Please poke holes (thoughts/suggestions) in my overall investment plan :)

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grit&delayedgrati
Posts: 5
Joined: Sun Jul 22, 2018 4:31 pm

Please poke holes (thoughts/suggestions) in my overall investment plan :)

Post by grit&delayedgrati » Sun Jul 22, 2018 6:18 pm

Hello BH!

I am a long time reader but my first time posting. So, I would like to take this opportunity to thank this forum and all the contributors collectively for all the questions and responses that has helped a finance/investment novices like me tremendously. I have learned a lot from you all and your collective wisdom. So, thank you!!!

I am 32, single, currently living/renting in a LCOL area, approx. $70K income from my FT job and currently in the 22% bracket. No debt at all! I like to live below my means and I've only been working my full-time "real" job for lil over 3 years. I discovered FIRE movement back in 2013-2014 (more interested in FI part of it) and have been reading this forum since then. I've always done at least the employer's match for 401K but I plan on maxing out this year on wards and plus I am planning on starting ROTH IRA in next month or two with Vanguard. I currently have 3 brokerages accounts, that I have been investing (learning from) in for last 3 years or so. Now I am getting ready to go full-throttle on my investing after I open my Vanguard accounts.

Here is where I stand currently:

401K: ~ 40K, all in Vanguard Index funds
Robo-1 (taxable): ~ $7.5K + $200/month in future (free management fee till $30K of AUM)
Robo-2 (taxable): ~ $5.5K (I plan on closing this and moving the $$ to 2 future Vanguard accounts below)
Brokerage (taxable): ~ $6.5K (Individual stocks, with my fun-money, currently/luckily ~ 450% ROI)

My future accounts:

ROTH-IRA (Vanguard): Max out the limit of $5.5K 2018 onwards.
Investment-VG (taxable): Start with $1K + $433/month in future + any extra that I can.

Here are my current and future account's asset allocation:

401K:
http://tinypic.com/r/20pdgzo/9

Robo-1:
80/20 Split of Stocks and Bonds

Roth (almost same as my 401K, ETFs and AA wise):
http://tinypic.com/r/4jke2v/9

Vanguard Taxable:
http://tinypic.com/r/r06t77/9

I live in approximately $20K/yr, and have an emergency fund of at least 8 months in a savings account at Ally. I drive a 10 year old (reliable) car and have a high savings rate of above 50% that includes all my investments contribution and cash. I love riding motorbike and I currently have a starter bike but I would LOVE to own the iconic American Harley-Davidson, probably Iron 883 ($5k - $8K) in next year or two. So, I’m saving for few things like that so I don’t go into debt for recreational purchases.

Please let me know what you think and if you have any suggestions for me on making my plan better.

Thank you in advance!

P.S. : In future, I plan on using all the knowledge I've gained to help fund the scholarship foundation that I run with my family to give education to 2 kids/ year in a developing country (where I am originally from). I currently fund this partially with rewards from my credit cards and my Credit Union checking account and remaining from my own pocket. I hope to find some sort of reliable, market based solution to this. I like to approach life with an abundance mindset, so I feel like I get a lot out of this philanthropic endeavor than what it's costing me.

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FiveK
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Re: Please poke holes (thoughts/suggestions) in my overall investment plan :)

Post by FiveK » Sun Jul 22, 2018 7:45 pm

g&dg, welcome to the forum.

You have some overlap in your funds and thus could simplify what you own without much change in your actual asset allocation, but there have been much worse portfolios presented here. ;)

So you could tweak some if you want, but otherwise keep up the good work!

Banjoman
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Joined: Thu Dec 21, 2017 7:30 pm

Re: Please poke holes (thoughts/suggestions) in my overall investment plan :)

Post by Banjoman » Sun Jul 22, 2018 8:19 pm

I would have to agree with FiveK that there seems to be some overlap. I would suggest a simpler plan like the Three Fund Portfolio, that would be appropriate in a taxable as well as a tax advantaged account.

aristotelian
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Re: Please poke holes (thoughts/suggestions) in my overall investment plan :)

Post by aristotelian » Sun Jul 22, 2018 8:42 pm

Your competing robo accounts are probably creating wash sales for one another. I would definitely get rid of one and seriously consider getting rid of the other.

grit&delayedgrati
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Re: Please poke holes (thoughts/suggestions) in my overall investment plan :)

Post by grit&delayedgrati » Sun Jul 22, 2018 9:26 pm

FiveK wrote:
Sun Jul 22, 2018 7:45 pm
g&dg, welcome to the forum.

You have some overlap in your funds and thus could simplify what you own without much change in your actual asset allocation, but there have been much worse portfolios presented here. ;)

So you could tweak some if you want, but otherwise keep up the good work!
Thank you FiveK!

Could you please elaborate on the overlaps that you are seeing? I intentionally kept my 401K and Roth similar with same funds. If there is a better way to approach my tax advantaged accounts, I am open for it. I prefer to be almost all stocks for 10-15 years, because of it's long time horizon.

With my Taxable-VG, I can't use the ones that was already taken by Robo-1 (example VTI). So I am planning on going to those 3 broad market funds and narrowed down the two TLH pairs for stocks ready just in case of an tax loss harvesting opportunity in future. Is there anything that you see that could be optimized here? I am planning on using my Taxable-VG as my main post tax investment account.

grit&delayedgrati
Posts: 5
Joined: Sun Jul 22, 2018 4:31 pm

Re: Please poke holes (thoughts/suggestions) in my overall investment plan :)

Post by grit&delayedgrati » Sun Jul 22, 2018 9:35 pm

Banjoman wrote:
Sun Jul 22, 2018 8:19 pm
I would have to agree with FiveK that there seems to be some overlap. I would suggest a simpler plan like the Three Fund Portfolio, that would be appropriate in a taxable as well as a tax advantaged account.
Hi Banjoman!

Thanks for your response! As I asked FiveK regarding, do you mind elaborating regarding the overlap for my tax-advantaged and Taxable-VG accounts.

Thanks!

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FiveK
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Joined: Sun Mar 16, 2014 2:43 pm

Re: Please poke holes (thoughts/suggestions) in my overall investment plan :)

Post by FiveK » Sun Jul 22, 2018 9:38 pm

You can use tools such as Portfolio X-Ray to check details, but in short:
- VTTSX effectively contains the first three funds listed for your 401k. You could get rid of VTTSX or the first three funds.
- I'd ditch the robo in order to use VTI in your Roth and taxable, but that's a judgment call. If there is a big market crash, you can manually swap VTI for VOO and back again, as those two are highly correlated but not substantially identical.

grit&delayedgrati
Posts: 5
Joined: Sun Jul 22, 2018 4:31 pm

Re: Please poke holes (thoughts/suggestions) in my overall investment plan :)

Post by grit&delayedgrati » Sun Jul 22, 2018 10:08 pm

FiveK wrote:
Sun Jul 22, 2018 9:38 pm
You can use tools such as Portfolio X-Ray to check details, but in short:
- VTTSX effectively contains the first three funds listed for your 401k. You could get rid of VTTSX or the first three funds.
- I'd ditch the robo in order to use VTI in your Roth and taxable, but that's a judgment call. If there is a big market crash, you can manually swap VTI for VOO and back again, as those two are highly correlated but not substantially identical.
Hmm... these are good points. Thanks!
- The reason I have VTTSX is to get exposure to Total International Index on my 401K because I don't have access to that on my 401K plan. I also don't have any access to VTSAX on my 401K. So, those first 3 funds were my crude way of making my own "total market" fund there.
- I am not opposed to ditching both of my robos. I recently realized when I contacted them to pause dividend transactions to avoid wash sale while I liquidate my other robo, I couldn't do that because of their automated nature. I'm gonna definitely think about this and decide.

57Ab90tH4
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Location: Twin Cities MN
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Re: Please poke holes (thoughts/suggestions) in my overall investment plan :)

Post by 57Ab90tH4 » Mon Jul 23, 2018 9:48 am

At 32, does your plan include buying a home in the near future? Your investments (paper assets) are certainly started off on the right track. In my experience, home ownership has provided a foundation of stability and equity building. My general advice would be to keep up what you are doing (great insights) but think seriously about owning the roof over your head when the timing seems right. (Renting is certainly cheaper in the short term.)
Todd | Opinions expressed or information shared should not be relied upon to make investment decisions.

grit&delayedgrati
Posts: 5
Joined: Sun Jul 22, 2018 4:31 pm

Re: Please poke holes (thoughts/suggestions) in my overall investment plan :)

Post by grit&delayedgrati » Mon Jul 23, 2018 4:35 pm

57Ab90tH4 wrote:
Mon Jul 23, 2018 9:48 am
At 32, does your plan include buying a home in the near future? Your investments (paper assets) are certainly started off on the right track. In my experience, home ownership has provided a foundation of stability and equity building. My general advice would be to keep up what you are doing (great insights) but think seriously about owning the roof over your head when the timing seems right. (Renting is certainly cheaper in the short term.)
57Ab90H4

Thank you! I will keep home ownership in mind but I don’t see it in near future, maybe in next 2-5 years. That could be my exposure to real estate, a physical one 🙂. I’ll probably start planning 1-2 years in advance for it.

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