Contemplating Portfolio Changes

[DogDad]

I have a hodge podge of investments in my IRA so am looking to simplify things. Want to stay "conservative" with some growth for heirs, not looking to hit home runs, more concerned about preservation and sleeping well at night. Present portfolio has over 50% equity with too many individual stocks and too much cash (not going to list everything, but its about 17 investments) and it would be too much for my wife to manage if anything happens to me. Don't need any detailed analysis but would just like to know if these tickers make any sense for my type of risk tolerance and to generate decent dividend/interest income, with about 45% equity exposure. For some this may still be too many, but I am OK with this number of tickers.

SCHD ~ 15%
FDVV ~ 12%
VIG ~ 4%
VEA ~ 4%
VWENX ~ 23%
VWIAX ~ 7%
GLDM ~ 3%
FUAMX ~ 6%
FZDXX ~ 22%
CDs ~ 4%

Any thoughts would be appreciated.

 

[Exchme]

To be tax efficient, you should be putting your bonds here. If you are 50% equity, then I would think your IRA would be mostly bonds.

As far as complexity, I would favor even more simplicity. Anything with 5% or less allocated to it is just noise, even if it's a great holding, there's not enough to matter and you've made rebalancing hard to figure out.

Dividend stocks are concentrated in a few market sectors, so creates a sector risk that can be diversified away by holding a total market fund. Wellesley and Wellington are well respected, but they charge a couple tenths of a percent more each year than just holding stocks & bond separately and again rebalancing becomes more of a chore. Long term, holding so much money market (FZDXX) wouldn't be my choice, though after 2022-23, it's easy to understand your reluctance to extend maturity.

Personally, I would pick my bond %, US stock % and foreign stock % and use one fund for each or substitute a TIPS ladder for the bond fund.

 

[pb4uski]

+2 What is proposed in the OP is more complex than what I would simplify to. For equities, I would use a handful of funds and would consider blending in QUELX QLENX and ORR.

But... if your IRA as a percentage of the total is less than your bond allocation then you could go with an iBond ladder in your IRA. They offer Treasury, corporate and high yield versions so you can blend them as you see fit.

 

[Al18]

You may want to consider swapping much of the FZDXX for a 5 year MYGA.

Also you might want to swap SCHD for VYM. They are both dividend funds, but VYM has been outperforming for a few years.

 

[Pointby2]

I just dropped all my investment holdings into ChatGPT and asked her what she thought. Of course I told her my goals, age and anything else pertinent to the decision. Chatty quickly gave me a road plan of what to consolidate and how to go about it. Try it, you don't have to do anything, but you may like the advice.

 

[TheWizard]

+2 What is proposed in the OP is more complex than what I would simplify to. For equities, I would use a handful of funds and would consider blending in QUELX and ORR.

But... if your IRA as a percentage of the total is less than your bond allocation then you could go with an iBond ladder in your IRA. They offer Treasury, corporate and high yield versions so you can blend them as you see fit.

QLENX I think you mean?

 

[pb4uski]

Yes. Fixed it.

 

[Koolau]

I prefer fewer funds but see no glaring problems with OP's AA.

 

[DogDad]

If you are 50% equity, then I would think your IRA would be mostly bonds.

Mostly cash and CDs, with some bonds. I usually just refer to that category as fixed income.

For equities, I would use a handful of funds and would consider blending in QUELX QLENX and ORR.

I actually hold QLENX in my current mix

I just dropped all my investment holdings into ChatGPT and asked her what she thought. Of course I told her my goals, age and anything else pertinent to the decision. Chatty quickly gave me a road plan of what to consolidate and how to go about it. Try it, you don't have to do anything, but you may like the advice.

Funny, you mentioned as that is exactly what I have been doing and playing one AI engines recommendations against the other. One other factor that has been in my mind is the Mira-Lago-Accord which may or may not come to pass. It involves moves the present admin is making that could devalue our currency to make our exports more enticing.

 

[mrfeh]

Mostly cash and CDs, with some bonds. I usually just refer to that category as fixed income.

I actually hold QLENX in my current mix

Funny, you mentioned as that is exactly what I have been doing and playing one AI engines recommendations against the other. One other factor that has been in my mind is the Mira-Lago-Accord which may or may not come to pass. It involves moves the present admin is making that could devalue our currency to make our exports more enticing.

I suggest your simplify your holdings, and ignore the news.

Bogleheads® investing start-up kit - Bogleheads

 

[DogDad]

I suggest your simplify your holdings, and ignore the news.

Bogleheads® investing start-up kit - Bogleheads

I am aware of the simple portfolios espoused by Bogleheads. I don't think this portfolio is very complicated but serves my needs to cover a good portion of my RMDs/expenses at low cost and low risk. I probably should have mentioned my holdings are all at Fidelity, except for the Wellington funds which I want to keep separately as is. Therefore, the other changes/simplifications are in funds/stocks/etfs all at Fidelity.

 

[Qs Laptop]

I don't have time to go through the whole list but right off the bat I see:

SCHD ~ 15%
FDVV ~ 12%

These are both dividend paying funds but FDVV has more growth potential because it's got some of the high-flying tech stocks in it like Nvidia, Broadcom, Microsoft whereas SCHD has less volatile companies that can protect better in a downturn. Basically FDVV seeks growth with some dividends and SCHD seeks dividends with some growth.

Pick one of these and dump the other and most of your heavy lifting in consolidating this part of your portfolio is done. Since you say you're "not looking to hit home runs, more concerned about preservation and sleeping well at night" I'd keep SCHD and sell FDVV.

Just Google SCHD vs FDVV and you will see what I'm talking about.

 

[target2019]

You've assembled popular funds and etf's in a way that only you understand.

There's definitely overlap in there.

Why hold VWENX and VWIAX in those percentages? Seems like a guess to me?

 

[DogDad]

Pick one of these and dump the other and most of your heavy lifting in consolidating this part of your portfolio is done. Since you say you're "not looking to hit home runs, more concerned about preservation and sleeping well at night" I'd keep SCHD and sell FDVV.

FDVV provides a better growth potential for heirs, which is also something I am trying to achieve.

Why hold VWENX and VWIAX in those percentages? Seems like a guess to me?

These are long term holdings, the mix was to reduce the overall equity % in Wellington. Perhaps, I am the only to understand this as you suggested, just trying to avoid something I might have overlooked. I appreciate all the comments.

 

[Qs Laptop]

FDVV provides a better growth potential for heirs, which is also something I am trying to achieve.

Sure, but I thought the individual stock portion of your portfolio was where you'd get future growth for your heirs.

Anyway, you could pick FDVV and sell SCHD, which would help lower the complexity of your portfolio for your wife to deal with in the future.

 

[Semi-Retyrd]

I have a hodge podge of investments in my IRA so am looking to simplify things. Want to stay "conservative" with some growth for heirs, not looking to hit home runs, more concerned about preservation and sleeping well at night. Present portfolio has over 50% equity with too many individual stocks and too much cash (not going to list everything, but its about 17 investments) and it would be too much for my wife to manage if anything happens to me. Don't need any detailed analysis but would just like to know if these tickers make any sense for my type of risk tolerance and to generate decent dividend/interest income, with about 45% equity exposure. For some this may still be too many, but I am OK with this number of tickers.

SCHD ~ 15%
FDVV ~ 12%
VIG ~ 4%
VEA ~ 4%
VWENX ~ 23%
VWIAX ~ 7%
GLDM ~ 3%
FUAMX ~ 6%
FZDXX ~ 22%
CDs ~ 4%

Any thoughts would be appreciated.

An IRA is the best place to put low risk funds with fully taxable distributions.

My suggestion -

1) Start by replacing SCHD with EGRIX.
2) Wait six months to get comfortable with it.
3) Assuming it continues to outperform, replace enough other positions to reach around 30% of your IRA.
4) Continue to replace smaller positions with EGRIX as you gain comfort level.

In my portfolio EGRIX is 100% of my Roth and will likely be 100% of my tIRA by the middle of this year.

To understand EGRIX see -

Why I like certain alternative investments

Often alternative investments are looked upon as more risky, more difficult to value or just plain weird compared to ordinary stocks and bonds. People tend to think of them in the categories of precious metals or other commodities, artwork, rare books, fine wines or other more esoteric things...

www.early-retirement.org

My wife has zero interest/knowledge in investing and will likely outlive me. So I want the simplest portfolio possible. FYI my taxable account is around 90% QLENX and represents about 50% of total portfolio.

Please note I am only presenting data and opinion here and this is not meant to be financial advice. You must do your own research before making any investment.

 

[dobig]

Considering I'm a dividend growth investor I love your portfolio and would not consolidate. As someone mentioned SCHD and FDVV have completely different methodologies. SCHD is more conservative but has a lifetime yearly dividend growth rate of 9%+/-. You can't beat that for inflation protection. Vanguard Wellington and Wellesly are historically good performers and give you your bond exposure. In fact the only thing I'd change is trying to get DGRO in the mix for it's outstanding dividend growth and price appreciation.

Don't let some beat you up on a well diversified dividend portfolio. Just because some are total return or Boglehead investors they'll feel the need to push you away from a safe, tried and true investment strategy. And as one of Goldman Sachs chief investment officers said last year on NBC in 14 of the past 15 recessions since 1940 the average drawdowns in S&P 500 dividends is 1%. In some recessions dividends actually went up. The notable exception being the GFC where the drawdown was 23% because of bank stocks. If I had to live off of 77% of my income for the 2 years trough to peak it took to recover those dividends vs having to sell stock at a 40 - 50% clip I'd make that choice every day.

 

[DogDad]

In my portfolio EGRIX is 100% of my Roth and will likely be 100% of my tIRA by the middle of this year.

To understand EGRIX see -

I have a small position in EGRIX, maybe I should hold and build as you suggest.

Considering I'm a dividend growth investor I love your portfolio and would not consolidate. As someone mentioned SCHD and FDVV have completely different methodologies. SCHD is more conservative but has a lifetime yearly dividend growth rate of 9%+/-. You can't beat that for inflation protection. Vanguard Wellington and Wellesly are historically good performers and give you your bond exposure. In fact the only thing I'd change is trying to get DGRO in the mix for its outstanding dividend growth and price appreciation.

Thanks, there are nuances in this selection that may not be obvious as to why these make sense, but that is OK. One thing I did catch that I changed is VEA is tax managed so will change that to VYMI.

 

[dobig]

I have a small position in EGRIX, maybe I should hold and build as you suggest.

Thanks, there are nuances in this selection that may not be obvious as to why these make sense, but that is OK. One thing I did catch that I changed is VEA is tax managed so will change that to VYMI.

I bought VYMI as well as IDMO this morning after the sale of some cefs.


Hold a sizeable position in QLENX in tax deferred account along with ORR and EGRAX (basically same as EGRIX). Think these are good hedges with upside potential.

 

[TickTock]

Thanks, there are nuances in this selection that may not be obvious as to why these make sense, but that is OK.

I don't see anything that looks out-of-whack with your stated objectives. It's (of course! ) not how I'd do it, but you don't need to make *me* satisfied, you need to make *you* satisfied. If you're happy with that AA, keep it (I did see your comment about switching out the tax-managed high-div international fund.)