Hello Everyone,
I want to put a sanity check on my current direction. As I have no one, in the real world, to talk finances with I result to posting here and consulting with everyones vast experience. I have become disillusioned with my current portfolio and planning on setting up an indexed portfolio. My main goal is to become financially independent as soon as possible.
To create the correct asset allocation model I think a little bio is required.
Age: 26 Years old as of July
Occupation: Military - E5 - 6 year mark in December and have recently re-enlisted.
Income: I bring home $3100 a month (hates taxes and SS!!) with a pay raise expected in January of about $300 a month. I also will receive $5000 every January for the next 5 years. I will use this to continue funding my Roth.
My current Taxable portfolio is as follows:
Taxable Total: $85,541.13 Symbol Description Quantity Price Most Recent Value BAC BANK OF AMERICA CORP 221.703 $52.07 $11,544.08 C CITIGROUP INC 164.191 $47.87 $7,859.82 FRE FREDDIE MAC 134.09 $60.63 $8,129.88 KFT KRAFT FOODS INC CL A 34.505 $33.85 $1,167.99 MO ALTRIA GROUP INC 104.252 $70.06 $7,303.90 PFE PFIZER INC 323.177 $25.26 $8,163.45 STI SUNTRUST BANKS INC 97.646 $74.95 $7,318.57 T AT&T INC COM 196.191 $42.29 $8,296.92 USB US BANCORP DEL COM NEW 256.016 $32.88 $8,417.81 WAG WALGREEN COMPANY 50 $38.82 $1,941.00 WFC WELLS FARGO & CO NEW 221.045 $36.04 $7,966.46 WM WASHINGTON MUTUAL INC 209.115 $35.20 $7,360.85
I also have $13,087 in my Roth which is invested in SDY.
As everyone can tell this portfolio is very heavy financial which have not done so well as of late. I had been following a dividend based strategy of buying large dividend paying companies which resulted in heavy financials. During my last fiscal year (25 Mar 06 - 25 Mar 07) the portfolio returned 18.68% which was enough to beat the market. This year so far is a completely different story. The portfolio is currently down .83% from 26-Mar-07 while the S&P 500 is up 9.17%! I thought I could easily deal with this type of index lagging but I really despise it. It is probably a good thing I came to realize this at this stage rather than down the road.
So now it is time to construct a new preliminary portfolio. Here is what I have in mind for the taxable portion of the account:
Domestic Stocks (USA) - 45%
International Stocks - 25%
Bonds - 20%
Reits - 5%
Commodity Index - 5%
Maybe a 5% play/fun section
I will further break down these as follows:
Domestic Stocks - 25% Large Cap Value, 25% S&P 500, 15% Mid Cap Value Index, 10% Mid Cap Index, 15% Small Cap Value Index, 10% Small Cap Index
International Stocks - 33% Pacific Index, 33% Europe Index, 33% Developing markets
Bonds - Either 100% Lehman US Aggregate Bond Index or a portion into that index and some international bonds.
Does anyone think it is worth holding the Value Index funds in a taxable portfolio. These index funds tend to have a +-20% turn over which will result in more taxes than a simple total market fund.
Currently all of my accounts are at Fidelity which does seem to charge a little more for index mutual funds than Vanguard does. I am considering either opening an account with Vanguard and using there mutual funds or using various ETFs to construct my new portfolio. The average ETF seems to be about 10 basis points cheaper than the mutual funds but have the typical $10 trading charge. As I will continue investing monthly I am not sure which way to go on this.
I could probably go on but this post is long enough and I canask more questions later!
-trixs
I want to put a sanity check on my current direction. As I have no one, in the real world, to talk finances with I result to posting here and consulting with everyones vast experience. I have become disillusioned with my current portfolio and planning on setting up an indexed portfolio. My main goal is to become financially independent as soon as possible.
To create the correct asset allocation model I think a little bio is required.
Age: 26 Years old as of July
Occupation: Military - E5 - 6 year mark in December and have recently re-enlisted.
Income: I bring home $3100 a month (hates taxes and SS!!) with a pay raise expected in January of about $300 a month. I also will receive $5000 every January for the next 5 years. I will use this to continue funding my Roth.
My current Taxable portfolio is as follows:
Taxable Total: $85,541.13 Symbol Description Quantity Price Most Recent Value BAC BANK OF AMERICA CORP 221.703 $52.07 $11,544.08 C CITIGROUP INC 164.191 $47.87 $7,859.82 FRE FREDDIE MAC 134.09 $60.63 $8,129.88 KFT KRAFT FOODS INC CL A 34.505 $33.85 $1,167.99 MO ALTRIA GROUP INC 104.252 $70.06 $7,303.90 PFE PFIZER INC 323.177 $25.26 $8,163.45 STI SUNTRUST BANKS INC 97.646 $74.95 $7,318.57 T AT&T INC COM 196.191 $42.29 $8,296.92 USB US BANCORP DEL COM NEW 256.016 $32.88 $8,417.81 WAG WALGREEN COMPANY 50 $38.82 $1,941.00 WFC WELLS FARGO & CO NEW 221.045 $36.04 $7,966.46 WM WASHINGTON MUTUAL INC 209.115 $35.20 $7,360.85
I also have $13,087 in my Roth which is invested in SDY.
As everyone can tell this portfolio is very heavy financial which have not done so well as of late. I had been following a dividend based strategy of buying large dividend paying companies which resulted in heavy financials. During my last fiscal year (25 Mar 06 - 25 Mar 07) the portfolio returned 18.68% which was enough to beat the market. This year so far is a completely different story. The portfolio is currently down .83% from 26-Mar-07 while the S&P 500 is up 9.17%! I thought I could easily deal with this type of index lagging but I really despise it. It is probably a good thing I came to realize this at this stage rather than down the road.
So now it is time to construct a new preliminary portfolio. Here is what I have in mind for the taxable portion of the account:
Domestic Stocks (USA) - 45%
International Stocks - 25%
Bonds - 20%
Reits - 5%
Commodity Index - 5%
Maybe a 5% play/fun section
I will further break down these as follows:
Domestic Stocks - 25% Large Cap Value, 25% S&P 500, 15% Mid Cap Value Index, 10% Mid Cap Index, 15% Small Cap Value Index, 10% Small Cap Index
International Stocks - 33% Pacific Index, 33% Europe Index, 33% Developing markets
Bonds - Either 100% Lehman US Aggregate Bond Index or a portion into that index and some international bonds.
Does anyone think it is worth holding the Value Index funds in a taxable portfolio. These index funds tend to have a +-20% turn over which will result in more taxes than a simple total market fund.
Currently all of my accounts are at Fidelity which does seem to charge a little more for index mutual funds than Vanguard does. I am considering either opening an account with Vanguard and using there mutual funds or using various ETFs to construct my new portfolio. The average ETF seems to be about 10 basis points cheaper than the mutual funds but have the typical $10 trading charge. As I will continue investing monthly I am not sure which way to go on this.
I could probably go on but this post is long enough and I canask more questions later!
-trixs