As many of you know, M and I started working with a great financial planner. We have not finished the whole start-up planning phase, but we have decided what our asset allocation will be and what our accounts are. You’ll see how I invested my money last year here, but in summary:
- 55% US stocks:
- VIIIX: Vanguard Institutional Index Fund Institutional Plus Shares 0.02%
- VIEIX: Vanguard Extended Market Index Fund Institutional Shares 0.12%
- 20% International stocks:
- VFWSX: Vanguard FTSE All-World ex-US Index Fund Institutional Shares 0.11%
- 10% Small cap value:
- VISVX: Vanguard Small-Cap Value Index Fund 0.2%
- 8% REITs:
- VGSIX: Vanguard REIT Index Fund Investor Shares 0.26%
- 7% Bonds:
- VBMPX: Vanguard Total Bond Market Index Fund Institutional Plus Shares 0.05%
Now there is a “we”, and we have decided to follow our FP’s advice to go 100% equities to maximize growth. We moved all of M’s 4 accounts (mix of old work IRAs, 401(k)s into one solo-401(k) at TD Ameritrade. He had 1099 income in 2016 and the solo-K was opened in December 2016. TDA allows Roth 401(k) so we opted to make his 2016 contributions Roth (small amount though since his 1099 income wasn’t substantial). He had a small amount contributed to his W2 job’s 401(k) in 2016 but he became unemployed relatively early in the year. He also contributed to a Roth IRA for 2016 (his first time) as well this year, and he’ll do 2017 in short order.
I’m still doing what I did last year – contributing the full $18,000 each to the 403(b) and 457(b) and $5,500 to a Roth IRA (already funded for 2017). I also have the option to do the “Mega Backdoor Roth IRA” (to be covered in a future post), but have not gone there yet. We don’t have a taxable account (yet).
Our IPS with our FP has the following asset allocation:
- 68% US stocks
- 17% Large cap growth, 17% Large cap value
- 17% Small cap growth, 17% Small cap value
- 24% International stocks
- 12% Large cap developed countries
- 12% Diversified emerging markets
- 8% US REITs
You’ll see that it’s not that different from my original, with the subtraction of bonds. There is no mid cap category since mid caps are a fuzzy category.
In M’s solo-401(k), the details are:
|iShare Core S&P Small-Cap||17%||IJR|
|Vanguard Dividend Appreciation ETF||17%||VIG|
|Vanguard FTSE Developed Markets ETF||12%||VEA|
|Vanguard FTSE Emerging Markets ETF||12%||VWO|
|Vanguard High Dividend Yield ETF||17%||VYM|
|Vanguard REIT ETF||8%||VNQ|
|Vanguard Small-Cap Growth ETF||17%||VBK|
This account is managed by our FP. I still manage my work’s 403(b) and 457(b) and I’m still managing my Roth IRA at Vanguard, but I may let them manage the Roth IRA at some point. I also plan to open up my own solo-401(k) this year. My allocation is a little bit different than what our IPS states but not too far off:
|Vanguard Institutional Index Fund (large caps)||40%||VIIIX|
|Vanguard Extended Market Index Fund (small & mid caps)||20%||VIEIX|
|Vanguard FTSE All-World ex-US Index Fund||12%||VFWSX|
|Lazard Emerging Markets||12%||LZEMX|
|Vanguard Small-Cap Value Index Fund||8%||VSIAX|
|Vanguard REIT Index Fund||8%||VGSIX|
The small cap and REIT funds are in my Roth IRA. The rest are in my 403(b) and 457(b). We will rebalance the accounts once a year. We have not fully decided how much we will put away for investments this year at this time. There are some moving parts right now making it challenging to project how much we will be able to put away outside of maxing out available tax-advantaged retirement pots.
What is your asset allocation for 2017? Comment below.