Kudos and thumbs up and clawing yourself out from under the Edward Jones umbrella and going for the lower cost DIY plans. Agree that you might want to consider other locations or alternatives to holding BND in your taxable account at this stage. You could always use Treasury Direct and I Bonds to delay taxes if you feel you need to hold some bonds, or tax-exempt municipal bond funds in your taxable account. However, at just age 36 I would be leaning heavily into the equity side of the allocation equation. I'll let others speak to it, but there must be some options available to you in the businesses to tax defer some of your income into retirement accounts.I’m in my mid-to-late 30’s and realized I have not taken investing and retirement seriously enough. The funds I have invested have been through Edward Jones, using the same financial planner guy as everyone else in my family - but I’m ready to move on. I’m pretty nervous about where things stand for saving for old age, and I want to put a plan into action for actually starting to invest for retirement.
About us
I am 36. Wife is 36. We have two children (2 and 6).
My pay is a little up in the air because I co-own two small businesses. My wife primarily takes care of our kids. Roughly speaking, we are making about $157,000 a year all combined. (This can go up or down depending on how business is going, but I think generally that’s probably the most realistic number I can offer.) Unfortunately, neither business has 401k’s and I can’t get my co-owners on board with setting them up, so let’s assume that’s not an option.
Our only debt is a 3.65% mortgage and a car we are paying off (at 3%).
Current cash -
- $33,000 in standard checking
Current investments - All through Edward Jones. The plan is to get out of EJ.
- $94,500 in HYSA
- Wife’s Roth IRA: $34,000
- My Roth IRA: $30,000
- 401k from old job (me) through Empower: $38,000
- Taxable brokerage account #1 (both of us): $5,000
The Plan
- Taxable brokerage account #1 (both of us): $29,000
So as stated the goal is to move our money out of EJ and into Fidelity. Here’s what I think we should do:
- Keep $20,000 in our standard checking account and $30,000 in our HYSA. So effectively all together we have a little more than 5 months worth of emergency funds.
- Move both of my and my wife’s Roth IRA’s ($30,000 and $34,000) to Fidelity 2055 target date fund.
- Leave 401k ($38,000) where it is in Empower but move it to a Vanguard target date fund if that’s possible via Empower. I don’t think that creates a taxable event.
- Move our existing taxable brokerage accounts in Edward Jones ($34,000 total amounts) as well as $77,500 in cash to a 90%/10% VT+BND portfolio. (I think I am not going to worry about the tax efficiencies of VTI+VXUS+BND). I know this will create a tax situation I have to deal with but better to pull off the bandaid, I think?
Any thoughts or feedback about this plan?
- Going forward, fully fund our Roth IRAs (already fully funded this year) and then also set and forget $500 a month into this taxable brokerage VT and BND mix
Simplicity is important to me, and I don’t want to make perfect the enemy of good enough. I can get paralyzed with decision making.
Thank you!
Regarding investment expenses, you want to keep as much of the pie as you can. EJ eats too much pie by being in the top row of pies in the graphic below, so you are headed in the right direction to get your investment costs down to the lower row of pies.
If we look at some of the guides regarding how much to save by certain ages to make sure you are on track to fund your retirement, you are close, if not actually being right in there with your current $263,500 at age 36. If we look at some of the guides from places like Fidelity, JP Morgan, and T. Rowe Price - you can see where each guide says you should be by age 40 to help with your plans to stay on track over the next four years.
Here are some of the guides...
Fidelity wants you at 3X $157K by age 40
JP Morgan wants you at $385K+ by age 40
T.Rowe Price wants you at least to be at 2X $157K by age 40
CyclingDuo
Statistics: Posted by CyclingDuo — Thu Sep 05, 2024 9:31 pm — Replies 2 — Views 192