Announcing… My New ETF and Mutual Fund Portfolio!

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I’ve done it! I got tired of my market-timing foolishness and bought IVV anyways today. I also put in orders to exchange all my Vanguard funds to try and match the asset allocation I decided on previously. Here’s what my actual portfolio looks like now:

16% iShares S&P 500 Index ETF (IVV)
19% Vanguard [Large Cap] Value Index Fund (VIVAX)
20% Vanguard Small-Cap Value Index Fund (VISVX)
11% Vanguard REIT Index Fund (VGSIX)
11% Vanguard International Value Fund (VTRIX)
11% Vanguard Emerging Markets Stock Index Fund (VEIEX)
11% Vanguard Intermediate-Term Investment-Grade Bond Fund (VFICX)

If you want to know exactly how much I have of each, my total invested amount is $63,400. I’m very happy I finally did this. My previous Vanguard Target Retirement Funds (such as VTIVX) were not a horrible choice, but I think this portfolio will outperform it in the long run with minimally added risk. In other words, I believe that it is closer to the Efficient Frontier.

If you want to read about my whole retirement portfolio planning saga, here are the highlights, starting from way back in 2004:

December – Which Broker for my Roth IRA?
December – Read some books which really helped me understand the reasoning and power behind index investing: A Random Walk Down Wall Street and The Four Pillars of Investing.

January – Decided on Vanguard Target Retirement 2035 Fund (VTTHX)
August – Should I Rollover My 401k and Where To? Part 1, Part 2, Part 3, Part 4.


March – A Portfolio Snapshot; Decided a change was needed.
March – Portfolio Options: Slice & Dice, Keep It Simple, or Just One Fund.
April – Final Target Portfolio
April – Choosing a Discount Stock Broker: Part 1 and Part 2.
April – Ended up with opening an account with Scottrade.

Now that this is all set, and I have some free trades from Scottrade burning a hole in my pocket (thanks to you all), I have the itch to spend some time learning about trading individual stocks and options. However, if anything, active trading will remain a very small part of my overall portfolio.

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  1. Did you have to pay the upfront fee for the Vanguard Emerging Markets Stock Index Fund? If you did, you should have bought the VIPER version, VWO, which has no front end load.

  2. Yes I did pay the fee, but the fee is paid directly into the fund (as opposed to the company, and is thus not technically a front-end load) and is only there to discourage active trading. Thus, if I am an inactive trader, as I plan to be, the fees from others will pump up the returns of the fund and I should actually come out ahead using the fund instead of ETF in that regard.

    I also avoid the stock commissions of the ETF, although it has a lower expense ratio.

  3. Have you considered at what point of the efficient frontier you are at?

  4. Close to #80 in the efficient fronter graph mentioned here: link.

    From the IFA site, #80 has a historical annualized return of 12.80% and a historical standard deviation of 12.75%. If I get that kind of return I’ll be ecstatic.

  5. anonymouos says

    Why did you decide to buy the iShares ETF instead of a comparable index that tracks the S&P (e.g. Vanguard 500)?

    Also, because of your negative experience with trying to time the market, I’m curious as to why you chose not to dollar-cost average.

    You may have answered these questions in a previous post but I am relatively new to the site.

  6. hejustlaughs says

    Dollar cost averaging won’t help him much anyways if he is in it for the long term. I would also rather have it in and over with than dollar cost average over a a year or so. Moneychimp has an article about DCA here

  7. How did you make the decision to divert $15k (or whatever the ammount of your taxable holdings are) out of your house downpayment fund back into your retirement account? I’m currently debating doing something similar.

  8. Anonymous says

    35% on big cap seems too much to invest with some time to go. I would have added some mid-cap. Reduce REITs for now to 5% and added IGE (oil and metals) and/or some commodities index.

  9. Go here to learn about options trading:

    I’ve been on that path myself, taking 5-10% of my portfolio for fun money. The bad news I just found out is that Scottrade does not allow protective options. You can only do 1 legged option purchases OR you can sell covered calls. I’m in the process of going to Schwab’s Cybertrader to better capture some extra returns on my play money.

  10. How old are you? I would consider dumping the bonds. Although they might add a wee bit of stability, over the long run all they will do is drag down your returns. That’s my opinion. Take it for what it’s worth.

  11. According to the efficient frontier theory bonds actually add value over the long run. Check out Intelligent Asset Allocator for more info on modern portfolio theory.

  12. Jonathan,

    Have you considered upping international to 30-40% and maybe lowering your real estate?


  13. Don Marek says

    Hmmm…. Too bad you were not able to get into VGPMX or VGENX before they were closed.

    You might explore some other commodity funds for metals or energy. These have really taken off in the last 2 years and still have much upside potential at this time.

  14. what’s your return so far?

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