Portfolio help

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Topic Author
alu4589
Posts: 15
Joined: Wed Jul 31, 2013 6:42 am

Portfolio help

Post by alu4589 »

Hi all,

Thanks in advance for the advice and help!


Tax Filing Status: Single
Tax Rate: 25% Federal, 5.6% State
Desired Asset allocation: 80% stocks / 20% bonds
Desired International allocation: Not sure - Currently 32%

Cash 7%
Bonds 10%
Large-cap stocks 34%
Mid/small-cap stocks 17%
International stocks 32%

-------------------------
Current retirement assets
-------------------------

401k

34% VANG TARGET RET 2055 (expense ratio)
25% BLKRK ACWI EX US NL
22% VANG INST INDEX PLUS
19% VANG EXT MKT IDX INS

Roth IRA at Fidelity
100% Fidelity Government Money Market SPAXX

Available funds (Expense Ratio in last column)

Name/Inception Date Asset Class 1 Year 3 Year 5 Year 10 Year/LOF* Gross Expense Ratio**

-------------------------
RETIREMENT TIME-BASED INVESTMENTS
-------------------------

VANG TARGET RET 2010 (VTENX)06/07/2006 Blended Fund Investments* 7.14% 9.39% 5.32% 5.46% 0.16%
VANG TARGET RET 2015 (VTXVX)10/27/2003 Blended Fund Investments* 9.63% 10.55% 5.45% 5.98% 0.16%
VANG TARGET RET 2020 (VTWNX)06/07/2006 Blended Fund Investments* 11.52% 11.49% 5.43% 5.43% 0.16%
VANG TARGET RET 2025 (VTTVX)10/27/2003 Blended Fund Investments* 12.96% 12.34% 5.33% 6.13% 0.17%
VANG TARGET RET 2030 (VTHRX)06/07/2006 Blended Fund Investments* 14.55% 13.23% 5.24% 5.23% 0.17%
VANG TARGET RET 2035 (VTTHX)10/27/2003 Blended Fund Investments* 16.00% 14.05% 5.30% 6.53% 0.18%
VANG TARGET RET 2040 (VFORX)06/07/2006 Blended Fund Investments* 16.86% 14.29% 5.48% 5.25% 0.18%
VANG TARGET RET 2045 (VTIVX)10/27/2003 Blended Fund Investments* 16.84% 14.32% 5.46% 6.93% 0.18%
VANG TARGET RET 2050 (VFIFX)06/07/2006 Blended Fund Investments* 16.84% 14.30% 5.46% 5.32% 0.18%
VANG TARGET RET 2055 (VFFVX)08/18/2010 Blended Fund Investments* 16.85% N/A N/A 12.64% 0.18%
VANG TARGET RET INC (VTINX)10/27/2003 Blended Fund Investments* 4.52% 7.43% 5.36% 5.40% 0.16%

-------------------------
CORE INVESTMENT - PASSIVE
-------------------------

BLKRK ACWI EX US NL03/28/2012 Stock Investments 13.42% N/A N/A 3.80% 0.11%
VANG EXT MKT IDX INS (VIEIX)07/07/1997 Stock Investments 25.97% 19.71% 8.99% 10.62% 0.12%
VANG INST INDEX PLUS (VIIIX)07/07/1997 Stock Investments 20.59% 18.45% 7.06% 7.33% 0.02%
BTC US DEBT T10/01/2001 Bond Investments -0.61% 3.52% 5.21% 4.53% 0.08%

-------------------------
CORE INVESTMENT - ACTIVE
------------------------- 

ALLBERN US VAL EQ10/31/2007 Stock Investments 26.02% 17.60% 6.16% 1.92% 0.63%
HARBOR CAP APPR INST (HACAX)12/29/1987 Stock Investments 14.16% 16.74% 6.85% 7.78% 0.68%
SMALL CAP CORE03/28/2012 Stock Investments 26.25% N/A N/A 14.68% 0.70%
TIFI TEMPL FORGN EQU (TFEQX)10/18/1990 Stock Investments 19.14% 9.08% 0.65% 9.18% 0.80%
PIM TOTAL RT INST (PTTRX)05/11/1987 Bond Investments 1.20% 4.67% 7.26% 5.97% 0.46%
STABLE VALUE FUND01/31/2005 Bond Investments 2.42% 2.62% 2.72% 3.38% 0.17%

-------------------------
SPECIALTY INVESTMENTS
-------------------------

DOMINI SOCIAL EQ IS (DIEQX)11/28/2008 Stock Investments 15.18% 16.13% N/A 16.91% 0.83%
FID CONTRAFUND K (FCNKX)05/17/1967 Stock Investments 16.92% 16.83% 6.12% 9.96% 0.63%
FID LOW PRICED STK K (FLPKX)12/27/1989 Stock Investments 27.22% 19.25% 9.95% 11.38% 0.76%
SSGA TIPS FUND08/01/2000 Bond Investments -4.82% 4.58% 4.34% 5.13% 0.02%
Last edited by alu4589 on Tue Aug 06, 2013 4:59 pm, edited 2 times in total.
User avatar
Duckie
Posts: 9767
Joined: Thu Mar 08, 2007 1:55 pm

Re: Portfolio help

Post by Duckie »

alu4589, you want an AA of 80% stocks, 20% bonds, with unknown in international. I'll pick 30% of stocks in international. That breaks down to 56% US stocks, 24% international stocks, and 20% bonds. Here are two possible retirement portfolios:

Portfolio #1
401k -- $13K -- 93%
93% (VTHRX) Vanguard Target Retirement 2030 Fund (0.17%)

Roth IRA at Vanguard -- $1K -- 7%
7% (VTHRX) Vanguard Target Retirement 2030 Fund (0.17%)

Portfolio #2
401k -- $13K -- 93%
39% (VIIIX) Vanguard Institutional Index Fund Institutional Plus Shares (0.02%)
10% (VIEIX) Vanguard Extended Market Index Fund Institutional Shares (0.12%) <-- Roughly 80% large caps (Institutional Index) plus 20% mid/small caps (Extended Market) makes up the total US stock market.
24% (N/A) BlackRock ACWI ex-US Index Fund NL03 Class (0.11%)
20% (N/A) BTC (BlackRock Institutional Trust Company) U.S. Debt Index Fund T10 Class (0.08%)

Roth IRA at Vanguard -- $1K -- 7%
7% (VTHRX) Vanguard Target Retirement 2030 Fund (0.17%)

My comments:
  • With limited IRA assets, Vanguard has better options. Fidelity's target-date funds aren't as good. Add enough to get to $1K for Vanguard fund minimums.
  • Portfolio #1 is easier. Portfolio #2 is a little cheaper.
  • Having a balanced fund (VANG TARGET RET 2055) along with the separate funds in your 401k is not optimum.
  • You have some excellent and inexpensive passive funds in your plan. You are lucky.
Your questions:
1. I pay the minimum on my car loan. Should I contribute more to that?
-- How risky is your job? 14 months expenses is a lot. You could use some of that to help pay down the loan but at that interest rate it's not a big deal.

2. The international fund has been doing horrible. Should I change that or decrease the allocation percentage?
-- The fund follows its index which is a good one. Figure out your AA and stick with it. Stocks go up and down; get used to it.

3. What fund(s) should I setup for the Roth?
-- Until you have more assets a Target Retirement fund with a $1K minimum is your best option.

4. How does everything else look?
-- Other than owning a lot of car, it looks fine.

Something to think about.
Topic Author
alu4589
Posts: 15
Joined: Wed Jul 31, 2013 6:42 am

Re: Portfolio help

Post by alu4589 »

Thanks Duckie! So the 2055 Fund is not as great as the 2030 even though i'm 26?

Any thoughts from the other Bogleheads on the funds and allocations?

Thanks again
ieee488
Posts: 1989
Joined: Thu Dec 10, 2009 7:57 am

Re: Portfolio help

Post by ieee488 »

alu4589 wrote:Thanks Duckie! So the 2055 Fund is not as great as the 2030 even though i'm 26?
It is all about the allocation of stocks and bonds in each. Nothing at all to do with which is "great" or not.

Oh, and Duckie is pretty darn good at this.
Dell Optiplex 3020 (Win7 Pro), Dell Precision M6300 (Ubuntu Linux 12.04), Dell Precision M6300 (Win7 Pro), Dell Latitude D531 (Vista)
Topic Author
alu4589
Posts: 15
Joined: Wed Jul 31, 2013 6:42 am

Re: Portfolio help

Post by alu4589 »

Thanks yeah I was just curious to see if anyone had any other opinions on some other possible portfolios.
User avatar
ruralavalon
Posts: 26297
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: Portfolio help

Post by ruralavalon »

alu4589 wrote: Any thoughts from the other Bogleheads on the funds and allocations?
No, looks good as the way to start. You have excellent, broadly diversified, low-expense ratio choices offered in the 401k and are very lucky.

Since 24% of future annual contributions go to the IRA, it will probably grow larger as a percentage of the overall portfolio. As that happens in about 2 years or so think about using it for your bond fund instead of the TR fund, when you get to $10k in the IRA. That amount lets you buy Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX), er = 0.10%, which is just a smidge more expensive than the bond fund in your 401k, and also lower than the expense ratio in the TR fund being dropped. That shift out of the bond fund in the 401k would let you buy lots more of that very low expense VANG INST INDEX PLUS (VIIIX), er = 0.02% in the 401k.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
User avatar
Duckie
Posts: 9767
Joined: Thu Mar 08, 2007 1:55 pm

Re: Portfolio help

Post by Duckie »

alu4589 wrote:So the 2055 Fund is not as great as the 2030 even though i'm 26?
They're both good funds. But you pick a target date fund by the assets inside not by the date in the title. You wrote you wanted an AA of 80% stocks and 20% bonds. The 2055 fund is 90/10. The 2030 fund is 78/22.
User avatar
LAlearning
Posts: 1365
Joined: Wed May 09, 2012 12:26 pm
Location: Los Angeles

Re: Portfolio help

Post by LAlearning »

Here is my opinion: I vote #1.
Duckie wrote:alu4589, you want an AA of 80% stocks, 20% bonds, with unknown in international. I'll pick 30% of stocks in international. That breaks down to 56% US stocks, 24% international stocks, and 20% bonds. Here are two possible retirement portfolios:

Portfolio #1
401k -- $13K -- 93%
93% (VTHRX) Vanguard Target Retirement 2030 Fund (0.17%)

Roth IRA at Vanguard -- $1K -- 7%
7% (VTHRX) Vanguard Target Retirement 2030 Fund (0.17%)

Portfolio #2
401k -- $13K -- 93%
39% (VIIIX) Vanguard Institutional Index Fund Institutional Plus Shares (0.02%)
10% (VIEIX) Vanguard Extended Market Index Fund Institutional Shares (0.12%) <-- Roughly 80% large caps (Institutional Index) plus 20% mid/small caps (Extended Market) makes up the total US stock market.
24% (N/A) BlackRock ACWI ex-US Index Fund NL03 Class (0.11%)
20% (N/A) BTC (BlackRock Institutional Trust Company) U.S. Debt Index Fund T10 Class (0.08%)

Roth IRA at Vanguard -- $1K -- 7%
7% (VTHRX) Vanguard Target Retirement 2030 Fund (0.17%)

My comments:
  • With limited IRA assets, Vanguard has better options. Fidelity's target-date funds aren't as good. Add enough to get to $1K for Vanguard fund minimums.
  • Portfolio #1 is easier. Portfolio #2 is a little cheaper.
  • Having a balanced fund (VANG TARGET RET 2055) along with the separate funds in your 401k is not optimum.
  • You have some excellent and inexpensive passive funds in your plan. You are lucky.
Your questions:
1. I pay the minimum on my car loan. Should I contribute more to that?
-- How risky is your job? 14 months expenses is a lot. You could use some of that to help pay down the loan but at that interest rate it's not a big deal.

2. The international fund has been doing horrible. Should I change that or decrease the allocation percentage?
-- The fund follows its index which is a good one. Figure out your AA and stick with it. Stocks go up and down; get used to it.

3. What fund(s) should I setup for the Roth?
-- Until you have more assets a Target Retirement fund with a $1K minimum is your best option.

4. How does everything else look?
-- Other than owning a lot of car, it looks fine.

Something to think about.
Set it, forget about it for a few years, and re-visit once the accounts start really growing.
I know nothing!
zmcpherson
Posts: 58
Joined: Tue Apr 17, 2012 8:20 pm

Re: Portfolio help

Post by zmcpherson »

Do not pay of the car loan early, its lower than the rate of inflation, you will actually save money by carrying the loan for the entire life of the loan.

At the same time, you definitely do not need 14 months worth of expenses as a single 26 year old with no family and a new car - 6 months is usually sufficient, or if you are risk adverse go 8 month (look for a 1% savings account). Take the extra money and max out your 401k, IRA, and if your company offers it, HSA (some argue to max this out first). Between those 3 you can get 26.5k sheltered from the IRS. After that its into the taxable accounts. Good job for saving so much early btw.

As for funds, just pick the target funds for now until the accounts get bigger
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