lots of good and not so good advice so far. It might be good to take a step back and not get lost in the trees and take a look at the forest. Please answer these questions as best you can to get a better overview:

1) What is your investment profile (aggressive or conservative, active or passive,etc.). How does it differ from the average person? Why are you veering off typical investment paths?
2) Are you getting matching in any retirement program? (don't turn down free money)
3) How do you have brokerage account invested? Do you want to invest in individual stocks?
4) How much do you owe in student loans? What is the payment and interest rate?
5) Do you own or plan to own a home? How does that play into retirement plans? Are you saving for retirement, a down payment or both?
6) How much do you have in an emergency fund? How is it held?

Biancadonk said: As you can probably tell, most of these descisions/allocations came from just sort of random guessing while clicking away on the interweb.
It appears that every decision has been made in isolation of your whole portfolio and life situation. How would you feel if you could take all your retirement funds and put it into the L2040 program? Imagine the career government worker who's first job was with the federal government and put every retirement penny into that program? It's quite safe, no? Personally, I believe in 100% stock allocation for young aggressive investors, so the 15% fixed funds is too high for me.

L2040 [9] - 5%G, 10%F, 42%C, 18%S, 25%I (http://en.wikipedia.org/wiki/Thrift_Savings_Plan)

Biancadonk said: I know I should look for low fees. I know I should be diversified.
You are not just diversified in your holdings, but OVER diversified. Trying to figure out your actual situation is VERY complex, but overall, it appears that you're overly conservative in your overall holdings. Don't be penny wise and pound foolish with low fees. Just because an international fund has higher fees than an S&P500 index doesn't make it a bad fund.

Linked by mod

Biancadonk said: My next decision is where to put my next 5,000 roth contribution.
The answer should be pretty much the same for $500 or $50,000. That's the concept behind asset allocation. Why not something like L2040?

Biancadonk said: Someone suggested Fidelity so I could get the no-fee ETFs. Should I move my 403(b) and other Roths there too.? Is it worth the account transfer fees? Can I liquidate my TRowe Roth and move the funds myself without a transfer fee? I also have a brokerage account with a few grand in it. Is there some strategy I should be following as to what types of stuff I put in my retirement accounts, and what I put in my regular brokerage?
Consolidate accounts to keep things simple without blending tax/tax-free accounts. Paying small transfer fees is probably worth it to keep things simple, but many brokerages have programs to mitigate these costs, especially when you're brining in dollars.

DaCheeze said: Do NOT commingle taxed and non-taxed funds. You will then have a tax nightmare later on if you do.
Good advice and put more funds in Roth funds if you can. It will give you more flexibility when you retire.

Now assuming you've got a decent emergency fund, here's one suggested aggressive starting target: 40%C, 30%S, 30%I
Over the next 10 years, move towards the F2040 allocation: 5%G, 10%F, 42%C, 18%S, 25%I

You could do the following to immediately simplify things.
Keep adding to your L2040 account maxing out any matching contributions and tax-free benefits. It's a very diversified, though conservative fund for long term and over time, should be safely growing as a percentage of your retirement investments.

1) $20,000 - L2040
2) $14,000 in 403(b) - move it ALL to TRBIX (small cap balanced)
3) $12,000 in Roth - move it ALL to EEM (emmerging mkts ETF)
4) $5,800 in another Roth - keep in 100%-PRGFX (TRowe Growth MF)

This gives you a starting point of: 2%G, 4%F, 27%C, 34%S, 33%I
Without any gains/losses, adding to the L2040 account
20k 3%G, 6%F, 31%C, 30%S, 31%I
40k 3%G, 7%F, 34%C, 27%S, 29%I

1) 1) What is your investment profile (aggressive or conservative, active or passive,etc.). How does it differ from the average person? Why are you veering off typical investment paths?
2) Are you getting matching in any retirement program? (don't turn down free money)
3) How do you have brokerage account invested? Do you want to invest in individual stocks?
4) How much do you owe in student loans? What is the payment and interest rate?
5) Do you own or plan to own a home? How does that play into retirement plans? Are you saving for retirement, a down payment or both?
6) How much do you have in an emergency fund? How is it held?

1- I suppose I should be aggressive, but with my discomfort with making frequent decisions, I'll gladly sacrifice a few % points of growth if it means I don't have to worry about rebalancing more than once a year or so. that's the big reason I like my 403(b), it rebalances automatically on my birthday for free. I figure I should have an average investment path, I make average salary, no major expenses. I don't plan on having children or get married anytime soon. My only big dream is that I'd like to "retire" early, or at least take several years off in my late 30's/early 40's, live in another country, and then maybe go back to work part time when I'm older.

2- I contribute 10% to my TSP, well over the 5% match.
3- My brokerage account has about $8000 total in a couple stocks, mostly large companies like google, apple, ge... and a few gambles like lululemon (I like her pants). I haven't added to this in a while.
4- Owe about $50000 in loans, rate is 3.25%
5- Don't own, may buy in a year or so, but my rent is very good and I like where I live and like not having to fix anything that breaks.
6- Cash, I got about $40,000 in cash right now (before my Roth contrib). Figure this will be my downpayment when I plan to buy. Most is in a rewards checking at a little bank (which my friend recommended), I think it gets like 4%. The rest mostly is sitting in a savings account.

So my plan is to move all my roths to one place... I guess I stick with one of my current accounts, and then maybe combine it all in one or two etfs or mfs (still really don't understand the controversy). I'll leave my 403(b) alone and reduce the number of investments, and maybe I'll pick a more aggressive fund in my TSP.

Maybe I'll find another picture.

igt123, you have some good points, but overall I have to give you red. You are giving some suggestions which can get a person in trouble if they don't understand the whole picture. The average CFA will give her similar suggestions based on a standard allocation to what she would get here.
Your suggestion about 7% cds and 5-6% notes is based on hindsight. I bet you wouldn't be saying that if the market didn't crash. They turned out to be the better option, but are you going to tell her to always be in CDs and notes? What if she can't find rates as high as you want?
You like the ETF, but you don't mention that if she were in Vanguard, she could move around her Vanguard MFs for free.
Explaining the preferences of a 50 year old vs a 23 year old is something that has already been done, and something that she probably knows already.

Biancadonk said: ...maybe combine it all in one or two etfs or mfs (still really don't understand the controversy).
Don't sweat the EFT versus MF debate. It's mostly academic and for good funds (i.e. low expense, follow their goal, etc.) like VFINX, VTSMX, VTI, the difference probably in the 5th decimal point.
VFINX vs. VTSMX vs. VTI vs. S&P500
If you're going to make lots of little purchases (i.e. weekly $50), then transaction costs on EFT will kill you. If you're making a $10k+ purchase annually and holding forever, then you might save a smidgen avoiding the equivalent mutual funds. I doubt you really care about intraday trading on retirement accounts. http://www.mymoneyblog.com/archives/2006/03/dont_let_commis_1.html

You're doing far better than average for under 30, and the goal of early retirement isn't unrealistic. This article http://www.bargaineering.com/articles/average-retirement-savings-by-age.html links to some good data at Employee Benefit Research Institute’s latest report on Individual Account Retirement Plans (August 2009).

1) Investment Profile - I think the easiest retirement plan for the average person is to put it all into one or two accounts and use simple asset allocation. A diversified plan like L2040 is a set it and forget it plan and keep adding to it regularly without worry. Vanguard has target plans that serve the same purpose for everyone else.

2) Matching - Excellent!

3) Brokerage Account - The rule of thumb used to be take 5% and speculate on whatever you think will be the next big thing (latin america, africa mining, wind&solar, off-shore drilling, real estate, shopping malls, etc.) I'm aggressive myself and think 10% or even 20% might be ok if everything else is great (emergency fund, home, etc.). Just make sure that the remaining 90% or 80% will be adequate for the later years. I expect to leave my kids an inheritance, so the success or failure of these speculations is less likely to impact my retirement than what they receive . Your IBM position belongs in this category, whether it's in an actual named retirement fund or not. Whether to take on stock-picking or any speculative investments are topics on it's own.

4) The amount is higher than I would have guessed, but the rate is pretty good, especially if fixed. You need to compare this liability to your other fixed income assets like 31% of $12,000 -STHBX (Short-term investment bonds) and 4% taxable FDIC insured bank account. Right now, they all seem pretty much equivalent, but if the student loan rate isn't fixed and rises, or you're not getting risk-free after tax return > 3% or higher return/higher risk on your cash, then you might want to shuffle amounts around.

5) Home - buy or rent are topics on their own as well. So is investing in real estate/REITs. Right now, home prices have crashed, but keeping a down payment in cash may not be a good long term strategy. It might be time to buy a property for investment or shift some of that cash into REITs or homebuilders to hedge against home price increases. XHB has done terribly no doubt, but has the potential to keep that down payment relevant, though mortgage payments could get ahead of incomes if prices rise too fast again (2000-2006).

6) The 4% is a great rate for a checking account. I doubt many saving accounts are any better.

Biancadonk said:
1- I suppose I should be aggressive, but with my discomfort with making frequent decisions, I'll gladly sacrifice a few % points of growth if it means I don't have to worry about rebalancing more than once a year or so. that's the big reason I like my 403(b), it rebalances automatically on my birthday for free. I figure I should have an average investment path, I make average salary, no major expenses. I don't plan on having children or get married anytime soon. My only big dream is that I'd like to "retire" early, or at least take several years off in my late 30's/early 40's, live in another country, and then maybe go back to work part time when I'm older.

This is why the Lifecycle plans work so well. The Government used Mercer, an internationally recognized benefits administrator, to determine the asset allocation for the L funds. http://www.tsp.gov/lifecycle/flash/qs_as.html#Q2 Therefore, I disagree with the previous poster that has all of your assets thrown into stocks. A bond and cash surplus can be rebalanced into stocks during a severe downmarket like we just had. In addition, they provide some cushion in the event of a prolonged bear market, such as what happened in the 1970's. It's only the 80's and the 90's that we think of the stock market with superlative performance, but before then, they were quite middling. That's the other reasoning behind switching your 403b into the Lifecycle funds. TIAA CREF has good expense ratios, but nothing as low as the TSP. By simply switching your 403b to the lifecycle funds, you get an extra 0.20-0.30% of performance with no effort. Not much when the stock market is doing 10% year over year, but every little bit helps.

If you are looking at retiring early you should have an idea of how to get to the magic net worth "number". Look up the Early Retirement forums for discussions from dreamers like you and those who have achieved their goals of early retirement. It is definitely a tremendous freedom to know that you don't have to go paycheck to paycheck.


2- I contribute 10% to my TSP, well over the 5% match.


If you have the financial capacity to do so try to hit the maximum. The advantage of a tax deductible TSP contribution is that contribution to a tax exempt account reduces your adjusted gross income, which can keep your eligibility for Making Work Pay Credit, student loan deduction, tuition and fees deduction, etc.


3- My brokerage account has about $8000 total in a couple stocks, mostly large companies like google, apple, ge... and a few gambles like lululemon (I like her pants). I haven't added to this in a while.

I think it is fine to have a certain percentage of one's account that is actively managed. Currently I have an account that I actively trade. If you want to you can take advantage of some of the brokerage offers available in some of the other threads. Companies like TD Ameritrade and Tradeking periodically give people cash for opening accounts.


4- Owe about $50000 in loans, rate is 3.25%
5- Don't own, may buy in a year or so, but my rent is very good and I like where I live and like not having to fix anything that breaks.


Pay off your loan as slowly as possible. Student loans are the best deal going because of the deferment privileges for going back to school, forebearance for unemployment, and automatic cancellation upon death or permanent disability. Since you work for the Government take advantage of the new Public Service Loan Forgiveness program by changing your loan repayment status to Income Based Repayment, if possible. Payments are based on your income (but can never exceed the standard repayment schedule) and after ten years the loan is cancelled, with no tax liability.


6- Cash, I got about $40,000 in cash right now (before my Roth contrib). Figure this will be my downpayment when I plan to buy. Most is in a rewards checking at a little bank (which my friend recommended), I think it gets like 4%. The rest mostly is sitting in a savings account.

So my plan is to move all my roths to one place... I guess I stick with one of my current accounts, and then maybe combine it all in one or two etfs or mfs (still really don't understand the controversy). I'll leave my 403(b) alone and reduce the number of investments, and maybe I'll pick a more aggressive fund in my TSP.

I partially agree. Consolidate your Roths into a low cost broker-Schwab or Fidelity if you want to continue on the ETF path, Vanguard if you wish to move to regularly traded mutual funds. Move the 403b to the TSP in order to take advantage of the low expense ratio, unless there are special provisions in the 403b that I am not aware of. Keep your cash in the rewards checking account, check the rate, and make sure that you do all the little transactions to maintain the rate. If the rate drops too much, or you are tired of doing the little transactions, move the checking account to Alliant Credit Union, which has had consistently high rates for some time now. Best of luck to you.

Why is that? She claimed she was refered by a FWF member, who probably told her to promise/post pics. Are any pics on the net legit?
If she didn't promise pics, there would be at least 5 posts asking for them...So why not, her pictures are not bad, and I don't see that she is offering anything else besides that picture...

Edit: Pic promise or not, I think she would have gotten similar advice, albeit much less green.

Bianca do you still have the Pug?