portfolio check

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evolvelo
Posts: 5
Joined: Fri Nov 17, 2017 10:02 am

portfolio check

Post by evolvelo » Wed Nov 22, 2017 6:00 pm

Emergency funds:
6 months of expenses in Betterment (80/20 stocks-bonds; avg 0.1% expense ratio)
5 months of expenses in savings acct (Don't know why I am holding this cash - No major purchases planned; I may slowly transfer into my retirement taxable acct)
Debt: Refinanced this year to a 15-yr mortgage @ 3.25%, 140k remaining
Tax Filing Status: Single
Tax Rate: 28% Federal, 6.37% State
State of Residence: NJ
Age: 31
Desired Asset allocation: 85% stocks / 15% bonds (Willing to be a bit more aggressive and adjust to 90/10)
Desired International allocation: 20% of stocks


Current retirement assets (~210k)

Taxable
5% FIDELITY 500 INDEX PREMIUM CLASS (FUSVX) (0.035%)
1% ISHARES CORE S&P SMALL-CAP ETF (IJR) (0.07%)
2% VANGUARD FTSE DEVELOPED MARKET ETF (VEA) (0.07%)
6% VANGUARD INDEX FDS VANGUARD TOTAL STK MKT ETF (VTI) (0.04%)

401k - These are all employer managed funds
16% US Total Stock Fund (0.17%)
13% Small & Medium US Stock Index (0.02%)
10% Large Cap US Stock Index (0.01%)
5% International Stock Fund (0.44%)
10% Total Return Bond (0.29%)
26% Company Shares Fund (0.01%) - Not planning on selling at this time; in the future I may change contributions
Company matches 80% of first 6%

Roth IRA
1% VANGUARD TARGET RETIREMENT 2050 (VFIFX) (0.16%)
1% Cash

HSA
1% FIDELITY INTERNATL INDEX INVESTOR CLASS (FSIIX) (0.16%)
2% VANGUARD HIGH DIVID YLD INDEX FD INV CL (VHDYX) (0.15%)
1% Cash


Contributions

New annual Contributions
Maxed 401k (Employer matches 80% of first 6%)
Maxed Roth IRA
Maxed HSA
Plan on contributing monthly to taxable account in 2018.. not sure how much at this time

Available funds

Funds available in 401(k) - Unfortunately not too many options here. These are all employer managed funds.
Total US Stock Market Index Fund (0.01%) - Consists of 100% BlackRock US Equity Market F
International Stock Index Fund (0.02) - Consists of 100% BlackRock MSCI ACWI ex-US Superfund F
Stable Value (0.31%) - Stable Vl Fd Grp Trust Mtu
Assorted lifecyle funds (0.18%)


I'll admit I jumped into this while I was still learning so the current allocations are out of sync, and there's still cash in my accounts. I would like to simplify my portfolio to reduce costs and make rebalancing easy and less time consuming. Since most of my assets are in my 401k, I assume it would be best to start there.

Please let me know if I need to add any additional information. General comments, corrections, and feedback are greatly appreciated.

Questions/Comments:
1. I have my emergency fund in Betterment. I realize this may be redundant with what I'm try to do with my retirement accounts. Should I put this money in a high yield savings account?

2. Regarding my 401k, there aren't many options. My main concern is the the International fund @ 0.44%. The other International fund is cheaper BlackRock MSCI ACWI ex-US Superfund F (0.02%). My other option would be to remove Intl exposure completely, and add to my other accounts. I suppose the same applies with the Bond Fund however the expense ratio is a bit lower at 0.29% albeit higher than BND for example.

3. I have VHDYX and VFIFX which I feel can be better used in other ways. I was thinking of removing these and adding more in FSIIX. The Premium version of this fund (FSIVX) has an expense ratio of 0.06%.

4. Eventually I would like to balance the domestic stock across my accounts. Currently I have funds across indices (S&P500, R3000), Small/Mid/Large caps, total stock market, etc. Would it make sense to simply to only Large, Mid, and Small Cap funds? Or is there still a benefit in having the total stock market in your portfolio (VTI in taxable and US Stock Fund in 401k)?

Thanks for reading!

ThrustVectoring
Posts: 251
Joined: Wed Jul 12, 2017 2:51 pm

Re: portfolio check

Post by ThrustVectoring » Wed Nov 22, 2017 6:08 pm

evolvelo wrote:
Wed Nov 22, 2017 6:00 pm
1. I have my emergency fund in Betterment. I realize this may be redundant with what I'm try to do with my retirement accounts. Should I put this money in a high yield savings account?
Yes. Your emergency fund should be in cash. Fortunately, you have 5 months of expenses in cash in your high-yield savings account. Tada, your betterment account is now part of your taxable accounts earmarked for retirement. Transfer the assets in-kind if you want to simplify, but it really doesn't matter. 5 months in savings account + 1 month in checking is usually fine for emergency savings.

Only other thing I'd look into is possibly replacing some of your bond contributions with mortgage prepayments. They're substantially equivalent from a return perspective, though mortgage prepayments are significantly less liquid. So keep enough liquid that you can rebalance if stocks crash. If you're comfortable using margin, you can go more aggressive on mortgage prepayments and lever up to rebalance.

mega317
Posts: 1238
Joined: Tue Apr 19, 2016 10:55 am

Re: portfolio check

Post by mega317 » Wed Nov 22, 2017 11:45 pm

26% of your entire portfolio is in your company's stock?? No!! Too much concentrated risk.

You could easy cut down to a three fund portfolio and hold max 2 funds in each account. I don't see a benefit of holding a total stock fund plus large- and mid/small-cap funds. Maybe you can tell us what you're doing with this.

You don't need many good options in your 401k, just one. And you appear to have several. I'd probably drop the more expensive international fund in 401k, you have other options either Blackrock or taxable/Roth.

retiredjg
Posts: 30802
Joined: Thu Jan 10, 2008 12:56 pm

Re: portfolio check

Post by retiredjg » Thu Nov 23, 2017 8:32 am

1. I have my emergency fund in Betterment. I realize this may be redundant with what I'm try to do with my retirement accounts. Should I put this money in a high yield savings account?
An account that is 80% stock is not really an emergency fund. But you do have a savings account that you could consider your emergency fund.

2. Regarding my 401k, there aren't many options. My main concern is the the International fund @ 0.44%. The other International fund is cheaper BlackRock MSCI ACWI ex-US Superfund F (0.02%). My other option would be to remove Intl exposure completely, and add to my other accounts. I suppose the same applies with the Bond Fund however the expense ratio is a bit lower at 0.29% albeit higher than BND for example.

You do not need to hold total stock in addition to large cap and mid and small cap (which combined in the right ratio can be the same as total stock). Pick one way or the other.

Yes, the BlackRock international fund is better. Use it instead. The bond fund is fine.

3. I have VHDYX and VFIFX which I feel can be better used in other ways. I was thinking of removing these and adding more in FSIIX. The Premium version of this fund (FSIVX) has an expense ratio of 0.06%.
I'd be holding some bonds in the HSA in case I actually need the money.

4. Eventually I would like to balance the domestic stock across my accounts. Currently I have funds across indices (S&P500, R3000), Small/Mid/Large caps, total stock market, etc. Would it make sense to simply to only Large, Mid, and Small Cap funds? Or is there still a benefit in having the total stock market in your portfolio (VTI in taxable and US Stock Fund in 401k)?
Use one way or the other. There is no need to have a total stock and then have 2 funds that add up to total stock all in the same account.

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KlingKlang
Posts: 494
Joined: Wed Oct 16, 2013 3:26 pm

Re: portfolio check

Post by KlingKlang » Thu Nov 23, 2017 8:44 am

Not too much for me to add to the previous comments. Check whether the yield on the 401(k) Stable Value fund is higher than the return on the 401(k) Total Return Bond fund. You can always add bonds to any account but you can only get a stable value fund inside of a 401(k).

retiredjg
Posts: 30802
Joined: Thu Jan 10, 2008 12:56 pm

Re: portfolio check

Post by retiredjg » Thu Nov 23, 2017 8:54 am

P.S. Having 26% of your nest egg in the same tree as your current income is not wise. There is no reasonable excuse to take this kind of risk if you are able to sell those shares. You cannot afford to lose both at the same time. Yes, that does happen. And it always happens at the worst possible time.

Company stock should be closer to 5% of your portfolio, if any at all.

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abuss368
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Re: portfolio check

Post by abuss368 » Thu Nov 23, 2017 9:13 am

The investment portfolio includes a lot of funds and moving parts. I would consider fund consolidation or perhaps all in one funds. The Three Fund Portfolio or Vanguard Four Fund Portfolio is an excellent choice.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

evolvelo
Posts: 5
Joined: Fri Nov 17, 2017 10:02 am

Re: portfolio check

Post by evolvelo » Thu Nov 23, 2017 10:18 pm

Thanks all for the insight. I looked into the 3/4 fund portfolio and it looks like something I'd be interested in.

It seems if I decided to go with all ETfs I will have extra bits of cash sitting. I suppose one of the advantages of having the fund version over the ETF is that you are able to invest every penny. I realize that in the long run this may be insignificant. Additionally, some of funds have a slightly lower expense ratio (eg: 0.01% difference).

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