Please review and critique my portfolio.

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Topic Author
ElmoHongZito
Posts: 149
Joined: Tue Mar 27, 2018 9:17 am

Please review and critique my portfolio.

Post by ElmoHongZito » Tue Mar 05, 2019 3:12 pm

I would be so grateful if I can get a temperature check from some of you BH gurus on how I am self-managing my current portfolio. I just turned 37 and the asset allocation I am currently aiming to get to by the end of the year is 70/30. I am still a newbie at this but have read a wealth of information on the forum since I discovered it. I like simplicity and something that is manageable and doesn't require me to constantly be up to speed on what the market is doing.

As of right now I keep all bonds in tax-advantaged accounts and based on how much I have among those accounts is how I determine how much to move from my bank account to stock indexes every month to be at that 70/30 by year end. So my overall invested portfolio size is always dependent on the size of the tax-advantaged accounts size and the rest of my cash savings sits in the bank.

Based on my current funding schedule it looks like by the end of this year my 70/30 investment portfolio will be roughly 780k and I should still have a large amount funds in the bank which is probably not a great strategy. I probably want to move a portion of those funds to my Vanguard money market fund or a new money market account elsewhere. Please let me know your thoughts. Thank you all in advance. Here is the breakdown...

BONDS
Our IRA's..... 17k (all in Vanguard Total Bond Market Index Fund Admiral Shares)
My 401k...... 149k (11k in VANG TOT BD MKT INST (VBTIX) and the rest in Vanguard Total Bond Market Index Fund Institutional Plus Shares(VBMPX))
HSA funds.....12k (just found out it is not invested and am working to move to new employer HSA and invest in a total bond market fund)
Wife's 403B ...17k (all in Vanguard Intermediate Bond Index Admiral (VBILX))
TOTAL - 195k

STOCKS
72k in Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)
161k in Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
The following 3 positions are from a managed brokerage account I took over after finding BH.org
72k in Vanguard Small Cap Value (VBR)
28k in Ishares TR Core MSCI EAF (IEFA)
55k spread out among 38 (was more stocks but I sold all the ones that had a loss at the end of 2018. These 55 remain in the positive)
TOTAL - 388k

CASH
35k in Vanguard Prime Money Market Fund
350k in regular Checking/Savings
TOTAL - 385k

PROPERTY
Current home is paid off and is worth roughly 330k
TOTAL - 330k

COLLEGE PREPAID ACCOUNTS
TOTAL - 33K

User avatar
David Jay
Posts: 6337
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Please review and critique my portfolio.

Post by David Jay » Tue Mar 05, 2019 5:40 pm

You’ve made a really good start.

Keep whittling away on that mess of individual holdings - the positions average about $1400 apiece so they are just so much noise at the bottom of your financial statement. I would pick a number (say, $500) in taxes that you are willing to pay each year to clean it up. Sell the small holdings with limited capital gains first.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Topic Author
ElmoHongZito
Posts: 149
Joined: Tue Mar 27, 2018 9:17 am

Re: Please review and critique my portfolio.

Post by ElmoHongZito » Wed Mar 06, 2019 11:29 pm

Thanks for the
David Jay wrote:
Tue Mar 05, 2019 5:40 pm
You’ve made a really good start.

Keep whittling away on that mess of individual holdings - the positions average about $1400 apiece so they are just so much noise at the bottom of your financial statement. I would pick a number (say, $500) in taxes that you are willing to pay each year to clean it up. Sell the small holdings with limited capital gains first.
Thanks for the tip. I have had all those individual stock positions for over a year so I would probably pay 15% long term capital gains tax on any gains as I sell them

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David Jay
Posts: 6337
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Location: Michigan

Re: Please review and critique my portfolio.

Post by David Jay » Thu Mar 07, 2019 8:52 am

ElmoHongZito wrote:
Wed Mar 06, 2019 11:29 pm
Thanks for the
David Jay wrote:
Tue Mar 05, 2019 5:40 pm
You’ve made a really good start.

Keep whittling away on that mess of individual holdings - the positions average about $1400 apiece so they are just so much noise at the bottom of your financial statement. I would pick a number (say, $500) in taxes that you are willing to pay each year to clean it up. Sell the small holdings with limited capital gains first.
Thanks for the tip. I have had all those individual stock positions for over a year so I would probably pay 15% long term capital gains tax on any gains as I sell them
Don’t let the fear of taxes tail wag the simplification dog, that’s why I suggested a yearly “tax budget”. With an average holding of $1400, let’s say that you have a 25% gain in a particular stock and it is a long term capital gain. 1400 x .25 x .15 = $52.50, so you can dump perhaps 12-15 stocks the first year for $500.

Sell the stocks with the lowest gains first, remember our goal is simplification, not optimization. Let’s get rid of the bottom 20 or 25 stocks within the next 2 years.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Topic Author
ElmoHongZito
Posts: 149
Joined: Tue Mar 27, 2018 9:17 am

Re: Please review and critique my portfolio.

Post by ElmoHongZito » Thu Mar 07, 2019 1:37 pm

Thanks a bunch. I love the simplicity of that strategy and I know I will feel allot better once I dismantle that mess. Thanks again.

HomeStretch
Posts: 153
Joined: Thu Dec 27, 2018 3:06 pm

Re: Please review and critique my portfolio.

Post by HomeStretch » Thu Mar 07, 2019 1:42 pm

Have you turned off dividend reinvestment for the stocks you are looking to ultimately sell?

Keep a current list of capital gains by stock so you are poised to take advantage of any stock price dips.

Good luck with fine-tuning your portfolio!

Topic Author
ElmoHongZito
Posts: 149
Joined: Tue Mar 27, 2018 9:17 am

Re: Please review and critique my portfolio.

Post by ElmoHongZito » Wed Mar 13, 2019 1:51 pm

David Jay wrote:
Thu Mar 07, 2019 8:52 am
ElmoHongZito wrote:
Wed Mar 06, 2019 11:29 pm
Thanks for the
David Jay wrote:
Tue Mar 05, 2019 5:40 pm
You’ve made a really good start.

Keep whittling away on that mess of individual holdings - the positions average about $1400 apiece so they are just so much noise at the bottom of your financial statement. I would pick a number (say, $500) in taxes that you are willing to pay each year to clean it up. Sell the small holdings with limited capital gains first.
Thanks for the tip. I have had all those individual stock positions for over a year so I would probably pay 15% long term capital gains tax on any gains as I sell them
Don’t let the fear of taxes tail wag the simplification dog, that’s why I suggested a yearly “tax budget”. With an average holding of $1400, let’s say that you have a 25% gain in a particular stock and it is a long term capital gain. 1400 x .25 x .15 = $52.50, so you can dump perhaps 12-15 stocks the first year for $500.

Sell the stocks with the lowest gains first, remember our goal is simplification, not optimization. Let’s get rid of the bottom 20 or 25 stocks within the next 2 years.
So when you say sell the stocks with the lowest gains first, do you mean $ gains or % gains? Just wanted to clarify before I start selling them off. Thanks

User avatar
David Jay
Posts: 6337
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Please review and critique my portfolio.

Post by David Jay » Wed Mar 13, 2019 2:00 pm

ElmoHongZito wrote:
Wed Mar 13, 2019 1:51 pm
David Jay wrote:
Thu Mar 07, 2019 8:52 am
ElmoHongZito wrote:
Wed Mar 06, 2019 11:29 pm
Thanks for the
David Jay wrote:
Tue Mar 05, 2019 5:40 pm
You’ve made a really good start.

Keep whittling away on that mess of individual holdings - the positions average about $1400 apiece so they are just so much noise at the bottom of your financial statement. I would pick a number (say, $500) in taxes that you are willing to pay each year to clean it up. Sell the small holdings with limited capital gains first.
Thanks for the tip. I have had all those individual stock positions for over a year so I would probably pay 15% long term capital gains tax on any gains as I sell them
Don’t let the fear of taxes tail wag the simplification dog, that’s why I suggested a yearly “tax budget”. With an average holding of $1400, let’s say that you have a 25% gain in a particular stock and it is a long term capital gain. 1400 x .25 x .15 = $52.50, so you can dump perhaps 12-15 stocks the first year for $500.

Sell the stocks with the lowest gains first, remember our goal is simplification, not optimization. Let’s get rid of the bottom 20 or 25 stocks within the next 2 years.
So when you say sell the stocks with the lowest gains first, do you mean $ gains or % gains? Just wanted to clarify before I start selling them off. Thanks
If the goal is simplification, I would focus on getting rid of the highest number of companies for the lowest taxes paid. So in most cases I guess that looks like the lowest $ gain, but there may be exceptions.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Topic Author
ElmoHongZito
Posts: 149
Joined: Tue Mar 27, 2018 9:17 am

Re: Please review and critique my portfolio.

Post by ElmoHongZito » Wed Mar 13, 2019 6:04 pm

David Jay wrote:
Wed Mar 13, 2019 2:00 pm
ElmoHongZito wrote:
Wed Mar 13, 2019 1:51 pm
David Jay wrote:
Thu Mar 07, 2019 8:52 am
ElmoHongZito wrote:
Wed Mar 06, 2019 11:29 pm
Thanks for the
David Jay wrote:
Tue Mar 05, 2019 5:40 pm
You’ve made a really good start.

Keep whittling away on that mess of individual holdings - the positions average about $1400 apiece so they are just so much noise at the bottom of your financial statement. I would pick a number (say, $500) in taxes that you are willing to pay each year to clean it up. Sell the small holdings with limited capital gains first.
Thanks for the tip. I have had all those individual stock positions for over a year so I would probably pay 15% long term capital gains tax on any gains as I sell them
Don’t let the fear of taxes tail wag the simplification dog, that’s why I suggested a yearly “tax budget”. With an average holding of $1400, let’s say that you have a 25% gain in a particular stock and it is a long term capital gain. 1400 x .25 x .15 = $52.50, so you can dump perhaps 12-15 stocks the first year for $500.

Sell the stocks with the lowest gains first, remember our goal is simplification, not optimization. Let’s get rid of the bottom 20 or 25 stocks within the next 2 years.
So when you say sell the stocks with the lowest gains first, do you mean $ gains or % gains? Just wanted to clarify before I start selling them off. Thanks
If the goal is simplification, I would focus on getting rid of the highest number of companies for the lowest taxes paid. So in most cases I guess that looks like the lowest $ gain, but there may be exceptions.
Ok. That makes sense to me. So right now there is 43k in unrealized gain all of which are long term gains.

Of that 21k is vanguard small cap and 4k is iShares TR Core MSCI EAF which is an index designed to measure large-, mid-, and small-cap capitalization equity market performance and includes stocks from Europe, Australasia, and the Far East. I think that I can comfortably stay in those positions since they are nicely diversified and can be part of my overall AA.

The remaining 18k is in the individual stock positions.

So assuming that 18k stayed as is, at 15% tax rate thats $2700 in taxes. About how many years should I stretch that over as I dumo them? At $500 per year, thats 5+ years. What do you think?

User avatar
David Jay
Posts: 6337
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Please review and critique my portfolio.

Post by David Jay » Wed Mar 13, 2019 7:21 pm

It’s the money out of your pocket that you are willing to spend each year. I’ll bet that the bottom dozen will only cost you a few hundred. Keep the top 10 for a few yearsif you want.

Again, it is simplification. Just unload a bunch of tickers.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

SarahS
Posts: 124
Joined: Mon Nov 19, 2018 1:42 pm

Re: Please review and critique my portfolio.

Post by SarahS » Wed Mar 13, 2019 10:44 pm

You are doing great!

Q: What are you holding the $385k in cash for? House is paid off, child’s college is funded. Is there some other short-term goal you are holding it for? If not, I would re-allocate to your 70/30 mix. At the very least, get it into VMMXX until you figure out what you want to do with it.

🍻 on your progress!

Topic Author
ElmoHongZito
Posts: 149
Joined: Tue Mar 27, 2018 9:17 am

Re: Please review and critique my portfolio.

Post by ElmoHongZito » Thu Mar 14, 2019 7:09 am

SarahS wrote:
Wed Mar 13, 2019 10:44 pm
You are doing great!

Q: What are you holding the $385k in cash for? House is paid off, child’s college is funded. Is there some other short-term goal you are holding it for? If not, I would re-allocate to your 70/30 mix. At the very least, get it into VMMXX until you figure out what you want to do with it.

🍻 on your progress!
Thanks for the kind words. I am actually kind of glad you caught that. I need a little kick in the butt to do something with all that cash. I do NOT have a short term goal I am holding it for. I think its just a security blanket like money under the matrress.

Before I found BH I had allot more in the bank in cash and knowing that was a poor plan, I reached out to my wifes cousin who is a financial advisor and I got sucked into the idea of overfunding 2 index universal life insurance policies (for me and my wife) at 100k per year each. I was going to fund each with 50k throughout the year and then dump the remaining 100k in one lump sum at the end of the year for multiple years. He would have preferred I do the full 100k per account through the year but I wasn’t comfortable seeing that amount being drafted every month. After I saw the first month draft drawn from my account, I kind of freaked and starting doing more reading online and found BH. That’s when I pulled the plug on the IUL. It was a very expensive lesson (9k) but I am fortunate that I caught it quickly because it could have been much worse.

Since the bonds in my AA all go to tax-advantged accounts (thats what I have read is BH way if investing) I am limited in how much of that cash I can put into stock indexes without throwing off my AA. For that reason, I think transferring it to VMMXX as you mentioned is probably the best move.

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