Personal Investments • Debt and Savings Strategies for Young Adult

Prelude

Hello everyone, I'm a working professional with a stable job and moderate income. I've got around $30k in student loans at less than 5% APY, roughly the same amount in assets, and a solid emergency fund to cover 6 months of expenses. My long-term goals include retirement savings, setting myself up for success, and achieving financial independence.

In terms of debt repayment, I've got one large student loan at 4.53% APY, I plan on pay off all of my student loans by September 2027. Once I've paid off the large loan of $15,000.00, my remaining loans will be under 3.73%, making it easier for me to invest in higher-return accounts.

I'm looking to simplify my investment strategy and avoid unnecessary administrative overhead. I've been considering a 3-4 fund portfolio, but I'm open to adjusting based on the type of accounts I use. My employer offers a 403(b) Roth, which might be a good option for some savings. However, I'm also weighing the pros and cons of a Traditional 403(b) and whether it's the best choice for me.

One thing that's been on my mind is the $7,000 I've stashed away in my HYSA for a Roth IRA. While it was a good starting idea, I've recently started to question whether this is the right choice for me. Is it worth contributing more or exploring other options? One of my biggest considerations is that I am able to pull out my contributions at any time - thus it's risk-adverse. I'd love to get your thoughts on this and any advice you might have.

I'd like to keep my investment strategy simple and manageable, with no more than an hour of work per week dedicated to monitoring and adjusting. Before investing, I'd love to get your advice on how to create a plan, make incremental changes, and modify it as needed each year to stay on track. Additionally, I'm aware that my salary will likely increase over the next five years, potentially by around 40%. How can I best take advantage of this
growth and plan for the future - particularly in terms of diversifying both account types of investment types in their best respective accounts?

Thank you in advance for your guidance and support!

General Financial Information

Income and Taxes

• Gross Annual Income: $92,000.00
• Post-Tax Annual Income Estimation: $63,448.49
• Effective Tax Rate: 34.59% (Sum of Federal, State, and FID0EE Tax, SS, Medicare, Mapfl, and Mapml).
• Marginal Tax Rate: 27% (Sum of state and Federal) Federal is 22%, where State is 5%.
• Tax Filing Status: Single
• State of Residence: MA

Financial Situation

• Age: 24
• Desired Asset Allocation: 75 / 25 (General rule, open to suggestions)
• Desired International Allocation: Less than 30%

Investment Capacity

• Approximate size of total portfolio: $2,802.00
• Amount waiting for next steps: $7,000.00
• Monthly investment capacity after expenses (all free cash available): ~$1,500.00

Employer-Sponsored Retirement Accounts

I currently have two employer-sponsored retirement accounts: a 403(b) account through Fidelity and a 401(k) through
Paychex from a previous employer. Here's an overview of each:

403(b) Accounts

Fidelity 403(b)

This account offers both a Traditional and Roth option.

• Investment Name: FID FDM IDX 2065 IPR (FFIKX)
• Value: $2260.00
• Vesting Schedule: 100% vested

The Fidelity IRA has a range of investment options seen in the table below (this is a big consideration given that many of these are not the best choice for portability or return); however, I'll need to understand my employer's admin fees better to know the exact cost of these:

Additional Investment Options

There may be additional administrative fee's, but I am unsure where to get this information from my employer.

| Name/Inception Date | Plan-specific option | Gross Expense Ratio** |
| ---------------------------- | -------------------- | --------------------- |
| ABF LG CAP VALUE R6 (AALRX) | Yes | 0.61% |
| FID 500 INDEX (FXAIX) | No | 0.015% |
| FID GROWTH CO K6 (FGKFX) | Yes | 0.45% |
| VANG MIDCAP IDX INST (VMCIX) | Yes | 0.04% |
| FID SMALL CAP VALUE (FCPVX) | No | 0.97% |
| VANG SM CAP IDX ADM (VSMAX) | No | 0.05% |
| AF EUROPAC GROWTH R6 (RERGX) | Yes | 0.47% |
| FID FDM IDX 2010 IPR (FFWTX) | No | 0.08% |
| FID FDM IDX 2015 IPR (FIWFX) | No | 0.08% |
| FID FDM IDX 2020 IPR (FIWTX) | No | 0.08% |
| FID FDM IDX 2025 IPR (FFEDX) | No | 0.08% |
| FID FDM IDX 2030 IPR (FFEGX) | No | 0.08% |
| FID FDM IDX 2035 IPR (FFEZX) | No | 0.08% |
| FID FDM IDX 2040 IPR (FFIZX) | No | 0.08% |
| FID FDM IDX 2045 IPR (FFOLX) | No | 0.08% |
| FID FDM IDX 2050 IPR (FFOPX) | No | 0.08% |
| FID FDM IDX 2055 IPR (FFLDX) | No | 0.08% |
| FID FDM IDX 2060 IPR (FFLEX) | No | 0.08% |
| FID FDM IDX 2065 IPR (FFIKX) | No | 0.09% |
| FID FDM IDX INC IPR (FFGZX) | No | 0.08% |
| FID TOTAL BOND K6 (FTKFX) | Yes | 0.3% |
| VANG INFL PROT ADM (VAIPX) | Yes | 0.1% |
| VANG TOT BD MKT ADM (VBTLX) | No | 0.05% |
| FID GOVT MMKT K6 (FNBXX) | Yes | 0.27% |
| BROKERAGELINK | Yes | N/A |

Paychex IRA

• Previous Employer: 401(K)
• Vested Amount: 100%
• Value: $779.00

My previous employer's 401(k) plan is fully vested, I have considered transferring this to Fidelity, however there is a flat $100.00 fee that makes that a bad choice.

Pension Plan

Fully vested in 5 years (30% completed). Tiered pension based on length of employment.

Debt Management

Student Loans

• Interest Rate: 2.75-4.53% APY
• Value: $32,000.00
• Monthly Payment: ~$1,100 (Avalanche payoff) + lump sums
• Notes: I have one large loan at 4.53% for ~15,000.00.

Revolving Debt

• Interest Rate: 18-28% APY
• Value: $699.00
• Notes: I've paid this debt in full every month and never use a debit card.

Assets

Here's an overview of my assets:

Liquid Assets

| Category | Value |
| -------- | ----- |
| HYSA | $25,500.00 |
| Checking | $400.00 |

I have a high-yield savings account (HYSA) with 12k in emergency funds and 7k for potential IRA contributions in
2024.

Other Assets

| Category | Value |
| -------- | ----- |
| Car | $4,500.00 |

As I continue to grow my retirement accounts and manage my debts, I'd appreciate any advice or insights from
fellow Bogleheads. Are there any specific investment options or debt management strategies you recommend?

Statistics: Posted by Improving1323 — Wed Oct 02, 2024 4:51 pm — Replies 7 — Views 286

---