Author Topic: Portfolio questions  (Read 1309 times)

BeanCounter

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Portfolio questions
« on: May 25, 2018, 10:33:23 AM »
Thoughts on this portfolio for a taxable brokerage account-
 FSTVX- Fidelity Total Market- 32%
FEQTX- Fidelity Equity Dividend Income- 32%
FSIVX- Fidelity International- 21%
FOHFX- State Muni Fund- 15%

We are 40 with kids we recently hit our FI number. We are still working, still focused on asset growth but intend to RE and look more at asset preservation in the next three years. Half our assets in the brokerage and half in retirement accounts. Retirement investments are really only three fund- FSTVX, FSIVX and FTBFX.

Is there any reason to make this more complicated? Should we be considering REITs? What about more focus on generating dividends?
Now that we've got the money we need, I'm not sure what our next focus should be.

TIA MMM community for any help you can provide.



robartsd

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Re: Portfolio questions
« Reply #1 on: May 25, 2018, 11:50:27 AM »
@L.A.S. is right that it is better to consider all your account types when balancing your portfolio and allocate your asset holdings to account types based on tax treatment. Hold bonds in pre-tax before Roth before taxable then fill in with equities.

SeattleCPA

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Re: Portfolio questions
« Reply #2 on: May 25, 2018, 12:00:48 PM »
Your portfolio seems pretty risky to me. Not only are you 85% stocks, you have stocks that are all pretty correlated.

I will be criticized (hopefully only in a professional constructive way) for sharing this thought. And FYI I understand the math and history. But I've also been investing for three plus decades.

You might find this relevant and useful: 100% stocks allocation suffers from two flaws.

BTW, for my traditional asset class investing, I'm personally using Swensen's model:
30% US stocks
15% REITs
15% Developed international markets
15% intermediate treasuries
15% TIPS
10% emerging markets

Note that Swensen's model puts 70% into equities but 30% into riskless assets to protect you from worst case scenarios. Also that he puts 30% into real assets to protect you from inflation. This is modern portfolio theory in practice.

One other thought: there's a thread here about the lack of correlation between housing and equities and the "Rate of Return of Everything" study. That would be a useful thing to peruse. It's really about your question.

terran

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Re: Portfolio questions
« Reply #3 on: May 25, 2018, 12:08:36 PM »
I have come to learn that mutual funds (other than Vanguard) are somewhat tax inefficient because they have to realize capital gains (which means you realize capital gains and pay tax on them). ETFs on the other hand (which includes Vanguard's mutual funds because they have a patent that lets them combine their mutual funds and ETFs) don't have to realize capital gains, so they spin off less taxable income.

After learning this I'm working on transitioning my Fidelity taxable account to IXUS (going all international in taxable for the foreign tax credit) and would use ITOT if I wanted a domestic all market index. Both trade commission free at Fidelity.

MDM

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Re: Portfolio questions
« Reply #4 on: May 25, 2018, 01:49:59 PM »
What is a riskless asset?
See NAME for the MPT or CAPM-based diagram with the hyperbola and tangent line? - Bogleheads.org for some discussion.

For the pedantic, there is no real riskless asset (e.g., "but what if an atomic bomb...?";  "...a large meteor strike...?") but some things (e.g., US Treasuries) are low enough risk to be treated as "riskless".

ETA: fixed link - thanks.
« Last Edit: May 29, 2018, 12:07:49 PM by MDM »

robartsd

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Re: Portfolio questions
« Reply #5 on: May 29, 2018, 11:57:48 AM »