My portfolio - thoughts?

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Topic Author
MrMonte
Posts: 4
Joined: Tue Feb 14, 2017 11:00 am

My portfolio - thoughts?

Post by MrMonte »

Hello all. I am new here. I'm 56 and hoping to retire early, say at 62 or 63. I'm also concerned about potential uncertainties under the current Administration. So, I finally took the plunge. Sold all my stocks and reallocated to index funds, mostly Vanguard, and divided between 35% BND ETF and a little in cash, and 65% Equities. The equity indices that I chose are based on research, and reflect a couple areas of specific interest. The allocation is as follows:

35% BND Vanguard total bond market etf
40% VOO (S&P 500) Vanguard index funds S&P 500 ETF
10% FDN (An internet ETF) First Trust DJ Internet
5% HDV (High-Yield equity ETF) IShares core high dividend ETF
5% VNQ (REIT) Vanguard REIT ETF Index
5% VXUS (International) Vanguard total international ETF

I'd be very interested in hearing the views of you experts. I had owned HDV and it was doing well, so I held on to it. And I like having a modest stake in internet stocks.

Thanks,

MrMonte
Last edited by MrMonte on Tue Feb 14, 2017 12:56 pm, edited 1 time in total.
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prudent
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Re: My portfolio - thoughts?

Post by prudent »

Welcome to bogleheads!

Please edit your post (using the "pencil" icon in the upper right corner of your post) to include the names of the funds/ETFs.
betablocker
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Joined: Mon Jan 11, 2016 1:26 pm

Re: My portfolio - thoughts?

Post by betablocker »

Your 65/35 equity bonds with 95% us equity exposure. I'd suggest you ditch both the high yield ETF and the internet ETF. High yield equity is a proxy for value as you can see if you plug it into Morningstar and look at the style box. I'd recommend just buying a value ETF if you want that exposure and in addition dividend stocks are a bit overbought given the low bond yields. FDN is the opposite, it's an all growth fund heavy on the FANGS (amazon, Facebook, etc.). I'd recommend selling of those and putting the proceeds in international to give you more diversification there. There are plenty of threads on the board about the advantages and disadvantages of international diversification. Just note that based on CAPE ratios, international has higher expected returns right now. If you want to tilt to value or small you could make those adjustments as well. Whether 65/35 is the right split is a personal risk and return question and you can find many threads on this board and resources from companies like Vanguard to judge your personal situation.
kenner
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Re: My portfolio - thoughts?

Post by kenner »

prudent wrote:Welcome to bogleheads!

Please edit your post (using the "pencil" icon in the upper right corner of your post) to include the names of the funds/ETFs.
Also, it would be helpful if you list annual expense ratios for the funds.
betablocker
Posts: 505
Joined: Mon Jan 11, 2016 1:26 pm

Re: My portfolio - thoughts?

Post by betablocker »

Forgot about REITs. They offer some diversification and many bogleheads hold allocations. I personally am selling them off because the valuations have run up so much that expected returns are extremely low. About that I could very well be wrong though and will certainly be accused of market timing.
aristotelian
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Re: My portfolio - thoughts?

Post by aristotelian »

How close are you to early retirement? Are the funds in IRA's or taxable?

I think the funds are fine overall. One small critique would be that you are missing mid and small cap, which tend to outperform although with higher volatility. Consider replacing the internet ETF, REIT, or a portion of VOO with PSCT and/or VXF and/or VBR.

Also I would consider going closer to 50/50 depending on how close you already are to your target portfolio goal.
Topic Author
MrMonte
Posts: 4
Joined: Tue Feb 14, 2017 11:00 am

Re: My portfolio - thoughts?

Post by MrMonte »

aristotelian wrote:How close are you to early retirement? Are the funds in IRA's or taxable?

I think the funds are fine overall. One small critique would be that you are missing mid and small cap, which tend to outperform although with higher volatility. Consider replacing the internet ETF, REIT, or a portion of VOO with PSCT and/or VXF and/or VBR.

Also I would consider going closer to 50/50 depending on how close you already are to your target portfolio goal.
that seems like good advice. I'm agnostic on the REITs, so maybe I will follow through.

I'm not quite ready to go to 50/50, but I do plan to rebalance every January and change the bond/equity allocation by 5% a year in additional bonds, at least for a few years.

the money is in a ROTH IRA. I am hoping to retire in about 5 years or so.

I go back and forth on the dividend fund. I realize it's redundant, but I've had it for a while and it's done very well. Of course, I sold a number of stocks that had done well the past few years as well so I'm pretty "all in."

I'm pretty comfortable with 10% allocation on the internet front; that seems a controllable risk based on my risk tolerance.

I am looking forward to piece of mind as I enter this phase of my life and investment cycle.
Topic Author
MrMonte
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Joined: Tue Feb 14, 2017 11:00 am

Re: My portfolio - thoughts?

Post by MrMonte »

prudent wrote:Welcome to bogleheads!

Please edit your post (using the "pencil" icon in the upper right corner of your post) to include the names of the funds/ETFs.
done
Topic Author
MrMonte
Posts: 4
Joined: Tue Feb 14, 2017 11:00 am

Re: My portfolio - thoughts?

Post by MrMonte »

aristotelian wrote:How close are you to early retirement? Are the funds in IRA's or taxable?

I think the funds are fine overall. One small critique would be that you are missing mid and small cap, which tend to outperform although with higher volatility. Consider replacing the internet ETF, REIT, or a portion of VOO with PSCT and/or VXF and/or VBR.

Also I would consider going closer to 50/50 depending on how close you already are to your target portfolio goal.
Just so you know, I took your advice and added VBR to the portfolio, cutting back on the VOO. 65/35 allocation remains the same.

Good thought.

Still mulling the REIT ETF. I am interested in Real Estate. Not sure if this fund is the ideal way to go.

Thanks!
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nedsaid
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Re: My portfolio - thoughts?

Post by nedsaid »

MrMonte wrote:Hello all. I am new here. I'm 56 and hoping to retire early, say at 62 or 63. I'm also concerned about potential uncertainties under the current Administration. So, I finally took the plunge. Sold all my stocks and reallocated to index funds, mostly Vanguard, and divided between 35% BND ETF and a little in cash, and 65% Equities. The equity indices that I chose are based on research, and reflect a couple areas of specific interest. The allocation is as follows:

35% BND Vanguard total bond market etf
40% VOO (S&P 500) Vanguard index funds S&P 500 ETF
10% FDN (An internet ETF) First Trust DJ Internet
5% HDV (High-Yield equity ETF) IShares core high dividend ETF
5% VNQ (REIT) Vanguard REIT ETF Index
5% VXUS (International) Vanguard total international ETF

I'd be very interested in hearing the views of you experts. I had owned HDV and it was doing well, so I held on to it. And I like having a modest stake in internet stocks.

Thanks,

MrMonte
This is actually not a bad portfolio. 65/35 stock bond split, good. You have International representation, good but not enough in my opinion. International should be 20% to 50% of your stocks. Personally, I have about 25% of my stocks in International. It looks like you are chasing dividends, in the era of very low interest rates investors have been chasing dividend yield hard for eight years now. If interest rates keep rising, High Dividend Yield won't do well. REITs are okay, I am keeping mine but not adding to them. Again the yield chasers have been in action chasing REITs to the point where they no longer represent value. Glad you added Vanguard Small Cap Value Index ETF, this is a long term holding. Remember that Small Value was on fire in 2016. Not sure why you would have an Internet ETF.

I hope you aren't performance chasing. High Dividend and REITs have done well in recent years, in large part because of investors hunger for yield. Small Value did great in 2016. In my opinion, you should be looking for cheaper asset classes which include International Developed Markets and in particular International Emerging Markets.
A fool and his money are good for business.
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