Author Topic: Please review my investment portfolio  (Read 2509 times)

whywork

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Please review my investment portfolio
« on: January 07, 2018, 07:41:22 PM »
40 year old, total networth 580K

140K:  401K + Roth IRA (megabackdoor)
160K: VOO (Vanguard S&P 500 Index ETF)
80K: VGT (Vanguard Information Technology ETF)
80K:  MGK (Vanguard Mega Cap Growth ETF)
30K: AMZN (Stock)
30K: FB (Stock)
30K: GOOG (Stock)
30K: Cash in Citibank Savings account

Each year, I can max out 401K (27K including company match) and after-tax 401K (27K) which comes to about 54K. On top of this I can save another 54K per year. I plan to distribute this latter 54K into buying VOO, VGT, MGK in the same ratio (2:1:1). All the 401K and after tax 401K (which gets mega backdoor rothed) goes into Vanguard's Target retirement 2045 fund. I recently started 401k, that's why its so low. 

nick_mmm

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Re: Please review my investment portfolio
« Reply #1 on: January 07, 2018, 08:38:42 PM »
You are very heavy into technology if you are comfortable with that it is fine, but most would recommend being more diversified between sectors.

You also seem to be very US-focused.  Lastly, consider adding some bond ETF.  Your vanguard target date fund seems to be your only international and bond exposure.

You have managed to save a huge amount of money which is a big accomplishment, but I think you should focus more on asset allocation. Everyone has different theories on this, but usually you want to have a combination of US and international stock and bond funds.  Bogleheads and many other sites have a lot of information on different strategies.

Of course what is most important is to invest in whatever makes you comfortable.
« Last Edit: January 07, 2018, 08:43:01 PM by nick_mmm »

Hargrove

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Re: Please review my investment portfolio
« Reply #2 on: January 07, 2018, 11:05:30 PM »
There's a lot of redundancy in FANG + S&P500 + Mega cap growth + IT. The portfolio is very IT-heavy. VTSAX and VTIAX for me.

(Having international as a separate fund lets you adjust the allocation yourself, and saves you the expense ratio on the balance in the domestic fund)

I'm with you on purely stocks. I don't keep anything in cash, though - I figured I got to a point where a month's cashflow would cover a credit card for any emergency before I had to pay interest.

soccerluvof4

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Re: Please review my investment portfolio
« Reply #3 on: January 08, 2018, 03:36:26 AM »
There's a lot of redundancy in FANG + S&P500 + Mega cap growth + IT. The portfolio is very IT-heavy. VTSAX and VTIAX for me.

(Having international as a separate fund lets you adjust the allocation yourself, and saves you the expense ratio on the balance in the domestic fund)

I'm with you on purely stocks. I don't keep anything in cash, though - I figured I got to a point where a month's cashflow would cover a credit card for any emergency before I had to pay interest.
You are very heavy into technology if you are comfortable with that it is fine, but most would recommend being more diversified between sectors.

You also seem to be very US-focused.  Lastly, consider adding some bond ETF.  Your vanguard target date fund seems to be your only international and bond exposure.

You have managed to save a huge amount of money which is a big accomplishment, but I think you should focus more on asset allocation. Everyone has different theories on this, but usually you want to have a combination of US and international stock and bond funds.  Bogleheads and many other sites have a lot of information on different strategies.

Of course what is most important is to invest in whatever makes you comfortable.



I gotta agree with both of these ^ and noticed right away your way overwieght sector specific. I would too get more diversified. Good Job on the saving!!

Mighty-Dollar

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Re: Please review my investment portfolio
« Reply #4 on: January 08, 2018, 04:02:48 AM »
30K: AMZN (Stock)
30K: FB (Stock)
30K: GOOG (Stock)
30K: Cash in Citibank Savings account
I gave up on individual stocks a long time ago. Unless you're wanting to gamble I'd shy away from putting so much in just 3 stocks. But they've probably done well for you. Also I don't like this new last in first out tax rule. Did you buy these stocks in one block or invest over time?
What's the cash for? That money is not invested.
Also you have NO bonds. That Schiller PE ratio is startin' to get up there. http://www.multpl.com/shiller-pe/

Mr. Boh

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Re: Please review my investment portfolio
« Reply #5 on: January 08, 2018, 06:16:01 PM »
I'll echo what others have said about your lack of diversification. You are extremely overweighted in the tech sector and underweighted in all other S&P sectors. FB, GOOG and AMZN are among the top five holdings in your ETFs (although AMZN is not held in VGT). I would encourage you to look at the holding weightings of those ETFs. The first thing you will notice is the redundancy. You might also be surprised by how much Apple you own.

I applaud your aggressiveness and I assume it has served you well, but in the event of a downturn the odds are good that you would outperform to the down side. Others have mentioned the 30k cash but a 5% cash weighting on an aggressive portfolio is right on target. FWIW I am invested with Schwab and their target asset allocation for an aggressive portfolio is 50% large cap equity, 20% small cap equity, 25% international equity and 5% cash. Even if you allocated in such an aggressive way you would be much better protected in a crash. There is an old saying that diversity is the only free lunch in the investing world. You might have lower or higher returns with such a portfolio but it is certain that you would have a lower risk profile.


whywork

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Re: Please review my investment portfolio
« Reply #6 on: January 09, 2018, 12:26:59 AM »
Thank you everyone. I will make the changes to become more diversified.

Probably putting all of it like my 401k into something like a Target Retirement 2050 fund would be the easiest way to achieve it I guess? It has both international split on stock and also bonds.

Kalergie

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Re: Please review my investment portfolio
« Reply #7 on: January 09, 2018, 12:50:06 AM »
Careful now going into a selling spree. Your FANG holdings have seen tremendous gains so depending on when you got in you may face some capital gains tax; especially if you held them short term. If you can, rather make asset allocation adjustments through adding new capital into holdings other than FANG. That way you don't have to sell and realize your cap gains. But that would require quite a large capital addition.