What are some ways that I can maximize this portfolio, staying true to the Bogle philosophy?

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zayd13
Posts: 44
Joined: Sun May 31, 2015 2:17 pm

What are some ways that I can maximize this portfolio, staying true to the Bogle philosophy?

Post by zayd13 » Mon Apr 03, 2017 1:52 pm

Age: 28 (39 years left to retirement)

Debt: None (took a lot of hard work and foresight to get here, but I did it!)

Current portfolio:
• Roth IRA: 100% VFFVX - Target Date Fund 2055 (maxing since 2015, will continue to max this year and beyond)
• Vanguard Taxable: 100% VTSMX (currently valued at ~$5k); plan on holding this for the long-term (10, 15, 20 years+)

Risk tolerance: High. As you can see I am currently pursuing a very aggressive portfolio, with ~92% stocks ~8% bonds. I plan on keeping this allocation until I reach about age 32 where I’ll shift to being less aggressive (85-90% stocks, 10-15% bonds at that point).

Major goals:
• By early 2019 I should have a 20% home DP. My fiancée and I do not anticipate having children for a while or any other major purchases for at least 5 years. The house DP funds need to be relatively liquid, so none of it is wrapped up in my investment portfolio. At this point in my life, other than the house, my only long-term goal is to increase my net worth.

My question is very simple: given everything I’ve shared so far, what are some ways that I can maximize my current portfolio? What are some things that I should be considering if I want the dollars I am willing to invest in my taxable to work even more for me (but not kill me with taxes/fees)? I have 100% VTSMX in my taxable, but would pursuing REIT-ETFs, Int’l ETFs, or other mutual funds/ETF’s - for instance - in my Vanguard account be a wiser decision in order to potentially increase my returns and add more diversification? Or, is what I have right now pretty strong and I should continue what I’m doing, growing my VTSMX to admiral class status?

I ask this because I will have about $120-$200/month in extra income coming in and want to know where I can put it where it would give me the best chance of increasing my overall net worth. Not that I’m doubtful, but I literally don’t know if simply contributing to VTSMX is the wisest way to go given whatever options are out there. To be clear - I have no debt, my Roth and work pension are being maxed, and my house goal is being achieved via MMA's/CD.

Hopefully my question makes sense! I essentially want to see if there’s anything I should be thinking about and things that I can be doing better right now to make my money work more for me.

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Peter Foley
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Location: Lake Wobegon

Re: What are some ways that I can maximize this portfolio, staying true to the Bogle philosophy?

Post by Peter Foley » Mon Apr 03, 2017 2:04 pm

There are many who recommend small cap value over the long term. I've never owned it myself.

I think your AA is fine for your age and your plan to make it a bit more conservative in a few years is on target with the approach I would take. (Not that this is right, mind you, just two persons' opinions so far.)

If you stay the course and continue to invest during both up and down markets you should be fine. Increasing savings in tax deferred when you get a salary increase is a great way to boost returns over the long haul.

Tax efficiency also matters. You don't mention your income level, but in general I would favor a Roth when in the 15% bracket and 401k/403b when in the 25% bracket.

dbr
Posts: 23676
Joined: Sun Mar 04, 2007 9:50 am

Re: What are some ways that I can maximize this portfolio, staying true to the Bogle philosophy?

Post by dbr » Mon Apr 03, 2017 2:11 pm

By choosing 8% bonds you have already agreed that you want to sacrifice some expected return for more certainty. You also already agree that you want to migrate to a higher allocation to bonds in the future. This is contradictory to saying you want the maximum return possible.

If you want a more nuanced idea about this, such as could this portfolio have a greater expected return without increasing risk, then you are going to have to delve into the world of modern portfolio theory, factor investing, etc. That is above my pay grade and yours too. Go there when you no longer have to ask. In the meantime you could investigate those topics for yourself.

zayd13
Posts: 44
Joined: Sun May 31, 2015 2:17 pm

Re: What are some ways that I can maximize this portfolio, staying true to the Bogle philosophy?

Post by zayd13 » Mon Apr 03, 2017 2:14 pm

Peter Foley wrote:There are many who recommend small cap value over the long term. I've never owned it myself.

I think your AA is fine for your age and your plan to make it a bit more conservative in a few years is on target with the approach I would take. (Not that this is right, mind you, just two persons' opinions so far.) If you stay the course and continue to invest during both up and down markets you should be fine. Increasing savings in tax deferred when you get a salary increase is a great way to boost returns over the long haul. Tax efficiency also matters. You don't mention your income level, but in general I would favor a Roth when in the 15% bracket and 401k/403b when in the 25% bracket.


Thanks for your insight. I don't know much about small cap value either, but I've heard about it. Maybe others can chime in regarding small cap value ETF's (since I won't have the minimum on hand for a small cap fund)? My bracket is 25%.

dbr
Posts: 23676
Joined: Sun Mar 04, 2007 9:50 am

Re: What are some ways that I can maximize this portfolio, staying true to the Bogle philosophy?

Post by dbr » Mon Apr 03, 2017 2:17 pm

If you want to explore these things there is an excellent book out by Larry Swedroe: https://www.amazon.com/Your-Complete-Gu ... +investing

I would definitely look carefully before leaping.

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