New Investor Pulse Check

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J0NATHAN
Posts: 103
Joined: Mon Jan 11, 2016 7:52 pm
Location: Chicago

New Investor Pulse Check

Post by J0NATHAN » Wed Oct 26, 2016 12:06 pm

Hi All: I just started investing about 5 months ago. I took the "jump in and figure it out later" approach, so I'm confident you'll have feedback for me.

All constructive feedback welcome. I'll read it all.

Emergency funds: Kind of – I have very limited exposure (No car, house, or dependents) I have a contingency plan assuming I lose my job. As for cash, I have ~3 months in a savings account (although some of this is going to fund a certificate in the next few months) and ~3 months of contributions in the Roth IRA that could be accessed in an absolute crisis.
Debt: 0
Tax Filing Status: Single
Tax Rate:
Marginal – 15% (fed), 7.65% (FICA), 3.75% (state)
Effective – 9.52% (fed), 7.65% (FICA), 3.34% (state)
State of Residence: IL
Age: 22
Desired Asset allocation: 100%/0% until age 25 (on Roth IRA); target date on 401k
Desired International allocation: No preference at this point
Current portfolio is mid-4 figure (<1 year investing); should hit 5 figures in early 2017.

Current retirement assets

401k at Fidelity
100% Vanguard Target Retirement 2060 Trust II – Exp Ratio (Gross) 0.08%
Company match: 100% to 6% - Yes I’m getting this, to the limit.

Roth IRA at Fidelity
100% FIDELITY SELECT MEDICAL EQUIP&SYSTEM (FSMEX) – Exp Ratio (Gross) .76%


Contributions

New annual Contributions
$2,639 401K (before 100% match)
$5,500 Roth IRA


Available funds

Funds available in his 401(k)

Name/Inception Date Asset Class Category Gross Expense Ratio** Shareholder Fees
FID 500 INDEX INST (FXSIX)02/17/1988 Stock Investments Large Cap 0.04% No additional fees apply.
FID GROWTH CO K (FGCKX)01/17/1983 Stock Investments Large Cap 0.77% No additional fees apply.
JH DISCPL VALUE R6 (JDVWX)01/02/1997 Stock Investments Large Cap 0.72% No additional fees apply.
ARIEL APPREC INST (CAAIX)12/01/19897 day yield as of07/31/2012   0.00% Stock Investments Mid-Cap 0.79% No additional fees apply.
ROYCE SPECIAL EQ IS (RSEIX)05/01/1998 Stock Investments Small Cap 1.04% No additional fees apply.
VANG SM CAP IDX ADM (VSMAX)10/03/1960 Stock Investments Small Cap 0.08% No additional fees apply.
DODGE & COX INTL STK (DODFX)05/01/2001 Stock Investments International 0.64% No additional fees apply.
FID DIVERSIFD INTL K (FDIKX)12/27/1991 Stock Investments International 0.87% Short term trading fees of 1% for fee eligible shares held less than 30 days.
HTFD INTL SM CO Y (HNSYX)04/30/2001 Stock Investments International 0.99% No additional fees apply.
VANG TOT INTL STK AD (VTIAX)04/29/1996 Stock Investments International 0.12% No additional fees apply.
PIF DVRSD RA CIT T105/30/2013 Blended Investments* N/A 0.74% No additional fees apply.
VANGUARD TARGET 201002/29/2008 Blended Investments* N/A 0.08% No additional fees apply.
VANGUARD TARGET 201502/29/2008 Blended Investments* N/A 0.08% No additional fees apply.
VANGUARD TARGET 202002/29/2008 Blended Investments* N/A 0.08% No additional fees apply.
VANGUARD TARGET 202502/29/2008 Blended Investments* N/A 0.08% No additional fees apply.
VANGUARD TARGET 203002/29/2008 Blended Investments* N/A 0.08% No additional fees apply.
VANGUARD TARGET 203502/29/2008 Blended Investments* N/A 0.08% No additional fees apply.
VANGUARD TARGET 204002/29/2008 Blended Investments* N/A 0.08% No additional fees apply.
VANGUARD TARGET 204502/29/2008 Blended Investments* N/A 0.08% No additional fees apply.
VANGUARD TARGET 205002/29/2008 Blended Investments* N/A 0.08% No additional fees apply.
VANGUARD TARGET 205508/31/2010 Blended Investments* N/A 0.08% No additional fees apply.
 VANGUARD TARGET 206003/01/2012 Blended Investments* N/A 0.08% No additional fees apply.
VANGUARD TARGET INC02/29/2008 Blended Investments* N/A 0.08% No additional fees apply.
DREY/S GLB FX INC Y (DSDYX)12/31/1993 Bond Investments Income 0.48% No additional fees apply.
FID US BOND IDX IPR (FXNAX)03/08/1990 Bond Investments Income 0.03% No additional fees apply.
PIM TOTAL RT INST (PTTRX)05/11/1987 Bond Investments Income 0.47% No additional fees apply.
VANG ST BOND IDX ADM (VBIRX)03/01/1994 Bond Investments Income 0.09% No additional fees apply.
FID RET GOVT MM (FGMXX)12/16/19887 day yield as of09/30/2016   0.08% Short-Term Investments N/A 0.42% No additional fees apply.

Questions:
1. Any recommendations regarding fund allocation? I am okay with large risk until age 25, at which time I’ll probably shift to a 90% | 10% asset allocation. Thinking about moving Roth IRA to FSTVX - .045% expense ratio

2. A general pulse check of how I'm doing, what I should look out for, general constructive/actionable feedback

Thank you all.
Jonathan
“There is nothing noble in being superior to your fellow man; true nobility is being superior to your former self.” - Ernest Hemingway

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

Re: New Investor Pulse Check

Post by Yossarian » Wed Oct 26, 2016 1:09 pm

Why is your ROTH IRA in a medical equipment fund? Just put it in the same fund that's in your 401k.

J0NATHAN
Posts: 103
Joined: Mon Jan 11, 2016 7:52 pm
Location: Chicago

Re: New Investor Pulse Check

Post by J0NATHAN » Wed Oct 26, 2016 1:33 pm

Yossarian wrote:Why is your ROTH IRA in a medical equipment fund? Just put it in the same fund that's in your 401k.
My career is in healthcare and it seemed to have a strong track.

I think the target date is the best option for my 401k based on what's available. I'd like to be a little more aggressive and active in the Roth IRA. I feel that it'll learn much more than just putting it in a target date and leaving it.
“There is nothing noble in being superior to your fellow man; true nobility is being superior to your former self.” - Ernest Hemingway

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BolderBoy
Posts: 4146
Joined: Wed Apr 07, 2010 12:16 pm
Location: Colorado

Re: New Investor Pulse Check

Post by BolderBoy » Wed Oct 26, 2016 1:47 pm

J0NATHAN wrote:
Yossarian wrote:Why is your ROTH IRA in a medical equipment fund? Just put it in the same fund that's in your 401k.
My career is in healthcare and it seemed to have a strong track.

I think the target date is the best option for my 401k based on what's available. I'd like to be a little more aggressive and active in the Roth IRA. I feel that it'll learn much more than just putting it in a target date and leaving it.
My career was in healthcare, too, but the "don't put all your eggs in one basket" mantra still applied.

How would you counsel the Enron employees who worked in the energy sector their whole lives?

Diversification is what protects your assets.

Other than that, you are doing the right thing by investing early and often.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

J0NATHAN
Posts: 103
Joined: Mon Jan 11, 2016 7:52 pm
Location: Chicago

Re: New Investor Pulse Check

Post by J0NATHAN » Wed Oct 26, 2016 2:36 pm

BolderBoy wrote:
J0NATHAN wrote:
Yossarian wrote:Why is your ROTH IRA in a medical equipment fund? Just put it in the same fund that's in your 401k.
My career is in healthcare and it seemed to have a strong track.

I think the target date is the best option for my 401k based on what's available. I'd like to be a little more aggressive and active in the Roth IRA. I feel that it'll learn much more than just putting it in a target date and leaving it.
My career was in healthcare, too, but the "don't put all your eggs in one basket" mantra still applied.

How would you counsel the Enron employees who worked in the energy sector their whole lives?

Diversification is what protects your assets.

Other than that, you are doing the right thing by investing early and often.
Well it is a mutual fund and not a singular equity. That said, I mostly did it "to get started" because I was being indecisive and was worried I wouldn't start if I didn't pick a course. I knew I would end up changing it after some time.

My thought at this point is to move 100% to FSTVX - .045% expense ratio after riding out the early Redemption Fee in my current fund (0.75% - Redemption Period 30 days)

EDIT: Just kidding. 10K minimum to invest in FSTVX. Maybe next year.
“There is nothing noble in being superior to your fellow man; true nobility is being superior to your former self.” - Ernest Hemingway

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BolderBoy
Posts: 4146
Joined: Wed Apr 07, 2010 12:16 pm
Location: Colorado

Re: New Investor Pulse Check

Post by BolderBoy » Wed Oct 26, 2016 4:59 pm

J0NATHAN wrote:Well it is a mutual fund and not a singular equity. That said, I mostly did it "to get started" because I was being indecisive and was worried I wouldn't start if I didn't pick a course. I knew I would end up changing it after some time.
We are just suggesting the fine tuning. You are doing marvelously by starting early.

One BH mantra to consider in the future is to avoid sector funds except for very small portions of one's overall portfolio.
Last edited by BolderBoy on Wed Oct 26, 2016 5:39 pm, edited 1 time in total.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

J0NATHAN
Posts: 103
Joined: Mon Jan 11, 2016 7:52 pm
Location: Chicago

Re: New Investor Pulse Check

Post by J0NATHAN » Wed Oct 26, 2016 5:16 pm

BolderBoy wrote:
J0NATHAN wrote: Well it is a mutual fund and not a singular equity. That said, I mostly did it "to get started" because I was being indecisive and was worried I wouldn't start if I didn't pick a course. I knew I would end up changing it after some time.
We are just suggesting the fine tuning. You are doing marvelously by starting early.

One BH mantra to consider in the future is to avoid sector funds except for very small portions of one's overall portfolio.
I do appreciate the fine tuning suggestion - one post had asked why I had done what I did; I was only attempting to give an explanation. I fully agree that it isn't optimized yet.

Thank you for the BH mantra to consider.
“There is nothing noble in being superior to your fellow man; true nobility is being superior to your former self.” - Ernest Hemingway

Stonebr
Posts: 1468
Joined: Wed Jan 21, 2009 11:19 am
Location: Maine

Re: New Investor Pulse Check

Post by Stonebr » Wed Oct 26, 2016 7:34 pm

1. Fund allocation doesn't matter much at this stage in your life. Just get exposure to equities, build an emergency fund and keep saving. The amount you save has far more impact on your results than the return in the early years. For that reason a Total Stock Index fund is the place to be. The 100/0 allocation is fine, but only if you have a decent emergency fund.

2. You are way ahead of where I was at 22. My assets were totally liquid in my twenties -- a sixpack on payday.
"have more than thou showest, | speak less than thou knowest" -- The Fool in King Lear

J0NATHAN
Posts: 103
Joined: Mon Jan 11, 2016 7:52 pm
Location: Chicago

Re: New Investor Pulse Check

Post by J0NATHAN » Wed Oct 26, 2016 9:02 pm

Stonebr wrote:1. Fund allocation doesn't matter much at this stage in your life. Just get exposure to equities, build an emergency fund and keep saving. The amount you save has far more impact on your results than the return in the early years. For that reason a Total Stock Index fund is the place to be. The 100/0 allocation is fine, but only if you have a decent emergency fund.

2. You are way ahead of where I was at 22. My assets were totally liquid in my twenties -- a sixpack on payday.
Thanks for the feedback. I won't say I'm not also investing in a decent liquor selection... but drinking at home is pretty much the only option when a single beer is like ~$7 (before tip) at the bars here.
“There is nothing noble in being superior to your fellow man; true nobility is being superior to your former self.” - Ernest Hemingway

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