My suggestion....

1. Max fund her Roth.
2. Invest all the rest in her 401k. The benefit of the tax shelter VASTLY outweighs the bad expense ratios here compared with putting it into a taxable account.

It would be perfectly fine to put the Roth money into a target fund and then try to mimic the allocation of the target fund in the 401k funds you have available.

Personally, if you want to be aggressive and easy, I'd do this:

Roth IRA = Vanguard Target Retirement

401k = Mix of TAP Stk Idx (which is apparently tracks S&P500) and the Vanguard Small Cap Idx. I personally wouldn't put any of the 401k assets into bonds for two reasons: the fees on these suck and bond returns are horrible right now. Tyler's link would suggest going with something like 80-85% TAP Stk Idx and 15-20% Small Cap. You could certainly put some of it into international, but those fees suck and I didn't look up what that fund is investing into.

Edit: I just actually googled the JPMorgan smart retirement funds, and that's not a bad option either, even if the fees are alot higher than vanguard's version of this kind of vehicle.

Once she quits, then you can rollover the 401k to an IRA at the same company you open the Roth with and reallocate it to super low cost funds however you like.

Tyler/Dale/others:

Are you aware if there's a thread on here specific to Boglehead type thinking? I'd love to have a thread that specifically would let people share their allocations or we could discuss index oriented strategies. Didn't want to re-create the wheel if it exists.

pedantically, i would say the bolded is market timing and flawed thinking, particularly for someone with a long horizon. diversification, efficient frontier, dry powder for rebalancing, yadda yadda. it's unlikely to matter much though, particularly since hero will have a small amount in fixed income until he's older.

actually a better option might be to buy bonds in the roth. yeah i like this better.

i'm not going to pull all the actual numbers together without some help but how about something like:

Roth 20%
20% TBM (or 10-15% TBM and 5-10% TSM)

401k 40%
32.5% TAP Stk Index
7.5% Vanguard Small Cap

Taxable 40%
20% TSM
20% TISM

this gives 80% equities/20% fixed income with 33% of equities in international.

all of that said, i'm also fine with the "just buy target date funds everywhere" strategy, especially as a first step. simplicity is worth a lot.

ETA: in case i wasn't clear, jalexand and i are in agreement on basically everything here.

i've been merrily dispensing boglehead-style advice in the "i have xx to invest" thread for some time now -- does that count?

i'm not aware of any thread like this. i'd subscribe.

one problem is that boglehead-style investing is pretty boring: you just buy all the markets, let marinade, rebalance occasionally, retire. what's left to discuss?

Yeah, I know it's bad bad bad. But, clearly right now interest rates are at historic lows, they aren't likely to improve soon, and if they DO improve soon, it's not going to be friendly to bond fund principal short term. I obviously don't hate it, because in a long term strategy, bonds clearly have a critical place.

Clearly we can discuss things that satisfy the tinkerers in us, like small cap tilts, best ways to monitor/rebalance/tax harvest/etc.

If there's more interest, I'll create it.

my take is that in the long run it won't matter, so i continue to buy and hold TBM and I Bonds. if i needed to hold fixed income in taxable space or if i had a shorter horizon, i'd be looking harder at alternatives: CDs, treasuries (i've read a bit about a "barbell" strategy employing a mix of short-term and long-term treasuries).

i'm pretty sure dale is just stalking me at this point, so sign him up too .

Bought into a "fund of funds" mutual fund through JP Morgan. 90% stocks 10% bond mixture, lot of "select" funds that have 1MM entry barrier. 4.5% load fee for my initial 6k investment. Thoughts?

lol.

You got raped most likely. Load fees are bad. What specific fund did you put it into?

FYP.

lol. It's things like that that make 2+2>>>>>>>>>Bogleheads.

Thanks for the responses. I'll absorb them and check back in w more questions.

They had class C shares for the same fund. Same fund, no load fees, higher management fee %...
Figured since I was going long term it would be better to pay the load fee

That's like picking between getting kicked in the nuts and punched in the face. Buy a product from a company that doesn't do either.

Well I'm glad I posted. Set up an etrade account. Are the MF options on there just as good? I'm an investing fish but want to do some research. Have a pile of money from poker sitting in safety deposit boxes...

1. make sure you're doing tax favored investing. If you're playing poker professionally, make sure you're doing a SEP/Solo 401k/etc. You can shelter alot of money doing that. If you're a fish, just dump money in those kinds of accounts into Vanguard Target Retirement.

2. if you're going to be investing with money in a taxable account on top of that, you'll want to find some super low cost funds or etf's that are tax efficient.

Thank you for your time. So maxing out Vanguard IRA is the way to go?
Buying ETFs on Etrade, you pay the trade commission and that's it? No management fees? Why would I ever allow my broker to hustle me into buying that JPM fund...sigh

Thanks for the comments guys. I'd be interested in following the above thread.

There will still be expenses. Most vanguard funds are around 0.2% expense. You are paying expenses on the JPMorgan stuff on top of the load, and I'd bet money that it's way north of .2%, without even knowing what it is.

Always always max out tax sheltered options before you invest taxable.

How can TSE:TA (TransAlta Corporation) have a 34 P/E ratio and yet give out ~8% in dividends? Surely this is not sustainable?

Dumb question:

You can, I assume, just send a check to the company who handles your 401(k) at the end of the year in order to max everything out? We don't have to figure it out on a bi-weekly basis? Then, when tax time comes, you just note the amount that you contributed and your taxable income is adjusted by this amount?

ace,

no, it has to come out of the paycheck because it's pre-tax money.

Any advice on which ETFs are solid options? Recently set up an Etrade account and would like to know which metrics I should be comparing/analyzing when looking at their ETFs. Thanks in advance!

Start by looking at vanguard options. If it's in a tax sheltered account, you can just buy the Vanguard Target Retirement funds to do something super simple. If it's in a taxable account, it's more complex.