Portfolio review: Currently feeling foolish for being a Boglehead. Help!

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blue_red
Posts: 5
Joined: Wed Sep 02, 2020 2:13 pm

Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by blue_red »

I am a long time Boglehead. But posting first time to seek portfolio advice

Living in a tech hub, all my friends are investing in tech stocks like Apple, Zoom, Peloton, Salesforce etc. I am the odd one out investing in the 3 fund portfolio. They have gotten significantly better returns compared to my 3 fund portfolio, and I am beginning to feel a little foolish. It feels like the tech wave will continue for a bit, and I am just sitting on the sidelines.

Here are my portfolio details:

* Emergency funds: 1 year in High yield Savings Account (0.8%)
* Debt: $300K mortgage at 3.5%. Mortgage will be paid of by 2045
* Tax Filing: MFJ
* State: CA
* Age: 35, and 35. 1 child
* Income: $400K, HCOL
* Current Stocks/Bonds: 75/25, Slowing want to bring it to 85/15 by buying only equities since Mar 2020
* Current expenses: $100k

Overall Allocation:
* 52% VTSAX
* 18% VTIAX
* 25% VBTLX

Portfolio: ~$1M

Brokerage: (35% of Portfolio)
* 100% VTSAX

His Roth: (18% of Portfolio)
* 100% VTIAX

His IRA (27% of Portfolio)
* 50% VBTLX
* 50% VTSAX

Her 401K: (10% of Portfolio)
* 100% VBTLX

His 401K: (10% Of Portfolio)
* 50% VTSAX
* 50% VBTLX

Contributions per year:
* His 401k: $19.5K + Match
* Her 401K: $19.5k + Match
* Brokerage: $72K
* Overall Contributions per year: $125K

Currently only buying VTSAX with all new contributions since March, 2020 downturn.

Mindset:
1. On downturns, I am comfortable buying more equities by rebalancing Bonds to stock

Questions:

* I don’t have any “Risk/play money”, maybe I should allocate 5% of my net worth where I can make bets on individual stocks? Thoughts?

* Do Bonds still have value in this new world of super low rates? Should I replace VBTLX with something else?

* Am I overweight on VTIAX?

* Living in a tech hub, all my friends are investing in tech stocks like Apple, Zoom, Peloton, Salesforce etc. I am the odd one out investing in 3 fund portfolio. They have gotten significant returns compared to my 3 fund portfolio, and I am beginning to feel a little foolish. It feels like the tech wave will continue for a bit, should I go tilt towards tech?

* What optimizations could I make?

Thank you so much for your advice.
000
Posts: 2842
Joined: Thu Jul 23, 2020 12:04 am

Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by 000 »

As far as your FOMO (fear of missing out), a few things:
  1. You live in a tech hub, so you already have exposure to the macro-level successes of tech. Doubly so if you work in tech.
  2. Index funds have a lot of exposure to tech.
  3. You can't buy past returns.
  4. Your friends haven't made a profit until they sell.
  5. Are your friends telling you about their losers?
  6. IMO it's not worth stock picking unless one has a good strategy.
tashnewbie
Posts: 826
Joined: Thu Apr 23, 2020 12:44 pm

Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by tashnewbie »

To me, this feels like a humble brag post. You seem to be doing very well for your ages.

I would look into moving his (I'm assuming it's pre-tax, rollover from prior employer) IRA into his 401k. This will make doing backdoor conversions into Roth IRA much simpler. ETA: You can then start contributing $6k/year into his Roth IRA via the backdoor method. Have you been making direct contributions to Roth while your modified adjusted gross income was what it probably is now?

She doesn't appear to have any pre-tax IRAs, so you can contribute $6k/year into a Roth IRA for her with the backdoor method. Check out the wiki for more info about the backdoor Roth IRA.

I agree with 000 about the FOMO. If you truly feel the need to scratch an itch, maybe take a small percentage of his or her 401k and invest in something like VIGAX/VIGIX if it's available.

ETA: Look into refinancing that mortgage. Seems people are getting 30 years for no more than 3% nowadays.
burritoLover
Posts: 328
Joined: Sun Jul 05, 2020 12:13 pm

Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by burritoLover »

Instead of flushing your money down the toilet betting on individual stocks, why not start paying down that mortgage? While your tech co-workers are in debt up to their eyeballs, you can be debt-free in not much time on that salary. Then when they are talking about their Tesla lease payments and million dollar mortgage, you can be all smug with your no-debt self.
"Your money is like a bar of soap. The more you handle it, the less you’ll have." - Gene Fama
NotWhoYouThink
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Joined: Fri Dec 26, 2014 4:19 pm

Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by NotWhoYouThink »

Keep in mind that people lie.

Also, people remember and brag about their gains, but bury the news of their losses, even to themselves.

Don't compare your reality to their boasts.

Even so, it could be that they have made a bunch more than you have. So be happy for them. But be nervous for them, because those who take big risks are more likely to see big losses ahead.
klondike
Posts: 69
Joined: Thu Jan 10, 2019 6:58 pm

Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by klondike »

IMO, you have too much bonds for your age and income level.
Grt2bOutdoors
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Location: New York

Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by Grt2bOutdoors »

IMO, take 5% and scratch that itch! You will learn certainly learn a lesson from doing this, so best do it now rather than later when 5 percent of a much higher number could be worse. At most you lose $50k, at best who knows?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
ZWorkLess
Posts: 74
Joined: Thu May 04, 2017 8:13 pm

Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by ZWorkLess »

An easy replacement for Bond investments -- use that bond money to pay down or pay off your mortgage. I'd look at refinancing it to a (much) lower interest rate 15 year mortgage ASAP -- which should be no problem given your assets and income. Then I'd plan on doing extra principle payments as you are able with money you'd otherwise invest in bonds according to your AA. No safer investment than paying down your own debt . . . Even if you don't want to pay down principle more rapidly using your bond money, definitely refinance it. You're paying too high a rate, and you could easily afford a 15 year note.
Big Dog
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Joined: Mon Sep 07, 2015 4:12 pm

Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by Big Dog »

why not take a small % and call it play money. But AAPL, or TSLA, or invest in Vanguard's US Growth Admiral (VWUAX), which has tech stocks in its major holdings, or $100k in Vanguard's Technology Sector fund. You can still be a 3-fund Boglehead, but with a tilt.

https://investor.vanguard.com/mutual-fu ... file/VWUAX

Agree with the others on a refi with a 15 year term. Look for a so-called 'no-cost' refi.
Last edited by Big Dog on Wed Sep 02, 2020 3:34 pm, edited 1 time in total.
wawoodjr
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by wawoodjr »

It's a great portfolio that will serve you well. No problem at your age if you want to go 85/15...you're young. International exposure fits nicely with what many Bogleheads recommend at 20-30% of equity position.

To impress your friends just tell them you have about $100K riding in Apple, Amazon, Microsoft, Google and Facebook (which is about 20% of your position in VTSAX). That'll shut em up.
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jriding
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Location: CO

Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by jriding »

17% of VTSAX consists of these five tech companies:
Microsoft
Apple
Amazon
Facebook
Alphabet

Reference: https://finance.yahoo.com/quote/VTSAX/holdings/

So rest assured that you already own the high flyers!
Mr.BB
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Joined: Sun May 08, 2016 10:10 am

Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by Mr.BB »

It's natural to compare yourself to others. Instead of feeling jealous about your friends success, why don't you feel happy for them?
You are obviously doing well for yourself (I'm happy for you!!), but as it was pointed out, work on paying off your house. I bet none of your friends can say they have no mortgage payment. Also, if you really feel the need to be in on the conversation regarding owning stocks like AAPL. AMZN, TSLA, then buy a few shares of each and if anyone asks you, you can honestly say that you own shares in those companies. :-)
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."
klondike
Posts: 69
Joined: Thu Jan 10, 2019 6:58 pm

Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by klondike »

wawoodjr wrote: Wed Sep 02, 2020 3:33 pm It's a great portfolio that will serve you well. No problem at your age if you want to go 85/15...you're young. International exposure fits nicely with what many Bogleheads recommend at 20-30% of equity position.

To impress your friends just tell them you have about $100K riding in Apple, Amazon, Microsoft, Google and Facebook (which is about 20% of your position in VTSAX). That'll shut em up.
Well, I told people how much I lost and how poor I am and usually they will shut up.
tdmp
Posts: 61
Joined: Sat Mar 09, 2019 10:12 am

Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by tdmp »

blue_red wrote: Wed Sep 02, 2020 2:26 pm I am a long time Boglehead. But posting first time to seek portfolio advice

Living in a tech hub, all my friends are investing in tech stocks like Apple, Zoom, Peloton, Salesforce etc. I am the odd one out investing in the 3 fund portfolio. They have gotten significantly better returns compared to my 3 fund portfolio, and I am beginning to feel a little foolish. It feels like the tech wave will continue for a bit, and I am just sitting on the sidelines.

Here are my portfolio details:

* Emergency funds: 1 year in High yield Savings Account (0.8%)
* Debt: $300K mortgage at 3.5%. Mortgage will be paid of by 2045
* Tax Filing: MFJ
* State: CA
* Age: 35, and 35. 1 child
* Income: $400K, HCOL
* Current Stocks/Bonds: 75/25, Slowing want to bring it to 85/15 by buying only equities since Mar 2020
* Current expenses: $100k

Overall Allocation:
* 52% VTSAX
* 18% VTIAX
* 25% VBTLX

Portfolio: ~$1M

Brokerage: (35% of Portfolio)
* 100% VTSAX

His Roth: (18% of Portfolio)
* 100% VTIAX

His IRA (27% of Portfolio)
* 50% VBTLX
* 50% VTSAX

Her 401K: (10% of Portfolio)
* 100% VBTLX

His 401K: (10% Of Portfolio)
* 50% VTSAX
* 50% VBTLX

Contributions per year:
* His 401k: $19.5K + Match
* Her 401K: $19.5k + Match
* Brokerage: $72K
* Overall Contributions per year: $125K

Currently only buying VTSAX with all new contributions since March, 2020 downturn.

Mindset:
1. On downturns, I am comfortable buying more equities by rebalancing Bonds to stock

Questions:

* I don’t have any “Risk/play money”, maybe I should allocate 5% of my net worth where I can make bets on individual stocks? Thoughts?

* Do Bonds still have value in this new world of super low rates? Should I replace VBTLX with something else?

* Am I overweight on VTIAX?

* Living in a tech hub, all my friends are investing in tech stocks like Apple, Zoom, Peloton, Salesforce etc. I am the odd one out investing in 3 fund portfolio. They have gotten significant returns compared to my 3 fund portfolio, and I am beginning to feel a little foolish. It feels like the tech wave will continue for a bit, should I go tilt towards tech?

* What optimizations could I make?

Thank you so much for your advice.
You are doing well. Don't let how others do affect what you do. I was told I missed out on TSLA. My response was I missed out on more than just TSLA: AAPL and AMZN in 2002, GOOG in 2004 and more recently overstock.com and wayfair in april 2020. I miss out on a lot, but I am comfortable where I am. It could be worse. I am happy for all those that got into TSLA at $15 billion, $50 billion, $100 billion, $200 billion, and $300 billion market cap. If you want to tilt tech, then just buy QQQ or VGT.
KlangFool
Posts: 17784
Joined: Sat Oct 11, 2008 12:35 pm

Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by KlangFool »

OP,


1) Your annual expense is 100K per year.


2) Your annual saving is 125K per year.


3) Your portfolio size is 1 million.


4) Let's assume your FI number is 4 million aka 40 X 100K = 4 million. You can reach your FI number in 12 years or less with a nominal return of 7%.

Starting Net Worth $1,000,000
Annual Savings $125,000

Years
Return Rate 9 10 11 12
6.00% $3,125,893 $3,438,447 $3,769,754 $4,120,939
7.00% $3,335,708 $3,694,207 $4,077,802 $4,488,248
8.00% $3,559,949 $3,969,745 $4,412,325 $4,890,311
9.00% $3,799,523 $4,266,480 $4,775,463 $5,330,255
10.00% $4,055,382 $4,585,921 $5,169,513 $5,811,464



5) Average Annual Return of 70/30 is 9.1%

https://personal.vanguard.com/us/insigh ... llocations


6) With your saving rate, you can reach your FI goal in 12 years or less with 70/30. Why should you take on more risks? 75/25 or 70/30 is good enough.


KlangFool
Last edited by KlangFool on Wed Sep 02, 2020 4:21 pm, edited 1 time in total.
zorgs10
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Joined: Tue Oct 14, 2014 7:16 pm

Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by zorgs10 »

blue_red wrote: Wed Sep 02, 2020 2:26 pm I am a long time Boglehead. But posting first time to seek portfolio advice
...
I noticed that your post doesn't state what your goals are. If you mention those, you might get more specific advice on how to achieve the goals.
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KingRiggs
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by KingRiggs »

What kind of “friends” are these that are comparing portfolio returns with you? I don’t discuss the specifics of my investments with anyone but my spouse and my accountant. Not even family.

My guess is that your “friends” are cherry-picking the information they give you, and are not divulging their losses.

Be comforted by the fact that this tech dominance in the market will not last forever. And when it does, your more diverse holdings will treat you well.

I do agree with posters above that at your age and income level, you are WAY over-exposed to bonds. I didn’t own any until I was 50...
Advice = noun | Advise = verb | | Roth, not ROTH
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fredflinstone
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by fredflinstone »

OP, back in 2000 I felt the way you do now. Everyone, it seemed, was making big bucks on tech stocks, especially in telecom. I bought some shares in a high-flying telecom company called JDS Uniphase right near the tippy top of the market around Janaury 2000. It proceeded to lose about 98 percent of its value, maybe more. I've done much better the past 10 years buying and holding broad market index funds. It's doesn't make for exciting cocktail talk, but it works. Best of luck.
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash (mainly CDs) 22 / TIPS 8
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Chrono Triggered
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by Chrono Triggered »

You and your wife are 35, save six figures a year, and already have a $1M portfolio. You'll be fine.

If you need some assurance with your index funds, read these articles:
https://www.nytimes.com/2017/05/12/your ... -wont.html
https://www.stlouistrust.com/why-most-s ... ver%20time
Xrayman69
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by Xrayman69 »

The turtle and the hare.......

Your fine. Diversification is a safety play. Your income is probably heavily dependent upon tech industry. Careful about too many eggs in a single basket. Don’t go to the bathroom where you are eating. You are eating at the trough of tech. Get your kicks somewhere else.
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LilyFleur
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by LilyFleur »

You're doing great!

Maybe take some fun money and put in in the Vanguard index fund MGC. I just researched it on Schwab and it's a buy.

At your age, I was aggressively invested in my company stock with a small amount in the stable value fund. I wouldn't recommend that road but it happened to work out well for me. I became a boglehead after I retired, and this forum saved me from a huge loss.

Would you be comfortable with less of your asset allocation in bonds?
index245
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by index245 »

I keep these two quotes on my IPS (they help me, at least, when I consider the index fund path versus the "sure thing" of individual stock investing):

William Bernstein:
"I'll emphasize three main principles: first, to not get too greedy, second, to diversify as widely as possible, and last, to always be wary of the investment industry."

Jack Bogle:
“The greatest enemy of a good plan is the dream of a perfect plan. Stick to the good plan.”

Whatever path you take, you are doing very well. Best wishes!
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ray.james
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by ray.james »

Living in bay area, I know how you feel OP. Trust me!

A few hours ago my wife said, her friends made a lot of money on Tesla why didn't I buy it?(I was the one to suggest tesla has a huge moat and not a car-only company. Apparently her friend thought what I said made sense and invested a lot :D ). Yesterday in a group chat, a buddy casually mentioned he made tens of grands in ZOOM. These conversations are part of all around especially in Bay area! I used to in rural Sacramento and the conversations are quite different, slow pace and joyous. Tech areas combined with techie friends makes for this monotonic conversations and may I say - 'greed'. That's the life part.

Regarding investing, not all are always successful. The above friend that made tesla money, lost a lot on Gopro back in its heydays and swore off stocks. The zoom guy lost in some cloud company. One buddy made a ton in amazon and lost a lot few years ago in zynga. The reality is they do not know their IRR. My bet is it will be less than you. Second, out of random 10 people that would invested in tesla, more than half would have got out before tesla hit $1000. Once the money doubles /triples some will get out. Some will hang on to losers till it goes to zero. This is pretty much Russian roulette and no way many can time both sides. There was one guy in office who was a bitcoin millionaire. other than him, very few would beat me in index funds. I doubt if they can continue to beat me for next 25 years.

If you have the itch, do that 10% speculative portfolio and have some fun!
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939
DesertDiva
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by DesertDiva »

Wish your friends well in their future endeavors. Find a new topic to discuss.
bogledogle
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by bogledogle »

FOMO is real, specially in the bay area with the tech crowd working from home with nothing to do other than gamble with stocks. You say you to want to take more risk, but your 25% bond allocation seems conservative.

You have high income with a high savings rate, so you can afford to take risk and take in some losses if it does not work out. Let's assume you start your "play fund" with 5% of your savings. What do you think your return rate would be this high risk investment?

Making over 400k in California means you will lose a significant % of gains to taxes when you sell stock - both short term and longterm. Calculate the true tax rate for your own personal situation. Also, you need to know exactly when to buy and when to sell and burden yourself to monitor the market and actively trade. Market dips and crazy run ups don't come along often, so let's assume you make a 50% gain while VTSAX makes 12% over the next 5 years.

How many trades have you made during this time? Did you end up paying short term capital gains on those trades? Did you sit on the cash in between trades? How much time and effort did you put in to manage 5% of your portfolio? And how did that change your bottom line at the end of the day?
bogledogle
Posts: 298
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by bogledogle »

ray.james wrote: Wed Sep 02, 2020 6:10 pm Living in bay area, I know how you feel OP. Trust me!

A few hours ago my wife said, her friends made a lot of money on Tesla why didn't I buy it?(I was the one to suggest tesla has a huge moat and not a car-only company. Apparently her friend thought what I said made sense and invested a lot :D ). Yesterday in a group chat, a buddy casually mentioned he made tens of grands in ZOOM. These conversations are part of all around especially in Bay area! I used to in rural Sacramento and the conversations are quite different, slow pace and joyous. Tech areas combined with techie friends makes for this monotonic conversations and may I say - 'greed'. That's the life part.

Regarding investing, not all are always successful. The above friend that made tesla money, lost a lot on Gopro back in its heydays and swore off stocks. The zoom guy lost in some cloud company. One buddy made a ton in amazon and lost a lot few years ago in zynga. The reality is they do not know their IRR. My bet is it will be less than you. Second, out of random 10 people that would invested in tesla, more than half would have got out before tesla hit $1000. Once the money doubles /triples some will get out. Some will hang on to losers till it goes to zero. This is pretty much Russian roulette and no way many can time both sides. There was one guy in office who was a bitcoin millionaire. other than him, very few would beat me in index funds. I doubt if they can continue to beat me for next 25 years.

If you have the itch, do that 10% speculative portfolio and have some fun!
+1 :sharebeer
sambb
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by sambb »

Friends took more RISK and made more returns.

Check out VITAX (vanguard technology). Has done far better over 10 years than total stock.
BUT it has more risk since it is a sector

More risk = more potential reward. Same with your friends stock.

You can take more risk and potentially make more money. Or lose more. One never knows.
peterwantstosave
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by peterwantstosave »

Your friends are probably highlighting their winners and minimizing their losers, as others have said on this thread.

Focus on how you're doing, not on keeping up with the Joneses, who may or may not be truth tellers.

Hope this helps, P
403b: 54% VTSAX, 36% BTMKX 10% QCBMRX | GSRA: 100% Money Market (100% QCBMRX on Dec 11, 2020) | Roth IRA: 100% FIPFX | Taxable: 100% FSKAX
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David Jay
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by David Jay »

Grt2bOutdoors wrote: Wed Sep 02, 2020 3:28 pmIMO, take 5% and scratch that itch! You will learn certainly learn a lesson from doing this, so best do it now rather than later when 5 percent of a much higher number could be worse. At most you lose $50k, at best who knows.
I say "Go for it". But keep very good records. In 10 years, compare the active portfolio (the whole active portfolio, not just that 10-bagger) to VTSAX.

I was a stock picker when I came to BH. I thought I was doing great (this was 2010 -2014) but someone here asked me to compare my performance to the SP500. Sure enough, I was under-performing by about 1% per year.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
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Brianmcg321
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by Brianmcg321 »

klondike wrote: Wed Sep 02, 2020 3:28 pm IMO, you have too much bonds for your age and income level.
I was going to say the same thing.

OP, your income is so high I would consider that your "bond". You adding so much to your portfolio every year you don't need bonds until you are ready to retire. Put those bonds in QQQ and you won't have FOMO anymore.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.
whereskyle
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by whereskyle »

blue_red wrote: Wed Sep 02, 2020 2:26 pm I am a long time Boglehead. But posting first time to seek portfolio advice

Living in a tech hub, all my friends are investing in tech stocks like Apple, Zoom, Peloton, Salesforce etc. I am the odd one out investing in the 3 fund portfolio. They have gotten significantly better returns compared to my 3 fund portfolio, and I am beginning to feel a little foolish. It feels like the tech wave will continue for a bit, and I am just sitting on the sidelines.

Here are my portfolio details:

* Emergency funds: 1 year in High yield Savings Account (0.8%)
* Debt: $300K mortgage at 3.5%. Mortgage will be paid of by 2045
* Tax Filing: MFJ
* State: CA
* Age: 35, and 35. 1 child
* Income: $400K, HCOL
* Current Stocks/Bonds: 75/25, Slowing want to bring it to 85/15 by buying only equities since Mar 2020
* Current expenses: $100k

Overall Allocation:
* 52% VTSAX
* 18% VTIAX
* 25% VBTLX

Portfolio: ~$1M

Brokerage: (35% of Portfolio)
* 100% VTSAX

His Roth: (18% of Portfolio)
* 100% VTIAX

His IRA (27% of Portfolio)
* 50% VBTLX
* 50% VTSAX

Her 401K: (10% of Portfolio)
* 100% VBTLX

His 401K: (10% Of Portfolio)
* 50% VTSAX
* 50% VBTLX

Contributions per year:
* His 401k: $19.5K + Match
* Her 401K: $19.5k + Match
* Brokerage: $72K
* Overall Contributions per year: $125K

Currently only buying VTSAX with all new contributions since March, 2020 downturn.

Mindset:
1. On downturns, I am comfortable buying more equities by rebalancing Bonds to stock

Questions:

* I don’t have any “Risk/play money”, maybe I should allocate 5% of my net worth where I can make bets on individual stocks? Thoughts?

* Do Bonds still have value in this new world of super low rates? Should I replace VBTLX with something else?

* Am I overweight on VTIAX?

* Living in a tech hub, all my friends are investing in tech stocks like Apple, Zoom, Peloton, Salesforce etc. I am the odd one out investing in 3 fund portfolio. They have gotten significant returns compared to my 3 fund portfolio, and I am beginning to feel a little foolish. It feels like the tech wave will continue for a bit, should I go tilt towards tech?

* What optimizations could I make?

Thank you so much for your advice.
Go ahead and play with 5%.

But take note that you are making a common mistake for an investor. You are measuring your portfolio, which has a time horizon of forever, against runs of outperformance in individual stocks. As a Boglehead, I intend to accumulate enough money to retire with a SWR that will ensure my portfolio survives me. I do not compare the life-time performance of that portfolio to a 1, 2, 3, 5, or 10-year run of outperformance of a few individual stocks. Would it have been great to own all of these tech stocks when they doubled, tripled, and quadrupled? Yes. Will I be able to meet my long-term goals even though I took much less risk and missed out? Absolutely.

"The stock market is a distraction from the business of investing." Watching others hit home runs should not dissuade you from opting for a guaranteed .500 batting average.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
Jack FFR1846
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by Jack FFR1846 »

Friends like that: "Hey, I just made a boatload on Tesla with the split".

You: "That's great for you. I made squat. Can you give me a 20 so I can buy lunch?"
Bogle: Smart Beta is stupid
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BolderBoy
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by BolderBoy »

blue_red wrote: Wed Sep 02, 2020 2:26 pmLiving in a tech hub, all my friends are investing in tech stocks like Apple, Zoom, Peloton, Salesforce etc. I am the odd one out investing in the 3 fund portfolio. They have gotten significantly better returns compared to my 3 fund portfolio, and I am beginning to feel a little foolish. It feels like the tech wave will continue for a bit, and I am just sitting on the sidelines.
In February 2000, I had a friend who was >95% in tech stocks. She was set to retire the end of that year. By April 2000, she had to delay retirement for nearly 15 years to try to recoup her losses.

It really can happen. You are doing the right thing. Stick with it.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
Frugalbear
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by Frugalbear »

klondike wrote: Wed Sep 02, 2020 3:28 pm IMO, you have too much bonds for your age and income level.
Agreed! Not to mention in the wrong places, for instance in your Roth account.
Kookaburra
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by Kookaburra »

Jack FFR1846 wrote: Wed Sep 02, 2020 7:58 pm Friends like that: "Hey, I just made a boatload on Tesla with the split".
If someone says this, it exposes just how ignorant they really are.
tim1999
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by tim1999 »

Your annual account contributions are more than I earn gross in a year. My advice is to be humble.
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Brianmcg321
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by Brianmcg321 »

Frugalbear wrote: Wed Sep 02, 2020 8:28 pm
klondike wrote: Wed Sep 02, 2020 3:28 pm IMO, you have too much bonds for your age and income level.
Agreed! Not to mention in the wrong places, for instance in your Roth account.
Yes again.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.
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blue_red
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by blue_red »

index245 wrote: Wed Sep 02, 2020 5:40 pm I keep these two quotes on my IPS (they help me, at least, when I consider the index fund path versus the "sure thing" of individual stock investing):

William Bernstein:
"I'll emphasize three main principles: first, to not get too greedy, second, to diversify as widely as possible, and last, to always be wary of the investment industry."

Jack Bogle:
“The greatest enemy of a good plan is the dream of a perfect plan. Stick to the good plan.”

Whatever path you take, you are doing very well. Best wishes!
Such valuable quotes. I will add this to my IPS too to counter when I feel FOMO
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blue_red
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by blue_red »

Wow! Thank you for all your generosity in taking the time to provide advice.

Clearly I need to fix a few things,
1. Reduce my bond allocation
2. Refinance my mortgage to get better rates
3. I am not going to do 5% play money. Thinking through: taxes, cash on sidelines, needs too much monitoring, and too burdensome. Instead, I could invest in a Tech focussed Index fund, and reduce my FOMO

Principles I learned from this thread:
1. Don’t measure life-time portfolio performance against outperformance of individual stocks during relatively brief periods of time
2. Don’t aim for a perfect portfolio, a good portfolio you can stick with is good enough
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blue_red
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by blue_red »

Brianmcg321 wrote: Wed Sep 02, 2020 9:33 pm
Frugalbear wrote: Wed Sep 02, 2020 8:28 pm
klondike wrote: Wed Sep 02, 2020 3:28 pm IMO, you have too much bonds for your age and income level.
Agreed! Not to mention in the wrong places, for instance in your Roth account.
Yes again.
thanks I am going to fix bond allocation
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by Ferdinand2014 »

“What investors need is an ability to both disregard mob fears or enthusiasms and to focus on a few simple fundamentals. A willingness to look unimaginative for a sustained period — or even to look foolish — is also essential.

-Warren Buffett Shareholder letter
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by Expro »

What were you and your friends talking about in March?
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blue_red
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by blue_red »

Expro wrote: Wed Sep 02, 2020 11:18 pm What were you and your friends talking about in March?
They were always tech-heavy, and March didn't change that. March I was doing rebalancing, while they were buying tech stocks. In a way, in my bubble all we know is tech so thats where investments tend to go.
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by bluquark »

You don't need to reduce your bond allocation. At 75/25 it's already "age in bonds minus 10" which is a standard rule of thumb.

I'm only a few years older than you and sitting happily at 70/30. I can meet my financial goals at this AA. The brief 2020 crash hasn't made me overconfident that future stock market crashes are necessarily going to be this short, and the low interest rates haven't made me greedier.
70/30 portfolio | Equity: global market weight | Bonds: 20% long-term munis - 10% LEMB
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Stinky
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by Stinky »

blue_red wrote: Wed Sep 02, 2020 10:35 pm
Principles I learned from this thread:
1. Don’t measure life-time portfolio performance against outperformance of individual stocks during relatively brief periods of time
2. Don’t aim for a perfect portfolio, a good portfolio you can stick with is good enough
Blue-red,

Welcome to the Forum!

Those two lessons that you learned are pretty profound learnings. If you can stick with those, you'll be in good shape.

By the way, there is no such thing as a "perfect" portfolio. But there is such a thing as "a portfolio that you can stick with over time". You're well down the road in defining that "portfolio you can stick with", and you're going to do just fine.

Your savings rate is just awesome! Keep it up.
It's a GREAT day to be alive - Travis Tritt
typical.investor
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by typical.investor »

blue_red wrote: Wed Sep 02, 2020 2:26 pm
* Living in a tech hub, all my friends are investing in tech stocks like Apple, Zoom, Peloton, Salesforce etc. I am the odd one out investing in 3 fund portfolio. They have gotten significant returns compared to my 3 fund portfolio, and I am beginning to feel a little foolish. It feels like the tech wave will continue for a bit, should I go tilt towards tech?
Has it been the case that those companies outperformed based on earnings? Orhave they just gotten more expensive? My understanding is that they gave gotten more expensive (perhaps on expectations of the future) and not really on performance.

Buying futures earnings now might be great, or inflation could rise and today's high price will suddenly not be supported.

Anyway, if tech workers make $400k/yr and are investing mostly in tech stocks, no wonder things are how they are. Then the indexers make a contribution and buy at the price the speculators are willing to pay.

All fine, but I wonder if many of the high priced tech stocks have investors who are waiting to take profits and flee on signs of a turn.

Well if you are in tech, maybe you should invest like everyone else in tech so you can talk the talk and show an understanding of the industry. But if that isn't necessary, then I'd just continue your present course.
Last edited by typical.investor on Thu Sep 03, 2020 6:37 am, edited 1 time in total.
HappyJack
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by HappyJack »

If your batting average was .300 during your entire career in major-league baseball you would probably never win the batting title in any year. But you would have an excellent chance of ending up in the baseball Hall of Fame.
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by Dottie57 »

Kookaburra wrote: Wed Sep 02, 2020 8:43 pm
Jack FFR1846 wrote: Wed Sep 02, 2020 7:58 pm Friends like that: "Hey, I just made a boatload on Tesla with the split".
If someone says this, it exposes just how ignorant they really are.
+1
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by Dottie57 »

bluquark wrote: Thu Sep 03, 2020 12:28 am You don't need to reduce your bond allocation. At 75/25 it's already "age in bonds minus 10" which is a standard rule of thumb.

I'm only a few years older than you and sitting happily at 70/30. I can meet my financial goals at this AA. The brief 2020 crash hasn't made me overconfident that future stock market crashes are necessarily going to be this short, and the low interest rates haven't made me greedier.
I agree that 70/30 To 60/40 Is a good stock/bond allocation. Don’t let anyone push you to really high allocation of stock if you are uncomfortable. Each and every person is different. You do not have to conform to anyone’s expectations but your own.
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Re: Portfolio review: Currently feeling foolish for being a Boglehead. Help!

Post by MostlyABogleHead »

Comparing salaries, investment returns and networth in Bay Area is hard due to the wide difference in pay and luck. Someone who joined a hot startup that got bought up by a large tech company or lucked out buying the right stock at the right time can make some serious cash that is hard to fathom when you are a salaried tech worker of equal talent and being a boglehead.

I find the following useful. Compare against your past self and understand where you want to land for a comfortable life. Make plans to land in that zone for the future and you are set. When in doubt revisit these plans and over time you will concentrate more on your life rather than how others chose to live it. Also remember money is only part of the story for a comfortable life. A lot of money in your portfolio with a highly stressful life that can affect your health is no way to live.
Last edited by MostlyABogleHead on Tue Sep 08, 2020 3:41 am, edited 1 time in total.
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