Quick taxable portfolio review

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Topic Author
WylieStan2
Posts: 2
Joined: Sun Nov 10, 2019 4:36 pm

Quick taxable portfolio review

Post by WylieStan2 » Sun Nov 10, 2019 5:15 pm

Hello everybody, I've been a lurker for the past couple of years now. For good reason, as I was a poor college student who had no money to invest. I've gotten to the point where I've paid off my student loans and am investing in non-taxable accounts. I've read the bogleheads guide to investing and am following that almost 99% of the way. However, that 1% is my taxable account, where I'd like to try my hand in portfolio construction/asset allocation.

Here is my taxable account info, I have about $1.5k invested in it, I am hoping to add a couple hundred(depending on my budget) each month but would like a review of my asset allocation before I commit more money.

Taxable:

U.S Value stocks (38%):
20.14% Vanguard Value ETF (VTV) (0.04%)
10.26% Vanguard Small-Cap Value ETF (VBR) (0.07%)
7.6% Vanguard Mid-Cap Value ETF VOE (0.07%)

U.S Growth stocks (24%) :
12.72% Vanguard Growth ETF (VUG) (0.04%)
7.68% Vanguard Mid-Cap Growth ETF (VOT) (0.07%)
3.6% Vanguard Small-Cap Growth ETF (VBK) (0.07%)

Bonds (10%):
7% PIMCO Total Return Active Exchange-Traded Fund (BOND) (0.76%)
3% Vanguard Total International Bond ETF (BNDX) (0.09%)

International (28%):
7.56% Vanguard FTSE All-World ex-US Small-Cap ETF (VSS) (0.12%)
6.16% Vanguard FTSE All-World ex-US ETF (VEU) (0.09%)
5.32% Vanguard International High Dividend Yield ETF (VYMI) (0.32%)
5.04% WisdomTree International SmallCap Dividend Fund (DLS) (0.58%)
3.92 Vanguard International Dividend Appreciation ETF (VIGI) (0.25%)

This is my iteration of a portfolio with core holdings tilted(slightly) to value and small cap stocks. I have an active bond fund in there as well as I think there's some merit to active investing in the fixed income space. Does this portfolio seem okay to put money into?

Thanks everybody
-WS2

stan1
Posts: 7602
Joined: Mon Oct 08, 2007 4:35 pm

Re: Quick taxable portfolio review

Post by stan1 » Sun Nov 10, 2019 6:11 pm

In a taxable account you want something that is very tax efficient. That's Total Stock Market for the most part. What you are proposing could be a very difficult asset allocation to maintain even with new contributions.

Are you contributing to a Roth IRA? You'd want to do that before investing in taxable.

Does your employer have a retirement plan?

User avatar
Duckie
Posts: 6867
Joined: Thu Mar 08, 2007 2:55 pm
Location: California Bay Area

Re: Quick taxable portfolio review

Post by Duckie » Sun Nov 10, 2019 7:02 pm

WylieStan2, welcome to the forum.
WylieStan2 wrote:Here is my taxable account info, I have about $1.5k invested in it, I am hoping to add a couple hundred (depending on my budget) each month but would like a review of my asset allocation before I commit more money.
You have 13 ETFs in an account worth $1500. This is nuts. And bonds do not belong in a taxable account.
I have an active bond fund in there as well as I think there's some merit to active investing in the fixed income space.
There is no merit to paying 0.76% for bonds when you could pay 0.04%.
Does this portfolio seem okay to put money into?
No. The only ETFs you should put in a taxable account are VTI and VXUS. And at your dollar amount just one is best until you have a lot more money.

What non-taxable accounts do you have and what do they hold?

retired@50
Posts: 485
Joined: Tue Oct 01, 2019 2:36 pm

Re: Quick taxable portfolio review

Post by retired@50 » Sun Nov 10, 2019 7:03 pm

stan1 wrote:
Sun Nov 10, 2019 6:11 pm
In a taxable account you want something that is very tax efficient. That's Total Stock Market for the most part. What you are proposing could be a very difficult asset allocation to maintain even with new contributions.
+1
Twenty years from now, you may be kicking yourself for getting involved with 13 funds, instead of two. VTSAX, VTIAX.

Reading about value tilting can be inspiring, but you really need to be prepared for the complexity it will add. If it were possible to do this in a tax-deferred or tax-free (Roth IRA) account you would probably have an easier time of maintaining your proper allocation(s).

Regards,

HomeStretch
Posts: 2645
Joined: Thu Dec 27, 2018 3:06 pm

Re: Quick taxable portfolio review

Post by HomeStretch » Sun Nov 10, 2019 7:09 pm

Aim for a simple tax-efficient Taxable account using VTSAX/VTI and VTIAX/VXUS from the start. Unwinding a more complicated, less tax-efficient portfolio like the one you propose is more difficult, especially as time goes on, due to tax consequences.

Topic Author
WylieStan2
Posts: 2
Joined: Sun Nov 10, 2019 4:36 pm

Re: Quick taxable portfolio review

Post by WylieStan2 » Sun Nov 10, 2019 8:33 pm

Thanks for the feedback everybody. My non-taxable accounts for the most part in line with the boglehead philosophy. VTSAX + VTIAX + VTBSX as a three fund portfolio with the exception of a few 401k that don't offer those funds! I admit, maintaining 13 funds is a bit of challenge but its kind of fun to dabble into factor investing and trying to implement some of Larry Swedroe research.

Great points on the implementation and complexity, I suppose I wasn't looking at it that far down the line. Time to head back to the drawing board.

User avatar
1789
Posts: 236
Joined: Fri Aug 16, 2019 3:31 pm
Location: OR

Re: Quick taxable portfolio review

Post by 1789 » Sun Nov 10, 2019 10:00 pm

WylieStan2 wrote:
Sun Nov 10, 2019 5:15 pm
Hello everybody, I've been a lurker for the past couple of years now. For good reason, as I was a poor college student who had no money to invest. I've gotten to the point where I've paid off my student loans and am investing in non-taxable accounts. I've read the bogleheads guide to investing and am following that almost 99% of the way. However, that 1% is my taxable account, where I'd like to try my hand in portfolio construction/asset allocation.

Here is my taxable account info, I have about $1.5k invested in it, I am hoping to add a couple hundred(depending on my budget) each month but would like a review of my asset allocation before I commit more money.

Taxable:

U.S Value stocks (38%):
20.14% Vanguard Value ETF (VTV) (0.04%)
10.26% Vanguard Small-Cap Value ETF (VBR) (0.07%)
7.6% Vanguard Mid-Cap Value ETF VOE (0.07%)

U.S Growth stocks (24%) :
12.72% Vanguard Growth ETF (VUG) (0.04%)
7.68% Vanguard Mid-Cap Growth ETF (VOT) (0.07%)
3.6% Vanguard Small-Cap Growth ETF (VBK) (0.07%)

Bonds (10%):
7% PIMCO Total Return Active Exchange-Traded Fund (BOND) (0.76%)
3% Vanguard Total International Bond ETF (BNDX) (0.09%)

International (28%):
7.56% Vanguard FTSE All-World ex-US Small-Cap ETF (VSS) (0.12%)
6.16% Vanguard FTSE All-World ex-US ETF (VEU) (0.09%)
5.32% Vanguard International High Dividend Yield ETF (VYMI) (0.32%)
5.04% WisdomTree International SmallCap Dividend Fund (DLS) (0.58%)
3.92 Vanguard International Dividend Appreciation ETF (VIGI) (0.25%)

This is my iteration of a portfolio with core holdings tilted(slightly) to value and small cap stocks. I have an active bond fund in there as well as I think there's some merit to active investing in the fixed income space. Does this portfolio seem okay to put money into?

Thanks everybody
-WS2
You don’t need to do this. Growth stocks are the worst for long term growth,in contrary to their names. I would just hold VTSAX here. If you want international, you may want to VTIAX, maybe upto 20% of your equity allocation.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

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