Portfolio Review- Please give me your feedback

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Topic Author
SCbound
Posts: 2
Joined: Mon Sep 09, 2019 11:13 am

Portfolio Review- Please give me your feedback

Post by SCbound » Mon Sep 09, 2019 11:30 am

Hello, Can you kindly review our portfolio . I believe I need to make some adjustment and would like your insight and feedback. I am considering switching to the three fund portfolio in my Roth IRA, from the Fidelity 2035 fund. Thank you in advance!

Emergency fund: Four months of Expenses
Debt: Mortgage $375, 3.25% Property Value $525
Tax filing status: Married Filing Jointly
Tax Rate 24% Federal 6.37% State
State of residence : NJ
Age 40
Desired Asset Allocation 60% Stock , 30% bonds 10% REIT I am not 100% sure this is a good mixed for my age, 40. I can retire from my first employer at 43 with a pension.
Current Total portfolio: Low six-figures
Current Retirement Assets :

Ally High Yield Savings ( Emergency Fund, 25K)

HIM
Fidelity Roth IRA ( Monthly Backdoor Roth Conversations) I did not contribute for many years, I recently learn of the back door conversation.
(FFTHX) Fidelity 2035 Fund ($8,200) Exp Ratio 0.73%

YTD (Monthly) 1 Yr 3 Yrs 5 Yrs 10 Yrs Life
12.72% -0.70% 8.77% 6.29% 9.03% 6.68%

Domestic Equities 56.24%
International Equities 31.12%
Bonds 10.88%
Short-Term Debt & Net Other Assets 1.76%

Fidelity Cash Reserve ( $5,000) I am considering using this for the three fund portfolio and selling the Fidelity 2035 and reinvesting in the 3 fund portfolio. I am also considering putting all of the funds in a Fidelity 2035 index fund with less of an expense ratio. If someone could kindly recommend three Fidelity index funds I can review please.

New Jersey State Deferred Companion 457
Prudential Goalmaker ($95,000)
Currently contributing 12% of Salary (No match). I am working on contributing up to the full $19,000 per year. I anticipate being able to do that January 2020.
Name Asset Class Holdings Exp Ratio
PIMCO All Asset Fund Institutional Class Allocation - Balanced Value 9.06% 1.01
Large Cap Value / LSV Asset Management Large Cap - Value 18.82% 0.60
Polen Capital Large Cap Growth Large Cap - Growth 19.76% 0.64
Small Cap Value / TBCAM Fund Small Cap - Value 12.02% 0.94
Small Cap Growth II Fund (managed by Wellington) Small Cap - Growth 12.04% 0.89
International Blend / Lazard Fund International - Blend 21.50% 0.86
Invesco Oppenheimer Developing Markets Fund Class Y International - Emerging Market 6.80% 1.05


OTHER AVAILABLE FUNDS

• DCP Stable Value Fund
• Core Bond Enhanced Index/PGIM Fund Exp Ratio 0.25
• Core Plus Bond/PGIM Fund Exp Ratio 0.38
• Vanguard Wellesley Income Fund Exp Ratio 0.24
• Prudential IncomeFlex Target® Balanced Fund Exp Ratio 1.37
• DCP Equity Fund Exp Ratio 0.11
• Calvert Equity I* Exp Ratio 0.76
• Large Cap Growth/Columbia Management Fund Exp Ratio 0.55
• QMA Large Cap Quantitative Core Equity Fund Exp Ratio Unknown
• Vanguard Institutional Index Fund Exp Ratio 0.12
• QMA Mid Cap Quantitative Core Equity Fund Exp Ratio 0.65
• DCP Small Cap Equity Fund Exp Ratio 0.11
• Small Cap Growth/RBC Fund Exp Ratio 0.90
• Small Cap/TBCAM Fund Exp Ratio 0.94
• Dodge & Cox International Stock Fund 0.63


New Jersey State Pension ( Contributed 145K)

Final Salary 110K at 65% = $71,500 a year pension. I can begin collecting in 3 years. Or I can continue to work with my current State employer for 8 more years and collect 70% and receive approximately $77,000 a year. The salary could raise another 4% with contracts or a promotion before the 8 years left.

HER Age(36)
Prudential 401K GOALMAKER Aggressive Portfolio 26+ Years to retirement
Company Matching Contribution 4%. Her contribution 13% : Balance ($105K)

Investment Asset Class Current % of Allocations

QMA U.S. Broad Market Index Fund Large Cap – Blend 31% exp ratio 0.02
Vanguard Small-Cap Index Fund Institutional Plus Shares Small Cap – Blend 21% exp Ratio 0.03
QMA International Developed Market Index International - Developed / Emerging 24% exp ratio 0.06
Vanguard Emerging Markets Stock Index Fund Institutional Shares International - Emerging Market 5% exp ratio 0.10
Prudential Retirement Real Estate Fund Alternative - Diversified Real Estate 10% expt ratio 0.65
Wellington Trust Company CIF II Diversified Inflation Hedges Portfolio Alternative - Diversified Real Assets 9% exp ratio 0.72


Other Available Funds
Vanguard Short-Term Investment-Grade Fund Admiral Shares 0.10%
Vanguard Intermediate-Term Treasury Index Fund Institutional Shares 0.05%
Prudential Core Conservative Bond Fund 0.08%
Prudential High Yield CIT 0.32%
PGIM Global Total Return Fund - Class R6 .058%
PESP IncomeFlex Target Balanced Fund 1.0%
DFA Global Allocation 60/40 Portfolio Institutional Class 0.26%
Delaware Small Cap Core Equity Fund 0.49%
Wellington Trust Company CIF II International Opportunities Portfolio 0.58%



Other Assets
Prudential Cash Balance Pension Plan (25K) Balance has increased approximately $5,200 a year of employment .
HSA (16K)
Company Stock plan (3K)

Roth IRA ( $7,000) Currently not contributing
(FFFHX) Fidelity 2050 Exp Ratio 0.75%
Domestic Equities 60.31%
International Equities 33.05%
Bonds 5.72%
Short-Term Debt & Net Other Assets 0.92%

529 Plans I would like to increase my contributions in the near future.
Child 1 (age 11) (19K) $150 a month contribution
Child 2 (age 7) (8K) 100 a month contribution

Kindly provide like feedback on the funds in my 457, her 401K funds and the Roth IRA’s.

I am considering opening a Taxable account next year with when I have more funds available. I do not want to duplicate the investments I already have. Any advise where to invest those funds. It should be approximately $500 a month.

I am expecting an inheritance in October of approximately 30K, I would like feedback on where to allocate those funds.

Thanks in advance.
Last edited by SCbound on Mon Sep 09, 2019 5:20 pm, edited 4 times in total.

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David Jay
Posts: 6938
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Portfolio Review- Please give me your feedback

Post by David Jay » Mon Sep 09, 2019 1:20 pm

Welcome to the forum!

You will find that here at BH we are very focused on fund costs. It is very difficult to make recommendations for your 457 or your spouse’s 401K without knowing the fund Expense Ratios (ERs).

You can edit your original post to include the ERs for the funds.
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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Duckie
Posts: 6763
Joined: Thu Mar 08, 2007 2:55 pm

Re: Portfolio Review- Please give me your feedback

Post by Duckie » Mon Sep 09, 2019 4:59 pm

SCbound wrote:HIM
Fidelity Roth IRA ( Monthly Backdoor Roth Conversations) I did not contribute for many years, I recently learn of the back door conversation.
(FFTHX) Fidelity 2035 Fund ($8,200) Exp Ratio 0.73%

YTD (Monthly) 1 Yr 3 Yrs 5 Yrs 10 Yrs Life
12.72% -0.70% 8.77% 6.29% 9.03% 6.68%

Domestic Equities 56.24%
International Equities 31.12%
Bonds 10.88%
Short-Term Debt & Net Other Assets 1.76%
If you want to keep a target-date fund here switch to the index fund: (FIHFX) Fidelity Freedom Index 2035 Fund Investor Class (0.12%). It has a much lower expense ratio and fewer funds in it.
If someone could kindly recommend three Fidelity index funds I can review please.
The Fidelity funds in the three-fund portfolio are:
  • (FSKAX) Fidelity Total Market Index Fund (0.015%)
  • (FTIHX) Fidelity Total International Index Fund (0.06%)
  • (FXNAX) Fidelity U.S. Bond Index Fund (0.025%)
However, in general it's better to put assets with higher expected growth (stocks) in Roth accounts and assets with lower expected growth (bonds) in pre-tax accounts. That's because you've already paid the taxes in the Roth accounts so future growth is tax-free. So try to keep all bonds in pre-tax accounts and only stocks in Roth and taxable accounts.
AVAILABLE FUNDS
We need the plan expense ratios, but especially look at funds containing the word "index". For example:
• Vanguard Institutional Index Fund
• Core Bond Enhanced Index/PGIM Fund
HER Age(36)
Prudential 401K GOALMAKER Aggressive Portfolio 26+ Years to retirement
We need her plan expense ratios.
Roth IRA ( $7,000) Currently not contributing
(FFFHX) Fidelity 2050 Exp Ratio 0.75%
Domestic Equities 60.31%
International Equities 33.05%
Bonds 5.72%
Short-Term Debt & Net Other Assets 0.92%
If she's going to keep the target-date fund switch to the index fund: (FIPFX) Fidelity Freedom Index 2050 Fund Investor Class (0.12%).

deikel
Posts: 778
Joined: Sat Jan 25, 2014 7:13 pm

Re: Portfolio Review- Please give me your feedback

Post by deikel » Wed Sep 11, 2019 12:58 pm

SCbound wrote:
Mon Sep 09, 2019 11:30 am

• DCP Equity Fund Exp Ratio 0.11

• Vanguard Institutional Index Fund Exp Ratio 0.12

• DCP Small Cap Equity Fund Exp Ratio 0.11




New Jersey State Pension ( Contributed 145K)

Final Salary 110K at 65% = $71,500 a year pension. I can begin collecting in 3 years. Or I can continue to work with my current State employer for 8 more years and collect 70% and receive approximately $77,000 a year. The salary could raise another 4% with contracts or a promotion before the 8 years left.

HER Age(36)
Prudential 401K GOALMAKER Aggressive Portfolio 26+ Years to retirement
Company Matching Contribution 4%. Her contribution 13% : Balance ($105K)

Investment Asset Class Current % of Allocations

QMA U.S. Broad Market Index Fund Large Cap – Blend 31% exp ratio 0.02
Vanguard Small-Cap Index Fund Institutional Plus Shares Small Cap – Blend 21% exp Ratio 0.03
QMA International Developed Market Index International - Developed / Emerging 24% exp ratio 0.06
Vanguard Emerging Markets Stock Index Fund Institutional Shares International - Emerging Market 5% exp ratio 0.10
Prudential Retirement Real Estate Fund Alternative - Diversified Real Estate 10% expt ratio 0.65
Wellington Trust Company CIF II Diversified Inflation Hedges Portfolio Alternative - Diversified Real Assets 9% exp ratio 0.72


Other Available Funds
Vanguard Short-Term Investment-Grade Fund Admiral Shares 0.10%
Vanguard Intermediate-Term Treasury Index Fund Institutional Shares 0.05%
Prudential Core Conservative Bond Fund 0.08%




Other Assets
Prudential Cash Balance Pension Plan (25K) Balance has increased approximately $5,200 a year of employment .
HSA (16K)
Company Stock plan (3K)

Roth IRA ( $7,000) Currently not contributing
(FFFHX) Fidelity 2050 Exp Ratio 0.75%
Domestic Equities 60.31%
International Equities 33.05%
Bonds 5.72%
Short-Term Debt & Net Other Assets 0.92%

529 Plans I would like to increase my contributions in the near future.
Child 1 (age 11) (19K) $150 a month contribution
Child 2 (age 7) (8K) 100 a month contribution

Kindly provide like feedback on the funds in my 457, her 401K funds and the Roth IRA’s.

I am considering opening a Taxable account next year with when I have more funds available. I do not want to duplicate the investments I already have. Any advise where to invest those funds. It should be approximately $500 a month.

I am expecting an inheritance in October of approximately 30K, I would like feedback on where to allocate those funds.

Thanks in advance.
I would suggest to think about one round of simplifying your investments and follow roughly the three fund portfolio (or three fund plus real estate if you so choose). Your options in your retirement accounts seem quite good for large cap index and small cap index. Your wife shows good options for bond funds. Consider one allocation ACROSS all retirement assets, rather then trying to fit every account into the allocation - all assets are owned jointly anyway and treating them the same will make it a ton easier. Always look at the lowest fee funds first, this automatically gets you to non-managed index funds and you have the choices available to you.

I would make an exception for the 529s since your withdrawal from them will be much earlier, so they should have more conservative choices to make sure the money is there when needed (an economic downturn would deplete your account and at the same time increase competition at colleges for seats and money) - meaning more bond funds here

I did not do the math, but continuing to work for your employer does not seem like a smart choice if the numbers are true, for 8 years more work, you only get 5.5k more retirement money for starting to also draw at a later date...this seems an odd logic to me, I would double check or maybe I am missing something.....and obviously its a question of can you get an equivalent job somewhere else....

I would take the inheritance and put it into the 529s in two consecutive years to the max state tax savings possible or add to taxable if no other tax advantage space available anymore.

Taxable account should be international index funds for the (minor) tax benefit, but don't hold your breath, we are talking maybe ten dollars a year for small accounts and medium incomes.
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.

User avatar
David Jay
Posts: 6938
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Portfolio Review- Please give me your feedback

Post by David Jay » Wed Sep 11, 2019 1:24 pm

I hope you learned some things from the exercise of researching your ERs. 5 of your 7 funds have ERs over 0.8. I would not use any of these funds. No QMA, Columbia or Calvert.

It is good to see that you have some reasonable funds in your 457:
SCbound wrote:
Mon Sep 09, 2019 11:30 am
• Vanguard Wellesley Income Fund Exp Ratio 0.24
• DCP Equity Fund Exp Ratio 0.11
• Vanguard Institutional Index Fund Exp Ratio 0.12
• DCP Small Cap Equity Fund Exp Ratio 0.11
Dodge&Cox is a bit pricey by BH standards, but they have an excellent track record and appear to be the only reasonable way for you to access International in your 457.

For your Roth, Fidelity has a family of low-cost, index based target date funds but they tend to hide them a bit. Fidelity Freedom Index 2035 would be the equivalent fund, with an ER of 0.12 instead of 0.73. Or you can go 3-fund, it doesn’t make much difference within a Roth.

As you can see, the first 4 funds in your wife’s 401K are nice, low expense funds. With those and the Vanguard Intermediate Term Treasury she can build a great portfolio.
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
SCbound
Posts: 2
Joined: Mon Sep 09, 2019 11:13 am

Re: Portfolio Review- Please give me your feedback

Post by SCbound » Sat Sep 14, 2019 6:58 pm

I am very grateful for all the feedback. It was a valuable lesson learning about expense ratio's and a great exercise going through my 457 plan.
Can you give me feedback on my allocations and plan selection for my 457. I am uncertain if I should include the international fund or use that for a one fund taxable account. I do have some international in my Roth Ira through the Fidelity target date plan. I plan on switching to the Fidelity target date index fund as suggested, for our Roth IRA's. I like the idea of using the inheritance for my children's 529. I really would like to allocate some funds to a REIT fund, but I am not sure where to put it and how to allocate. Any other suggestions would be greatly appreciated.

My selection for Employer 457, please give me your feedback on the selections and percentage amounts.

Vanguard Institutional Index Fund Exp Ratio 0.12 or DCP Equity Fund Exp ratio 0.11 Large Cap 50%
DCP Small Cap Equity Fund Exp Ratio 0.11 small Cap 20%
Vanguard Wellesley Income Fund Exp Ratio 0.24 or Core Bond Enhanced Index Fund (0.25%) 20%
Dodge&Cox International exp ratio 0.63 International 10% ( I do have some international in my Roth targeted date fund, Should I remove it from my 457b?)

Thank you

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