April 2008 Investment Portfolio Snapshot

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Since we just made our IRA contributions for 2007 recently and had made a few mutual fund exchanges, I figured this was a good time to post another portfolio snapshot. Since we have so many different accounts now, I changed the presentation layout a bit to clean things up.

4/08 Portfolio Breakdown
Retirement Portfolio
Asset Class / Fund $ %
Broad US Stock Market $38,836 32%
VTSMX – Vanguard Total Stock Market Index Fund
DISFX – Diversified Stock Index Institutional Fund
DODGX – Dodge & Cox Stock Fund
US Small-Cap Value $10,480 9%
VISVX – Vanguard Small Cap Value Index Fund
Real Estate (REITs) $10,017 9%
VGSIX – Vanguard REIT Index Fund
Broad International Developed $29,925 26%
FSIIX – Fidelity Spartan International Index Fund
VDMIX – Vanguard Developed Markets Index Fund
International Emerging Markets $10,198 9%
VEIEX – Vanguard Emerging Markets Stock Index Fund
Bonds – Short-Term $8,989 8%
VFISX – Vanguard Short-Term Treasury Fund
Bonds – Inflation-Indexed $8,260 7%
VIPSX – Vanguard Inflation-Protected Securities Fund
Total $116,705

Contribution Details
Through the end of 2007, we maxed out the salary contributions of both of our 401k/403b plans and put in $15,500 each. We didn’t qualify for a Roth IRA contribution in 2007, but after exploring the options of a non-deductible contribution to a Traditional IRA, we decided to go for it and put in $4,000 each in early April. For 2008, my wife has contributed about $5,000 so far to her 403b and is on track to max out again. I’m lagging a bit behind, but should catch up later in the year.

YTD Performance
The 2008 year-to-date time-weighted performance of my personal portfolio is -1.96% as of 4/18/08. Although not necessarily a benchmark, the Vanguard S&P 500 Fund has returned -4.77% YTD, their FTSE All World Ex-US fund has returned –3.47% YTD, and their Total Bond Index fund has returned 1.32% YTD as of 4/18/08.

Portfolio Construction Details
We followed the general asset allocation plan outlined here. I went ahead and moved forward to a 85% stocks/15% bonds split since I base it on the formula [115-Age] and I’ll be turning 30 in a few months. Here is an example of how we implemented the asset allocation across multiple accounts, although I’ve since moved some funds around. It’s definitely not an exact science, we just did the best we could with the fund choices available.

You can view all my previous portfolio snapshots here.

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  1. Thanks for publishing the information Jonathan. I am also thinking of reallocating my assets in my 401K. BTW, did you calculate the return correctly? I am curious because the YTD on your funds (excl your bond and REIT funds) all locked in losses greater than 8%.

  2. You’re too young to be going to a 85-15 split. 30 is hardly old. Even if you are going to retire early you cant touch the money until you are 59.5 years old.

  3. Great blog ! Keeping it simple with low-cost indexing is not a bad way to go; check out scottburns.com for his “couch-potato portfolio”. I prefer a little more spice to my mix, so I also hold CGM Focus, a focused (20-25 stocks) go-anywhere fund run by Ken Heebner. Returned 80% (that’s not a misprint, 80%) last year, great 3,5,10 year track record, with a 1% expense ratio. I also buy indivdual stocks in my roth – AAPL UTX BBY and UYG – a double-long etf indexed to the US financial sector (it’s gotta come back sometime). I use yahoo finance and charts on stockcharts to fine-tune entry/exit points using MACD, stochastic MA’s.

  4. @Grok – I was skeptical as well after looking at the benchmarks, but I double-checked and don’t think I missed anything inflows. Perhaps it is simply the power of diversification?

    I don’t see any funds with YTDs of -8%? Here are the rest of the funds’ YTD returns:

    Emerging Mkts: -3.99%
    SmallCap Value: -1.93%
    REIT: +8.82%
    ST T-Bonds: +2.39%
    TIPS: +3.69%


    Also, it’s probably partially luck. Our 401k contributions I think just posted before the slight rally in April.

    @Joe – It’s all along the risk/return continuum. I plan on contributing plenty, and I don’t want to worry about the swings. I’m just not that daring. 🙂 How much risk do I really need to take to reach my goals? Otherwise, we’d all be hold 100% micro-cap stocks as they have returned great over long periods of time as well.

    Regarding withdrawals, I probably won’t want to, but I can take money out via 72t withdrawals if necessary, or I can take out my Roth IRA contributions (not earnings).

  5. so you maxed out your 401k’s at 15.5k each, and put 4k each into IRA’s? plus still had money to put into vanguard, and your only 29? must be nice to be young and rich lol

  6. Our IRAs are at Vanguard, so all the above are in tax-advantaged accounts. Putting 20k away each year in pre-tax accounts is definitely not something everyone does. We are happy to be able to do it, as that is a major step to achieving our goal of financial freedom.

  7. squeezer. I think that the cost of living in their area allows for some larger pay checks than the rest of the nation. In addition, they received higher high educations and chose careers that provide opportunities for six-figure plus incomes.

    Unlike most in the bay area, they are frugal, living like they are a normal family on a budget in the U.S.

    Any family in the U.S. with a similar education and career path should be able to save just as much money. Unfortunately, many have to spend what would be their savings servicing and paying their debt. And most do not buy what they do smartly.

    It’s the old story, “Give 100 Americans $100,000 each and you’ll end up with one American with $12 million in his pocket and 99 Americans with $20,000 in debt.”

  8. Hey Jonathan –

    Your portfolio looks close to a global market-cap weighted mix, with a US small value and US REIT tilt. Is that basically what you are going for? I am considering adding US SV and US REIT to my global weighted portfolio too, but I have not yet convinced myself to pull the trigger out of the fear that I will never be able to stop tweaking my allocations. I spend quite a bit of time on diehards.org, (what a great resource) and it seems like the global weighting is not as common I would think, given that many on that board are “diehard” passive investors. Any foreign REIT and foreign SV planned in the future?

  9. I’m constantly holding myself back from tweaking asset allocation, and also spend too much time on Diehards sometimes. Keep in mind, that’s how discussion groups work. Nobody wants to talk about the boring stuff.

    I like nearly a global cap weighted portfolio, yes. From what I’ve seen most people tend to tilt to their own country, some people say to protect from currency swings (if you plan on spending dollars in retirement).

    There are tons of things you could add on top like you said – Real Estate, Small Cap, Int Small Cap, Commodities…. I try not to change too often, but it’s hard because I am still a relatively new investor and am learning continuously. Let me know what you settle on.

    I also look carefully at expense ratios. For example, foreign REITs or commodities might be nice, but is it worth the higher expense?

  10. There was a neat article in The NY Times Biz section yesterday about a study that shows reducing your exposure to equities as you age doesn’t lower your risk or increase your returns. Just a thought! Thanks for you great blog.

  11. buying commodities inside or outside retirement accounts are taxing nightmares (that’s what the former (2007) buyers said recently). that’s how i held on buying ETFs like DBC and USO…

  12. So I started a business while I still in grade school, so what? My candy business was one of four businesses I ran at the same time, starting in the 6th grade. I bought the gum at five cents apiece and sold it for a quarter. I negotiated my low prices with the lady that ran the neighborhood grocery. Besides all that candy in my backback (I was not that fat at all!) I delivered two different papers each morning (two paper routes combined doubled my income for almost the same bike ride)
    I also sold greeting cards door to door, mixing in homemade cards with commercials ones I ordered and secretly paid for. Finally I convinced my school that they had to hire me to turn the lights and projector on and off in the auditorium. Later I convinced a state inspector that the school should have been paying me at least minimum wage all those years. The state agreed and the school district coughed up all that back pay!

    I actually sold the candy business idea to another kid, right before I went on to the next school. Another kid paid me to be next in line for the school auditorium lighting job. I made sure she got the position when I moved on.

    Yes, I own my own business today. I attribute most of my success to the gift of gab, I negotiate, I barter, I know the benefits of my services and tell every prospective customer. To this day, I also still maintain four strong sources of income: business education consulting, photography, writing, and investing. Good luck!

  13. TH Williams, while I applaud your commercial attitude, isn’t your post a bit out of the blue here?

  14. I think he was actually intending to respond to this post. Might make a bit more sense if you read that first 🙂

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