Portfolio Review - (relatively) new to this whole thing

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
tzatziki
Posts: 3
Joined: Sat Sep 22, 2018 12:15 pm

Portfolio Review - (relatively) new to this whole thing

Post by tzatziki » Sat Sep 22, 2018 12:43 pm

Hi all,

I've been reading this forum and the Bogleheads wiki, and still feel pretty new to working and saving. I'd very much appreciate a sanity check on my current portfolio and thoughts on future direction.

Background Info
Age: 28
Income: $120k
Emergency funds: ~6 months
Debt: None (I'd like to buy a lightly used car within a year or two, though...)
Tax Filing Status: Single
Tax Rate: 24% Federal, 5.1% State
State of Residence: MA
Age: 28
Desired asset allocation: ~80% stocks / ~20% bonds
Desired international allocation: 30-40% of stocks

Total Assets
~$120k not including emergency funds and cash

Current Retirement Assets
12.72% Taxable
4.95% Vanguard Total Stock Market Index Fund Investor Shares (VTSMX) (0.14%)
4.36% Vanguard Total International Stock Index Fund Investor Shares (VGTSX) (0.17%)
3.41% Vanguard Total Bond Market Index Fund Investor Shares (VBMFX) (0.15%)

72.76% Former Company 401k
24.66% Vanguard Institutional 500 Index Trust (0.01%)
20.99% Vanguard Institutional Total International Stock Market Index Trust (0.04%)
14.91% Vanguard Institutional Total Bond Market Index Trust (0.07%)
12.20% Vanguard Institutional Extended Market Index Trust (0.03%)

10.23% Current Company 401k
5.07% Vanguard Large Cap Index Adm (VLCAX) (0.05%)
2.36% Vanguard Total Intl Stock Index Adm (VTIAX) (0.11%)
1.97% Vanguard Total Bond Market Index Adm (VBTLX) (0.05%)
0.83% Vanguard Small Cap Index Adm (VSMAX) (0.05%)
Company matches 6%

4.29% Roth IRA (Vanguard)
4.29% Vanguard Target Retirement 2065 Fund Investor Shares (VLXVX) (0.15%)

Available Funds
From Former Company's 401k (excluding target date retirement funds):
ARTISAN INTL SEP AC 0.6729%
DODGE & COX INTL STK (DODFX) 0.63%
DODGE & COX STOCK (DODGX) 0.52%
FID LPS POOL CLASS 2 0.45%
FID WORLDWIDE (FWWFX) 0.81%
ORACLE COMMON STK FD 0.001%
US SMID CAP VAL SP 0.5036%
WM BLAIR SMID CAP GR 0.7035%
FID BALANCED K (FBAKX) 0.46%%
PIM INFL RESP MA IS (PIRMX) 1.51%
BROAD MARKET BOND I 0.24%
GALLIARD STABLE VAL 0.31%

From Current Company's 401k:
Vanguard Instl Target Retirement 2065 (VSXFX) 0.09%
Oppenheimer International Growth I (OIGIX) 0.69%
JPMorgan Short Duration Bond Fund R6 (JSDUX) 0.36%
BlackRock High Yield Bnd Portfolio K (BRHYX) 0.54%
PIMCO Intl Bond (Unhedged) Instl (PFUIX) 0.60%
BlackRock Inflation Protected Bond K (BPLBX) 0.40%
DFA U.S. Small Cap Portfolio I (DFSTX) 0.37%
Delaware Small Cap Value R6 (DVZRX) 0.75%
Goldman Sachs Small/Mid Cap Growth R6 (GTMUX) 0.90%
Harbor Capital Appreciation Ret (HNACX) 0.63%
MFS Mid Cap Value Fund Class R6 (MVCKX) 0.71%
Oppenheimer Main Street I (OMSIX) 0.50%
Vanguard Total Bond Market Index Adm (VBTLX) 0.05%
Vanguard Equity Income Adm (VEIRX) 0.17%
Vanguard Emerging Mkt Stk Index Adm (VEMAX) 0.14%
Vanguard Growth Index Adm (VIGAX) 0.05%
Vanguard Mid Cap Index Adm (VIMAX) 0.05%
Vanguard Large Cap Index Adm (VLCAX) 0.05%
Vanguard Federal Money Market Inv (VMFXX) 0.11%
Vanguard Mid-Cap Growth Index Adm (VMGMX) 0.07%
Vanguard Mid-Cap Value Index Adm (VMVAX) 0.07%
Vanguard Strategic Equity Inv (VSEQX) 0.18%
Vanguard Small-Cap Growth Index Adm (VSGAX) 0.07%
Vanguard Small-Cap Value Index Adm (VSIAX) 0.07%
Vanguard Small Cap Index Adm (VSMAX) 0.05%
Vanguard Total Intl Stock Index Adm (VTIAX) 0.11%
Vanguard Value Index Adm (VVIAX) 0.05%
Wells Fargo Small Company Growth R6 (WSCRX) 0.90%
Vanguard Instl Target Retirement 2060 (VILVX) 0.09%
Vanguard Instl Target Retirement 2055 (VIVLX) 0.09%
Vanguard Instl Target Retirement 2050 (VTRLX) 0.09%
Vanguard Instl Target Retirement 2045 (VITLX) 0.09%
Vanguard Instl Target Retirement 2040 (VIRSX) 0.09%
Vanguard Instl Target Retirement 2035 (VITFX) 0.09%
Vanguard Instl Target Retirement 2030 (VTTWX) 0.09%
Vanguard Instl Target Retirement 2025 (VRIVX) 0.09%
Vanguard Instl Target Retirement 2020 (VITWX) 0.09%
Vanguard Instl Target Retirement 2015 (VITVX) 0.09%
Vanguard Instl Target Retirement Income (VITRX) 0.09%

Questions:
1) Does this look reasonable? Should I be examining other funds (especially in the current job's 401k?) Other accounts look to be about as low ER as they get.
2) Should I roll over my old 401k? It seems that having it lying around is just one more complication, but the funds available to me there seem quite good in comparison to everything else I have access to.
3) If I wanted to simplify my accounts, how would I go about doing so? I've been treating each account relatively independently in terms of asset allocation, and from what I'm reading it's wiser to allocate funds in context of the entire portfolio.
4) If I wanted to rebalance everything to be a tad more aggressive, is there a significant difference between rebalancing *right now* and adjusting the proportions of future contributions? The right answer might be to sell off the bonds in the taxable account and redistribute them towards stock.
5) What should I do about my Roth? If it wasn't clear, I started a taxable brokerage account for most of the prior year. I figure I'd pause/reduce contributions to the taxable account, get the Roth to $10k ASAP, trade it all for VTSAX and keep future contributions there.

Thanks in advance!

PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: Portfolio Review - (relatively) new to this whole thing

Post by PFInterest » Sat Sep 22, 2018 2:01 pm

I would get total bond out of taxable.
I would put your FI into the 401k and change the rIRA to all stock.
You may as well consolidate the 401ks as both have good options.

retiredjg
Posts: 34372
Joined: Thu Jan 10, 2008 12:56 pm

Re: Portfolio Review - (relatively) new to this whole thing

Post by retiredjg » Sun Sep 23, 2018 7:26 am

Welcome to the forum.

It is quite rare to have a newbie portfolio that cannot be improved in some somewhat significant way. Your portfolio is an exception. There is very little to no improvement to be suggested here. :happy

Things that came to mind
  • - the bonds in your taxable account could be eliminated, but at that small a slice, the bonds could be offering more convenience than tax-inefficiency

    -the target fund in the Roth IRA is not at your desired stock to bond ratio....but you might be doing that in order to have a high percentage of stocks in the Roth IRA (as many people prefer)
1) Does this look reasonable? Should I be examining other funds (especially in the current job's 401k?) Other accounts look to be about as low ER as they get.
Yes, it is reasonable. There is nothing else that is needed. Some people like to add in a little bit of this and that, but that is not necessary.

2) Should I roll over my old 401k? It seems that having it lying around is just one more complication, but the funds available to me there seem quite good in comparison to everything else I have access to.
If you rolled your old 401k into the new 401k, the cost difference would be so small as to be unimportant. There could be one reason to keep it though - if that old 401k will still accept rollovers from 401k or IRA, it could be a guaranteed low cost repository for all "old" 401k accounts that you have in the future.

Once you have left employment, some plans will no longer accept rollovers- you'd have to find out. If not, it will eventually just become a small nuisance account. However, you have some time before that happens. You should also find out if some admin fee became your responsibility when you left that employment.

3) If I wanted to simplify my accounts, how would I go about doing so? I've been treating each account relatively independently in terms of asset allocation, and from what I'm reading it's wiser to allocate funds in context of the entire portfolio.
It can be wiser if one account or another does not have low cost choices in everything you want. In your case, this is not really relevant.

If you decide to allocate in context of the entire portfolio, I think I'd move all the international to taxable (which could take some time). Other than not putting more bonds in taxable, I can't see that one idea is any better than another idea.

4) If I wanted to rebalance everything to be a tad more aggressive, is there a significant difference between rebalancing *right now* and adjusting the proportions of future contributions? The right answer might be to sell off the bonds in the taxable account and redistribute them towards stock.
That would be a "reallocation", not a "rebalance" which means to bring your portfolio back to target after it has wandered off target.

I'm one of the people who believes that 20% in bonds is a good minimum, so I would encourage you not to change. But if you do, it will make very little difference how fast or slow you do it unless you are making a big change.

5) What should I do about my Roth? If it wasn't clear, I started a taxable brokerage account for most of the prior year. I figure I'd pause/reduce contributions to the taxable account, get the Roth to $10k ASAP, trade it all for VTSAX and keep future contributions there.
Definitely contribute to the Roth IRA. However, I would not put Total Stock there because you hold Total Stock in taxable.

If you sell Total Stock in taxable at a loss, you could inadvertently create a wash sale with the identical fund in Roth IRA. A wash sale is not illegal, but it must be accounted for in your taxes. Most people would just rather avoid the hassle.

To avoid that, put something like 500 index and extended market (roughly 80/20) in the Roth IRA. Or just leave it in an aggressive target fund.

There is information about wash sales in the Wiki.

Ron Scott
Posts: 1090
Joined: Tue Apr 05, 2016 5:38 am

Re: Portfolio Review - (relatively) new to this whole thing

Post by Ron Scott » Sun Sep 23, 2018 7:51 am

You’re doing great. Keep reading and planning.

Some thoughts:

1. Simplify. A TSM fund, a total bond fund, emergency money, maybe a muni strategy. You might not be able to keep it that simple in a 401k as time goes by, but simplicity is a good goal. Don’t get cute with tilting, etc.
2. Your age in bonds.if you become reasonably successful, regardless of your,tolerance for risk, the smart strategy is to gradually shift from growth to risk avoidance.
3. Investing in international has a nice theoretical feel to it. I don’t see much practical sense in it. If you MUST, maybe invest less than 20% of your equities in countries where the government plays a relatively small role in subsidizing, picking winners, etc.
4. Develop a good feel for Asset Location strategies. The comment above about bonds in taxable is smart and there are ways to handle the issues. Munis for example.
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

tzatziki
Posts: 3
Joined: Sat Sep 22, 2018 12:15 pm

Re: Portfolio Review - (relatively) new to this whole thing

Post by tzatziki » Sun Sep 23, 2018 3:09 pm

Thanks for your feedback everyone!
PFInterest wrote:
Sat Sep 22, 2018 2:01 pm
I would get total bond out of taxable.
I would put your FI into the 401k and change the rIRA to all stock.
You may as well consolidate the 401ks as both have good options.
I have the same train of thought that you do (moving bonds out of taxable) since it's just more tax hassle (as small as the overall proportion is). What I noticed about my current company's 401k is that it has two easily accessible components of the basic 3-fund portfolio (Intl stock and bonds) but leaves the door fairly open on domestic stock. I tried to approximate a total stock market style fund using this information, but wasn't sure if that would lead to future headaches down the line.
retiredjg wrote:
Sun Sep 23, 2018 7:26 am
  • - the bonds in your taxable account could be eliminated, but at that small a slice, the bonds could be offering more convenience than tax-inefficiency

    -the target fund in the Roth IRA is not at your desired stock to bond ratio....but you might be doing that in order to have a high percentage of stocks in the Roth IRA (as many people prefer)
The existence of the bonds in the taxable account are largely because I tried to achieve my desired breakdown in each account I had. I think it's going to be more convenient in the long run to not worry about having to account for the dividends yearly. Moving the bonds to stock in the taxable account and gradually upping the proportion of bonds in my 401k sounds like my best bet if I want to keep contributing to as many accounts as I can.

The reasoning behind choosing the target-date retirement fund of the Roth IRA was that when I started it, it didn't contain enough money to hit minimum investment levels for the funds I wanted. I'd like to shift to a stock-only option following your later advice (again, compensating for the lost proportion of bonds in the 401k).
If you rolled your old 401k into the new 401k, the cost difference would be so small as to be unimportant. There could be one reason to keep it though - if that old 401k will still accept rollovers from 401k or IRA, it could be a guaranteed low cost repository for all "old" 401k accounts that you have in the future.

Once you have left employment, some plans will no longer accept rollovers- you'd have to find out. If not, it will eventually just become a small nuisance account. However, you have some time before that happens. You should also find out if some admin fee became your responsibility when you left that employment.
I'll investigate this, but I doubt it -- in that case I think my best bet is to simplify everything and roll it over.
That would be a "reallocation", not a "rebalance" which means to bring your portfolio back to target after it has wandered off target.

I'm one of the people who believes that 20% in bonds is a good minimum, so I would encourage you not to change. But if you do, it will make very little difference how fast or slow you do it unless you are making a big change.
Noted. My limited intuition pointed me towards that conclusion, but I suppose asking never hurt!
Definitely contribute to the Roth IRA. However, I would not put Total Stock there because you hold Total Stock in taxable.

If you sell Total Stock in taxable at a loss, you could inadvertently create a wash sale with the identical fund in Roth IRA. A wash sale is not illegal, but it must be accounted for in your taxes. Most people would just rather avoid the hassle.

To avoid that, put something like 500 index and extended market (roughly 80/20) in the Roth IRA. Or just leave it in an aggressive target fund.

There is information about wash sales in the Wiki.
Thanks, that's a good point and one I'd never thought of. Being young and far off from needing to convert any of this to something more liquid (or so I would hope), I wouldn't anticipate this being a huge problem, but circumstances change and it's better to be on the safe side here.

I also plan on adjusting my future investments to prioritize the Roth IRA and max it out as I am able, or for long as I am able, since I'm right on the income limit.
Ron Scott wrote:
Sun Sep 23, 2018 7:51 am
You’re doing great. Keep reading and planning.

Some thoughts:

1. Simplify. A TSM fund, a total bond fund, emergency money, maybe a muni strategy. You might not be able to keep it that simple in a 401k as time goes by, but simplicity is a good goal. Don’t get cute with tilting, etc.
2. Your age in bonds.if you become reasonably successful, regardless of your,tolerance for risk, the smart strategy is to gradually shift from growth to risk avoidance.
3. Investing in international has a nice theoretical feel to it. I don’t see much practical sense in it. If you MUST, maybe invest less than 20% of your equities in countries where the government plays a relatively small role in subsidizing, picking winners, etc.
4. Develop a good feel for Asset Location strategies. The comment above about bonds in taxable is smart and there are ways to handle the issues. Munis for example.
As noted above, approximating a TSM fund is something that looks like I'm on my own (in terms of fund choices) to implement. Otherwise, I'm curious; I know my holdings aren't strictly in the 3-fund style but otherwise stick to broad index funds. Is this too complicated still? I believed that tolerance for international exposure was also investor-specific, so in the spirit of knowing that I know nothing and wanting to distribute risk as much as possible, following the average of other investors' leads was the wisest decision I could possibly make for myself in that moment.

I'll start reading about municipal bonds and tax efficient placement and see if there's a viable similarly hands-off strategy there. Thank you for the pointer!

retiredjg
Posts: 34372
Joined: Thu Jan 10, 2008 12:56 pm

Re: Portfolio Review - (relatively) new to this whole thing

Post by retiredjg » Sun Sep 23, 2018 3:25 pm

Keep in mind that the "3 fund portfolio" is a concept that may take many more than 3 funds to actually implement. You have to use the building blocks you have available, not the funds that are listed as the "3 fund portfolio".

It's a template. You do not have to have just those 3 funds. Get pretty close and call it good.

I didn't check the math, but you seem to understand how to use the building blocks well enough. No, that is not adding too much complexity as long as you know what each fund holds and what it is supposed to accomplish in your portfolio.

tzatziki
Posts: 3
Joined: Sat Sep 22, 2018 12:15 pm

Re: Portfolio Review - (relatively) new to this whole thing

Post by tzatziki » Wed Sep 26, 2018 11:12 pm

I reallocated the bonds in taxable to the TSM fund in the same account, and rebalanced my current company's 401k to be more bond heavy to hit that 20% figure. Adjusted future contributions to the 401k to reflect the new proportions since I expect to keep contributing to Roth and taxable, which should be entirely stock (after I transfer the Roth out of the target date retirement fund)

Guess I'll keep reading and come back in a year?

Dottie57
Posts: 4775
Joined: Thu May 19, 2016 5:43 pm

Re: Portfolio Review - (relatively) new to this whole thing

Post by Dottie57 » Wed Sep 26, 2018 11:32 pm

Looks good.

Keep investing.
Simple is good.
Tax efficient is good.
Well funded emergency fund is good
Index funds are good.
Low expense rates and fees are good.

Post Reply