Author Topic: Optimize investments; 25 yr old grad student  (Read 743 times)

yesi_7

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Optimize investments; 25 yr old grad student
« on: June 15, 2021, 07:04:06 PM »
Hello!

I am looking for some guidance on my investments and how I can better allocate them, as I work to invest about $20,000 that I have in savings.  I want to make sure I am thinking this through and making the best steps.

I will have to provide a lot of details because I think it will help to provide a comprehensive view of my situation.

As I am contributing across different accounts I am having a hard time figuring out how to maintain my asset allocation across accounts while also keeping things simple.
As of now I am more focused on following the principles of FI than having a specific age I want to FIRE. If I had to pick I would say late 30's to early 40's.

So, my main question is if anyone has suggestions for how I should go about investing as I move forward, while taking into account that I have a lump sum (20K) that I want to invest over this year. Can I make things simpler and are there certain funds I should buy in certain accounts (Roth vs Taxable vs 457)
Basically, how can I optimize my investments?

Life Situation: Graduate student-with full tuition coverage so I do not pay for school , 25, Single, Midwest,

Gross Salary/Wages: Approximately $29,000-From work as graduate research assistant and random side gigs

Here is some info on my accounts and the allocations, I calculated the percentage each fund is relative to my total portfolio

Current value of all investments: $82,146.64
I have About $20,000 in cash that I want to invest

I aim for a 90/10 allocation of stocks vs bonds with about 25% in international stocks

Here is a summary of where my allocations are at right now

Stocks:
Large-cap (VTI, SWTSX, VIIIX) About 75%
International (VXUS, SWISX) About 9%
Large Growth (VUG, Fidelity Comingled Growth fund) About 9%
Mid-Cap (VEMPX) .58%

Bonds
Total Bond fund (VBMPX) 6%

Roth IRA: $24,4880.74
-Max out every year (Contribution limit is $6,000)

SWTSX: Schwab Total Stock $21,247.26, 2.01%
SWISX: Schwab International Stock $1,98.50, 2.41%
VUG: Vanguard Growth ETF: $1654.98 (Just recently started investing in this after a friend suggested, still unsure if I should just invest in this instead of SWTSX)

457: $12,964.74 (Tax-deferred)
-Contribute $1,550 each month, planning to max out each year ($19,500)
-Not sure if I should keep contributing to all of the funds I have been, recently stopped buying bonds, and started buying the others
-Will be able to contribute until I graduate in about 2 years...

VIIIX: Vanguard Institutional Index: $7324.77, About 9%
VEMPX: Vanguard Extended Market Index: $477.34, .58%
Fidelity Growth Company Commingled Pool Class: $159.99, .19%
VBMPX: Vanguard Total Bond: $ 5,002.64, About 6%

As of now this is how I have my contributions set (they are done automatically each month that I contribute the $1,550)

VIIIX 60%, VEMPX 30%, Fidelity Growth Fund 10%, Bonds (0%)

**Should I change this?

Taxable Account: $50,883.20

VTI Total stock ETF: $25,859.34, About 32%
VUG: Large Growth ETF: $5240.77, About 6%
VXUS: Total International ETF: $2,685.89 About 3%
SWISX: Total International Stock $2,990.29, About 4% (No longer investing in this one)
SWTSX: Total Stock Index: $6,907.12, About 8% (No longer investing in this one)

cool7hand

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Re: Optimize investments; 25 yr old grad student
« Reply #1 on: June 16, 2021, 06:42:25 AM »
I'm not 100% sure what you're asking. No one can pick the right portfolio for you. Only you can decide. Read up at bogleheads. Once you have a portfolio that fits your goals and risk tolerance, most people here seem to use a spreadsheet or similar tool to track their investments across work and personal accounts to decide when to rebalance.

Steeze

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Re: Optimize investments; 25 yr old grad student
« Reply #2 on: June 16, 2021, 07:09:22 AM »
You have a target of 90/10 & 25% international which seems very reasonable - so right now your are light on bonds & international
You also said you were not purchasing bonds anymore, so there is a conflict there.

If 90/10 is for you, then commit to it! Purchase what you need to keep your AA in line, rebalance if you need to. I would recommend you set automatic purchases to 90/10 with 25% international and rebalance 1-2 times a year. I do it in January because I have cash from my year end bonus to make things easier, then again later in the year around my birthday I adjust my remaining purchases for the year so my AA isn't too far off my target by the end of the year.

Other thoughts - you have some large cap growth & mid/small indexes thrown in there. This is all good, but I would recommend that you have a fixed % target for these and stick to it. Things like VTI already include these, so any overweighting is a 'tilt' toward a certain factor. Randomly buying / selling large growth based on your gut instincts at the time is probably a bad idea. If you want a 5% tilt, or 10% tilt (or whatever amount) - write it down, write down why you think it is a good idea, write down why you think it could be a bad idea and be prepared to stick to it for the long haul. What will you do if it overperforms? What will you do if it underperforms for years on end?

The Investor Policy Statement is a wonderful tool - basically just writing down your investment hypothesis and providing yourself a framework with rules on what to buy, when, and how much. Instructions on when to rebalance, when to sell, etc. That way when the market is doing the opposite of what you envisioned you can go to your IPS and make sure you are following the rules before you click the buy or sell button.

You are doing great though, keep it up!
« Last Edit: June 16, 2021, 07:11:10 AM by Steeze »

Steeze

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Re: Optimize investments; 25 yr old grad student
« Reply #3 on: June 16, 2021, 07:19:35 AM »
Here is a snapshot of my own spreadsheet with a 5/25 rebalancing band column:
If RB="NO" then Do Nothing


yesi_7

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Re: Optimize investments; 25 yr old grad student
« Reply #4 on: June 16, 2021, 08:27:42 AM »
I'm not 100% sure what you're asking. No one can pick the right portfolio for you. Only you can decide. Read up at bogleheads. Once you have a portfolio that fits your goals and risk tolerance, most people here seem to use a spreadsheet or similar tool to track their investments across work and personal accounts to decide when to rebalance.

Thanks!

yesi_7

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Re: Optimize investments; 25 yr old grad student
« Reply #5 on: June 16, 2021, 08:29:38 AM »
You have a target of 90/10 & 25% international which seems very reasonable - so right now your are light on bonds & international
You also said you were not purchasing bonds anymore, so there is a conflict there.

If 90/10 is for you, then commit to it! Purchase what you need to keep your AA in line, rebalance if you need to. I would recommend you set automatic purchases to 90/10 with 25% international and rebalance 1-2 times a year. I do it in January because I have cash from my year end bonus to make things easier, then again later in the year around my birthday I adjust my remaining purchases for the year so my AA isn't too far off my target by the end of the year.

Other thoughts - you have some large cap growth & mid/small indexes thrown in there. This is all good, but I would recommend that you have a fixed % target for these and stick to it. Things like VTI already include these, so any overweighting is a 'tilt' toward a certain factor. Randomly buying / selling large growth based on your gut instincts at the time is probably a bad idea. If you want a 5% tilt, or 10% tilt (or whatever amount) - write it down, write down why you think it is a good idea, write down why you think it could be a bad idea and be prepared to stick to it for the long haul. What will you do if it overperforms? What will you do if it underperforms for years on end?

The Investor Policy Statement is a wonderful tool - basically just writing down your investment hypothesis and providing yourself a framework with rules on what to buy, when, and how much. Instructions on when to rebalance, when to sell, etc. That way when the market is doing the opposite of what you envisioned you can go to your IPS and make sure you are following the rules before you click the buy or sell button.

You are doing great though, keep it up!

Wow, thank you for these suggestions!! You are right about randomly buying/selling growth is not a good idea. And lately it has been randomly buying so I think an investor policy statement will be helpful!

yesi_7

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Re: Optimize investments; 25 yr old grad student
« Reply #6 on: June 16, 2021, 08:30:05 AM »
Here is a snapshot of my own spreadsheet with a 5/25 rebalancing band column:
If RB="NO" then Do Nothing



Super helpful, thanks!

 

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