First Post - Any input welcome! [Help with Portfolio]

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First Post - Any input welcome! [Help with Portfolio]

Postby Dean82 » Sun Feb 10, 2013 6:21 pm

Hello! I've been lurking around here for a few years now. I recently passed 100k in my retirement accounts, so I figured it would be a good time ask for some feedback. I've made plenty of mistakes in investing, but I'm pretty much on autopilot right now. My first few years of investing were a full of errors. First, I picked the fund with the highest 1 year return (not so good the next year). Then I diversified, the 5 funds with the highest 1 year return (also predictably bad results). Then I read A Random Walk Down Wall-Street and saw the light of low cost index funds and how good average returns really are.

I have a few questions at the end, but I'd love any input or advice from anyone!

Emergency funds: 5 Months Expenses
Debt: None (Currently Renting)
Tax Filing Status: Single
Tax Rate: 25% Federal, 7.05% State
State of Residence: MN
Age: 30
Desired Asset allocation: 50% Domestic stocks / 30 % Intl stocks / 20% bonds

Current Portfolio: Just crossed into 6 digits.

Current retirement assets:

401k
53% Vanguard Institutional Total Stock Market Index Fund Institutional Shares (VITNX) 0.04%
7% Spartan® International Index Fund - Fidelity Advantage Institutional Class (FSPSX) .07%
19% Spartan® U.S. Bond Index Fund - Institutional Class (FXSTX) .07

Roth IRA at Vanguard
21% Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) 0.18%



Contributions

New annual Contributions
$17500 401k (no matching)
$5500 Roth IRA

Available funds

Funds available in his 401(k)
Fidelity Freedom K® Income Fund (FFKAX) .39
Fidelity Freedom K® 2010 Fund (FFKCX) .5
Fidelity Freedom K® 2020 Fund (FFKDX) .54
Fidelity Freedom K® 2030 Fund (FFKEX) .59
Fidelity Freedom K® 2040 Fund (FFKFX) .62
Fidelity Freedom K® 2050 Fund (FFKHX) .64

Vanguard Institutional Index Fund Institutional Plus (VIIIX) .02
Vanguard Institutional Total Stock Market Index (VITNX) .04
Spartan® Extended Market Index Fund (FSEVX) .07
Spartan® International Index Fund (FSPSX) .07
Spartan® U.S. Bond Index (FXSTX) .07
Vanguard REIT Index (VGRSX) .1
Vanguard Inflation-Protected Securities Fund (VIPIX) .07

Fidelity® Contrafund® (FCNKX) .69
Fidelity® Mid-Cap Stock (FKMCX) .69
Vanguard Explorer Fund Admiral (VEXRX) .34
Dodge & Cox International Stock Fund (DODFX) .64%
Vanguard Windsor II Fund Admiral (VWNAX) .27
Metropolitan West Total Return Bond Fund (MWTIX) .41
Dodge & Cox Stock Fund (DODGX) .52
Vanguard Wellington Fund Admiral (VWENX) .19
Vanguard Wellesley Income Fund (VWIAX) .18
Vanguard Long-Term Bond Index (VBLTX) .22
PIMCO Total Return Fund (PTRAX) .71


Questions:
1. HSA's. I do have an HSA available to me, as well as a very generous traditional health insurance plan. Right now, i'm healthy but that can change. Our traditional health insurance plan costs me about 20 dollars per month and only has a deductible of 200 dollars. This is the rate for a single person, and it jumps up to around 180 a month for family coverage. The traditional health insurance also provides 2000 dollars per year in dental/vision coverage. I am currently close to maxxing out that vision/dental account at 10k - which I would forfeit to switch to an HSA. So the basic question - does it make sense to leave a very good health plan for a higher deductible HSA plan (and also give up 2k per year in vision/dental for a 1k employer contribution to the HSA)?

2. Is it time for me to add TIPS to my portfolio? Vanguard Inflation-Protected Securities Fund was added to my 401k lineup for 2013 so now seems like a good time. I've also been considering tilting towards small-cap but I worry about tinkering too much.

Key Points: I'm 30 working for a software company. My lifestyle is low key, and my hobbies are pretty inexpensive - fly fishing, cycling, and coin collecting. Outside of retirement, I have been saving cash for a down payment on house. I suspect next year I would have saved 20+ percent to buy the type of house I would be in market for. No rush for me though as my rent is inexpensive and love my location. I have a girlfriend (who has a 4 year old) and I could see getting married a few years down the line. The big thing instilled in me by my parents is to live below your means and then life is pretty easy.

I think my appetite for risk is high, I could handle a 50 percent portfolio drop without problem. We do have a pension at work, but in my 6 years at this company the retirement benefit has been reduced 3 times - so I'm not banking much on that.
Last edited by Dean82 on Sun Feb 10, 2013 9:23 pm, edited 1 time in total.
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Re: First Post - Any input welcome!

Postby Peter Foley » Sun Feb 10, 2013 8:52 pm

Welcome to the forum. In addition to the information here there is also a fairly active MN BH chapter that meets 4 times a year. We are a pretty non threatening group if you want to attend a meeting some time. The next meeting is in May.
Regarding health care. It sounds like you have a good plan. I personally would not leave it to take advantage of an HSA option. I thought about this when I retired - I figured an auto accident or athletic injury might cost me the difference in deductible what I would save in the premium.

Yes, I would add TIPs. I would do it through your ongoing contributions. They are not a particulaly good buy right now so taking a 5% to 10% position (1/4 to 1/2 your bonds) in them over the course of a couple years would be how I would approach it.
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Re: First Post - Any input welcome!

Postby Dean82 » Mon Feb 11, 2013 2:29 pm

Peter Foley wrote:Welcome to the forum. In addition to the information here there is also a fairly active MN BH chapter that meets 4 times a year. We are a pretty non threatening group if you want to attend a meeting some time. The next meeting is in May.
Regarding health care. It sounds like you have a good plan. I personally would not leave it to take advantage of an HSA option. I thought about this when I retired - I figured an auto accident or athletic injury might cost me the difference in deductible what I would save in the premium.

Yes, I would add TIPs. I would do it through your ongoing contributions. They are not a particulaly good buy right now so taking a 5% to 10% position (1/4 to 1/2 your bonds) in them over the course of a couple years would be how I would approach it.



Thanks! Easing into TIPS is a pretty reasonable solution.

There may be a Boglehead meeting sometime in my future :)
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Re: First Post - Any input welcome! [Help with Portfolio]

Postby robocop » Mon Feb 11, 2013 3:35 pm

I'd stick with the traditional health insurance plan since it sounds like a good deal. I only do HDHP and HSA because it is cheaper than the normal HMO plan for me at work, and so that + the extra tax space works out for me.

I'd also add TIPS as the other poster suggested. I wouldn't try to tinker more than that- probably too much work for what it is worth.
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Re: First Post - Any input welcome! [Help with Portfolio]

Postby patriciamgr2 » Mon Feb 11, 2013 7:41 pm

bumping this topic up
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Re: First Post - Any input welcome! [Help with Portfolio]

Postby Dean82 » Tue Feb 12, 2013 2:15 pm

I suspect that our health insurance plans at work will become more expensive in the future, our premiums and coverage have not changed since I started working there. It's probably something for me to revisit when our plan changes.

Thanks!
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Posts: 3
Joined: Fri Feb 08, 2013 12:39 pm

Re: First Post - Any input welcome! [Help with Portfolio]

Postby goodoboy » Tue Feb 12, 2013 6:37 pm

Dean82 wrote:Hello! I've been lurking around here for a few years now. I recently passed 100k in my retirement accounts, so I figured it would be a good time ask for some feedback. I've made plenty of mistakes in investing, but I'm pretty much on autopilot right now. My first few years of investing were a full of errors. First, I picked the fund with the highest 1 year return (not so good the next year). Then I diversified, the 5 funds with the highest 1 year return (also predictably bad results). Then I read A Random Walk Down Wall-Street and saw the light of low cost index funds and how good average returns really are.

I have a few questions at the end, but I'd love any input or advice from anyone!

Emergency funds: 5 Months Expenses
Debt: None (Currently Renting)
Tax Filing Status: Single
Tax Rate: 25% Federal, 7.05% State
State of Residence: MN
Age: 30
Desired Asset allocation: 50% Domestic stocks / 30 % Intl stocks / 20% bonds

Current Portfolio: Just crossed into 6 digits.

Current retirement assets:

401k
53% Vanguard Institutional Total Stock Market Index Fund Institutional Shares (VITNX) 0.04%
7% Spartan® International Index Fund - Fidelity Advantage Institutional Class (FSPSX) .07%
19% Spartan® U.S. Bond Index Fund - Institutional Class (FXSTX) .07

Roth IRA at Vanguard
21% Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) 0.18%



Contributions

New annual Contributions
$17500 401k (no matching)
$5500 Roth IRA

Available funds

Funds available in his 401(k)
Fidelity Freedom K® Income Fund (FFKAX) .39
Fidelity Freedom K® 2010 Fund (FFKCX) .5
Fidelity Freedom K® 2020 Fund (FFKDX) .54
Fidelity Freedom K® 2030 Fund (FFKEX) .59
Fidelity Freedom K® 2040 Fund (FFKFX) .62
Fidelity Freedom K® 2050 Fund (FFKHX) .64

Vanguard Institutional Index Fund Institutional Plus (VIIIX) .02
Vanguard Institutional Total Stock Market Index (VITNX) .04
Spartan® Extended Market Index Fund (FSEVX) .07
Spartan® International Index Fund (FSPSX) .07
Spartan® U.S. Bond Index (FXSTX) .07
Vanguard REIT Index (VGRSX) .1
Vanguard Inflation-Protected Securities Fund (VIPIX) .07

Fidelity® Contrafund® (FCNKX) .69
Fidelity® Mid-Cap Stock (FKMCX) .69
Vanguard Explorer Fund Admiral (VEXRX) .34
Dodge & Cox International Stock Fund (DODFX) .64%
Vanguard Windsor II Fund Admiral (VWNAX) .27
Metropolitan West Total Return Bond Fund (MWTIX) .41
Dodge & Cox Stock Fund (DODGX) .52
Vanguard Wellington Fund Admiral (VWENX) .19
Vanguard Wellesley Income Fund (VWIAX) .18
Vanguard Long-Term Bond Index (VBLTX) .22
PIMCO Total Return Fund (PTRAX) .71


Questions:
1. HSA's. I do have an HSA available to me, as well as a very generous traditional health insurance plan. Right now, i'm healthy but that can change. Our traditional health insurance plan costs me about 20 dollars per month and only has a deductible of 200 dollars. This is the rate for a single person, and it jumps up to around 180 a month for family coverage. The traditional health insurance also provides 2000 dollars per year in dental/vision coverage. I am currently close to maxxing out that vision/dental account at 10k - which I would forfeit to switch to an HSA. So the basic question - does it make sense to leave a very good health plan for a higher deductible HSA plan (and also give up 2k per year in vision/dental for a 1k employer contribution to the HSA)?

2. Is it time for me to add TIPS to my portfolio? Vanguard Inflation-Protected Securities Fund was added to my 401k lineup for 2013 so now seems like a good time. I've also been considering tilting towards small-cap but I worry about tinkering too much.

Key Points: I'm 30 working for a software company. My lifestyle is low key, and my hobbies are pretty inexpensive - fly fishing, cycling, and coin collecting. Outside of retirement, I have been saving cash for a down payment on house. I suspect next year I would have saved 20+ percent to buy the type of house I would be in market for. No rush for me though as my rent is inexpensive and love my location. I have a girlfriend (who has a 4 year old) and I could see getting married a few years down the line. The big thing instilled in me by my parents is to live below your means and then life is pretty easy.

I think my appetite for risk is high, I could handle a 50 percent portfolio drop without problem. We do have a pension at work, but in my 6 years at this company the retirement benefit has been reduced 3 times - so I'm not banking much on that.



Hello,

You are doing good with savings. Your current AA looks good. You also have good funds in your 401K options

Future Contributions I would try this

Future Contributions Total $23,000 for 2013 year

401k - 17,500
66% Vanguard Institutional Total Stock Market Index Fund Institutional Shares (VITNX) 0.04%
26% Spartan® International Index Fund - Fidelity Advantage Institutional Class (FSPSX) .07%
8% Spartan® U.S. Bond Index Fund - Institutional Class (FXSTX) .07

Roth IRA at Vanguard - 5,500
100% Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) 0.18%

This should give your 80/20 AA by end of the year 2013, then you just keep on contributing like this.
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