Portfolio Update

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neon beanbag
Posts: 18
Joined: Thu Mar 10, 2016 6:22 pm

Portfolio Update

Post by neon beanbag » Tue Jul 10, 2018 11:53 am

I posted one of these a couple of years ago and things have changed since then...

Emergency funds: Yes
Debt: None (I currently rent)
Tax filing status: Single
Tax bracket: 22% Federal, 3.23% State
State of residence: IN
Age: 36
Desired asset allocation: 100% stocks
Desired international allocation: 40%

Portfolio size is a little over mid five-figures.

Current Retirement Assets

401K Through Company (55% of stocks)
80% Large Cap Equity Index
20% Small/Mid Cap Equity Index

Vanguard Roth IRA (45% of stocks)
100% Vanguard Total International Stock Index Admiral

Company HSA (Company contributes $600 per year)
$2,232.55 in cash account

Contributions
$5250 in 401k (Employer will add $5625)
$5500 in Roth IRA (I'd like to try to max this out each year)

Funds Available

401k (Fidelity)
Fidelity Target Retirement Funds ER: between .61% and .69%
Large Cap Equity Index 0.06%
Large Cap Equity (I'm guessing a managed fund) 0.48%
SM/MID Cap Equity Index 0.1%
SM/MID Cap Equity 0.74%
International Equity 0.56%
International Equity Index 0.11%
Emerging Markets Equity 0.59%
Interest Income 0.33%
Fixed Income 0.29%
Fixed Income Index 0.08%
Real Return 0.46%

Next year I'd like to start maxing out 401k and HSA. I'm currently saving for a house and have a little over $30k saved.

Questions

1. How do things look right now and can I do anything differently? I chose to separate US and international for now because the fund in the 401k didn't include emerging markets and Canada. In the future I'm not sure what I'll do since I'll be contributing a lot more to the US in the 401k that it might through the allocation out of whack. Would it be best to try to mirror the 2 accounts?

Thanks.

ExitStageLeft
Posts: 485
Joined: Sat Jan 20, 2018 4:02 pm

Re: Portfolio Update

Post by ExitStageLeft » Tue Jul 10, 2018 12:24 pm

Welcome back! I'll do my duty here and remind you that a portfolio of 100% stocks is not generally advised. You should consider having a bond buffer for when the bear returns.

If you're not obsessive about maintaining an exactly perfect balance, I would probably leave the 401k contribution as it is and start putting the annual IRA contribution into Vanguard Total Stock market (VTSAX). Having both of those in the IRA gives you the flexibility of exchanging one for the other when it comes time to re-balance.

Do you have some investing options in the HSA?

staythecourse
Posts: 5732
Joined: Mon Jan 03, 2011 9:40 am

Re: Portfolio Update

Post by staythecourse » Tue Jul 10, 2018 12:43 pm

In my opinion, your asset allocation makes not difference at this stage of the game. The MOST important right now is simply how much you save per year. Nothing will matter more then that. Being 100% stocks will not make you rich, but saving A TON will. Do you have a plan on how to increase saving next year? If so, then why not do it now? If you are single and living in a LCOL area like IN why do you need to buy a house? I would keep saving money instead of buying a house which is NOT needed for a single person. It is more of a want.

Just my 2 cents.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

neon beanbag
Posts: 18
Joined: Thu Mar 10, 2016 6:22 pm

Re: Portfolio Update

Post by neon beanbag » Tue Jul 10, 2018 1:03 pm

Thanks for the advice so far. I know 100% stocks isn't advised, but I'm still in the accumulation phase with not a lot so far. I know a bear market wouldn't cause me to panic.

There is investing allowed in the HSA, but I think you need a certain amount to begin investing.

My plan was to try maxing out the 401k next year after I saved a little more cash this year. You are right in that the house is more of a want than a need. I don't believe I'm wasting my money in rent (I pay $650 a month for one bedroom), because at the end I have a roof over my head. I do enjoy not having a yard to keep up and having my maintenance covered. I just like the idea though of my money going towards paying off a home and that I can paint how I want or make things how I would want. As far as the apartment, I do feel mostly content living there, but there are times when I'd like a little more space. I feel conflicted at times about the rent vs buy war.

ExitStageLeft
Posts: 485
Joined: Sat Jan 20, 2018 4:02 pm

Re: Portfolio Update

Post by ExitStageLeft » Tue Jul 10, 2018 1:24 pm

You'll find plenty of posts on that topic in the Personal Finance section of the forum. I was 28 and single when I bought my first house. It was a distressed property and I made several improvements that just about paid for themselves. More importantly it allowed me and my three dogs to live the life that I wanted.

Having the 20% downpayment already saved gives you a lot of options if and when you decide that a house is right for you. It does take a lot of time and/or money to maintain a house and yard. If you think you would end up paying someone else to do the yard work and maintenance, then you're probably just as well off renting.

soccerrules
Posts: 687
Joined: Mon Nov 14, 2016 4:01 pm

Re: Portfolio Update

Post by soccerrules » Tue Jul 10, 2018 1:38 pm

a few thoughts
1) Your 401K match looks a little off -- your employer contributes MORE than you ? You should push to max 401K ASAP
2) HSA- I would check your plan. Mine requires $2K in cash and the rest can be invested. Maybe you just need to select the investment for the extra funds to go to, otherwise I think they sit in cash. Mine makes a trade each pay period when a contribution is made.
3) I would push yourself to save more. $50K at age 36 is a little behind if you are planning a comfy retirement.
4) Vote for keep renting.
5) Remember the concept of compounding interest. The more money you can get into the market now will be better for you when you hit age 50 and above. Waiting does not benefit you only requires you save more in the future to meet the same goal.

Do you have a goal for early retirement ? or plans for when you want to retire and with X income ?
If you want to retire at 60/61 - you have 25 years which is a decent amount of time.
START NOW !
Tighten budget if you need to -- hit $18,500 in 401k, continue max Roth contributions and then extra to a taxable account.
Don't let your outflow exceed your income or your upkeep will be your downfall.

neon beanbag
Posts: 18
Joined: Thu Mar 10, 2016 6:22 pm

Re: Portfolio Update

Post by neon beanbag » Wed Jul 11, 2018 8:05 am

soccerrules wrote:
Tue Jul 10, 2018 1:38 pm
a few thoughts
1) Your 401K match looks a little off -- your employer contributes MORE than you ? You should push to max 401K ASAP
2) HSA- I would check your plan. Mine requires $2K in cash and the rest can be invested. Maybe you just need to select the investment for the extra funds to go to, otherwise I think they sit in cash. Mine makes a trade each pay period when a contribution is made.
3) I would push yourself to save more. $50K at age 36 is a little behind if you are planning a comfy retirement.
4) Vote for keep renting.
5) Remember the concept of compounding interest. The more money you can get into the market now will be better for you when you hit age 50 and above. Waiting does not benefit you only requires you save more in the future to meet the same goal.

Do you have a goal for early retirement ? or plans for when you want to retire and with X income ?
If you want to retire at 60/61 - you have 25 years which is a decent amount of time.
START NOW !
Tighten budget if you need to -- hit $18,500 in 401k, continue max Roth contributions and then extra to a taxable account.
1) Yes, they match 50% of a certain percentage I put in and then they contribute an extra percentage even if you don't put anything in the 401k
2) I have a little over 2k in mine in a Fidelity HSA, but it looks like most funds require $2500 as a minimum. I don't really understand the interface enough to know how to buy funds yet.

soccerrules
Posts: 687
Joined: Mon Nov 14, 2016 4:01 pm

Re: Portfolio Update

Post by soccerrules » Wed Jul 11, 2018 8:14 am

neon beanbag wrote:
Wed Jul 11, 2018 8:05 am
soccerrules wrote:
Tue Jul 10, 2018 1:38 pm
a few thoughts
1) Your 401K match looks a little off -- your employer contributes MORE than you ? You should push to max 401K ASAP
2) HSA- I would check your plan. Mine requires $2K in cash and the rest can be invested. Maybe you just need to select the investment for the extra funds to go to, otherwise I think they sit in cash. Mine makes a trade each pay period when a contribution is made.
3) I would push yourself to save more. $50K at age 36 is a little behind if you are planning a comfy retirement.
4) Vote for keep renting.
5) Remember the concept of compounding interest. The more money you can get into the market now will be better for you when you hit age 50 and above. Waiting does not benefit you only requires you save more in the future to meet the same goal.

Do you have a goal for early retirement ? or plans for when you want to retire and with X income ?
If you want to retire at 60/61 - you have 25 years which is a decent amount of time.
START NOW !
Tighten budget if you need to -- hit $18,500 in 401k, continue max Roth contributions and then extra to a taxable account.
1) Yes, they match 50% of a certain percentage I put in and then they contribute an extra percentage even if you don't put anything in the 401k
2) I have a little over 2k in mine in a Fidelity HSA, but it looks like most funds require $2500 as a minimum. I don't really understand the interface enough to know how to buy funds yet.
Ahh, makes sense-- nice benefit. Push to max it out ASAP (you will not be sorry)
On the HSA I might send an email to HR or review any materials you received. I know when I logged into my HSA online it actually had alerts to tell me that I had not maximized my account and suggest sending $$ to investments. The $2500 seems high as an initial amount to invest-- but maybe it is.
Don't let your outflow exceed your income or your upkeep will be your downfall.

pennylane
Posts: 54
Joined: Thu Apr 12, 2018 10:22 am

Re: Portfolio Update

Post by pennylane » Wed Jul 11, 2018 8:39 am

you don't need 20% down to purchase a home. You can do it with 5% down + closing costs (3-5%). PMI is fairly inexpensive if you have great credit. I'd suggest purchasing a home sooner rather than later as the interest rates are going up.

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