Portfolio Advice.

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isidhu
Posts: 6
Joined: Sun May 20, 2018 3:01 pm

Portfolio Advice.

Post by isidhu » Tue Jun 12, 2018 12:51 am

Hi Folk,

First of all i would like to thank every one for investing their time on the forum. This is invaluable what we got here. This is my first post (Actually my second as the first one got lost as I did not save it before submitting). Anyways, I have been looking into defining an overall strategy for our investments. Having done a lot of research I have come with the following plan.

Emergency funds: Three to six months of expenses (Separate from investments)
Debt: No Debt, everything payed off. Do not own a house
Tax Filing Status: Married Filing Jointly
State of Residence: CA (Taxed way too much)
Age: Mid 30's
Desired Asset allocation: Depends on estimated time to goal.
Desired International allocation: Depends on time to goal
We currently have low 6 figure amount including all investments but we have seriously started on a budget and at a stage were we want to ramp up our saving.
I have my assets allocated as per goals for each (time duration). The asset allocation is as per morningstar published tables. I am still in the process of adding bond funds to the allocations (3% for both Goal1 and Goal3).

Portfolio:

(Goal1- After tax saving for long term use as needed 20 yrs)
Funds Breakdown After Tax Saving Bucket % of total

Prime-cap Odyssey(POGRX)(ER-0.67)--- 28%
Tax managed Capital growth (VTCLX) (ER-0.09)--- 38%
VEMAX (Emerging Market)(ER-0.14)--- 18%
Commodities--- 16% (I know these are high for now)(Over time these should come down to 3% or so. I do not plan to rebalance these as these are not in the form of ETF. For now will not put anything in bonds to counter this.)

(Goal2- Near term savings for house downpayment - 2 to 5 yrs)
Funds Breakdown (House Down-payment) % of total

Vanguard Welleselley(VWIAX)(ER-0.15)--- 60.00%
Vanguard Short term Tips(VTAPX)(ER-0.09)--- 25.00%
Cash (One year CD at 2%)--- 15.00%

(Goal3- All retirement accounts)
Funds Breakdown (Retirement) % of total

Primecap Odessey(POGRX)(ER-0.67)--- 9.5.00%
S&P Index fund in 401k-Blackrock(ER-0.02)--- 22.00%
Dodge & Cox Stock (DODGX)(ER-0.52)--- 20.5%
Dodge & Cox International(DODFX)(ER-0.63)--- 38.00%
Vanguard Small Cap Index(VSCIX)(ER-0.04)--- 10.00%

My questions are:
1. how does the overall plan look. Am I missing something. What would you do differently?
2. Feedback on individual portfolios would be great. I know I have them designed differently.
3. Anything else that comes to mind.

Again I really appreciate your feedback and will try and keep this thread up to date.
Last edited by isidhu on Fri Jun 15, 2018 10:20 am, edited 1 time in total.

isidhu
Posts: 6
Joined: Sun May 20, 2018 3:01 pm

Re: Portfolio Advice.

Post by isidhu » Thu Jun 14, 2018 12:47 am

Added the fund Tickers. Hope this helps.

ExitStageLeft
Posts: 342
Joined: Sat Jan 20, 2018 4:02 pm

Re: Portfolio Advice.

Post by ExitStageLeft » Thu Jun 14, 2018 3:48 pm

Welcome to the forum!

Could you also add what your expenses are for those funds?

isidhu
Posts: 6
Joined: Sun May 20, 2018 3:01 pm

Re: Portfolio Advice.

Post by isidhu » Fri Jun 15, 2018 10:21 am

ExitStageLeft wrote:
Thu Jun 14, 2018 3:48 pm
Welcome to the forum!

Could you also add what your expenses are for those funds?
Added the ER's thanks for pointing it out.

ExitStageLeft
Posts: 342
Joined: Sat Jan 20, 2018 4:02 pm

Re: Portfolio Advice.

Post by ExitStageLeft » Fri Jun 15, 2018 4:22 pm

it seems that your Goal1 and Goal3 are essentially the same. I would lump them together for portfolio management purposes. Your Goal2 is for a specific purpose within a specific time frame, and should in my mind be treated as a savings account. You have the bulk of those savings in a mutual fund holding 38% equities. I'd put it in something less vulnerable to a signifcant market correction and start think of it as a savings account, not part of an investment portfolio.

For the remainder of your assets, looking at them as one portfolio should simplify the portfolio balancing and allow you to maximize tax efficienct fund placement. You state you would like to increase your bond holdings by 3% in your taxable and retirement accounts. Bonds in a taxable account are not tax efficient, and will increase your tracking and reporting burden. You could instead simply increase your bond allocation in one or more of the retirement accounts such that it represents your overall desired bond allocation.

That brings me to your bond allocation. Other than the bond portion of the Wellesley fund you have no bonds. I don't know enough about commodities to discern if your holdings represent ballast or an anchor. I would look to trim at least half the commodities out of the portfolio and replace with bond funds.

I'm guessing you weren't an investor during 2008 and 2009. If that's the case, you haven't felt what a 50% market correction does to a portfolio. The Boglehead philosophy involves buying and holding your assets, and having a portfolio designed to weather the downturns as well as capture the gains and upswings. Is your current portfolio one you would stick with in an extended bear market? If not, you should move to one that will allow you to stay the course no matter the market conditions.

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