Quality of my portfolio?

[stocknoobie]

Hello,

I am relatively new to investing, but over the last year have taken a keen interest.

I have a little less than 10k in a diversified ETF based portfolio that I have made over the past year, planning on keeping my holdings for the long term & adding more money into it annually. (Still in college, do not have 401k opportunities currently, but am planning ahead)

Basically this is the distribution of my portfolio:
High Yield Dividend: VIG 13.92%
REIT: SCHH 8.13%
International: EFA 12.81%
Emerging Markets: EEM 9.34%
Bond ETF: AGG 25.7%
National Munis: SMB 13.98%
Consumer Staples: XLP 16.11%

With all the news with the debt ceiling & the government shutdown I am slightly concerned.

I would very much so appreciate any feedback on my overall portfolio strengths/weakness & any suggestions.

Thanks.

[Strevlac]

Are these held in a Roth or a taxable brokerage account? If this a taxable account, and you have earned income for the year I would suggest moving up to $5,500 into a Roth this year, and the remaining amount next year.


As to your choice of investments, they are very low cost in the aggregate so that is good. You are about 40% fixed income which is overly conservative in my opinion but that's really a personal decision.

One thing that is a concern is that you are buying all of these different ETFs and are probably paying transaction costs for each purchase. For the small $ amounts that you are buying you are most likely getting eaten alive. Here is the easiest, and most likely the best thing for both noobs and experienced investors to do:

1) Decide on an allocation of fixed income, domestic equities, and international equities you are comfortable with.

2) Go to Vanguard, Fidelity, Schwab, or T-Rowe Price and open an account (taxable brokerage or a Roth)

3) Purchase a total domestic stock market index fund, total international stock market index fund, and a total bond market index fund. If fund minimums are getting in the way of your predetermined allocation, then go the ETF route. If you are at Vanguard, just buy the target retirement fund with the closest equity/fixed income ratio to your desires. Vanguards target retirement funds are simple one-stop shops of four core index funds.

4) PAY NO TRANSACTION FEES. Choose only "NTF" (no transactions fee) funds or ETFs.

5) Set up automatic monthly purchases. If a Roth account, make it $458.33 a month.

6) Get on with your life/career.

[jIM_Ohio]

Hello,

I am relatively new to investing, but over the last year have taken a keen interest.

I have a little less than 10k in a diversified ETF based portfolio that I have made over the past year, planning on keeping my holdings for the long term & adding more money into it annually. (Still in college, do not have 401k opportunities currently, but am planning ahead)

Basically this is the distribution of my portfolio:
High Yield Dividend: VIG 13.92%
REIT: SCHH 8.13%
International: EFA 12.81%
Emerging Markets: EEM 9.34%
Bond ETF: AGG 25.7%
National Munis: SMB 13.98%
Consumer Staples: XLP 16.11%

With all the news with the debt ceiling & the government shutdown I am slightly concerned.

I would very much so appreciate any feedback on my overall portfolio strengths/weakness & any suggestions.

Thanks.

Portfolio looks conservative, is that by design?
LOVE VIG, not familiar with other holdings.

I would focus on three things
1) education-keep learning, do you know why I thought it was conservative? This education can also help you learn how to handle debt ceiling issues.
2) Save a fixed percentage of gross income now, and continue that when you get a good job (suggest 20%)
3) set goals. It is much easier to make financial decisions if you have goals. Share the goals with those close to you (don't be embarrassed talking about money).

[stocknoobie]

Thanks for the responses!

Are these held in a Roth or a taxable brokerage account? If this a taxable account, and you have earned income for the year I would suggest moving up to $5,500 into a Roth this year, and the remaining amount next year.


As to your choice of investments, they are very low cost in the aggregate so that is good. You are about 40% fixed income which is overly conservative in my opinion but that's really a personal decision.

One thing that is a concern is that you are buying all of these different ETFs and are probably paying transaction costs for each purchase. For the small $ amounts that you are buying you are most likely getting eaten alive. Here is the easiest, and most likely the best thing for both noobs and experienced investors to do:

1) Decide on an allocation of fixed income, domestic equities, and international equities you are comfortable with.

2) Go to Vanguard, Fidelity, Schwab, or T-Rowe Price and open an account (taxable brokerage or a Roth)

3) Purchase a total domestic stock market index fund, total international stock market index fund, and a total bond market index fund. If fund minimums are getting in the way of your predetermined allocation, then go the ETF route. If you are at Vanguard, just buy the target retirement fund with the closest equity/fixed income ratio to your desires. Vanguards target retirement funds are simple one-stop shops of four core index funds.

4) PAY NO TRANSACTION FEES. Choose only "NTF" (no transactions fee) funds or ETFs.

5) Set up automatic monthly purchases. If a Roth account, make it $458.33 a month.

6) Get on with your life/career.

These holdings are held in a taxable brokerage account. I use OptionsHouse, so my transaction costs are not terrible - around $3.69 I believe per.

When I was originally making the portfolio, I wanted to mitigate my risk exposure so I tried to make it around 40% fixed income & 60% equity - with around 20% exposure to international & emerging markets.

I am pretty conservative & am content having a small annual return, thought would be better than having my money sitting in my savings account, which basically was losing value to inflation every year.

How do Roth accounts work and what do you mean set up automatic monthly purchases? I currently work part time at a internship, but am a full time student - so am limited in my benefits.

Portfolio looks conservative, is that by design?
LOVE VIG, not familiar with other holdings.

I would focus on three things
1) education-keep learning, do you know why I thought it was conservative? This education can also help you learn how to handle debt ceiling issues.
2) Save a fixed percentage of gross income now, and continue that when you get a good job (suggest 20%)
3) set goals. It is much easier to make financial decisions if you have goals. Share the goals with those close to you (don't be embarrassed talking about money).

It is very conservative because I have a considerable amount in fixed income. Even though my username is "stocknoobie" I know more than a completely inexperienced investor hahah, I have been following financial news and what not for the last few years, and have taken core finance & other upper level business classes. (Just want to learn more)

As for the immediate future, do you think I should continue employing a mostly ETF based strategy? I was planning on putting another grand or so in treasury bills & money market funds soon, but now obviously due to recent events with the debt ceiling I am much less inclined at moment.

[stocknoobie]

Are these held in a Roth or a taxable brokerage account? If this a taxable account, and you have earned income for the year I would suggest moving up to $5,500 into a Roth this year, and the remaining amount next year.


As to your choice of investments, they are very low cost in the aggregate so that is good. You are about 40% fixed income which is overly conservative in my opinion but that's really a personal decision.

One thing that is a concern is that you are buying all of these different ETFs and are probably paying transaction costs for each purchase. For the small $ amounts that you are buying you are most likely getting eaten alive. Here is the easiest, and most likely the best thing for both noobs and experienced investors to do:

1) Decide on an allocation of fixed income, domestic equities, and international equities you are comfortable with.

2) Go to Vanguard, Fidelity, Schwab, or T-Rowe Price and open an account (taxable brokerage or a Roth)

3) Purchase a total domestic stock market index fund, total international stock market index fund, and a total bond market index fund. If fund minimums are getting in the way of your predetermined allocation, then go the ETF route. If you are at Vanguard, just buy the target retirement fund with the closest equity/fixed income ratio to your desires. Vanguards target retirement funds are simple one-stop shops of four core index funds.

4) PAY NO TRANSACTION FEES. Choose only "NTF" (no transactions fee) funds or ETFs.

5) Set up automatic monthly purchases. If a Roth account, make it $458.33 a month.

6) Get on with your life/career.

Wait, for your (3) point, are you saying I should go the mutual fund route, rather than ETF's? I just hate mutual funds fees relative to ETF's, significantly more.

[Strevlac]

These holdings are held in a taxable brokerage account. I use OptionsHouse, so my transaction costs are not terrible - around $3.69 I believe per.

When I was originally making the portfolio, I wanted to mitigate my risk exposure so I tried to make it around 40% fixed income & 60% equity - with around 20% exposure to international & emerging markets.

I am pretty conservative & am content having a small annual return, thought would be better than having my money sitting in my savings account, which basically was losing value to inflation every year.

How do Roth accounts work and what do you mean set up automatic monthly purchases? I currently work part time at a internship, but am a full time student - so am limited in my benefits.

.......

As for the immediate future, do you think I should continue employing a mostly ETF based strategy? I was planning on putting another grand or so in treasury bills & money market funds soon, but now obviously due to recent events with the debt ceiling I am much less inclined.

Wait, for your (3) point, are you saying I should go the mutual fund route, rather than ETF's? I just hate mutual funds fees relative to ETF's, significantly more.

The firms I mentioned in my original post all have very low cost mutual funds. Index funds at these firms are extremely low cost. Their corresponding ETFs are often even cheaper but the difference we are talking about is miniscule. Also when you buy ETFs you can lose on the bid/ask spread that would dwarf any difference in the expense ratios.

But, like I said, going the ETF route is not a terrible idea, and maybe even a good one if you can't get your desired equity/fixed income ratio because of fund minimums. Vanguard is $3,000 minimum for their core index funds, if I remember correctly. Fidelity's minimums are even higher. Not sure about Schwab or T-Rowe Price. All four firms have good websites where you can look them up quite easily.

I have my funds at Vanguard. I own VTI (I'm not totally against ETFs) in Vanguard brokerage services and VTHRX in Roth and rollover IRAs.

At Vanguard each core index fund has a corresponding ETF. You could build a diversified portfolio using VTI, VXUS, BND and maybe a bit of BNDX. I'd imagine it's the same way at Fidelity, Schwab, etc. You could build an ETF portfolio and never pay a single transaction fee again. $3.95 might not seem like much but trust me, it's TOO MUCH.

Regarding Roth:

A Roth IRA is simply a basket in which to place your investments just like a taxable brokerage account. You put money into these accounts that you have already paid taxes on. The difference with the Roth is that all future earnings are completely free of taxation, unless you withdraw earnings before age 59 1/2. Notice I said earnings. You can withdraw principal at any time, for any reason with no tax or penalties.

Edit to add: I forgot to address your question about automatic purchases. These are exactly what they sound like, periodic purchases that are made automatically. Your checking/money market/whatever account is automatically drafted each month to purchase more of whatever investment vehicle you want to purchase. I mentioned $458.33 monthly for a Roth because the maximum amount an individual can legally contribute is $5,500 a year.

[jIM_Ohio]

Thanks for the responses!



These holdings are held in a taxable brokerage account. I use OptionsHouse, so my transaction costs are not terrible - around $3.69 I believe per.

When I was originally making the portfolio, I wanted to mitigate my risk exposure so I tried to make it around 40% fixed income & 60% equity - with around 20% exposure to international & emerging markets.

I am pretty conservative & am content having a small annual return, thought would be better than having my money sitting in my savings account, which basically was losing value to inflation every year.

How do Roth accounts work and what do you mean set up automatic monthly purchases? I currently work part time at a internship, but am a full time student - so am limited in my benefits.




It is very conservative because I have a considerable amount in fixed income. Even though my username is "stocknoobie" I know more than a completely inexperienced investor hahah, I have been following financial news and what not for the last few years, and have taken core finance & other upper level business classes. (Just want to learn more)

As for the immediate future, do you think I should continue employing a mostly ETF based strategy? I was planning on putting another grand or so in treasury bills & money market funds soon, but now obviously due to recent events with the debt ceiling I am much less inclined at moment.

The goal of the news is NOT to educate you.
The goal of news is to sell advertising space

Take a step back, see the forest through the trees, and realize you need some fundamental education.

For example, why did you choose that brokerage?
Then ask yourself, should you choose ETFs or mutual funds (which is cheaper)?
And realize, I know a place where you can buy VIG at no cost.

Think about it... focus on education first and foremost. I would not react to news on debt ceiling with a decision about making portfolio 60-40.

I would make portfolio 60-40 for another reason, then use certain holdings to profit from the debt ceiling.

EDUCATION!

[snafu]

I'm delighted that you are saving and investing. I agree with others that given your age and circumstances your holding seem ultra conservative. You have a lot of years to make up for any short term slippage. It helps to make a plan and stick to it. For example, we do our best to review the economy and extrapolate out 5 yrs. Of course mother nature and media hungry politicians can turn sound economic planning upside down. It might seem like market timing but when big time drama causes the market to flounder, I look at it as a buying opportunity.