Critique, what can I do better?

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gaius julius caesar
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Joined: Thu Sep 13, 2018 10:43 pm

Critique, what can I do better?

Post by gaius julius caesar » Sat Sep 15, 2018 7:51 pm

Hey guys, i've been investing for a about a year and learned alot so far, a decent amount the hard way. I'll list some basic information, and I want to see if anyone can reccomend changing anything in order to make a more efficient, and hopefully profitable portfolio for the long run!
-Age 22, in college and working
-emergency fund
-no debt
-Max contribution to a Trad IRA annually
Asset allocation (IRA)
40% s&p 500 index through schwab swppx
30% total market swtsx
30% international swisx

funds are .03%-.06% expense ratio with no fees or loading on purchase/sale

-remainder to taxable account
half gets broken up into the above allocation, the other half into individual industry leader eg MA, V, AAPL etc..

I dont plan on selling any assets, except for a down payment on a house in 10 odd years, and retirement. I'd assume this is the most tax efficient way about running a portfolio.
Also, since i have a 10 year-40 year horizon I intend to stay agressive invested in 100% stock and just rebalance.

Thoughts:
-Im thinking of adding 10-20% allocation to small caps SWSSX to my allocation, hopefully to reap a few more percentage points over, well probably 40 years in the ira, hopefully.
-Rebancing the allocation quarterly or biannually
-theres a strong overlap between the sp500 index and the total, is it worth having seperate funds or just merge into total market 60%, international 30%, small caps 10% for example.
-considering tax loss harvesting on approx 1k losses in the future, whenever that might present itself

Im trying to optimize a portfolio for essentially a lifetime of investing
Im absolutley open to critique, and im sure there are things i havent even thought of or consitered. Oh and if i left any relevent information off please feel free to ask! Thanks!

Flyer24
Posts: 213
Joined: Sun Apr 08, 2018 4:21 pm

Re: Critique, what can I do better?

Post by Flyer24 » Sat Sep 15, 2018 8:26 pm

What not invest in a Roth instead of Traditional and let it grow tax free? Pay the taxes now while you are in the lower bracket.

PFInterest
Posts: 2083
Joined: Sun Jan 08, 2017 12:25 pm

Re: Critique, what can I do better?

Post by PFInterest » Sat Sep 15, 2018 8:34 pm

Yes rIRA only.

MotoTrojan
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Re: Critique, what can I do better?

Post by MotoTrojan » Sat Sep 15, 2018 8:40 pm

Agree on Roth.

Why are you in S&P500 and total market? Just do TSM.

I’d pass on the individual stocks.

Having a plan for harvesting losses is a great idea. My point about consolidating into TSM moving forward will help there too.

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badbreath
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Re: Critique, what can I do better?

Post by badbreath » Sat Sep 15, 2018 8:50 pm

-Im thinking of adding 10-20% allocation to small caps SWSSX to my allocation, hopefully to reap a few more percentage points over, well probably 40 years in the ira, hopefully. Not needed at this point in time, invest in the total stock which has the smalls in it
-Rebancing the allocation quarterly or biannually Once a year is good .
-theres a strong overlap between the sp500 index and the total, is it worth having seperate funds or just merge into total market 60%, international 30%, small caps 10% for example. I like the total better since it includes mid an small cap funds
-considering tax loss harvesting on approx 1k losses in the future, whenever that might present itself You can not tax loss harvest on a 401k. Maybe you are talking about a taxable.
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

ExitStageLeft
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Re: Critique, what can I do better?

Post by ExitStageLeft » Sun Sep 16, 2018 10:31 am

Welcome to the forum! Good on ya for getting your sights focused on your future while still in college. Once you've amassed a portfolio worth a few $100k you'll likely want to shift a portion into bonds. Until then, keeping it simple with low-cost indexed funds is the way to go.

There's nothing wrong with putting money in a traditional IRA right now. Assuming you are currently in a very low tax rate, you can save yourself much higher taxes in the future by instead putting it in a Roth IRA. Trying to figure out which is optimal is an evergreen challenge, but as a rule if your marginal tax bracket is 15% or less it is more advantageous to save in a Roth IRA.

As you start your career and earning power increases, a Roth IRA becomes an essential element in maximizing the savings each year into tax-advantaged accounts. If your career path is one that is highly compensated such as a doctor or lawyer, your traditional IRA could become an impediment to making Roth IRA contributions down the road. It's something to consider as you fine-tune your long-term strategy.

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BolderBoy
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Location: Colorado

Re: Critique, what can I do better?

Post by BolderBoy » Sun Sep 16, 2018 10:53 am

gaius julius caesar wrote:
Sat Sep 15, 2018 7:51 pm
Also, since i have a 10 year-40 year horizon I intend to stay agressive invested in 100% stock and just rebalance.
Since your AA will be 100/0, you won't have any rebalancing to do.

If I were you I'd stick with index funds and not do any individual stock investing.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

gaius julius caesar
Posts: 2
Joined: Thu Sep 13, 2018 10:43 pm

Re: Critique, what can I do better?

Post by gaius julius caesar » Sun Sep 16, 2018 2:38 pm

Great advice guys, i'll definitely look into the Roth! I am in the lower bracket so im sure that would be a big help.
I see alot of input on small value tilts on the foroum, any word if its worth it for a long term investor or just stick with a total market fund?

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