Personal Investments • Retirement Strategy

Hello, a little about myself, 32, employed(90k/yr), married(combined income 120k/yr), no debt besides home, emergency fund(15k).

My question: I currently manage my own Roth IRA and brokerage account and wanted to know if my investing strategy would net me an average of +10%/year for the next ~30 years.

Roth IRA:
$550/month contribution
50% FZROX(Total market - 2,634 holdings)
40% FNILX(Large Cap Index - 508 holdings)
10% FZILX(International Total market - 2,296 holdings)

Individual(Long term account):
$250/month contribution
50% FSKAX(Total market - 3,888 holdings)
20% FXAIX(500 index - 506 holdings)
20% FTIHX(Total International)
10% Stock(whatever I desire)

My goal is to hold these positions long term and sell only if required. I also have a 401K(4% match) I contribute to that currently has ~30k. I would like to retire as much before 67 as possible, and would require a few million dollars. [emphasis added]

Establishing a high rate of contributions is the most important investing decision you can make, forum discussion.

In general make maximum annual contributions to all available tax-advantaged accounts. Wiki article, Prioritizing investments.

Her are calculators you can use to assess the range of possible outcomes at different levels of contributions:
1) https://firecalc.com/;
2) Optimal Retirement Planner (i-ORP);
3) Otar Retirement Calculator; and
4) retirement best egg calculator.

When you say "maxed out your Roth 401k (for company match)" do you mean the $23k contribution limit? Or are you just contributing enough to get the full match?

$429/month into the 401k

~$150 from company match

Is it worth investing more into the 401k? I guess I dont have much confidence in the target date 2055 fund.

Why do you lack confidence in the target date 2055 fund?

What other funds are offered in your employer's 401k plan? Please give fund names, tickers and expense ratios.

What is your tax bracket, both federal and state? What is your tax filing status?

If any decent funds are offered in your employer's 401k then you clearly should try to make maximum annual employee contributions ($23k) to that account.

The employer match does not count towards the employee maximum, it's extra.

Making the maximum annual employee contribution should be a priority over contributions to an individual taxable brokerage account.

Wiki article, Prioritizing investments. "If the company plan offers good, low-cost funds, it may be preferable to contribute to the company plan before contributing to an IRA."

Wow, thanks for this. I just looked into my 401k account and it looks like I have access to 26 different funds.

Fed tax 22%
State tax 4.55%
Married

Looking at the best performing over the last 5 years:
- Vanguard FTSE Social Index Fund Institutional Shares (VFTNX) ~15%
- Vanguard Small-Cap Value Index Fund Institutional Shares (VSIIX) ~11%

These do have higher expense ratios than my current funds. The TDF has returned almost 5% average over the last 5 years with a much lower expense ratio.

So would it be best to just focus my efforts entirely into my 401k? I dont currently have 23k a year to invest.

Would this be a better plan?
- Increase my Roth 401k contributions by $250/month(this would be about $500 from my pocket) & potentially look at fund change
- Continue to max my Roth IRA & condense my monthly contributions to FZROX(90% total market) & FZILX(10% total international)

This will depend on the quality of the funds offered in your employer's 401k plan. If good funds with low expense ratios are offered then I suggest maximum annual employee contributions to the plan, as a priority over contributions to the IRA or to the individual taxable account

What funds are offered in your employer's plan? Don't just look for recent historical performance, I would not usually suggest the 2 funds which you mentioned. Instead you need funds with a combination of broad diversification (to reduce your risk) and low expense ratios (to increase your net returns).

Ideally you want some combination of three types of funds:
1) a total stock market index fund, or a S&P 500 index fund, or a large cap index fund);
2) a total international stock index fund, or a developed markets index fund; and
3) a total bond market index fund, or an intermediate-term investment-grade bond fund.
Sometimes similar actively managed funds will suffice.

Please give fund names, tickers and expense ratios for all the funds offered your employer's 401k plan.

Statistics: Posted by ruralavalon — Wed Aug 21, 2024 6:11 pm — Replies 29 — Views 5282

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