My first post - A review request

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Topic Author
dergon
Posts: 27
Joined: Wed May 15, 2013 10:25 am

My first post - A review request

Post by dergon »

Hello everyone!! My first post. I am sorry for the chaos that is my investment portfolio. I am looking forward to your advice.




Emergency funds: 6 months expenses
Debt: No debt (CC, mortgage, loans all paid)
Tax Filing Status: Married Filing Jointly
Tax Rate: 39.6% Federal, 5.925% State
State of Residence: Ohio
Age: 46
Desired Asset allocation: agressive
Desired International allocation: 20% of stocks


Please provide a hint as to the size of your current total portfolio: Low 7 figures

(( I am married but for now would like to review just these assets as they represent the part of the portfolio that I can take action upon. The wife has assets in the low 6 figures but does her investment independently.))

Current retirement assets:

Taxable Acct #1 at Schwab
1.2% cash (for investing – do not include emergency funds)
4.0% American Funds EuroPacific Growth Fund Class F-1 AEGFX (0.85%)
7.3% American Funds The Growth Fund of America F-1 GFAFX (0.68%)
7.7% American Funds Washington Mutual Investors Fund Class F-1 WSHFX (0.66%)
3.2 % Columbia Seligman Communications and Information Fund Class A SLMCX (1.38%)
6.3% PIMCO All Asset All Authority Fund Class A PAUAX (1.63%)
4.2% Vanguard Mid-Cap Index Fund Investor Shares VIMSX (0.24%)
4.1% Vanguard Small Capitalization Index Fund Investor Shares NAESX (0.24%)
0.03% Pfizer PFE




Taxable Acct #2 at Schwab
1.3% Vanguard Consumer Discretionary ETF VCR (0.14%)
2.2% Vanguard Energy ETF VDE (0.14%)
0.9% Vanguard FTSE Emerging Markets ETF VWO (0.18%)
4.2% Vanguard Small Cap ETF VB (0.10)

1.7% American Funds The Growth Fund of America F-1 GFAFX (0.68%)
1.7% American Funds Washington Mutual Investors Fund Class F-1 WSHFX (0.66%)
2.4% SCHWAB TOTAL STOCK MKT INDEX SWTSX (0.10%)
2.2% Vanguard 500 Index Fund Investor Class VFINX (0.17%)
1.1% Vanguard Total International Stock Index Fund Investor Shares VGTSX (0.22%)
0.9% Apple Inc AAPL






403b at Fidelity
3.2% Fidelity Contrafund FCNTX (0.74%)
1.9% Spartan® 500 Index Fund - Institutional Class FXSIX (0.04%)
2.4% SPARTAN GLOBAL EX USINDEX FID ADV CL (0.18%)
2.8% SPRTN TOTAL MKT INDX FID ADVANTAGE CLASS FSTVX (0.06%)


Company match? Yes

457b at Fidelity
2.3% Fidelity Contrafund FCNTX (0.74%)
0.4% SPTN INTL INDEX ADV FSIVX (0.12%)
1.5% Spartan® 500 Index Fund - Institutional Class FXSIX (0.04%)
2.9% Fidelity Spartan Extended Market Index Fund FSEVX (0.07%)

401a at Fidelity
4.3% VANGUARD DIVIDEND GROWTH INVESTOR CL VDIGX (0.29%)




Rollover IRA at Schwab
4.3% VANGUARD REIT VNQ (0.10%)
7.0% SCHWAB TOTAL STOCK MKT INDEX SWTSX (0.10%)
2.9% Thornburg Investment Income Builder Fund Class A TIB1Z (1.43%)
7.0% Vanguard Dividend Appreciation Index Fund Investor Shares VDAIX (0.29%)
0.5% Fidelity International Growth Fund FIGFX (1.20%)



Simple IRA at Schwab
0.5% Vanguard Dividend Growth Fund Investor Shares VDIGX (0.29%)



Contributions

New annual Contributions
$17,500 to 403b (+ $8,750 match)
$17,500 to 457b (+ $8,750 match
$5,500 his IRA
$120,000 taxable (for retirement, not short term goals)


My Questions/Issues:

After a long strech of higherer ed, for the first 10 years of my career I had a financial adivisor. A few years back I began doing it myself and have been allocating new money to lower cost funds. I still have many holdovers from the earlier time, however, particularly in my taxable accounts.

I am trying to improve my portfolio over time and be smart with it. I apologize in advance for any errors in formatting above…. There may well be some. Thanks for your review!!
Last edited by dergon on Mon Jun 10, 2013 7:21 am, edited 4 times in total.
Stan Dup
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Joined: Fri May 10, 2013 10:25 am

Re: My first post - A review request

Post by Stan Dup »

A few of the expense ratios are really high.

This seems overly complex. How do you rebalance?

A simpler portfolio would achieve similar diversification with fewer funds, lower expenses, and less work to monitor and rebalance. Do a search on Lazy Portfolios.

I see a S+P 500 fund in three different accounts. You can do that of course, but you can treat your portfolio as one pile and only have the 500 fund in one account. Here are instructions on how to diversify across your accounts: http://www.bogleheads.org/wiki/Asset_Al ... e_Accounts
"The tyranny of compounding expenses is the eighth deadly sin." - George Sisti
Topic Author
dergon
Posts: 27
Joined: Wed May 15, 2013 10:25 am

Re: My first post - A review request

Post by dergon »

Thanks for the prompt reply!

Yeah.... overly complex is right. And the real crux of it.

I have generally done hillbilly rebalancing by simply adding new monies, sometimes into new funds....... and that's gotten me where I am now. I've made my bed and am now sleeping (somewhat poorly) in it.

Many of the higher expense ratio funds are in my taxable accounst. I have been a bit paralyzed with the potential tax implications of selling entire holdings in order to get in to lower cost index funds there.
Default User BR
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Re: My first post - A review request

Post by Default User BR »

That's the question. What is the capital gains situation on those funds?


Brian
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runner9
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Location: Ohio

Re: My first post - A review request

Post by runner9 »

Not what you're asking for, but if you're still higher ed in Ohio look at http://www.ohio457.org as a lower cost alternative to 403b, or as a supplement to it. Can't get any lower on the ERs!
sambb
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Re: My first post - A review request

Post by sambb »

comsider moving all the lifestrategy growth. 80% stock. done. unless you want to adjust allocation over time.
Topic Author
dergon
Posts: 27
Joined: Wed May 15, 2013 10:25 am

Re: My first post - A review request

Post by dergon »

Default User BR wrote:That's the question. What is the capital gains situation on those funds?


Brian
I don't have the exact details, but I would figure it would be painful. No new money has gone into any of the higher cost funds for a couple of years now. They've seen a fair bit of gains and represent probably $500k+ of my portfolio. I'm sure it would hurt in the short term.
Stan Dup
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Re: My first post - A review request

Post by Stan Dup »

Paying taxes means you made money; that is good.

Although I have never had to do it, people like Warren Buffet advocate never let tax decisions decide what you need to do.

Or, you could let it stay where it is and the ER will eat it away until it is gone.
"The tyranny of compounding expenses is the eighth deadly sin." - George Sisti
Ella
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Re: My first post - A review request

Post by Ella »

Dergon,

Wecome to Bogleheads.

For the funds in your taxable accounts that you'd like to dump but that have high capital gains, you may wish to donate those funds to a charitable gift account at Vanguard or Fidelity. You get to take a deduction on the full amount transferred. Poof! - capital gains become charitable donations, saving you on taxes instead of costing you taxes.

This approach can work really well if substantial charitable donations is a part of your lifestyle, or you want it to be in the future. You "recommend" grants to any legitimite charity, which the fund administrators then execute. You don't "own" your money anymore, but you're in charge of how it gets invested and disbursed.

Unless you are extremely wealthy or have a very long time frame, you wont want to transfer ALL your high cost/high gain funds at once -- it will implode your taxable asset allocation and harm your net worth (money in the charitable gift fund isn't part of your net worth anymore). But over a few years, as the amount transferred into the gift fund grows along with the amount of earned income going into your taxable and tax-sheltered accounts, the whole investing portfolio gets cleaner, simpler, and lower cost.

Ella
dickenjb
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Location: Philadelphia PA

Re: My first post - A review request

Post by dickenjb »

The fact that you have F class funds implies you are paying a wrap or aum fee - is that correct? If so, these funds are even higher cost than they seem.
YDNAL
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Location: Biscayne Bay

Re: My first post - A review request

Post by YDNAL »

dergon wrote:Hello everyone!! My first post....

Please provide a hint as to the size of your current total portfolio: Low 7 figures

(( I am married but for now would like to review just these assets as they represent the part of the portfolio that I can take action upon. The wife has assets in the low 6 figures but does her investment independently.))
Welcome to the Forum, dergon!

She owns 50% of ALL Assets, why wouldn't you use a combined portfolio ? Will talk about that later.
dergon wrote:Current retirement assets:

Taxable Acct #1 at Schwab
Taxable Acct #2 at Schwab
Before you fix anything, you must know what it costs (taxes) to fix a Taxable account.
403b at Fidelity
457b at Fidelity
401a at Fidelity
Rollover IRA at Schwab
Simple IRA at Schwab

New annual Contributions
$17,500 to 403b (+ $8,750 match)
$17,500 to 457b (+ $8,750 match
$6,500 his IRA
$120,000 taxable (for retirement, not short term goals)
Some observations:
  • All tax-advantaged accounts, plus Taxable discussed previously, should be viewed as ONE - and this includes your wife's accounts. In a unified portfolio, you should use the combination of Funds that provide (1) the most diversification for (2) the lowest cost, (3) to meet your desired overall asset allocation.
  • You have US Large caps in all of them, you have International Large caps in all of them. Pick the best fund, regardless of account to meet your desired allocation, and use that.
    3.2% Fidelity Contrafund FCNTX (0.74%)
    1.9% Spartan® 500 Index Fund - Institutional Class FXSIX (0.04%)
    2.4% SPARTAN GLOBAL EX USINDEX FID ADV CL (0.18%)
    2.8% SPRTN TOTAL MKT INDX FID ADVANTAGE CLASS FSTVX (0.06%)
    2.3% Fidelity Contrafund FCNTX (0.74%)
    0.4% SPTN INTL INDEX ADV FSIVX (0.12%)
    1.5% Spartan® 500 Index Fund - Institutional Class FXSIX (0.04%)
    2.9% Fidelity Spartan Extended Market Index Fund FSEVX (0.07%)
    4.3% VANGUARD DIVIDEND GROWTH INVESTOR CL VDIGX (0.29%)
    4.3% VANGUARD REIT VNQ (0.10%)
    7.0% SCHWAB TOTAL STOCK MKT INDEX SWTSX (0.10%)
    2.9% Thornburg Investment Income Builder Fund Class A TIB1Z (1.43%)
    7.0% Vanguard Dividend Appreciation Index Fund Investor Shares VDAIX (0.29%)
    0.5% Fidelity International Growth Fund FIGFX (1.20%)
    0.5% Vanguard Dividend Growth Fund Investor Shares VDIGX (0.29%)
Have you seen the reading list ?
Link: http://www.bogleheads.org/readbooks.htm/url
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
pkcrafter
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Re: My first post - A review request

Post by pkcrafter »

New annual Contributions
$17,500 to 403b (+ $8,750 match)
$17,500 to 457b (+ $8,750 match
$6,500 his IRA


Did you mean to write $5,500?

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
Topic Author
dergon
Posts: 27
Joined: Wed May 15, 2013 10:25 am

Re: My first post - A review request

Post by dergon »

Thank you all for the thoughtful replies. Extraordinarily helpful in clarifyling my thinking! :)

First the easy replies: Yes - I meant $5,500 to IRA (edited OP)



I've contacted my accountant to sit down and talk about the tax issues in the taxable account. Will follow-up there.

But what I know I need to do is jettison those high expense funds from my days with the advisor. I also need to do that in a way that gets me to an appropriately balanced portfolio on the back end. Also, I need to simply the portfolio overall so that future rebalancing and adjustments aren't problematic.

I will go on and do some reading and hope I can to a decent looking end product incurring as little tax as I can.

It's daunting to me.... so please bear with me... and thanks again for your help.
Topic Author
dergon
Posts: 27
Joined: Wed May 15, 2013 10:25 am

Re: My first post - A review request

Post by dergon »

So I've been poking around and reading some of other threads and wikis and I came across this, which sounds a bit like where I am perhaps.

Rebalancing in taxable accounts
I realized that where I was was just too complicated and unsustainable. My funds had high costs, there were too many of them, and I needed to simplify. Then, I discovered Bogleheads.

So, I liquidated everything and transferred it to Vanguard, into something like the three-fund portfolio. Suck it up, pay the taxes, get into something that is much more tax-efficient and much simpler than I had before.

Think about it: A "Reset" button on all my record keeping to establish the cost basis for investments that go back 20 years or more. I was able to shred and recycle mountains of paper records.

Sure, I am about to pay a lot of taxes, but in the long run I owe them anyway. Since I pulled the trigger, I have a lot less to worry about what future tax rates may be. That translates into much more freedom about investment and spending choices.

Keith
Maybe Keith and I are in the same boat. Hard for me to "pull the trigger" though.... jsut got to come to terms I guess.
Topic Author
dergon
Posts: 27
Joined: Wed May 15, 2013 10:25 am

Re: My first post - A review request

Post by dergon »

Hi there -- a bit of thread necromancy on my first portfolio review thread.

Since my initial post above, I've been in the slow process bit by bit of selling the high cost funds and moving to low cost index funds, while moving my asset allocation to something more age appropriate. Now I am down to only three legacy funds from the days of my financial adviser. A slow but steady change.



Today I have just a bit of a follow-up question as I prepare to sell some more this year . I'm prepared (both financially and psychologically) to handle the big chunk of capital gains that are going to come.



Regarding each of the following:

American Funds The Growth Fund of America F-1 GFAFX
American Funds Washington Mutual Investors Fund Class F-1 WSHFX
American Funds EuroPacific Growth Fund Class F-1 AEGFX


Which Index fund would be best suited as a substitute? (I'm schwab for cheap but have access to Vanguard within schwab too)



Your expertise again appreciated! You've all already helped me a lot!
livesoft
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Re: My first post - A review request

Post by livesoft »

Here is what I would suggest:

Go to Morningstar.com and use the Instant X-ray tool. Plug in the 3 funds either separately or altogether (use your actual dollar amounts). Look at X-ray and see how much US, foreign, and bonds they are giving you. Don't worry too much about what the actual funds contain once you have how much US, foreign, and bonds their sums contain.

Then do this. Buy
VTSAX for the US percentage
VTIAX for the foreign percentage
VBTLX for the bond percentage.

It really is that easy.

If you are at Schwab, you can Schwaberize the portfolio and funds: http://www.bogleheads.org/wiki/Schwab
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Topic Author
dergon
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Joined: Wed May 15, 2013 10:25 am

Re: My first post - A review request

Post by dergon »

livesoft wrote:Here is what I would suggest:

Go to Morningstar.com and use the Instant X-ray tool. Plug in the 3 funds either separately or altogether (use your actual dollar amounts). Look at X-ray and see how much US, foreign, and bonds they are giving you. Don't worry too much about what the actual funds contain once you have how much US, foreign, and bonds their sums contain.

Then do this. Buy
VTSAX for the US percentage
VTIAX for the foreign percentage
VBTLX for the bond percentage.

It really is that easy.

If you are at Schwab, you can Schwaberize the portfolio and funds: http://www.bogleheads.org/wiki/Schwab
Thanks -- that is very helpful. :)
ZiziPB
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Re: My first post - A review request

Post by ZiziPB »

livesoft wrote:

If you are at Schwab, you can Schwaberize the portfolio and funds: http://www.bogleheads.org/wiki/Schwab
Be careful about Schwab so called "index" funds, especially the bond funds. See discussion here: http://www.bogleheads.org/forum/viewtop ... 1&t=144856

I ended up using the Schwab Total Stock Market Index Fund only and used my Fidelity accounts for the international and bond portion of the portfolio.
Topic Author
dergon
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Joined: Wed May 15, 2013 10:25 am

Re: My first post - A review request

Post by dergon »

Be careful about Schwab so called "index" funds, especially the bond funds. See discussion here: viewtopic.php?f=1&t=144856

I ended up using the Schwab Total Stock Market Index Fund only and used my Fidelity accounts for the international and bond portion of the portfolio.
Thanks for the heads up.



Actually, my only bond funds are Vanguard. VOHIX and VWITX
Topic Author
dergon
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Joined: Wed May 15, 2013 10:25 am

Re: My first post - A review request

Post by dergon »

Well, it was much dragging of feet and gnashing of teeth, but I have finally jettisoned all of the high cost funds that were the legacy of my days with a financial advisor.

The capital gains will sting a bit this year but I am prepared. And if my estimates are correct I should save that money back in lower fees with the replacement index funds in about 4 years.
Topic Author
dergon
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Joined: Wed May 15, 2013 10:25 am

Re: My first post - A review request

Post by dergon »

4 years later - Jut a follow up - it's not perfect... but better

I've made a number of changes since my first post, doing my best to undertake some simplification compared to my earlier very complex holdings. It's still pretty complex, but I was at least able to jettison the high expense actively managed fund in favor in low cost indices.

Holdings are up to mid 7 figures.

Now my big challenge (as posted in the other thread) is getting my asset allocation between equities and fixed income in line. Here I am now:




Taxable Acct #1 at Schwab

1.5% VANGUARD INTER TERM TAX EXEMPT FD INVESTOR SHS VWITX (0.19%)
5.4% Vanguard Small Capitalization Index Fund Investor Shares NAESX (0.18%)
5.8% VANGUARD MID CAP INDEX FUND INV CL VIMSX (0.18%)
16.2% SCHWAB TOTAL STOCK MKT INDEX SWTSX (0.03%)
1.4% SCHWAB INTERNATNAL SMALL CAP EQY ETF SCHC (0.12%)






Taxable Acct #2 at Schwab
1.1% Vanguard Consumer Discretionary ETF VCR (0.14%)
3.3% SCHWAB INTERNATIONAL EQUITY ETF SCHF
5.5% Vanguard Small Cap ETF VB (0.10)
11.8% SCHWAB TOTAL STOCK MKT INDEX SWTSX (0.1%)
3.0 % Vanguard 500 Index Fund Investor Class VFINX (0.17%)
1.4 % Apple Inc AAPL






403b at Fidelity
5.0% FIDELITY TOTAL MKT INDEX PREMIUM CL FSTVX (0.04%)
2.7% FIDELITY U.S. BOND INDEX PREMIUM CLASS FSITX (0.05%)
3.2% VANG TOT STK MKT IS VITSX (0.04%)

Company match? Yes

457b at Fidelity
2.9% VANG TOT STK MKT IS VITSX (0.04%)
5.7% VANG INTL GROWTH ADM VWILX (0.33%)


401k at Fidelity
3.8% VANGUARD DIVIDEND GROWTH INVESTOR CL VDIGX (0.29%)




Rollover IRA at Schwab
2.6% VANGUARD REIT VNQ (0.10%)
2.5% VANGUARD GLBAL EX US REAL ESTATE ETF VNQI (0.15%)
7.2% SCHWAB TOTAL STOCK MKT INDEX SWTSX (0.10%)
2.8% SCHWAB INTERNATIONAL EQUITY ETF SCHF (0.06%)
2.6% SCHWAB EMERGING MARKETS EQUITY ETF SCHE (0.13%)



Simple IRA at Schwab
1.3% Vanguard Dividend Growth Fund Investor Shares VDIGX (0.33%)




Thanks.


(Edit: Forgot to mention that I now have $32k in an HSA.

I am still debt free but am close to probably having to borrow $500k in order to purchase our family vacation property from my parents. ... and I might spend $100-200k on a new boat :) )
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