Portfolio review: A check-up on my progress

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Portfolio review: A check-up on my progress

Postby jbran99 » Sat Jan 19, 2013 5:15 pm

Hello everyone. Last May I posted a slightly abbreviated portfolio overview with a focus on my wife's new 401k and received some good feedback. That thread can be found here.

At that time, I was just starting to implement some of the many things I'd learned from this forum. Since then, I've made good progress on my plan, but I was hoping for a portfolio review and some feedback on a few questions that are bouncing around in my head. Thanks for everything I've learned from this forum and thanks in advance for any feedback folks are willing to provide.

Ages: 34/30, Baby Girl - 5 months
Emergency Funds: Yes (my portfolio has grown to the point where I'm comfortable including my EF within my portfolio as a whole - see below)
Debt: 108k @ 3.85% (mortgage, pay $250 extra each month, ~$55k in equity), 11k @ 1.99% (1 vehicle)
Target AA: 80/20 (Int'l 20% of total portfolio, 25% of stocks)
Actual AA: 80/20 (Int'l only 10% of total, 12.5% of stocks)
Tax Rate: 25% Fed, 7% MN
Portfolio size: Mid 6 figures.

Taxable - 27%
8% Vanguard Total Int'l (VTIAX and VFWAX combo due to tax-loss harvesting, .18 ER each, combined ~$3k unrealized capital gains so I don't plan on consolidating)
4% Vanguard Total Stock (VTSAX, .06 ER, with ~$3k unrealized capital gains)
5% Misc stocks (Sold all losses or marginal gains, still have ~$10k in unrealized gains; will keep an eye open for selling opportunities in 2013)
5% Ameriprise Floating Rate Bond Fund (RFRAX, 1.09 ER)
    - To be used for charitable contributions; see Question #1 below
5% Cash (Earning ~2% APY in local Community Bank Rewards Checking)
    - This is my EF and I count it toward my bond/fixed-income allocation; see Question #2 below

His 401k - 21% - options listed below
10% Vanguard Target 2030 (VTHRX, .18 ER, Currently 55/24/21 - US stock / Int'l / Bond)
5% PIMCO Total Return Institutional (PTTRX, .46 ER)
6% MSI S&P 500 (Private fund, .03 ER)

His Roth - 28%
3% Vanguard Total Stock (VTSAX, .06 ER) <-- contributions go here
25% Ameriprise Active Diversified Aggressive (transferring to Vanguard over the rest of 2013)

Her 401k - 15% - options listed in previous thread here
15% Principal Large Cap S&P 500 R3 (PLFMX, .73 ER)

Her Roth - 9%
4% Vanguard Extended Market (VEXAX, .14 ER, Total Market Approximation with S&P500 in Her 401k in 80/20 ratio) <-- contributions go here
3% Vanguard Total Stock (VTSAX, .06 ER)
2% Vanguard Total Bond (VBTLX, .10 ER)

His 401k Options:
Stable Value - NY Life Anchor III (Private Fund, .45 ER)
Income - PIMCO Total Return Institutional (PTTRX, .46 ER)
Income - Legg Mason BW Global Opportunities Bond Fund (GOBSX, .64 ER)
Blend - Vanguard Target Date funds 2010/20/30/40/50/60 (.17 - .19 ER)
Blend - Vanguard Wellington Admiral shares (VWENX, .19 ER)
Stock - MSI S&P 500 (Private Fund, .03 ER)
Stock - Dodge & Cox Stock Fund (DODGX, .52 ER)
Stock - Earnest Mid Value Fund (Private Fund, .55 ER)
Stock - Earnest Small Value Fund (Private Fund, .55 ER)
Stock - Munder Mid Cap Core Growth (Private Fund, .68 ER)
Stock - Times Square Small Growth (TSCIX, 1.07 ER)
Stock - Vanguard PRIMECAP Admiral shares (VPMAX, .36 ER)
Int'l - Dodge & Cox Int'l Stock Fund (DODFX, .64 ER)
Int'l - MassMutual Premier Focused Int'l (MOUZX, 1.08 ER)

Annual Contributions:
Max ($17.5 ea.) to his & her 401k plus ~$10k company matches (combined his & her)
Max ($5.5k ea.) to his & her Roth IRA

Next Steps:
- Convert VTSAX in Her Roth IRA to Vanguard Total Int'l (VTIAX) to get closer to my target AA
- Convert VTSAX in His Roth IRA to Vanguard Extended Market (VEXAX) as a Total Market Approximation for the S&P 500 in His 401k
- Continue migrating His Ameriprise Roth IRA to Vanguard; add Total Int'l (VTIAX) to His Roth IRA to get closer to my target AA

Questions:
#1. Holding the Bond Fund in my taxable account is obviously not tax-efficient. Because I have significant capital gains in that fund, I will be donating the appreciated shares to various charitable organizations over the next year or so (as opposed to making cash donations). However, by taking this approach, I will fall below my target AA, so I need to make an adjustment / contributions elsewhere. Options:
    a. Make taxable contributions to Vanguard Total Int'l, adjust His 401k and/or Roth IRAs to maintain 80/20 AA
    b. Make taxable contributions to a Tax-Exempt Bond Fund (like Vanguard Intermediate-term VWITX)
    c. Make taxable contributions to iBonds
How would Bogleheads rate those options and why? Are there other options I should consider?

#2. My rewards checking has dropped from 3% to 2.5% to 2% over the past 6 months. Would it make any sense to convert a portion (say 1/3 or 1/2) of that to a short-term tax-exempt bond fund or iBonds, given the low rates in those places as well? That would move me toward a two-tier EF, which I would be OK with.

#3. Should I start funding a 529 plan? Would it make sense to sell part of my taxable holdings in order to fund a 529? The MN 529 doesn't appear to have any immediate tax benefits for contributions.

#4. Any other feedback anyone is willing to share?
jbran99
 
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Re: Portfolio review: A check-up on my progress

Postby Rainier » Sat Jan 19, 2013 5:46 pm

Were you planning on donating anyway or just to get rid of appreciated shares?

Personally, I'd just pay the taxes, donating is way more expensive.
- Bill
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Re: Portfolio review: A check-up on my progress

Postby jbran99 » Sat Jan 19, 2013 8:23 pm

I'll be donating the appreciated shares instead of my normal cash-based charitable donations. My charitable contributions for 2013 will be in line with 2012. I actually have slightly more shares than will be donated in 2013, so the process will carry into 2014 as well.
jbran99
 
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Re: Portfolio review: A check-up on my progress

Postby jbran99 » Tue Jan 22, 2013 10:37 am

self-serving bump (Sat night probably wasn't the best initial post time!)
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Re: Portfolio review: A check-up on my progress

Postby nydad » Tue Jan 22, 2013 11:11 am

Quick tip: if considering donating appreciated shares, consider giving them to a donor advised fund.

Fidelity, schwab and vanguard all have them, and the advantage is you get tax free growth on any
money you don't give out.(and can spread it more thinly if desired - $50 minimum,for fidelity for example.)
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Re: Portfolio review: A check-up on my progress

Postby jbran99 » Wed Jan 23, 2013 10:28 am

nydad wrote:Quick tip: if considering donating appreciated shares, consider giving them to a donor advised fund.
I looked into Vanguard's DAF, but they have a $25k minimum and I'm not quite at that level. Maybe I'll look into Fido/Schwab and see how they might work. Thanks!
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Re: Portfolio review: A check-up on my progress

Postby nydad » Wed Jan 23, 2013 10:37 am

I ended up going with Fidelity; they are the largest player; min is $5k and minimum grant size is $50.00. I've been happy with the service so far. It's a great thing to do with appreciated shares too, since you avoid capital gains tax - so you get more charity for your money. Fidelity even has an iphone app that will let you make grants from your phone - excellent for those spur of the moments when you want to support something, a few clicks and it's done...
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Re: Portfolio review: A check-up on my progress

Postby jbran99 » Sat Jan 26, 2013 12:02 pm

I'll be looking into Donor-Advised Funds for my giving, so thanks much for that suggestion!

Do you (or anyone else, for that matter) have any advice on the rest of the questions I listed? (Reallocating the bond funds, multi-tier EF, 529, etc.)? Thanks!
jbran99
 
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