23-Year-Old: Question About Portfolio

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markymark21
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Joined: Tue Jun 27, 2017 5:48 pm

23-Year-Old: Question About Portfolio

Post by markymark21 » Mon Aug 19, 2019 5:32 pm

Hey guys,

I recently got a first-time, big-boy job and just wanted opinions about my portfolio. I wanted something simple, but aggressive. If you have any tips or insight, feel free to let me know!

I live with my parents and have very little expenses, so I'm saving around $3,000/month after-tax. My company 401k is very generous - my company puts 10% of my base pay automatically into my 401k. I can contribute another 4%, which they match, so 18% is put into my 401k every year. This is in a Vanguard Target Retirement 2060 Fund (VTTSX). I also have a Roth IRA at Schwab that's 45% Schwab Total Stock Market Index Fund (SWTSX), 45% Schwab International Index Fund (SWISX), and 10% bonds (don't really need bond exposure for my age, but wanted to see how they behaved relative to my equity investments). Anything I save is funneled into my taxable brokerage account where 25% is in VTSAX, 25% VTISX. I take another 25% and invest in individual stocks (I like to play around with the market a bit), and generally keep the other 25% in cash (although i'm debating if I should move this into a money market fund/bond fund/or high-yield savings account). I like to keep that 25% liquid in case of a market downturn/recession.

How does my portfolio stack up? Any suggestions or tips?

Thanks again!

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Wiggums
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Re: 23-Year-Old: Question About Portfolio

Post by Wiggums » Mon Aug 19, 2019 5:55 pm

That 25% in cash might sit there for years. You’re in the accumulation phase and I think all your money should be invested.

A lot of us have held individual stocks. I stopped doing that, because I found that I was playing around with my account too much. You probably would do better if you tinker less.

Congratulations on getting an early start to saving. You are doing a lot of things right.

Good luck to you...

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jakehefty17
Posts: 168
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Location: New York

Re: 23-Year-Old: Question About Portfolio

Post by jakehefty17 » Mon Aug 19, 2019 6:04 pm

Welcome!

First, I'll suggest you post questions in the suggested format in this link. It's hard to provide good advice without the information.
viewtopic.php?f=1&t=6212&sid=9800402880 ... fc1c933199

Next, I'll suggest some links about prioritizing investments and tax efficient investing from the wiki.
https://www.bogleheads.org/wiki/Priorit ... nvestments
https://www.bogleheads.org/wiki/Tax-eff ... _placement

I'll reply in red
markymark21 wrote:
Mon Aug 19, 2019 5:32 pm
I live with my parents and have very little expenses, so I'm saving around $3,000/month after-tax. My company 401k is very generous - my company puts 10% of my base pay automatically into my 401k. I can contribute another 4%, which they match, so 18% is put into my 401k every year. This is in a Vanguard Target Retirement 2060 Fund (VTTSX).
That's a really good contribution and match. It would help if you provided your gross income, to see how close you are to maxing your retirement account. Target date fund should be fine.

I also have a Roth IRA at Schwab that's 45% Schwab Total Stock Market Index Fund (SWTSX), 45% Schwab International Index Fund (SWISX), and 10% bonds (don't really need bond exposure for my age, but wanted to see how they behaved relative to my equity investments).
This is fine. Bonds are usually considered most efficiently held within a pre-tax account such as a 401k. I'd keep all stocks in the Roth for potential growth, so long as you can maintain your desired asset allocation.

Anything I save is funneled into my taxable brokerage account where 25% is in VTSAX, 25% VTISX. I take another 25% and invest in individual stocks (I like to play around with the market a bit), and generally keep the other 25% in cash (although i'm debating if I should move this into a money market fund/bond fund/or high-yield savings account). I like to keep that 25% liquid in case of a market downturn/recession.
Two things - individual stocks and "playing around with the market" should be avoided, and bond funds are not tax efficient. Holding cash for a downturn is an attempt at market timing, which is also highly discouraged. Just invest it and let it ride.

How does my portfolio stack up? Any suggestions or tips?
Do you have an emergency fund? You should.
Do you have outstanding debt? Pay off high interest loans.
Would you consider your employment as stable? If not, increase emergency fund.

I'd suggest sticking to broad index funds and etfs and rid yourself of the individual stock market "playing".

Putting that aside, it looks like your heading in the right direction!


Thanks again!
"The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." -Charles Bukowski

jibantik
Posts: 213
Joined: Fri Nov 24, 2017 1:05 pm

Re: 23-Year-Old: Question About Portfolio

Post by jibantik » Mon Aug 19, 2019 6:24 pm

25% is WAYYYYY to high for play money in individual stocks. At your age, money is so valuable because you have so many years of compounding ahead of you. Don't throw it away by playing with individual stocks.

youngpleb
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Location: VA, USA

Re: 23-Year-Old: Question About Portfolio

Post by youngpleb » Mon Aug 19, 2019 6:57 pm

Congrats on the new job. It's a great idea to live at home for a while. Be thankful for your parents! Maybe consider paying them a bit if they will accept it.

3K/month is good and you will quickly build a solid nest egg. It really depends on your gross salary, but the general advice is 1) Contribute to get the match 2) Max a Roth IRA 3) Max your 401k 4) Invest in taxable accounts.

If I read your post right, you are only contributing 4% of your salary to your 401k. Unless that 4% equals $19,000, you are doing yourself a disservice by investing in taxable accounts before maxing the 401k. I'd recommend putting as much in as you can (after maxing the Roth IRA).

25% of your taxable funds to individual stocks is a bad move that you will only realize way into the future. Do yourself a favor and just put it in index funds.

25% to cash is not that bad really. If you don't have an emergency fund, I'd consider this to be it and put it either in a high-yield savings account or in a money market. You should be getting at least 2% on this cash right now. It might also come in handy for more near-term savings goals, like a down payment for a house.

Good luck! Don't spend too much time saving and forget to enjoy life. It's easy to push too hard and burn out on saving.

boogiehead
Posts: 118
Joined: Wed Sep 27, 2017 11:45 pm

Re: 23-Year-Old: Question About Portfolio

Post by boogiehead » Mon Aug 19, 2019 7:13 pm

1) What are your financial goals?
2) What is your risk tolerance?

After carefully thinking about those.... tweak your plan based on those answers. The 25% stocks to me means you want to hit the home run, but are you ok with striking out?

megabad
Posts: 2508
Joined: Fri Jun 01, 2018 4:00 pm

Re: 23-Year-Old: Question About Portfolio

Post by megabad » Tue Aug 20, 2019 3:29 pm

jakehefty17 wrote:
Mon Aug 19, 2019 6:04 pm
First, I'll suggest you post questions in the suggested format in this link. It's hard to provide good advice without the information.
viewtopic.php?f=1&t=6212&sid=9800402880 ... fc1c933199
+1 If you wouldn't mind posting in that format above, I think it will be easier to respond. Super tough to respond without knowing your tax bracket or whether you are maxxing out your retirement accounts. You can edit your post with the pencil button.

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ruralavalon
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Location: Illinois

Re: 23-Year-Old: Question About Portfolio

Post by ruralavalon » Tue Aug 20, 2019 3:46 pm

:confusedWelcome to the forum markymark21 :) .

It's great to see that you are saving so much, at the start establishing a high savings rate is the most important investing decision you can make.

It's also good to see you using broadly diversified index funds with low expense ratios. You are getting the most important things right.


jakehefty17 wrote:
Mon Aug 19, 2019 6:04 pm
Welcome!

First, I'll suggest you post questions in the suggested format in this link. It's hard to provide good advice without the information.
viewtopic.php?f=1&t=6212&sid=9800402880 ... fc1c933199

Next, I'll suggest some links about prioritizing investments and tax efficient investing from the wiki.
https://www.bogleheads.org/wiki/Priorit ... nvestments
https://www.bogleheads.org/wiki/Tax-eff ... _placement
I agree, more information will get you better suggestions.

Please simply the standard details in the suggested format to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is In one place.

A!lso read the wiki articles which jakehefty17 linked, for better understanding of some basics about priority and taxes.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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