Personal Investments • Portfolio Review request: I am a fumbling beginner

After my first post yesterday, I was advised to present for a full portfolio review. I hope this helps provide the necessary context for my questions! Thank you all in advance.

Emergency funds: 12 months

Debt: none

Tax Filing Status: single

Tax Rate: 24% Federal, 6% State

State of Residence: NY

Age: 45

Desired Asset allocation: 60/40? 70/30? Earliest possible retirement is probably in 20 years, likely longer if I am in good health. It took some time to get my current career established and I started investing late (late 30s), so I am playing catch up. But, I have no debt, good budgeting practices in place, and live well within my means, so I feel there's hope for me still. (To not retire in squalor.)

Desired International allocation: unsure.

Current retirement assets: ~$225k

-(20%) Cash (excluding 12 months’ emergency fund)
-(22%) Employer pension plan (allowance will be based on average salary of last three years, years of service, age; will be subject to federal but not state tax)
-(4%) Series I Bond purchased in 2022
-(46%) T Rowe Price Roth IRA, in Retirement 2045 Fund (TRRKX 0.62%)
-(1%) T Rowe Price Trad IRA, in All-Cap Opportunities Fund (PRWAX 0.81%)
-(7%) Vanguard Rollover IRA from old 401k, in Vanguard Total Stock Market Index Admiral Cl (VTSAX 0.04%)

Contributions:
-I believe my pension deductions are $130/bi-weekly. There's no changing them.
-Currently set to max out IRA contribution of $7k. I was funding the TRP Roth IRA until about two months ago when I opened the TRP Trad IRA and started funding that instead.
- Planning to start a brokerage account with some of my saved cash.

Apologies, I am not sure what “available funds” refers to in the template.

Questions:
1. My first from yesterday: “About two months ago, I created a Trad IRA and diverted my automated savings into that new account…. Should I transfer [it] into my existing Roth? (which, I understand, means I'll pay some taxes now on this $1800). Or was it a good idea to start a Trad after all, and if so, do I fund both halfsies or put all into the Trad?”

After my post yesterday I was asked whether I’m eligible to deduct Trad IRA contributions (which, I understand, is one of the main benefits). I had not thought about that. I’ve checked, and the answer is no (because of the pension plan + my MAGI).

I also think that maybe I can predict (to the extent that one can even try) that my tax rate at retirement is unlikely to change. I’m a city employee; the contract renegotiations aren’t typically that generous; it is quite a long way to the next tax bracket under present tax law. (I might be thinking about this completely wrongly.) ETA: current salary $107k, rises 2x a year by $2500-3500 but not without interruption (due to extended contract lapses/renegotiation periods).

Am I now able to answer my own question accurately? I should roll this small Trad IRA (referring to the 1% that’s in the T Rowe Price Trad IRA into something else?

In which case, the next question is where to move it to, which brings me back to….

2. I would also like to choose something to invest some of my cash into. Since I’m maxed out on non-taxable options I believe my only remaining option is a taxable brokerage account, right

But, as I said yesterday, “I'm having a hard time assessing what is ‘good.’”

I assume that we do look at longer term RoRs to decide what funds are good choices, right? So my question is, if a fund seems to have, say, a good 5-year RoR (is that long-term enough?) but high expense ratio, how do I compare that against another fund with a lower ROR but also lower expense ratio? Or is the answer always to pick the lowest expense ratio?

I can see that I should consider asset allocation questions more keenly as well. Most of my funds (46%) are in the Target Date fund on the assumption that those allocations manage my risk for my age. So perhaps I should be looking for… the Target Date fund with the lowest expense ratio, disregarding RoR #s? Or should I go all in on VTSAX until I’m 50?

(Relatedly, yesterday’s post also mentioned that my cash is in a high-yield savings account and I was trying to compare the 4.5% interest rate on that account with one of my IRA investments’ RORs (5.4%). I was told that was a terrible comparison. Is that because a Roth IRA is tax-deferred? Because the invested funds theoretically perform closer to 7-8% on average over the long-term?)

If there appear to be any other horrible decisions in my portfolio (other than the aforementioned 1% in the Trad IRA), please do point them out. I would really appreciate if, along with any suggestions, I could get your sense of how big an impact the change would have. With work and projects, I don’t have a ton of time and energy. In the past, I have found the process of transferring funds (from a past employer 401k to the VG; from a Citibank Roth to a TRowe Roth) to be quite time-consuming (involving a medallion signature chase, for e.g.) and anxiety-producing. Of course, I want to do things right for myself, but the additional info about how big an impact/how pressing something is to fix could help me triage.

Right now, these seem like three possible options (in order of most inertia to most change):

1.Leave all funds where they are. Continue fully funding the TRP Roth IRA. Start new brokerage account with VG. (which?)
2.Transfer the TRP Trad IRA to the TRP Roth IRA. Continue fully funding the TRP Roth IRA. Start new brokerage account with VG. (which?)
3.Transfer both TRP IRAs to a lower-expense VG Roth IRA and fund that. Start new brokerage account with VG. (which?)

Statistics: Posted by ruralavalon — Sun Feb 25, 2024 2:15 pm — Replies 4 — Views 340