My Portfolio – Youngish Investor – Can I Improve?

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tchasteen
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My Portfolio – Youngish Investor – Can I Improve?

Post by tchasteen » Fri Feb 09, 2018 10:19 am

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Last edited by tchasteen on Sat Mar 10, 2018 12:45 pm, edited 1 time in total.

chevca
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Re: My Portfolio – Youngish Investor – Can I Improve?

Post by chevca » Fri Feb 09, 2018 10:26 am

You're doing great!

No, do not take a mortgage out to invest.

I would switch out of the target date fund and just do a three fund across both accounts. Or, switch the deferred comp to the same target fund if available. One or the other, IMO. I don't like mixing them across accounts, but just my take on it.

JBTX
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Re: My Portfolio – Youngish Investor – Can I Improve?

Post by JBTX » Fri Feb 09, 2018 1:43 pm

Yes paper bonds are your bond allocation. Also/or you could consider them, especially the ibonds as part of your emergency fund or a liquid reserve.

Overall with the mortgage paid off, all the bonds and cash you are somewhat bond/cash heavy. That’s not a huge concern but be aware of it and concentrate your retirement accounts in stocks as long as you have them.

I disagree with the above suggestion to liquidate the target fund and do a three fund. Target funds make a lot of sense and only have marginally more fees and gives you better diversification. You really
Don’t need a three fund with bonds because you already have enough bonds. If you really want to do a “two fund” vs target date for marginally lower fees that is fine.

Make sure you are maxing out your retirement account opportunities. If you don’t have money to do that you can sell some of the bonds or worst case take out mortgage. I would only consider taking out mortgage if you can get a low rate, low fees and need it to fund your retirement accounts. I would not take out a mortgage just to fund a taxable investment account especially since for most people they won’t be able to deduct interest.

chevca
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Re: My Portfolio – Youngish Investor – Can I Improve?

Post by chevca » Fri Feb 09, 2018 1:50 pm

JBTX wrote:
Fri Feb 09, 2018 1:43 pm
I disagree with the above suggestion to liquidate the target fund and do a three fund. Target funds make a lot of sense and only have marginally more fees and gives you better diversification. You really
Don’t need a three fund with bonds because you already have enough bonds. If you really want to do a “two fund” vs target date for marginally lower fees that is fine.
I did say either or. The target date fund is fine, and I suggested using the same fund if available in the other account.

I didn't consider the bond part already being covered either. I agree, the OP could just hold stock indexes in the tax advantaged accounts. That would work fine.

DTSC
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Re: My Portfolio – Youngish Investor – Can I Improve?

Post by DTSC » Fri Feb 09, 2018 1:53 pm

You might want to check out Choosefi.com if you haven't done so already

tchasteen
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Re: My Portfolio – Youngish Investor – Can I Improve?

Post by tchasteen » Sat Feb 10, 2018 8:55 am

Thanks chevca,

I agree I also don't like mixing funds across accounts, the Ohio Deferred Compensation had limited options which is why I went with the Vanguard Institutional Index 55% Vanguard Institutional Index 12% in it. I was trying to get it as close to the Vanguard Total Stock Market as possible which I like better.

I supposed on way to think of it is that not taking out a mortgage is at least a guaranteed 3% (or whatever the interests rate would be) return each year.

JBTX,

I agree it is very cash/bond heavy. I've been considering if I should do more to balance the portfolio faster, but slowly investing in stocks over the next 3 years will get me at a ratio I am happy with without having to pay taxes for cashing out my bonds. I may do the two fund, since I don't really need the extra 10% in bonds that the target date is currently allocating. Plus, I don't mind balancing the portfolio myself, it forces me to pay attention to my investment strategy.

The only retirement opportunity I'm not maxing out is $18,500 (pre-tax) in a 403b per year. I max the Roth IRA ($5500) and 457 ($18500) but could live off cash for a year and max a 403b also. I'm just not sold on the 403b options at my work because the fees are super high 2-3%. What's your take on that?

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Strayshot
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Location: New Mexico

Re: My Portfolio – Youngish Investor – Can I Improve?

Post by Strayshot » Sat Feb 10, 2018 9:08 am

You are 28 but didn’t say your desired asset allocation, but you are very skewed to bonds. I would fix it now. I don’t understand the tax issue, you will owe taxes on the bonds regardless unless your point is that you are trying to sell just enough to stay in your current marginal bracket rather than be pushed to a higher marginal rate and that will take several years to accomplish. You might take into account that yes, the taxes will be higher, but every year you are overweight in bonds is a year you are missing the (expected, not guaranteed) higher returns of equities and associated compounding over time.

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WoodSpinner
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Re: My Portfolio – Youngish Investor – Can I Improve?

Post by WoodSpinner » Sat Feb 10, 2018 9:13 am

OP,

Probably the most important thing to do is keep saving and Live Below Your Means. 17 years is a long time, no need to make these kinds of plans now.

Trick is to find the balance to your life, find joy and adventure now, while putting away for tomorrow.

Well done!!

WoodSpinner

tchasteen
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Re: My Portfolio – Youngish Investor – Can I Improve?

Post by tchasteen » Sat Feb 10, 2018 1:47 pm

Strayshot,

Good point! My desired allocation is below 20% bonds. I guess my thinking with the paper bonds are why cash them and pay taxes just to put them into stocks which I will have to pay taxes on a second time when I withdraw. However, I could fiddle things and put more of my salary into a 403b at work pre-tax and cash the bonds to live on. That's an idea to speed up getting me to my desired allocation, not one I love due to the high fees of the 403b.

I think another reason I haven't cashed the bonds is because for a bond allocation they get pretty good returns and they can never lose money, I like that.

Thanks for getting me thinking.

Thanks WoodSpinner, the best things in life are free! :happy

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