My car crash of a portfolio

30 thoughts on “My car crash of a portfolio”

  1. 56 Line Items… that is a lot!

    We have kept our portfolio relatively simple, but it wasn’t always like that. We invested in employer plans, tried betterment, etc etc, but we recently started simplifying and consolidating to Vanguard. We still have other investments here and there (HSA with Health Equity, ESPP leftovers with eTrade), but we have a handle on it.

    When we began to track our Net Worth, we became aware of all the various accounts and where they are at. That helped us to get our a snapshot of our financial portfolio so we weren’t missing anything!

    1. Mrs AR – unbelievably I actually omitted some accounts like employer stock purchase and deferred comp – so there is more! (I guess it’s a good problem to have). But I need to reduce my cognitive load, and this is killing me.

  2. I currently use Vanguard, Wealthfront, Betterment & Acorns. Vanguard is my employer 401K, Wealthfront is a Roth IRA after rolling it over from another employer 401K, Betterment is a taxable account and Acorns is for the spare change.
    I’ve really enjoyed this model but will be looking into simplifying down the line. I might just streamline everything into Vanguard.

    1. Lance – that does not look too cumbersome to me, so sounds like a good system that works for you.
      With our traditional pension plans in the background I really need to get my asset allocation close to 100% stocks. Thanks for stopping by!

  3. Thanks for sharing. Our asset allocation is 65% stocks and 35% bonds. My wife will receive a pension as a public school teacher in pa. Our asset allocation is based on 110 – our age = our stock allocation. If I looked at her pension as a bond holding, I should be more weighted in stocks in our investment accounts. You gave me some food for thought.

    1. Dave – snap I married a teacher. I projected out her pension and it should be reasonably good so I assumed that was all bonds. Albeit nominal bonds, and not inflation linked. If we have huge inflation then that pension will be worthless.
      I hope you’ve looked at 457 it’s a great vehicle. We’re now also socking away the maximum in the 457 and 403b.

  4. Good luck cleaning up. Hopefully, you can get it done in a reasonable time. Changing asset allocation takes a really long time for me so I mostly leave it alone.
    Currently we’re at about 75/25 stock/bond, not counting real estate. I’d like a little more bond at this point, though.

  5. I’m in the process of cleaning up my portfolio too. Like you, I’ve moved back from Betterment to Fidelity to have better control over the specific funds and allocations. I still think Betterment is great for non-DIY investors who don’t want to bother building and managing a portfolio, but I have the time and knowledge. I’m also winding down my Prosper holdings – likely for the same reasons you’re moving away from LendingClub.

    And also like you, I’m scratching my head on the best way to handle the reallocations without getting hit with a TON of capital gains. I’ve already turned off DRIPs to start building cash and that will be one part of the rebalancing. That would be very slow though if it’s all I do. I had planned to convert some IRA-> Roth IRA this year but I might need to factor in the rebalance as a higher priority. Still have to ponder that a bit.

    Thanks for sharing your portfolio story!

  6. Your situation is almost stereotypical for professionals. We’ve all heard of the lawyer who has no will (I’ve been that guy) or the doctor who never gets a check-up. This falls into that category. Thanks for coming clean and allowing us to benefit from your experience. I also noted that you seem to be moving assets from Lending Club. I’ve been transitioning to Peer Street for the last year or so as LC cash becomes available. I’m much happier with the returns.

    1. Oldster – thanks for the comment. Peer Street is producing some nice returns but I’ve been frustrated with the cash drag. I always seem to have a lot of cash waiting for funding. I wanted to take that into account in calculating an IRR so I had to cut and paste stuff into a spreadsheet. Unbelievable that a purportedly professional investment firm can’t give you a straight answer to “what is my return”. And I’m forced to mess about with excel. But otherwise I like the asset class.

  7. I used to have an ugly mish-mash of active and passive funds from several companies, including target date funds, “funds of funds,” and funds with unnecessarily high expense ratios.

    It took a year or two from the time I realized what a mess it was before it was fully untangled. Based on what you’ve got, it could take you quite some time.

    The good news is everything not in a taxable brokerage account can easily be exchanged into the investment of your choice. In taxable, you may have to wait for time to pass to make any gains long-term, and will face the tax consequences of selling.


  8. Thanks for sharing your portfolio! It’s always interesting to see how professionals treat their own portfolios and how different it is from mine.

    I did simplify a few years ago and it has been great. Never went the Betterment route, but now looking to get into PeerStreet/RealtyShares etc. Just need to figure out if I should do it via a self-directed vehicle or not.

    Because of the capital gains, I almost always end up rebalancing with new money in taxable. But yeah, I can see why you’d want to reduce increase your equity exposure.

    1. WO – I’m lucky in that we have quite a lot of traditional pension that will kick in. So I feel that I can’t get enough equities. BTW Personally I wouldn’t hold professionals’ portfolios in any special regard…

  9. I actually like your portfolio’s low equity allocation very much. At this market juncture a high cash/bond positioning is quite appealing.
    If you’ll remain with this allocation a bit longer I’m almost certain you’ll be able to reallocate to equities at a 15-20% discount without 6-8 months and you’ll miss NO upside.
    At the very least, slowly dollar cost average ito equities over the next 10 monthsz

    1. Kirk – thanks for the comment. I personally hate to time things and I don’t need any more procrastination! But I’m sure you’ll find a lot of sympathizers for what you describe.

  10. This reminds me of the saying “the mechanic’s car is always the worst.” As someone married to a former mechanic, it’s very true.

  11. “This is not worth having” — that’s something I’ve been fighting with too. That and complexity are my two biggest enemies when it comes to my investments. There was a stretch of time, about 7-8 years ago, when I invested in smaller companies, real estate, etc. They’ve underperformed or otherwise been unremarkable… but I still track them. They take up space and they’re honestly not worth it. I’ve started unwinding them just to get them off the books and simplify my life.

    1. Jim – I’ve found myself valuing simplicity more and more and been willing to pay for it, or at least willing to forgo perceived opportunity, in order to get it. Thanks for dropping by and sharing your thoughts.

  12. Nice post! I have also become frustrated with Lending Club. I just checked today and saw that my “net annualized return” is all the way down at 1.4%. I don’t have very many notes, so I’m not well diversified, but come on. Peer Street isn’t an option for me though since I don’t qualify.

  13. My understanding is that most financial advisors won’t count the value of your primary residence and pensions for the purpose of designing an asset allocation that match your goals. Yours is somewhat conservative, but I wouldn’t say it’s a train wreck.

  14. First I think you need a plan. I’m not saying that to be flip, but as a way to focus. You need to understand why you own everything you own, and you should own only what fits into your plan. I’ve done everything from commodities trading, to day trading, to options trading, to fund and stock picking. One day I was listening to Alan Greenspan being interviewed on CNBC and he said “own everything” as in modern portfolio theory. That’s one thing I never even heard of, so I learned about it. So that was the start of my plan. I read some books on modern portfolio theory, my favorite are by Phil DeMuth. Suddenly my portfolio had purpose instead of chaos,and I started to fill out asset classes. My classes in an accumulation portfolio include:

    Equities 65%
    Bonds 23%
    Commodities 5%
    Alternatives 5%
    REITS 2%

    The equities are split between 2/3 domestic foreign emerging market. Before I FIRE’d I just kept stoking this portfolio. You need to have a schedule and put in money every month or even every week, PART OF THE PLAN. This portfolio weathered 2008 fine. I look at the portfolio as 2 parts, “equities” and “non correlated”. Non correlated (bonds commodities REITS Alternatives) are the thing that makes modern portfolio theory happen, the thing that pushes you onto the efficient frontier.

    When a crash happens harvest tax loss. I lived through 2000 and 2008 and had other losses and wound up with about 700K harvested loss (which is not quite the same as real loss). I consider this a separate asset class since I can pair it with capital gain to have a tax bill of $0. It eliminates the impediment of not wanting to re-balance because of capital appreciation. I’m NOT big into putting everything into pre tax accounts. I have twice as much in post tax as pretax money. RMD is the reason why. The govt makes you annuitize your pre tax accounts at age 70, and given your picture you’re likely going to get killed on taxes. Back door Roths is my advice.

    If you have things that don’t fit into your asset plan SELL THEM and put the cash into your plan. Don’t let taxes stop you. Just figure out the most efficient way to sell them. A crappy investment is a crappy investment even if it’s a little appreciated.

    I wouldn’t count my house as part of my portfolio. From the papers I’ve read it is typically a net drag (-1%) by the time you pay taxes insurance upkeep interest on the loan etc. One thing it is, is a ready source of leverage if you need some leverage.

    I would look at the pensions in the same way. They will decrease cash you have to extract from a portfolio in retirement but I wouldn’t call them an asset when planning your portfolio. Same with SS.

    Retirement spending is NOT the same as portfolio accumulation. In retirement you will need to take cash with as much tax efficiency as possible. When I retired I created what is called my “home brew annuity”. I took a total of $650K from post tax equities (my largest holding) and paired it with some LT cap loss (separate asset class) and paid no tax on the dough. I moved that into VWSUX a tax free muni bond fund. It grows a little tax free and should be responsive to inflation. This moved my 77/23 portfolio to something closer to 58:42. It is recommended to move your portfolio into a more bond heavy posture in early retirement. Since I’m living off VWSUX my equity stake will move back toward 75% automatically. During this time I will be back dooring Roth from my trad IRA’ at a 15% tax bite instead of 25-30%. I’m sitting out SS till 70. I calculate a 6.1% compounded rate of growth in that annuity by waiting, but especially if I die my wife will be better off. At 70 I will have to re-evaluate because SS and RMD kicks in, so I’ll re-retire at 70 make another 5 year plan, and keep doing that till I run out of respiration.

    All of this is predicated on a budget for my annuity. I use to generate my budget, and charge everything on a FIDO card. The few things I don’t charge also gets picked up by MINT so I know where the money goes. I use a portfolio aggregator to follow all my investments. Something like personal capital does the trick. My swr is 3% and I typically come in 85% of budget. THIS IS IMPORTANT how much you swr is dramatically related to portfolio longevity.

    I FIRE’d with 2 kids in college. I planned for each kid as a discrete line item and saved to cover the line. I didn’t get cute sticking a billion dollars into a 529, instead I put excess money into my post tax stock. Each kid got 20K of BRK.B in a gift trust when they were 1-2 and I just let it ride and didn’t tell them about it. BRK.B appreciated about 7 times in the interim with no taxable events I may not tell them till they are 50. My kids spent the summer in Europe paid for by the gift trust money, they are over 18. I’m a big fan of funding discrete retirement events as discrete line item events.

    There is nothing hodge podge or flapping around about this plan. If you follow something like it and actually PUT YOUR MONEY INTO THE MARKET every month or even every week you will be rich. My buddy puts his dough in every week and he’s rich as hell. If you think I don’t understand a car crash read the first paragraph again


  15. AoF,
    I just read another post of yours – “Think the unthinkable”
    In that context, I’d be careful assuming that pension benefit will be stable over a lengthy retirement.
    As an actuary I’d expect you may have more insight to pension plan health than most though.

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