Portfolio Help

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Topic Author
avlfutbol
Posts: 27
Joined: Fri Apr 17, 2015 11:44 pm

Portfolio Help

Post by avlfutbol »

Beginning to actually pay attention to my investing as I have just paid off a massive student loan. Also just noticed that I have a very high expense ratio on my Roth IRA. I just began pumping money in taxable accounts as I have eliminated all debt except car and sold a house. I have an aggressive outlook and mindset. I hold a master's degree in a reasonably stable industry with very specialized knowledge. Ideally, I will leverage background these relationships and start my own business in the next 3-5 years in the same industry. I have been late at life with everything and having gone through the exercise of breaking things down rather than throwing money at a dartboard, I realize that I am all over the place. I would like to consolidate this in a few simple funds.

Emergency Fund: Yes
Debt: Auto-18.5K at 0.9%
Filing Status: Single
Tax Rate: 25% Federal, 5% State
State of Residence: NJ
Age: 35
Desired Allocation: 85% stock/15% Bonds
Desired International: 15%

Current Total Portfolio: Low to mid six figures
Overall


TAXABLE (27%)
Cash: 17%
Vanguard Healthcare ETF (VGHCX): 5% (.35% Expense Ratio)
Vanguard Total Stock Market Admiral Shares (VTSAX): 5% (.05% Expense Ratio)

Tax-Advantaged
401K Vanguard (15%)


Target Retirement 2045 Trust I (VTIVX): 8.5% (Expense 0.0825%)
Fidelity Contrafund (FCNTX) 2.5% (Expense 0.64%)
Vanguard Institutional Index Fund Institutional Shares (VINIX): 1.5% (Expense 0.04%)
Vanguard Small Cap Index Fund Institutional Plus Shares (VSCPX) 1.5% (Expense 0.06%)
Company's Corporate Stock Fund (Strong Healthcare Company) 1% (Expense 0.0%)


Roth IRA at Buffalo Funds (58%)
Buffalo Discover Fund (BUFTX) 19%% (Expense 1.01%)
Buffalo Small Cap (BUFSX) 13% (Expense 1%)
Buffalo Large Cap (BUFEX) 12% (Expense 0.97%)
Buffalo Mid Cap (BUFMX) 11% (Expense 1.01%)
Buffalo Growth Fund (BUFGX) 3% (Expense 0.91%)

Contributions
5,500 to Roth each year
18,000 to 401K each year
800/month to cash reserves or taxable funds

Available Funds in 401K
Vanguard Prime Money Mkt Fund Inst VMRXX (.1%)
PIMCO Real Return Instl PRRIX (.47)
Vanguard Short-Term Invest-Gr Inst VFSIX (.07%)
Vanguard Total Bond Mkt Index Inst VBTIX (.07%)
Vanguard Balanced Index Fund Inst VBAIX (.08%)
Fidelity® Contrafund® FCNTX (.64%)
FMI Large Cap FMIHX (.94%)
Harbor Capital Appreciation Instl HACAX (.68%)
Vanguard Inst Index Fund Inst VINIX (.04%)
Vanguard Mid-Cap Index Fund Adm VIMAX (.09%)
Vanguard Sm-Cap Index Inst Plus VSCPX (.06%)

INTERNATIONAL STOCK FUNDS
Artisan International Institutional APHIX (.95%)
Harbor International Institutional HAINX (.77%)


Questions:

1. Where I currently have my Roth IRA, the expense ratios are outrageous now that I have looked into Vanguard. Does it make perfect sense to roll these funds over to Vanguard to take advantage of the significantly lower expense ratios? It is where I have parked my money since 18 for the BUFTX fund because it was particularly strong and then I just continued putting money in different funds because I had no clue what I was doing.

2. I know that it is recommended I not be this aggressive (85/15), but I am optimistic over the next five years in the US market and some international markets. Is this crazy?

3. With my taxable accounts, I have a five year time horizon barring any major changes (relocating out of the country, major family illness to parents, etc.). How can I best benefit from interest yet minimize risk (more than .9 percent in a savings account). I know healthcare and am very confident in growth over the next few years even with changes in healthcare policy.

4. What is a more realistic spread with Roth and 401k?

I know these are very elementary questions. I appreciate any feedback as I know this is far from a good approach. I have found myself reading about 10 hours a week on investing/retirement over the last few months but have finally decided to pull the plug and have a reasonable safety net with my finances. Thank you for any suggestions or advice.

Thanks,
Jim
User avatar
hoppy08520
Posts: 2193
Joined: Sat Feb 18, 2012 10:36 am

Re: Portfolio Help

Post by hoppy08520 »

Welcome to Bogleheads.
avlfutbol wrote:1. Where I currently have my Roth IRA, the expense ratios are outrageous now that I have looked into Vanguard. Does it make perfect sense to roll these funds over to Vanguard to take advantage of the significantly lower expense ratios? It is where I have parked my money since 18 for the BUFTX fund because it was particularly strong and then I just continued putting money in different funds because I had no clue what I was doing.
I think most people here would advise you to transfer the IRA to Vanguard if you want Vanguard mutual funds and ditch the high-expense funds.
avlfutbol wrote:2. I know that it is recommended I not be this aggressive (85/15), but I am optimistic over the next five years in the US market and some international markets. Is this crazy?
Not crazy. It's on the high side of stock allocations but not unreasonable. I believe the Vanguard target retirement date fund you have in the 401(k) is actually even more aggressive: around 90/10.
avlfutbol wrote:3. With my taxable accounts, I have a five year time horizon barring any major changes (relocating out of the country, major family illness to parents, etc.). How can I best benefit from interest yet minimize risk (more than .9 percent in a savings account). I know healthcare and am very confident in growth over the next few years even with changes in healthcare policy.
I'd advise you to rethink your faith in sector funds. Just because healthcare is going to grow doesn't mean it will be a good investment. What do you know that hasn't already been priced into the market?

By comparison, I work in tech. I think tech is a strong industry and it will grow. Well, duh, so does just about everyone else. So I don't buy tech funds because I don't have any reason to believe tech funds are underpriced relative to other funds that I can buy.
Topic Author
avlfutbol
Posts: 27
Joined: Fri Apr 17, 2015 11:44 pm

Re: Portfolio Help

Post by avlfutbol »

Thanks for your feedback. I see your point about the sector funds. I guess I assume a positive outlook for the industry is a false premise for stock growth. Point taken.
Thanks!
desiderium
Posts: 1264
Joined: Sat Jan 04, 2014 10:08 am

Re: Portfolio Help

Post by desiderium »

Congratulations on paying off your student loan debt

If you are planning to start a business, you may want to make sure you have a good emergency fund--12 months.
As far as not wanting to lose money in your taxable account, you may want to consider cd's or municipal bonds. As far as being confident health care is going to grow in the next 5 years, that isn't the same as being able to say the stock price is going to go up or outperform the total market. In general the market predictions for future growth are already baked into the current price, so unless your are psychic, you probably don't have a special edge.

Don't wait to transfer your Roth IRA to vanguard, the logic is straightforward.

You have considered your asset allocation, but your fund choices are a bit messy and duplicative. Think about everything being one big account. You can reduce duplication across your different accounts. For multiple asset classes and accounts, target retirement funds can make tracking your asset allocation and rebalancing more difficult.

You might also consider whether you wish to allocate a portion of your equities to international markets.
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