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2015 Investment Action Plan

March 16, 2015

PF blogger confession:  For the past 2 years or so, I’ve not spend any time on my investment portfolio.

I’ve been doing the basics, which I think is the most important:  saving as much as possible in an automatically rebalancing asset allocation / target date funds.

So, now is the time to revisit this and optimize.  Here’s my plan.

  1. Find out what our current investments actually look like.
  2. Re-evaluate our ideal asset allocation.
  3. Move out of target date funds and create our own where it makes sense.
  4. Move my old 401k.  It looks like the best option is to put this in my new 401k since the investment options are good.  Investment options are being changed to eliminate some extremely low expense ratio funds (.02 – .07).  My best option will be target date funds with .15% expense ratios.   This is enough to push me to rollover to vanguard instead.

Step 2 is the hardest, but I’m not going to overthink it.  Based on a brief bogleheads review, a 70/30 stock bond split, and following vanguards 4 fund allocations, I’m targeting something like this:

  • Total U.S. stock market index fund – 49%
  • Total international stock index fund – 28%
  • Total U.S. bond index fund – 21%
  • Total international bond index fund – 9%

If anyone smart has any reason I need to keep digging and researching to find a better allocation, I’m open to suggestions.

The largest portion of our money is in my LA employer’s 401k.  This has been auto-rebalancing on an asset allocation that I set a while ago, and all funds have low fees.  I was getting charged $6/year to keep it there in 2014, but now it looks like that fee went away.  I don’t see a reason to roll this over, so I adjusted the rebalance allocation to include more bonds to reflect a less risky portfolio going forward.

My most recent employer’s 401k has one year’s worth of contributions, all in a target date fund with a relatively high expense ratio (.7%).  The fund options weren’t very compelling, so I was stuck with that while I was employed.  Now I need to move it into a roll-over IRA.   This is also less intimidating than moving my other 401k.   This one is a relatively small percentage of my portfolio.  Once the rollover is complete, I’ll rebalance my rollover IRA to try to hit my final allocation target.

9 Comments leave one →
  1. March 16, 2015 8:44 pm

    If you haven’t spent any time on it for the last two years, it sounds like you have a great investment plan! So hands off.

    I don’t use an international bond index fund myself. It’s just added complication. If I was using target date funds, I wouldn’t mind its involvement though. My only comment about rolling your old 401(k) over to a Traditional IRA at Vanguard is that you’re giving up the Backdoor Roth IRA possibly for life – are you okay with that? Or do you already have a Traditional IRA, making that a moot point?

    I finally have all the steps ready to kick off my 401(k) rollover. I’m going to do that March 31st so that hopefully I don’t have a $100k swing in my net worth between months.

    • March 17, 2015 7:58 am

      Well, hands-off, but not optimized. It was in a state where it could self-survive, but it looks like I was overly invested in stocks.

      I have about $20k in a rollover IRA. T still has access to a backdoor Roth. I honestly don’t think I’ll pursue a backdoor route. I haven’t in the past few years. We have a ton of room in our tax-advantgaged accounts (up to $72k combined), so it just doesn’t seem necessary.

      I would like to move my newer 401k into my oldest 401k, but I’m pretty sure I can’t if I’m no long an employee. :/

      • March 17, 2015 5:42 pm

        Oh wow yeah if I had $72k in retirement room combined, I would care much less about the backdoor. As it stands, I have $43.5k including the backdoor. I’ll stick with it for as long as I can within reason 🙂

        Your old 401(k) *may* still accept rollovers. Some do. I think my current one does.

        • March 17, 2015 8:19 pm

          I meant combined me + t, so you do seem to have similar amount! Anyway, I’d already have to convert the $20k I have in an IRA to a roth, and I doubt I’ll want to do that.

          I should at least look into my old 401k options to be sure. 🙂

  2. ChasingGains permalink
    March 17, 2015 1:02 am

    Awesome investment plan ! Hopefully makes your life a lot easier and simpler having this plan in place, goodluck !

  3. March 17, 2015 9:19 am

    I don’t know if it’s the right thing to do or not, but last time I balanced/optimized, I did the same thing you did– went to Bogleheads and looked at what they suggested.

    We’re older now, so probably due for a re-balance of funds. Not sure how long our horizon is though, so maybe tipping more into bonds than we are now isn’t in our best interest. There’s so much in these decisions that’s so hard to predict.

  4. March 17, 2015 12:43 pm

    I like Morningstar portfolio x-Ray to get a snapshot of all my asset allocation. Now that our investments are consolidated in one firm, I don’t use it was much, but it’s a great tool if you have different accounts sitting in different places.

  5. middle_class permalink
    March 17, 2015 3:58 pm

    I’ve been using Morningstar X-ray for the big picture view, which is important when you have multiple retirement accounts. Once I saw all my funds in one place, I realized that I had a few funds with duplicate investment styles. Now I check yearly to track investment returns and see if I need to re-balance funds.

  6. April 11, 2015 7:27 am

    It looks good to me. Just make sure the international funds don’t also contain U.S. stocks.

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