Portfolio Review

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mildred66
Posts: 36
Joined: Fri Sep 16, 2011 4:43 pm

Portfolio Review

Post by mildred66 »

First of all, I want to thank everyone on this forum for teaching me so much about investing! I have been following a Boglehead-inspired portfolio design for a couple years now, but I think I’m ready for a review! I also cross-posted about REIT placement and livesoft's response got me thinking:

Emergency funds: 3-6 Months (in i-bonds and ING Direct)

Debt: Student Loans ~51k
~9k @ 3.75%
~6k @ 3.25
~36k @ 2.39%

Basics
Tax Filing Status: Married Filing Jointly
Tax Rate: 28% Federal, 9.3% State
State of Residence: CA
Age: 37
Desired Asset allocation: 74% stocks / 26% bonds
Desired International allocation: 30% of stocks

Portfolio Size: Low six-figures. Currently, the portfolio is split between Vanguard (his) and Fidelity (hers). I understand consolidation would make things simpler, but we are keeping them separated for now. I am allocating to the respective Total Bond, Stock and International for both companies.

Taxable
20.4% Fidelity Spartan Total Market Index Inv (FSGUX) (Expense Ratio (ER): 0.24%)
16.3% Spartan Global Ex US Index FD Investor Cl (FSTMX) (ER: 0.10%)
10.3% Yacktman Fund (YACKX) (ER: 0.80%)

His 401k
13.7% Vanguard Institutional Index Fund Institutional Shares (VINIX) (ER: 0.04%)
7.1% Vanguard REIT Index Fund Institutional Shares (VGSNX) (ER: 0.08%)
6.0% Vanguard Total Bond Market Index Fund Institutional Shares (VBTIX) (ER: 0.07%)
6.3% Vanguard Total International Stock Index Fund Investor Shares (VGTSX) (ER: 0.22%)

Her 403b
1.2% FID Freedom 2040 (FFFFX) (ER: 0.75%)

His Roth IRA at Vanguard
6.1% Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) (ER: 0.10%)

Her Roth IRA at Fidelity
12.6% Fidelity Total Bond Fund (FTBFX) (ER: 0.45%)

Annual Contributions
$17,000 his 401k (Employer match: 8,500)
$5,000 his Roth IRA
$5,000 her Roth IRA

Questions:

1. How does it look? Is this the best tax efficient placement?
In particular, where should I keep the REIT fund and the Bonds?

2. Does Yacktman Fund need to go?
It’s been a good performer, but I recognize the expense ratio is high and it violates our general principle of passively managed index funds. The FID Freedom 2040 has a high ER as well.

3. Should I keep paying the minimums for these student loans, or knock’em out using the taxable account?
I am following this page’s recommendation, which suggests the interest rates are low enough to de-prioritize paying down.

4. Is it ok to treat the taxable account as a repository for a very flexible savings goal but keep it part of the overall retirement AA?
We are in a high-priced area, so we might also rent forever, but we still like to save for a potential home downpayment. I’ve read this page, but wonder if I should treat the taxable account independently, or roll it into the overall retirement AA, then rebalance if we ever need the money.

Thanks in advance for looking this over!
Last edited by mildred66 on Sun Sep 30, 2012 7:07 pm, edited 1 time in total.
Johm221122
Posts: 6394
Joined: Fri May 13, 2011 6:27 pm

Re: Portfolio Review

Post by Johm221122 »

Pay debt first
Get rid of freedom fund and yackman (if not to much tax)
Bond and Reits in tax Deffered
http://www.bogleheads.org/wiki/Principl ... _Placement
Here is link for keeping cash needs in tax advantaged account
John
http://www.bogleheads.org/wiki/Placing_ ... ed_Account
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linuxuser
Posts: 1107
Joined: Mon Jan 24, 2011 8:15 pm

Re: Portfolio Review

Post by linuxuser »

mildred66 wrote: The FID Freedom 2040 has a high ER as well.
What other choices are there in the 403b?
Sometimes that is the best you can do.

I agree that jettisoning Yacktman is the thing to do.

Also pay off the student loans. Right now what is a sure 3.75%?
letsgobobby
Posts: 12073
Joined: Fri Sep 18, 2009 1:10 am

Re: Portfolio Review

Post by letsgobobby »

How did you get access to Vanguard's Total Bond Market Institutional shares in your Roth IRA?
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Topic Author
mildred66
Posts: 36
Joined: Fri Sep 16, 2011 4:43 pm

Re: Portfolio Review

Post by mildred66 »

Good catch, letsgobobby. I edited my OP to show it's Admiral, not Institutional.
wilked
Posts: 2441
Joined: Thu Mar 24, 2011 1:50 pm

Re: Portfolio Review

Post by wilked »

Johm221122 wrote:Pay debt first
Get rid of freedom fund and yackman (if not to much tax)
Bond and Reits in tax Deffered
http://www.bogleheads.org/wiki/Principl ... _Placement
Here is link for keeping cash needs in tax advantaged account
John
http://www.bogleheads.org/wiki/Placing_ ... ed_Account
this is about what I had to say...
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Topic Author
mildred66
Posts: 36
Joined: Fri Sep 16, 2011 4:43 pm

Re: Portfolio Review

Post by mildred66 »

Great, thanks for the suggestions!
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