April 2007 Investment Portfolio Snapshot

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It’s time for another bi-monthly update on my investment portfolio.

4/07 Portfolio Breakdown
Retirement Portfolio
Fund $ %
FSTMX – Fidelity Total Stock Market Index Fund $12,599 17%
VIVAX – Vanguard [Large-Cap] Value Index $14,082 18%
VISVX – V. Small-Cap Value Index $14,146 18%
VGSIX – V. REIT Index $9,229 12%
VTRIX – V. International Value $8,294 11%
VEIEX – V. Emerging Markets Stock Index $8,040 11%
VFICX – V. Int-Term Investment-Grade Bond $7,726 10%
BRSIX – Bridgeway Ultra-Small Market $2,086 3%
Cash none
Total $76,202
Fund Transactions Since Last Update
Bought $1,500 of FSTMX on 4/5/07 (36.773 shares)

Not much going on, I have been contributing a $500 a month to my Solo 401k while trying to build up my cash hoard for a house downpayment. I still plan on tweaking my asset allocation, but I’ve just been distracted by other things and kind of want to wait a full year before making any changes.

All of our Vanguard funds are held at Vanguard.com, where there are no commissions for trading their mutual funds. Currently, everything there is in Roth IRAs, one each for my wife and I. Even though Roth IRAs rock, we haven’t contributed to one this year yet because we might be over the income limits for 2007.

The Fidelity fund is also held in-house at Fidelity, where I have my Self-Employed 401k. Funds are also no transaction fee (NTF) there. It’s a bit annoying that both their Spartan Total US and International funds have high $10,000 minimums, but the 0.10% expense ratio is nice. I could also trade ETFs, but at $20 a trade it’s a bit expensive.

You can see some older posts on how this portfolio came to be here, as well as my previous portfolio snapshots here.

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  1. You might consider contributing to a traditional IRA even though it won’t be deductable. I understand that there are rules in place that will allow a recharacterization (conversion) of traditional to Roth IRA in 2010.

  2. James W. says

    You can fund your Roth now, even if you may exceed the income level at year end. If you do, you can simply file a few papers to pull it out of the IRA.

  3. Thanks for the suggestions, I’m definitely looking into what the options are for correcting an overcontribution. I can also recharacterize it into a non-deductible Traditional IRA like Bob suggested. But since I may be hit with penalties on earnings, maybe it’s better just to stick in the 401k since my limits (up to $45k) are so high for a Solo 401k.

  4. how come you don’t have a roth ira in an S&P 500 index fund?

  5. Jonathan,

    “All of our Vanguard funds are held at Vanguard.com, where there are no commissions for trading their mutual funds.”

    EXCEPT: VEIEX – V. Emerging Markets Stock Index has a .5% fee on purchases and redemptions. I know this isn’t a commission, because it is paid directly into the fund, but I wanted to make sure you were aware.


  6. Interesting to see how you have everything allocated. I’m not really very fond of funds myself but I’m glad it’s working for you.


  7. Squeezer, a Total Stock Market fund is 80% S&P500, 20% Mid+Small Cap Blend. You get coverage of 3 different segments with 1 fund versus buying 1 S&P500 fund, another midcap fund and a smallcap fund and separating your money out might mean you don’t qualify for the super-low-expense high-minimum funds anymore.

  8. David Zhao says

    you might have covered this already, but: who do you have your ira account with? Vanguard, or a third part brokerage, such as TD waterhouse?


  9. Ben, thanks, I am aware of the fee. Since everyone else has to pay it into the fund as well, I don’t really see it as hurting my performance unless I trade a lot.

    Yes, S&P 500 is simply one specific index, and is included in my Total Market Fund. There are lots of ways to capture the bigger companies.

    All our IRAs are currently at Vanguard. Although there are low-balance fees, there are no trade commissions on mutual funds. I don’t really trust any 3rd party company that offers free Vanguard mutual fund trades anymore, as Scottrade and Firstrade has tried and then later started charging again.

  10. Jonathan,

    Again, love the site.

    Question: I wanted to buy some FSTMX, looks like a great fund. But, when I went to purchase some through my brokerage account, it said the fund was closed except to “redemptions”. Is this fund truly closed? Can you purchase because you are already an owner of the fund?

    Thanks for any insight…

  11. FSTMX definitely still open, although it has a minimum opening investment of $10,000. I’d call your broker for some clarification.

  12. I heard a great tax tip on Nightly Business Report the other night. If you are worried about contributing too much to a Roth IRA – don’t be. You can make your full contribution in January and if it turns out your income is too much, you can have the brokerage move the excess portion of the contribution and its earnings into a non-deductible IRA without any penalties – you can have this done up until your tax return is due…

  13. Johnathan, I noticed that you’ve got money in a real estate investment trust (Vanguard VGSIX). In my opinion, these funds are going to loose heavily over the next few years becuase they are the ones left holding the RE bag as this whole thing starts to unwind. I work for a major lender, and I feel like I’ve got my finger on the pulse of this thing. Shoot me an email if you want to discuss further.


  14. Jonathan,

    First of all, I would like to thank you for your insightful articles. They are very helpful and I check your site often.

    I am curious as to why you chose VCIFX and not VBIIX for your bond allocation. What is the advantage of one over the other ? I am trying to decide on one of these for the bond portion of my portfolio. Thanks!


  15. I actually chose VCIFX to avoid low-balance fees since technically the Corporate bond fund isn’t an index fund. Now that they waive those fees with e-statements, I will probably switch to either the Total Bond Index or Short Term Bond Index fund. I think those two are probably the best bets. I’m going to do rebalance soon anyways, so I’ll probably wait until then.

  16. Jonathan,

    Thanks for the explanation – appreciate the quick response! Don’t mean to harp on the same subject but what would be the reasoning to choose one over the other (Short Term Bond Index fund vs Total Bond Index) ? I am looking at a time horizon of at least 10 years if not more and it is in a Traditional IRA account.

    Thanks again for all the helpful information you provide on your website!


  17. Viral Desai says

    Hi Jonathan,

    Excellent blog! Just curios — Are you paying transaction cost on FSTMX?

  18. No transaction costs on FSTMX, I am buying them through my self-employed 401(k) at Fidelity.

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