Author Topic: Help with haphazard investment mess  (Read 509 times)

Recliner

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Help with haphazard investment mess
« on: October 06, 2018, 10:23:53 AM »
I just helped my elderly father find a fiduciary to handle his investments and it made me realize that mine are a mess and I need a better plan. Mine are split with 3 different providers. My 457 at work, my American funds advisor I started with, and my vanguard account I had switched to.

457 account: $260k total with $25k in a Roth option
S&P index (HINX) - $50k
TIAA CREF Lg Cap Growth index (TCGI) - $185k
Vanguard Small Comp Growth (VSG2) - $25k

IRA: $150k total
Vanguard total market index (VTSAX) - $106K
American funds - $44k equal split between AMCAP Fund (AMCPX) Growth fund (AGTHX) Investment fund (AIVSX) and Euro Pacific fund (AEPGX)

Inherited IRA - $28k in VTSAX

Roth IRA - $204k
VTSAX - $43k
American fund - $161k equal split among same four as IRA except New World (NEWFX) instead of the euro pacific

Taxable account - $308k
VTSAX - $278k
Vanguard total bond index (VBTLX) $20K
Muni bonds @ 4.5% - $10k

I'm 15+ years from retirement and maxing all tax deferred accounts each year and adding $24-30k in the taxable account.

I'm very comfortable with risk since my time frame is still pretty long. We showed a $90k loss in the weeks after the January peak and it didn't stress me or my wife.

Am I making some big dumb mistakes? Bigger than paying the large load fees for American fund class A shares that I bought 10+ years ago


MustacheAndaHalf

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Re: Help with haphazard investment mess
« Reply #1 on: October 06, 2018, 11:43:33 AM »
Focusing on your IRA to illustrate something:
American Funds The Growth Fund of America (class A) has an 0.64% expense ratio.
Vanguard Total Stock Market (admiral shares) has an 0.04% expense ratio.

Throughout the year, the expense ratio is consumed by the fund first - silently.  Think of the fund as giving you a return of (performance minus expense ratio).  So the American Funds Growth Fund has to beat the total U.S. stock market by 0.60% in order to break even against it.  Which is probably why over 80% of active funds can't beat the S&P 500.
https://us.spindices.com/documents/spiva/spiva-us-year-end-2017.pdf

Do you have any allocation to international?

Recliner

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Re: Help with haphazard investment mess
« Reply #2 on: October 06, 2018, 12:25:09 PM »
The high expense ratios and load fees are what caused me to stop putting money in them a while back. I've been tracking the growth in each account for the last 3 years and even with the higher fees the American funds have virtually returned the same amount as my VTSAX. I've been waiting to see how they do in a downturn before dumping them since apparently they hold pretty steady return wise in a bull market.

My international is small. About $40k in New World American funds (NEWFX) in my Roth and $11k in Euro Pacific Growth (AEPGX) in my IRA

About 5% total international. That's helped in the last 15 years but I recognize it's not the best strategy moving forward

RecoveringCarClown

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Re: Help with haphazard investment mess
« Reply #3 on: October 06, 2018, 03:11:12 PM »
You are approaching 1M and still have 15years left on your sentence?

Recliner

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Re: Help with haphazard investment mess
« Reply #4 on: October 06, 2018, 07:36:05 PM »
I love my job and would enjoy being able to continue doing it for as long as I am physically able to keep up and contribute. I figure my early to mid 50s is the tipping point where I'd start to feel like I could be slowing my crew down and adding risk to everyone

MustacheAndaHalf

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Re: Help with haphazard investment mess
« Reply #5 on: October 07, 2018, 11:23:42 AM »
... for the last 3 years and even with the higher fees the American funds have virtually returned the same amount as my VTSAX.
A better comparison would be two growth funds, like AGTHX vs VUG (Vanguard Growth ETF).  According to morningstar's website: 
AGTHX's performance was +16.75% (3yr) and 12.86% (10yr) 
VUG's performance was +16.32% (3yr) and 14.04% (10yr) 

Actually, it looks like the 3 year performance is the only time period where AGTHX beat VUG.  Take a look at morningstar.com's data for those two funds to see for yourself.

Because of some tech stocks, growth has done quite well.  You can peek at Vanguard Technology (VGT) performance of +25.48% (3yr) and 17.74% (10yr).    Right now VUG allocates 32% to tech, while AGTHX allocates 27%.  So if tech continues doing well, VUG could outpace AGTHX (as it has done for the past year).