Portfolio Help/Opinions

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JayP20003
Posts: 1
Joined: Wed Aug 08, 2018 4:11 pm

Portfolio Help/Opinions

Post by JayP20003 » Wed Aug 08, 2018 5:58 pm

Personal Info
Emergency funds: 6 months
Debt: None
Tax filing status: Single
Marginal tax Rate: 24% (I think)
State of Residence: Virginia
Age: 29

Desired Asset allocation: 92-95% stocks / 5-8% bonds
Desired International allocation: 15-20% of stocks

Current retirement assets
Please note that the following percentages are the asset percentages of the total portfolio, not per account.

Taxable
8.51% USAA Virginia Bond Fund (USVAX), 0.58% expense
8.54% Vanguard Int'l Growth Fund (VWIGX), 0.45% expense
5.62% Vanguard Selected Value (VASVX), 0.39% expense

HSA
0.12% Vanguard Materials Index Adm (VMIAX), 0.10% expense

401k
19.29% Vanguard 500 Index Admiral (VFIAX), 0.04% expense
20.63% MFS Growth R3 (MFEHX), 0.94% expense
19.48% Vanguard Small Cap Index Adm (VSMAX), 0.06% expense
17.82% MFS Global Equity R3 (MWEHX), 1.17% expense

Roth IRA
$5,500 cash (undecided and pending allocation)

Contributions
401k: $18.5k + $1.5k match (14% into Traditional 401k, 4% into Roth 401k: 18% contribution total)
Roth IRA: $5.5k Backdoor
Taxable: Estimating $5k - $10k

Morningstar X-Ray - Asset Allocation
This data comes from the Morningstar X-Ray tool, after I manually entered my portfolio:

Cash: 2%
US Stocks: 73%
Foreign Stocks: 17%
Bonds: 8%

Morningstar X-Ray - Stock Sector
Basic Materials 4.60%
Consumer Cyclical 14.96%
Financial Services 15.21%
Real Estate 3.02%
Communication Services 2.16%
Energy 3.36%
Industrials 13.33%
Technology 20.70%
Consumer Defensive 8.03%
Healthcare 12.96%
Utilities 1.67%

Morningstar X-Ray - Stock Style Diversification
Large Value: 11%
Large Core: 22%
Large Growth: 38%
Med Value: 7%
Med Core: 7%
Med Growth: 7%
Small Value: 3%
Small Core: 3%
Small Growth: 2%

Available funds in 401k
Invesco Stable Value Trust Ret Opt
Delaware Diversified Income A (DPDFX), 0.70% expense
Vanguard Total Bond Market Index Adm (VBTLX), 0.05% expense
AB Global Bond A (ANAGX), 0.82% expense
American Beacon Lg Cap Value Inst (AADEX), 0.60% expense
Vanguard 500 Index Admiral (VFIAX), 0.04% expense
MFS Growth R3 (MFEHX), 0.94% expense
Vanguard Mid Cap Index Adm (VIMAX), 0.06% expense
Wells Fargo Discovery A (WFDAX), 1.21% expense
American Beacon Small Cp Val Inst (AVFIX), 0.83% expense
Vanguard Small Cap Index Adm (VSMAX), 0.06% expense
ClearBridge Small Cap Growth A (SASMX), 1.23% expense
Principal Real Estate Securities A (PRRAX), 1.28% expense
AllianzGI NFJ Mid-Cap Value A (PQNAX), 0.99% expense
American Funds EuroPacific Gr R5 (RERFX), 0.54% expense
MFS Global Equity R3 (MWEHX), 1.17% expense
Vanguard Total Intl Stock Index Admiral (VTIAX), 0.11% expense
Parametric Emerging Markets Investor (EAEMX), 1.38% expense
Vanguard Target Retirement Income Inv
Vanguard Target Retirement 2015 Inv
Vanguard Target Retirement 2020 Inv
Vanguard Target Retirement 2025 Inv
Vanguard Target Retirement 2030 Inv
Vanguard Target Retirement 2035 Inv
Vanguard Target Retirement 2040 Inv
Vanguard Target Retirement 2045 Inv
Vanguard Target Retirement 2050 Inv
Vanguard Target Retirement 2055 Inv
Vanguard Target Retirement 2060 Inv
Vanguard Target Retirement 2065 Inv
Vanguard LifeStrategy Income Inv
Vanguard LifeStrategy Cnsrv Gr Inv
Vanguard LifeStrategy Moderate Gr Inv
Vanguard LifeStrategy Growth Inv

Available funds in HSA
(I apologize for the all-caps here, I just copy-pasted this from the source)

VANGUARD SMALL CAP VALUE INDEX ADMIRAL (VSIAX) 0.07%
VANGUARD TOTAL BOND MARKET IDX INSTLPLS (VBMPX) 0.03%
VANGUARD TARGET RETIREMENT 2060 INV (VTTSX) 0.15%
VANGUARD GROWTH INDEX INSTITUTIONAL (VIGIX) 0.04%
VANGUARD TARGET RETIREMENT 2020 INV (VTWNX) 0.13%
VANGUARD WELLESLEY INCOME ADMIRAL (VWIAX) 0.15%
VANGUARD TARGET RETIREMENT 2040 INV (VFORX) 0.15%
VANGUARD TARGET RETIREMENT INCOME INV (VTINX) 0.13%
VANGUARD EXTENDED MARKET INDEX INSTLPLUS (VEMPX) 0.05%
VANGUARD TOTAL INTL STOCK IDX INSTLPLS (VTPSX) 0.07%
VANGUARD SHRT-TERM INFL-PROT SEC IDX ADM (VTAPX) 0.06%
VANGUARD INSTITUTIONAL INDEX INSTL PL (VIIIX) 0.02%
VANGUARD EMERGING MKTS STOCK IDX INSTL (VEMIX) 0.11%
VANGUARD SHORT-TERM BOND INDEX ADM (VBIRX) 0.07%
VANGUARD TARGET RETIREMENT 2030 INV (VTHRX) 0.14%
VANGUARD MATERIALS INDEX ADMIRAL (VMIAX) 0.10%
VANGUARD MID-CAP VALUE INDEX ADMIRAL (VMVAX) 0.07%
VANGUARD SMALL CAP INDEX ADM (VSMAX) 0.05%
VANGUARD TOTAL INTL BD IDX ADMIRAL (VTABX) 0.11%
VANGUARD INFLATION-PROTECTED SECS I (VIPIX) 0.07%
VANGUARD TARGET RETIREMENT 2050 INV (VFIFX) 0.15%
VANGUARD REAL ESTATE INDEX INSTITUTIONAL (VGSNX) 0.10%
VANGUARD VALUE INDEX ADM (VVIAX) 0.05%

Miscellaneous
* I am single
* I rent
* I have a high annual medical expense ($5k - $6k total after insurance (out of pocket))

Questions
I am relatively new to this process, and I am learning as I go! I really appreciate your time and insight here.

1. Overall, how does my portfolio look? Are there any glaring errors or mistakes?
2. Do my "desired allocations" make sense for my age (29)? What about international stocks?
3. Are some of my funds too expensive in terms of their expense ratios?
4. Would you get rid of any of these funds? Would you replace them with anything in particular?
5. Is my portfolio too complex?
6. Is my portfolio not diverse enough; is it too diverse?
7. Is my portfolio leaning too heavily in any direction?
8. Are my funds located in the proper accounts in terms of tax efficiency?
9. Would a three-fund portfolio likely out-perform my current portfolio?
10. I have $5.5k pending investment in my Roth. I was considering putting that into a small-cap value index fund, and/or a REIT. I am waiting to hear the feedback I get here before I make a decision about that.
11. I am contributing 14% into traditional 401k, and 4% into Roth 401k (18% total). Does this make sense to do? The thought process behind this decision was to try to diversify tax strategy.

Flyer24
Posts: 133
Joined: Sun Apr 08, 2018 4:21 pm

Re: Portfolio Help/Opinions

Post by Flyer24 » Wed Aug 08, 2018 10:08 pm

You have some expensive funds in your portfolio. Try to keep it in index funds. Otherwise I would just go 100% Vanguard Target Retirement fund (.15 expense ratio) if you want to simplify in your tax advantaged accounts.

megabad
Posts: 362
Joined: Fri Jun 01, 2018 4:00 pm

Re: Portfolio Help/Opinions

Post by megabad » Thu Aug 09, 2018 1:14 pm

JayP20003 wrote:
Wed Aug 08, 2018 5:58 pm
Personal Info
Emergency funds: 6 months
Debt: None
Tax filing status: Single
Marginal tax Rate: 24% (I think)
State of Residence: Virginia
Age: 29

Desired Asset allocation: 92-95% stocks / 5-8% bonds
Desired International allocation: 15-20% of stocks

Current retirement assets
Please note that the following percentages are the asset percentages of the total portfolio, not per account.

Taxable
8.51% USAA Virginia Bond Fund (USVAX), 0.58% expense If you are in 24% fed and 5.75% state, then I am on the fence on whether this is a good move or not. Up to you but I am not sure that the tax equivalent return is up to par with similar maturity bond funds that are more widely diversified.
8.54% Vanguard Int'l Growth Fund (VWIGX), 0.45% expense It appears you have chosen actively managed mutual funds in your taxable account. This is a personal decision and you will find the board obviously more strongly supports index funds. Be aware of the added expense ratio and the added tax impact associated with this decision.
5.62% Vanguard Selected Value (VASVX), 0.39% expense

HSA
0.12% Vanguard Materials Index Adm (VMIAX), 0.10% expense I am not personally a fan of a materials tilt, but I would much prefer this selection to a gold holding. I would be 100% VG Institutional Index at 0.02 ER.

401k
19.29% Vanguard 500 Index Admiral (VFIAX), 0.04% expense
20.63% MFS Growth R3 (MFEHX), 0.94% expense
19.48% Vanguard Small Cap Index Adm (VSMAX), 0.06% expense
17.82% MFS Global Equity R3 (MWEHX), 1.17% expense
I would reallocate away from the two MFS funds and into index funds due to the expense ratios. It is my strong opinion that few active funds will outperform enough to warrant a 1.17% ER. You have excellent Vanguard Index funds to choose from.

Roth IRA
$5,500 cash (undecided and pending allocation)

Contributions
401k: $18.5k + $1.5k match (14% into Traditional 401k, 4% into Roth 401k: 18% contribution total)
Roth IRA: $5.5k Backdoor
Taxable: Estimating $5k - $10k

Morningstar X-Ray - Asset Allocation
This data comes from the Morningstar X-Ray tool, after I manually entered my portfolio:

Cash: 2%
US Stocks: 73%
Foreign Stocks: 17%
Bonds: 8%

Morningstar X-Ray - Stock Sector
Basic Materials 4.60%
Consumer Cyclical 14.96%
Financial Services 15.21%
Real Estate 3.02%
Communication Services 2.16%
Energy 3.36%
Industrials 13.33%
Technology 20.70%
Consumer Defensive 8.03%
Healthcare 12.96%
Utilities 1.67%

Morningstar X-Ray - Stock Style Diversification
Large Value: 11%
Large Core: 22%
Large Growth: 38%
Med Value: 7%
Med Core: 7%
Med Growth: 7%
Small Value: 3%
Small Core: 3%
Small Growth: 2%

Available funds in 401k
Invesco Stable Value Trust Ret Opt
Delaware Diversified Income A (DPDFX), 0.70% expense
Vanguard Total Bond Market Index Adm (VBTLX), 0.05% expense
AB Global Bond A (ANAGX), 0.82% expense
American Beacon Lg Cap Value Inst (AADEX), 0.60% expense
Vanguard 500 Index Admiral (VFIAX), 0.04% expense
MFS Growth R3 (MFEHX), 0.94% expense
Vanguard Mid Cap Index Adm (VIMAX), 0.06% expense
Wells Fargo Discovery A (WFDAX), 1.21% expense
American Beacon Small Cp Val Inst (AVFIX), 0.83% expense
Vanguard Small Cap Index Adm (VSMAX), 0.06% expense
ClearBridge Small Cap Growth A (SASMX), 1.23% expense
Principal Real Estate Securities A (PRRAX), 1.28% expense
AllianzGI NFJ Mid-Cap Value A (PQNAX), 0.99% expense
American Funds EuroPacific Gr R5 (RERFX), 0.54% expense
MFS Global Equity R3 (MWEHX), 1.17% expense
Vanguard Total Intl Stock Index Admiral (VTIAX), 0.11% expense
Parametric Emerging Markets Investor (EAEMX), 1.38% expense
Vanguard Target Retirement Income Inv
Vanguard Target Retirement 2015 Inv
Vanguard Target Retirement 2020 Inv
Vanguard Target Retirement 2025 Inv
Vanguard Target Retirement 2030 Inv
Vanguard Target Retirement 2035 Inv
Vanguard Target Retirement 2040 Inv
Vanguard Target Retirement 2045 Inv
Vanguard Target Retirement 2050 Inv
Vanguard Target Retirement 2055 Inv
Vanguard Target Retirement 2060 Inv
Vanguard Target Retirement 2065 Inv
Vanguard LifeStrategy Income Inv
Vanguard LifeStrategy Cnsrv Gr Inv
Vanguard LifeStrategy Moderate Gr Inv
Vanguard LifeStrategy Growth Inv

Available funds in HSA
(I apologize for the all-caps here, I just copy-pasted this from the source)

VANGUARD SMALL CAP VALUE INDEX ADMIRAL (VSIAX) 0.07%
VANGUARD TOTAL BOND MARKET IDX INSTLPLS (VBMPX) 0.03%
VANGUARD TARGET RETIREMENT 2060 INV (VTTSX) 0.15%
VANGUARD GROWTH INDEX INSTITUTIONAL (VIGIX) 0.04%
VANGUARD TARGET RETIREMENT 2020 INV (VTWNX) 0.13%
VANGUARD WELLESLEY INCOME ADMIRAL (VWIAX) 0.15%
VANGUARD TARGET RETIREMENT 2040 INV (VFORX) 0.15%
VANGUARD TARGET RETIREMENT INCOME INV (VTINX) 0.13%
VANGUARD EXTENDED MARKET INDEX INSTLPLUS (VEMPX) 0.05%
VANGUARD TOTAL INTL STOCK IDX INSTLPLS (VTPSX) 0.07%
VANGUARD SHRT-TERM INFL-PROT SEC IDX ADM (VTAPX) 0.06%
VANGUARD INSTITUTIONAL INDEX INSTL PL (VIIIX) 0.02%
VANGUARD EMERGING MKTS STOCK IDX INSTL (VEMIX) 0.11%
VANGUARD SHORT-TERM BOND INDEX ADM (VBIRX) 0.07%
VANGUARD TARGET RETIREMENT 2030 INV (VTHRX) 0.14%
VANGUARD MATERIALS INDEX ADMIRAL (VMIAX) 0.10%
VANGUARD MID-CAP VALUE INDEX ADMIRAL (VMVAX) 0.07%
VANGUARD SMALL CAP INDEX ADM (VSMAX) 0.05%
VANGUARD TOTAL INTL BD IDX ADMIRAL (VTABX) 0.11%
VANGUARD INFLATION-PROTECTED SECS I (VIPIX) 0.07%
VANGUARD TARGET RETIREMENT 2050 INV (VFIFX) 0.15%
VANGUARD REAL ESTATE INDEX INSTITUTIONAL (VGSNX) 0.10%
VANGUARD VALUE INDEX ADM (VVIAX) 0.05%

Miscellaneous
* I am single
* I rent
* I have a high annual medical expense ($5k - $6k total after insurance (out of pocket)) If you have other health insurance options (other than HDHP) I would carefully weigh the costs. HDHP +HSA may not provide you the most financial benefit.

Questions
I am relatively new to this process, and I am learning as I go! I really appreciate your time and insight here.

1. Overall, how does my portfolio look? Are there any glaring errors or mistakes? As above, I would focus more on index funds to lower expense ratio, but on the whole, not bad and you have excellent investment options.
2. Do my "desired allocations" make sense for my age (29)? What about international stocks? They seem reasonable to me.
3. Are some of my funds too expensive in terms of their expense ratios? Yes in my opinion.
4. Would you get rid of any of these funds? Would you replace them with anything in particular? Yes see above.
5. Is my portfolio too complex? Do you think it is?
6. Is my portfolio not diverse enough; is it too diverse? I would not say it is too diverse. Currently you have a very heavy growth equity tilt. This is less diverse than say, a combination of total market index funds.
7. Is my portfolio leaning too heavily in any direction? It leans heavily to growth equity. Is this your preference?
8. Are my funds located in the proper accounts in terms of tax efficiency? If you choose to use actively managed funds, if possible I would hold these in 401k or IRA to avoid increase taxable distribution that typically come from these. In other words, I would switch your taxable active fund holdings to low cost, low turnover index funds for increased tax efficiency.
9. Would a three-fund portfolio likely out-perform my current portfolio? Who knows? I don't. I can state that studies have shown that the majority of active mutual funds underperform their benchmarks (usually indices).
10. I have $5.5k pending investment in my Roth. I was considering putting that into a small-cap value index fund, and/or a REIT. I am waiting to hear the feedback I get here before I make a decision about that. Nothing wrong with either choice necessarily, but these choices seem inconsistently with the growth tilt of your portfolio. Why have you suggested these in particular? Are you hoping to change the tilt of your portfolio?
11. I am contributing 14% into traditional 401k, and 4% into Roth 401k (18% total). Does this make sense to do? The thought process behind this decision was to try to diversify tax strategy. I would likely lean more toward 100% traditional in your case, but I don't really have all the info. Tax diversification is probably not a terrible strategy though unless your traditional 401k account is already very large.

JBTX
Posts: 3576
Joined: Wed Jul 26, 2017 12:46 pm

Re: Portfolio Help/Opinions

Post by JBTX » Thu Aug 09, 2018 6:46 pm

Taxable funds: not a big fan of your choices. High fees and spitting off taxable income. I'd get out of them if you can do so without much capital gains. Go with index funds for stocks and more tax efficient bond choices to the extent you want fixed income in taxable.

401k/Roth/Hsa. I'd go with Vanguard target date fund. If that is too much international for you then also add in vanguard total stock market index. Something 1/3 total market index and 2/3 target date will probably get you close to your allocation. Your goal is for your total portfolio to be at your allocation. Each account doesn't have to be.

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