Portfolio Review

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Buckybogle
Posts: 8
Joined: Thu Jun 02, 2016 9:37 am

Portfolio Review

Post by Buckybogle » Sat Jun 18, 2016 6:30 pm

Hi All! I’ll start off by saying a massive thank you to those that contribute to this site! My wife and I are finally getting to be a bit more serious on tracking our investments. We met with a few different Financial Advisors, but I always felt I was better off going it alone, and then stumbled upon this goldmine of a website and that certainly cemented my decision. I don’t have a ton of specific questions, but am more looking for an overall portfolio review. Thanks in advance!

(Hopefully formatting come through)

Emergency funds: Check
Debt: Student load – $6.6k @ 3.5%, Mortgage 1 - $406K @3.75%, Mortgage 2 - $155K @ 3.75% (Value of home = $674K)
Tax Filing Status: MFJ – No kids, hopefully soon!
Tax Rate: 33% Federal, 9.85% State
State of Residence: MN
Age: Him 32 / Her 33
Desired Asset allocation: 90%+ stocks / 10% bonds
Desired International allocation: 20% of stocks
Portfolio Size = Mid 6 figures (currently 1.4X income)

His 401K (Approx 33% is Roth 401K)
10.18% VANG TOT STK MKT IS VITSX 0.04
1.34% VANG TOT INTL STK AD VTIAX 0.12
1.26% FID TOTAL BOND FTBFX 0.45

His IRA
2.73% Vanguard Total Bond Market Index Fund Investor Shares VBMFX 0.16
0.94% Vanguard Total International Bond Index Fund Admiral Shares VTABX 0.14
5.12% Vanguard Total International Stock Index Fund Admiral Shares VTIAX 0.12
13.32% Vanguard Total Stock Market Index Fund Admiral Shares VTSAX 0.05

His Roth IRA
4.88% Vanguard Total Stock Market Index Fund Admiral Shares VTSAX 0.05 $18,507.61

His HSA
10.18% VANG TOT STK MKT IS VITSX 0.04 $38,620.68

Her 401K
6.06% BlackRock S&P 500 Index Fund Institutional Shares MASRX 0.3
0.69% MFS Institutional International Equity Fund MIEIX 0.75
0.34% PIMCO Total Return Fund Institutional Class PTTRX 0.46

Her IRA
3.76% Vanguard Total Bond Market Index Fund Admiral Shares VBTLX 0.06
8.87% Vanguard Total International Stock Index Fund Admiral Shares VTIAX 0.12
14.74% Vanguard Total Stock Market Index Fund Admiral Shares VTSAX 0.05

Her Roth IRA
3.48% Vanguard Total Stock Market Index Fund Admiral Shares VTSAX

Taxable
0.16% VANGUARD TOTAL BOND MARKET ETF BND 0.06
0.04% VANGUARD TOTAL INTL BOND INDEX ETF BNDX 0.15
2.79% VANGUARD TOTAL INTL STOCK INDEX FUND ETF VXUS 0.13
5.28% VANGUARD TOTAL STOCK MARKET ETF VTI 0.05
1.36% Tesla TSLA

Former Company ESPP
10.33% Large Consulting Firm - ~50% is unrealized gains

Contributions
His 401K 18K + 1.5% employee match. ~33% is roth
His HSA $3,350
Her 40K 18K + 4% employee match
Taxable ~30K per year, depending on bonus

Funds available in his 401K
New York Life Anchor NA 0.3
Fidelity Total Bond FTBFX 0.45%
Loomis Sayles Bond Instl LSBDX 0.63%
Invesco Comstock R5 ACSHX 0.49%
Vanguard Total Stock Mkt Idx Admiral VTSAX 0.05%
American Funds AMCAP R6 RAFGX 0.36%
JHancock Disciplined Value Mid Cap R6 JVMRX 0.81%
PRIMECAP Odyssey Aggressive Growth POAGX 0.65%
DFA US Small Cap I DFSTX 0.37%
Vanguard Financials Index Adm VFAIX 0.19%
Vanguard Health Care Adm VGHAX 0.30%
Vanguard Energy Adm VGELX 0.32%
AllianzGI Technology Institutional DRGTX 1.22%
Franklin Utilities Adv FRUAX 0.60%
T. Rowe Price Real Estate TRREX 0.79%
American Funds EuroPacific Gr R6 RERGX 0.49%
Vanguard Total Intl Stock Index Admiral VTIAX 0.14%
Fidelity Freedom Index Income W FIKFX 0.25%
Fidelity Freedom Index 2005 W FJIFX 0.25%
Fidelity Freedom Index 2010 W FKIFX 0.25%
Fidelity Freedom Index 2015 W FLIFX 0.24%
Fidelity Freedom Index 2020 W FPIFX 0.24%
Fidelity Freedom Index 2025 W FQIFX 0.25%
Fidelity Freedom Index 2030 W FXIFX 0.25%
Fidelity Freedom Index 2035 W FIHFX 0.26%
Fidelity Freedom Index 2040 W FBIFX 0.26%
Fidelity Freedom Index 2045 W FIOFX 0.26%
Fidelity Freedom Index 2050 W FIPFX 0.26%
Fidelity Freedom Index 2055 W FDEWX 0.26%

Funds available in her 401K
MIEIX MFS International Equity 0.75%
Various Lifecycle funds – avg .18%
STABLEVALUE Stable Value Fund 1.19%
PTTRX PIMCO Total Return Instl 0.46%
PSCZX Prudential Jennison Small Co Z 0.86%
TMDIX TimesSquare Mid Cap Growth 1.08%
HACAX Harbor Capital Appreciation Instl 0.67%
SMVTX RidgeWorth Mid Cap Value Eq 1.07%
AADEX American Beacon Large Cap Value 0.59%
ARTVX Artisan Small Cap Value 1.2%
MASRX BlackRock S&P 500 Eqty Indx H 0.3%

Funds available in his HSA
Davis New York Venture Fund Class A 0.86
JPMorgan Large Cap Growth Fund Select Class 0.91
Schwab Fundamental US Large Company Index Fund SFLNX 0.39
Vanguard Dividend Appreciation Index Fund Investor Shares VDAIX 0.20
Victory Diversified Stock Fund Class A SRVEX 1.10
American Century Mid Cap Value Fund Investor Class ACMVX 1.01
Artisan Small Cap Fund Investor Shares ARTSX 1.21
Neuberger Berman Mid Cap Intrinsic Value Fund Investor Class NBRVX 1.31
Oppenheimer Main Street Mid Cap Fund Class A OPMSX 1.10
Parnassus Mid Cap Fund PARMX 1.09
Dodge & Cox International Stock Fund DODFX 0.64
Thornburg International Value Fund Class I TGVIX 0.88
AMG Managers Intermediate Duration Government Fund MGIDX 1.00
Dodge & Cox Income Fund DODIX 0.44
Harbor Bond Fund Institutional Class HABDX 0.57
Metropolitan West Total Return Bond Fund Class M MWTRX 0.69
PIMCO Low Duration Fund Class D PLDDX 0.75
Vanguard Short-Term Investment-Grade Fund Investor Shares VFSTX 0.20
Various American Retirement Funds

Questions
1) New to this, but looking for overall suggestions on portfolio allocations
2) Any specific updates that I should make to the HSA fund? I’m not sure is there are any investments that make the most sense for a fund like this
3) After reading this site, it seems like I should not invest in my Roth 401K at all. Do you agree?
4) I can't contribute to a Roth IRA, and can't deduct IRA contributions. Is there any reason to contribute to the IRA over a taxable accounts?
5) I currently have 10% of my assets in a former ESPP, with a fairly large amount of unrealized gains. The stock has been a clear winner over the past 15 years, and I am struggling to convince myself to sell it. Any thoughts?

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FiveK
Posts: 5735
Joined: Sun Mar 16, 2014 2:43 pm

Re: Portfolio Review

Post by FiveK » Sun Jun 19, 2016 12:48 am

Buckybogle wrote:Age: Him 32 / Her 33
Desired Asset allocation: 90%+ stocks / 10% bonds
Desired International allocation: 20% of stocks
Contributions
His 401K 18K + 1.5% employee match. ~33% is roth
His HSA $3,350
Her 40K 18K + 4% employee match
Taxable ~30K per year, depending on bonus

Funds available in her 401K
Various Lifecycle funds – avg .18%
MASRX BlackRock S&P 500 Eqty Indx H 0.3%


Questions
1) New to this, but looking for overall suggestions on portfolio allocations
2) Any specific updates that I should make to the HSA fund? I’m not sure is there are any investments that make the most sense for a fund like this
3) After reading this site, it seems like I should not invest in my Roth 401K at all. Do you agree?
4) I can't contribute to a Roth IRA, and can't deduct IRA contributions. Is there any reason to contribute to the IRA over a taxable accounts?
5) I currently have 10% of my assets in a former ESPP, with a fairly large amount of unrealized gains. The stock has been a clear winner over the past 15 years, and I am struggling to convince myself to sell it. Any thoughts?
1) Appears you are doing great! I did not check to see if "actual = desired". Does it?
2) Existing HSA looks good. Why not his & her HSAs?
3) Yes, unless you expect ~the same income after retirement.
4) Can you roll the IRAs into your respective 401ks? If so, consider a Backdoor Roth IRA
5) No "obvious" strategy here. At least it isn't a current employer. Wouldn't be the worst thing in the world to hold it; wouldn't be terrible to sell some lots when you have other taxable losses to balance....

MPAndy222
Posts: 42
Joined: Thu Mar 31, 2016 6:26 pm

Re: Portfolio Review

Post by MPAndy222 » Sun Jun 19, 2016 5:56 am

Looks great - you have a lot of good options with the 401k accounts. I'd consider a lifecycle fund for her 401k. You may be better off with changing your 401k to all pretax as you will likely be in a lower tax bracket in retirement, however there are some advantages to having a Roth 401k. If you like the advantages of the Roth 401k there is no problem with keeping 1/3 of your 401k as post tax contributions. I'd calculate to see how close you are to the 28% tax bracket (if putting a little extra in pretax money puts you into the 28% bracket then I'd do all pretax for the 401k). Also make sure you are contributing the 5.5k each to traditional IRAs and then converting to Roth IRA through the backdoor. I'd put the bonds in this as you don't have any great low cost bond options (or a dash of REITs if desired). That would allow you to get the bonds out of your taxable

Buckybogle
Posts: 8
Joined: Thu Jun 02, 2016 9:37 am

Re: Portfolio Review

Post by Buckybogle » Sun Jun 19, 2016 7:07 am

FiveK wrote:
1) Appears you are doing great! I did not check to see if "actual = desired". Does it?
2) Existing HSA looks good. Why not his & her HSAs?
3) Yes, unless you expect ~the same income after retirement.
4) Can you roll the IRAs into your respective 401ks? If so, consider a Backdoor Roth IRA
5) No "obvious" strategy here. At least it isn't a current employer. Wouldn't be the worst thing in the world to hold it; wouldn't be terrible to sell some lots when you have other taxable losses to balance....
Thanks for the responses!

1) Yes - it is pretty close to desired
2) She has been on a traditional plan. Given our life plans, it was much cheaper to go that route
3) I certainly would hope to have the same, but this is one area I certainly need to take a closer look at
4) I have quite a bit of traditonal IRA, but the wife's is 100% 401K rollover.
5) Thanks - it has been a pretty consistent gainer, and will continue to be a smaller portion of my net worth, as I'll no longer be actively contributing to it.

Buckybogle
Posts: 8
Joined: Thu Jun 02, 2016 9:37 am

Re: Portfolio Review

Post by Buckybogle » Sun Jun 19, 2016 7:10 am

MPAndy222 wrote:Looks great - you have a lot of good options with the 401k accounts. I'd consider a lifecycle fund for her 401k. You may be better off with changing your 401k to all pretax as you will likely be in a lower tax bracket in retirement, however there are some advantages to having a Roth 401k. If you like the advantages of the Roth 401k there is no problem with keeping 1/3 of your 401k as post tax contributions. I'd calculate to see how close you are to the 28% tax bracket (if putting a little extra in pretax money puts you into the 28% bracket then I'd do all pretax for the 401k). Also make sure you are contributing the 5.5k each to traditional IRAs and then converting to Roth IRA through the backdoor. I'd put the bonds in this as you don't have any great low cost bond options (or a dash of REITs if desired). That would allow you to get the bonds out of your taxable

Thank you for the response! Is there a reason you suggest a lifecycle fund in her 401K?

The bonds that are in my taxable are pretty minimal this point. It was my first foray into investing, and i was just doing what the Vanguard calculator spit out at the time. I had no clue on tax implications at the time.

I'm not that close to the 28% bracket, so not sure that part will come into the equation.

User avatar
FiveK
Posts: 5735
Joined: Sun Mar 16, 2014 2:43 pm

Re: Portfolio Review

Post by FiveK » Sun Jun 19, 2016 10:50 am

Buckybogle wrote:
FiveK wrote: 3) Yes, unless you expect ~the same income after retirement.
3) I certainly would hope to have the same, but this is one area I certainly need to take a closer look at
Buckybogle wrote:I'm not that close to the 28% bracket, so not sure that part will come into the equation.
If you are making $24K/mo now, generating the same amount in retirement will require $7,200,000 at a 4% withdrawal rate (or some lower balance plus pension, etc.).

Even if you do accumulate $7.2 million, some of that will be Roth and thus not taxed when withdrawn. Yes, it's possible you will pay 33% marginal on your retirement income, but likely...?

Yossarian
Posts: 139
Joined: Thu May 31, 2007 6:19 pm

Re: Portfolio Review

Post by Yossarian » Sun Jun 19, 2016 1:18 pm

Get rid of any fund that's less than 5% of your total portolio. It doesn't contribute enough to bother with.

Why do you have the same funds scattered across accounts? You could simplify quite a bit by consolidating.

retiredjg
Posts: 34196
Joined: Thu Jan 10, 2008 12:56 pm

Re: Portfolio Review

Post by retiredjg » Sun Jun 19, 2016 2:11 pm

Questions
1) New to this, but looking for overall suggestions on portfolio allocations
What you have is fine, but if you want, this can be simplified and the costs could be cut a little. There is no need to have every asset class in every account. Most accounts that are not receiving money can be reduced to 1 fund.

2) Any specific updates that I should make to the HSA fund? I’m not sure is there are any investments that make the most sense for a fund like this
If you are using the HSA as a "stealth IRA", then holding Total Stock is fine. If you actually expect to pay some medical bills from the account, I think I'd add some Vanguard Short-Term Investment-Grade Fund Investor Shares VFSTX 0.20 to the HSA account.
3) After reading this site, it seems like I should not invest in my Roth 401K at all. Do you agree?
I do not believe that Roth 401k is in your best interests. It is very likely you can pay taxes later at something less than 33% federal and 9.85% state.
4) I can't contribute to a Roth IRA, and can't deduct IRA contributions. Is there any reason to contribute to the IRA over a taxable accounts?
You could choose to use the "back door" to contribute to Roth IRA. To do this, you'd have to move His IRA into His 401k and Her IRA into Her 401k. I hesitate to even suggest using the back door because so many people have messed it up and then have to repair the damage. But it is an option you might want to consider.

If you don't contribute to Roth (back door) or deduct tIRA contributions, put that extra money into taxable and invest tax-efficiently.
5) I currently have 10% of my assets in a former ESPP, with a fairly large amount of unrealized gains. The stock has been a clear winner over the past 15 years, and I am struggling to convince myself to sell it. Any thoughts?
That is a lot of your nest egg invested in 1 stock. However, the percentage should be getting smaller over time. I'd suggest that you not buy more (other than reinvested dividends). You could sell a small amount each year - say $5k - and the percentage will get smaller faster.

About your desired allocation of 90% stock. That is quite aggressive, not stupid aggressive, but aggressive any way. With the amount you are saving, I'm not sure you need to take that much risk. I also think it is possible that neither of you was actually invested in the market during the crash that started in 2007 and lasted awhile. If that is correct, you don't really know your tolerance for risk - seeing your money disappear for months or years on end. You can only guess at how you will feel.

I think you should consider having at least 20% bonds in your portfolio, maybe even 25%.

Buckybogle
Posts: 8
Joined: Thu Jun 02, 2016 9:37 am

Re: Portfolio Review

Post by Buckybogle » Sun Jun 19, 2016 3:31 pm

Thanks to everyone for the feedback! I'll certainly be spending the next few weeks implementing the advice!

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