First Impressions/Feedback of Our Portfolio

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Topic Author
ZeroWealth
Posts: 67
Joined: Sat Jan 07, 2017 12:00 am
Location: Emerald City

First Impressions/Feedback of Our Portfolio

Post by ZeroWealth » Wed Jan 18, 2017 11:08 am

Hello everyone, so happy to be a new member of the community. I've been lurking for a while now and wanted to get your feedback on how our portfolio looks at first glance.

Emergency funds: Six Months + 20% overage (LifeStrategy Conservative Growth Fund at Vanguard)
Debt: Mortgage with 266k left @ 4.25% (No PMI)
Tax Filing Status: Married Filing Jointly
Tax Rate: 25% Federal, 0% State
State of Residence: WA
Age: 34
Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: 33% of stocks
Portfolio Size: Mid five-figures (lack of 401(k) plans at previous jobs and not having a lot of financial knowledge stalled us from contributing more to retirement earlier on in our careers)

Current retirement assets

Taxable
None

His Traditional 401k
0% Fidelity 500 Index Fund - Premium Class (FUSVX) (0.045%)
- Company Match: 50% up to 6%, fully vested after 6 years
- Just started at the company and 401k availability kicks in this month for me, so 0% of total portfolio for now

His Roth IRA at Vanguard
16.5% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.05%)
23.6% Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) (0.12%)

Her Roth IRA at Vanguard
28.4% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.05%)

His Rollover Traditional IRA at Vanguard
17.9% Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.05%)

His HSA at Health Savings Administrators
4.1% Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) (0.12%)
9.5% Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) (0.06%)

Contributions

New annual Contributions
$18,000 his Traditional 401k (No employer contributions yet as I just started at this company a few months ago)
$5,500 his Roth IRA
$5,500 her Roth IRA

Available funds

Funds available in his 401(k)
AllianzGI NFJ Dividend Value Fund Institutional Class (NFJEX) (0.73%)
ClearBridge Aggressive Growth Fund Class I (SAGYX) (0.84%)
Columbia Contrarian Core Fund Class R4 (CORRX) (0.81%)
Fidelity® 500 Index Fund Premium Class (FUSVX) (0.045%)
Invesco Comstock Fund Class Y (ACSDX) (0.61%)
Fidelity Advisor® Leveraged Company Stock Fund I Class (FLVIX) (0.81%)
Undiscovered Managers Behavioral Value Fund Select Class (UBVSX) (1.64%)
Lazard International Strategic Equity Portfolio Institutional Shares (LISIX) (0.82%)
MFS International Diversification Fund Class R4 (MDITX) (0.96%)
Principal SmallCap Fund Institutional Class (PSLIX) (0.84%)
T. Rowe Price Retirement 2005 Fund Advisor Class (PARGX) (0.85%)
T. Rowe Price Retirement 2010 Fund Advisor Class (PARAX) (0.84%)
T. Rowe Price Retirement 2015 Fund Advisor Class (PARHX) (0.87%)
T. Rowe Price Retirement 2020 Fund Advisor Class (PARBX) (0.91%)
T. Rowe Price Retirement 2025 Fund Advisor Class (PARJX) (0.94%)
T. Rowe Price Retirement 2030 Fund Advisor Class (PARCX) (0.97%)
T. Rowe Price Retirement 2035 Fund Advisor Class (PARKX) (0.99%)
T. Rowe Price Retirement 2040 Fund Advisor Class (PARDX) (1.01%)
T. Rowe Price Retirement 2045 Fund Advisor Class (PARLX) (1.01%)
T. Rowe Price Retirement 2050 Fund Advisor Class (PARFX) (1.01%)
T. Rowe Price Retirement 2055 Fund Advisor Class (PAROX) (1.01%)
T. Rowe Price Retirement Balanced Fund Advisor Class (PARIX) (0.82%)
BlackRock High Yield Bond Portfolio Institutional Shares (BHYIX) (0.6%)
Loomis Sayles Strategic Income Fund Class Y (NEZYX) (0.69%)
Metropolitan West Intermediate Bond Fund Class Institutional (MWIIX) (0.46%)
Principal Government & High Quality Bond Fund Institutional Class (PMRIX) (0.52%)
Templeton Global Total Return Fund Advisor Class (TTRZX) (0.83%)
Fidelity Money Market Trust Retirement Government Money Market II Portfolio (FRTXX) (0.42%)

Funds available in his/her Roth IRAs
Everything Vanguard has to offer

Funds available in his Rollover Traditional IRA
Everything Vanguard has to offer

Funds available in his HSA
Vanguard Prime Money Market Fund Investor Shares (VMMXX) (0.16%)
Vanguard GNMA Fund Admiral Shares (VFIJX) (0.11%)
Vanguard LifeStrategy Income Fund (VASIX) (0.12%)
Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) (0.06%)
Vanguard LifeStrategy Conservative Growth Fund (VSCGX) (0.13%)
Vanguard Balanced Index Fund Admiral Shares (VBIAX) (0.08%)
Vanguard LifeStrategy Moderate Growth Fund (VSMGX) (0.14%)
Vanguard STAR Fund (VGSTX) (0.34%)
Vanguard Windsor II Fund Admiral Shares (VWNAX) (0.26%)
Vanguard LifeStrategy Growth Fund (VASGX) (0.15%)
Vanguard 500 Index Fund Admiral Shares (VFIAX) (0.05%)
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.05%)
Vanguard Social Index Fund Investor Shares (VFTSX) (0.22%)
Vanguard Selected Value Fund Investor Shares (VASVX) (0.39%)
Vanguard Morgan Growth Fund Admiral Shares (VMRAX) (0.27%)
Vanguard International Growth Fund Admiral Shares (VWILX) (0.33%)
Vanguard Mid-Cap Index Fund Admiral Shares (VIMAX) (0.08%)
Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)  (0.12%)
Vanguard Extended Market Index Fund Admiral Shares (VEXAX) (0.09%)
Vanguard Strategic Equity Fund (VSEQX) (0.21%)
Vanguard Small-Cap Index Fund Admiral Shares (VSMAX) (0.08%)
Vanguard Mid-Cap Growth Fund Investor Shares (VMGRX) (0.43%)

Questions
1. Emergency fund: Since it's in a taxable account, is it really wise that we put it in a LifeStrategy fund? I've been reading up on how the LS funds are not the best for taxable accounts, and was looking for recommendations on alternative investment options. I have a very stable job and we provided a 20% buffer in the account to make sure we still have 6 months expenses if there was a big drop in the market, so our risk tolerance for this account could be a bit less conservative if we needed it to be.

2. IRA accounts: My wife is a SAHM right now and I've been contributing to her Roth IRA since we started it. I'm wondering if we should move over to tIRAs, because we plan on either staying at our current tax bracket or one lower once we enter retirement. My wife does plan on entering the workforce again once our kiddo starts grade school, and I'm thinking we'll move up to the 28% tax bracket, but we'd probably stay under the $184k limit for Roth.

3. HSA: We have a legacy HSA account that isn't able to be contributed to right now, and I've treated that as part of our portfolio because we don't plan on using any funds in this account until we hit retirement. Is is a good idea to look at this investment as part of our retirement portfolio?

4. General: Anything else you see that we could be optimizing/thinking about?

Thanks!
Last edited by ZeroWealth on Wed Jan 18, 2017 11:50 am, edited 3 times in total.
"I seldom end up where I wanted to go, but almost always end up where I need to be." - Douglas Adams

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Taylor Larimore
Advisory Board
Posts: 28809
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Need % of each fund

Post by Taylor Larimore » Wed Jan 18, 2017 11:14 am

ZeroWealth:

It will be very helpful to analyze your portfolio if you will edit your post to put the percentage of each fund as the percentage of your TOTAL portfolio (not each account).

Use the little crayon edit box at the top of your window.

Thank you and best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

brad.clarkston
Posts: 682
Joined: Fri Jan 03, 2014 8:31 pm
Location: Kansas City, MO

Re: First Impressions/Feedback of Our Portfolio

Post by brad.clarkston » Wed Jan 18, 2017 11:19 am

ZeroWealth wrote: Questions
1. Emergency fund: Since it's in a taxable account, is it really wise that we put it in a LifeStrategy fund? I've been reading up on how the LS funds are not the best for taxable accounts, and was looking for recommendations on alternative investment options. I have a very stable job and we provided a 20% buffer in the account to make sure we still have 6 months expenses if there was a big drop in the market, so our risk tolerance for this account could be a bit less conservative if we needed it to be.
No it's not a target data fund is not very tax-efficient due to the bond dividends. A short term muni bond, or Total Stock/Total International would work fine. There's also no reason to just keep the EF in a Ally Bank 1% account it's not about making money but provide a EF.
ZeroWealth wrote: 2. IRA accounts: My wife is a SAHM right now and I've been contributing to her Roth IRA since we started it. I'm wondering if we should move over to tIRAs, because we plan on either staying at our current tax bracket or one lower once we enter retirement. My wife does plan on entering the workforce again once our kiddo starts grade school, and I'm thinking we'll move up to the 28% tax bracket, but we'd probably stay under the $184k limit for Roth.
Not sure that it will be matter but it's not a bad idea.
ZeroWealth wrote: 3. HSA: We have a legacy HSA account that isn't able to be contributed to right now, and I've treated that as part of our portfolio because we don't plan on using any funds in this account until we hit retirement. Is is a good idea to look at this investment as part of our retirement portfolio?
Yes, can it be rolled over to a active HSA? I'm not sure that's a real thing but hopefully someone else can chime in.
ZeroWealth wrote: 4. General: Anything else you see that we could be optimizing/thinking about?

Thanks!
It looks good enough to me. I would just keep adding and not worry to much about mini-maxing.

Topic Author
ZeroWealth
Posts: 67
Joined: Sat Jan 07, 2017 12:00 am
Location: Emerald City

Re: Need % of each fund

Post by ZeroWealth » Wed Jan 18, 2017 11:25 am

Taylor Larimore wrote:ZeroWealth:

It will be very helpful to analyze your portfolio if you will edit your post to put the percentage of each fund as the percentage of your TOTAL portfolio (not each account).

Use the little crayon edit box at the top of your window.

Thank you and best wishes.
Taylor
Thanks so much for the suggestion Taylor. I've updated the post to show % breakdown of total portfolio. I hope this helps!
"I seldom end up where I wanted to go, but almost always end up where I need to be." - Douglas Adams

Topic Author
ZeroWealth
Posts: 67
Joined: Sat Jan 07, 2017 12:00 am
Location: Emerald City

Re: First Impressions/Feedback of Our Portfolio

Post by ZeroWealth » Wed Jan 18, 2017 11:36 am

brad.clarkston wrote:
ZeroWealth wrote: Questions
1. Emergency fund: Since it's in a taxable account, is it really wise that we put it in a LifeStrategy fund? I've been reading up on how the LS funds are not the best for taxable accounts, and was looking for recommendations on alternative investment options. I have a very stable job and we provided a 20% buffer in the account to make sure we still have 6 months expenses if there was a big drop in the market, so our risk tolerance for this account could be a bit less conservative if we needed it to be.
No it's not a target data fund is not very tax-efficient due to the bond dividends. A short term muni bond, or Total Stock/Total International would work fine. There's also no reason to just keep the EF in a Ally Bank 1% account it's not about making money but provide a EF.
Reason we put our EF into a brokerage was we're quite secure in our income and we'd like to keep up with inflation, so that if in 10 years we need to tap into the EF, the purchasing power won't be 10-15% less than what we put into it.
brad.clarkston wrote:
ZeroWealth wrote: 3. HSA: We have a legacy HSA account that isn't able to be contributed to right now, and I've treated that as part of our portfolio because we don't plan on using any funds in this account until we hit retirement. Is is a good idea to look at this investment as part of our retirement portfolio?
Yes, can it be rolled over to a active HSA? I'm not sure that's a real thing but hopefully someone else can chime in.
Unfortunately we don't have access to a HDHP right now to let us contribute. My company only gives us one option for insurance (not complaining as they cover a huge portion), but would have loved to been able to contribute to an HSA.
brad.clarkston wrote:
ZeroWealth wrote: 4. General: Anything else you see that we could be optimizing/thinking about?

Thanks!
It looks good enough to me. I would just keep adding and not worry to much about mini-maxing.
Thanks for your feedback!
"I seldom end up where I wanted to go, but almost always end up where I need to be." - Douglas Adams

brad.clarkston
Posts: 682
Joined: Fri Jan 03, 2014 8:31 pm
Location: Kansas City, MO

Re: First Impressions/Feedback of Our Portfolio

Post by brad.clarkston » Wed Jan 18, 2017 11:37 am

Funds available in his 401(k)
Fidelity 500 Index Fund - Premium Class (FUSVX) (0.045%)
Everything else has an expense ratio of over 0.7% so not even worth looking at honestly
Could you add all of the available funds for his 401k? A 0.7% ER would be only VG passive funds there are allot of good ones that are higher than that.

Topic Author
ZeroWealth
Posts: 67
Joined: Sat Jan 07, 2017 12:00 am
Location: Emerald City

Re: First Impressions/Feedback of Our Portfolio

Post by ZeroWealth » Wed Jan 18, 2017 11:51 am

brad.clarkston wrote:
Funds available in his 401(k)
Fidelity 500 Index Fund - Premium Class (FUSVX) (0.045%)
Everything else has an expense ratio of over 0.7% so not even worth looking at honestly
Could you add all of the available funds for his 401k? A 0.7% ER would be only VG passive funds there are allot of good ones that are higher than that.
Sure thing Brad. It looks like I was a bit over-zealous with my estimates on a few of the funds since I hadn't looked in a few months.
"I seldom end up where I wanted to go, but almost always end up where I need to be." - Douglas Adams

User avatar
Taylor Larimore
Advisory Board
Posts: 28809
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Feedback of Our Portfolio

Post by Taylor Larimore » Wed Jan 18, 2017 4:39 pm

ZeroWealth:

Thank you for listing the percentage of each fund in your total portfolio. Your asset-allocation is much more important than individual funds. More than anything else it determines your risk and return. Here's your breakdown:

---------------US Stocks------------------------------Int. Stocks---------------------Bonds

His Roth--------16.5%---------------------------------23.6%
Her Roth--------28.4%
His Rollover----17.9%
His HSA--------------------------------------------------4.1%--------------------------9.5%

Totals-----------62.8%-------------------------------27.7%-------------------------9.5%

Comments:

* Your stock/bond ratio is about 90/10. This means that in the next bad bear market you should expect your portfolio to decline about 45% (one-half your stock allocation). This meets your "desired allocation." For reassurance or adjustment use this link to Vanguard Investor Questionnaire

* Your international allocation is 27.7% (31% of stocks). Sounds reasonable to me.

* Your portfolio is very diversified with over 17,000 world-wide securities (low risk).

* Your portfolio is very low cost -- the biggest determinant of future performance.

* Your portfolio is simple to understand and maintain (one company helps).

* Your funds will never return less than their categories which means less worry and more time to spend with friends, family and other endeavers.

* Your portfolio is very tax-efficient.

I think you have an excellent portfolio!
The enemy of a good plan is the dream of a perfect plan. -- Jack Bogle
Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

Topic Author
ZeroWealth
Posts: 67
Joined: Sat Jan 07, 2017 12:00 am
Location: Emerald City

Re: Feedback of Our Portfolio

Post by ZeroWealth » Wed Jan 18, 2017 5:41 pm

Taylor Larimore wrote:ZeroWealth:

Thank you for listing the percentage of each fund in your total portfolio. Your asset-allocation is much more important than individual funds. More than anything else it determines your risk and return. Here's your breakdown:

---------------US Stocks------------------------------Int. Stocks---------------------Bonds

His Roth--------16.5%---------------------------------23.6%
Her Roth--------28.4%
His Rollover----17.9%
His HSA--------------------------------------------------4.1%--------------------------9.5%

Totals-----------62.8%-------------------------------27.7%-------------------------9.5%

Comments:

* Your stock/bond ratio is about 90/10. This means that in the next bad bear market you should expect your portfolio to decline about 45% (one-half your stock allocation). This meets your "desired allocation." For reassurance or adjustment use this link to Vanguard Investor Questionnaire

* Your international allocation is 27.7% (31% of stocks). Sounds reasonable to me.

* Your portfolio is very diversified with over 17,000 world-wide securities (low risk).

* Your portfolio is very low cost -- the biggest determinant of future performance.

* Your portfolio is simple to understand and maintain (one company helps).

* Your funds will never return less than their categories which means less worry and more time to spend with friends, family and other endeavers.

* Your portfolio is very tax-efficient.

I think you have an excellent portfolio!
The enemy of a good plan is the dream of a perfect plan. -- Jack Bogle
Best wishes.
Taylor
Taylor, thank you so much for your time in reviewing our portfolio, it means a lot to us. To see that we're on the right track is very reassuring, we just need to stay the course, come what may of the markets. I only wish we started on this path earlier, but such is life! :sharebeer
"I seldom end up where I wanted to go, but almost always end up where I need to be." - Douglas Adams

Topic Author
ZeroWealth
Posts: 67
Joined: Sat Jan 07, 2017 12:00 am
Location: Emerald City

Re: First Impressions/Feedback of Our Portfolio

Post by ZeroWealth » Thu Jan 19, 2017 11:04 am

Did anyone happen to have any advice/thoughts on the emergency fund and IRA questions I had? I'm ready to make some immediate changes, though just looking for that gentle nudge from people way more knowledgeable about this stuff than myself. :D
"I seldom end up where I wanted to go, but almost always end up where I need to be." - Douglas Adams

User avatar
Taylor Larimore
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Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

More answers.

Post by Taylor Larimore » Thu Jan 19, 2017 4:19 pm

ZeroWealth wrote:Did anyone happen to have any advice/thoughts on the emergency fund and IRA questions I had? I'm ready to make some immediate changes. :D
Zero Wealth:
1. Emergency fund: Since it's in a taxable account, is it really wise that we put it in a LifeStrategy fund? I've been reading up on how the LS funds are not the best for taxable accounts, and was looking for recommendations on alternative investment options. I have a very stable job and we provided a 20% buffer in the account to make sure we still have 6 months expenses if there was a big drop in the market, so our risk tolerance for this account could be a bit less conservative if we needed it to be.
An "emergency fund" should normally be in a taxable account. Life Strategy funds should be in a tax-retirement account in your tax-bracket. Anyway, I'm not sure you need a separate low-yielding" emergency fund." I'll guess you can obtain emergency money from your bank account, credit card, portfolio, bank loan, even family. I do not have a separate "emergency fund." Keep investing simple.
2. IRA accounts: My wife is a SAHM right now and I've been contributing to her Roth IRA since we started it. I'm wondering if we should move over to tIRAs, because we plan on either staying at our current tax bracket or one lower once we enter retirement. My wife does plan on entering the workforce again once our kiddo starts grade school, and I'm thinking we'll move up to the 28% tax bracket, but we'd probably stay under the $184k limit for Roth.
No one knows what our tax-bracket will be when we retire. We're only guessing. I would not bother opening another type IRA with a current and expected tax bracket near 25%. Keep investing simple (read the "Simplicity" link below).

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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