28 yo portfolio checkup

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Topic Author
B3GINN3R
Posts: 126
Joined: Fri Oct 28, 2016 4:05 pm
Location: chicago

28 yo portfolio checkup

Post by B3GINN3R »

Just want to do a yearly check in to see if you guys have any advice on changes to make, or whether to just keep on chuggin', also a couple questions below.

Married 28 y.o.'s, a kid on way, HCOL
His income - $320k+ (depending on bonus)
Her income - $60k
Total yearly expenses - ~$75k

Cash - $133,000 (combined emergency fund together with downpayment savings)
Investments spread amongst Roth (Backdoor), 401ks, brokerage-$400k
-VTI - $300k
-BND - $12k
-International - $11.3k
-Money Market getting DCA'd into VTI - $66k
-Individual stocks - $10k

1. Main question is that I like being all stock (or mostly all stock), but do I need to switch to higher bond now that I am coming up on 30?

2. Am I making a mistake holding 133k in cash even if I plan on using it in the near term?
Last edited by B3GINN3R on Fri Jan 08, 2021 1:23 pm, edited 1 time in total.
lakpr
Posts: 7697
Joined: Fri Mar 18, 2011 9:59 am

Re: 28 yo portfolio checkup

Post by lakpr »

I am not sure what VBI etf is, I am unable to locate it through quick google search. But with only $12k in that ETF, really does not matter.

Question 1: Only you can tell what your SWAN (sleep-well-at-night) factor is. I recommend Age-20 allocation to bonds. By that token you should have 10% in bonds.

You have a mortgage, or renting? If you have a mortgage, the money intended for "bonds" can be used to pay down the mortgage principal and you will be in the exact same position as before risk wise.

If you are not even sure whether the available investment should be in stocks or bonds, there's the classic "split in half" solution. Half goes to investments, half goes to paying off the debt.

$133k is approximately 21 months of expenses based on your $75k yearly-expense figure; to me it does sound a bit excessive. I would hold 1-year expenses in cash. Rest should be allocated for near-term expenses and investments.

One last comment I want to make is for you to be prepared for tax loss harvesting opportunities. That means not investing in the same exact ETFs or funds in your 401k, IRA and taxable. It sounds like you have chosen VTI everywhere. Since you can exchange funds or ETFs in the 401k plan and Roth IRA without tax consequences, I suggest you move away from VTI in those accounts. As to what to move to in the 401k plan, that would depend on the choices available in the plan. For the Roth, either you can use 50% growth index ETF + 50% value index ETF (VUG and VTV), or a 80:20 split between large-cap index ETF and small-cap index ETF (VV and VB).
ivgrivchuck
Posts: 735
Joined: Sun Sep 27, 2020 6:20 pm

Re: 28 yo portfolio checkup

Post by ivgrivchuck »

B3GINN3R wrote: Fri Jan 08, 2021 11:53 am Just want to do a yearly check in to see if you guys have any advice on changes to make, or whether to just keep on chuggin', also a couple questions below.

Married 28 y.o.'s, a kid on way, HCOL
His income - $320k+ (depending on bonus)
Her income - $60k
Total yearly expenses - ~$75k

Cash - $133,000 (combined emergency fund together with downpayment savings)
Investments spread amongst Roth (Backdoor), 401ks, brokerage-$400k
-VTI - $300k
-VBI - $12k
-International - $11.3k
-Money Market getting DCA'd into VTI - $66k
-Individual stocks - $10k

1. Main question is that I like being all stock (or mostly all stock), but do I need to switch to higher bond now that I am coming up on 30?
Considering the size of your cash position, there is absolutely no need to buy additional bonds. As long as your subjective risk tolerance allows it a person at your age can be 100% stocks (excluding emergency fund + short term spend)
2. Am I making a mistake holding 133k in cash even if I plan on using it in the near term?
No. But keep it at a high-yield saving account to earn some interest...
37% VTI | 37% VXUS | 13% I-bonds | 13% EE-bonds
Topic Author
B3GINN3R
Posts: 126
Joined: Fri Oct 28, 2016 4:05 pm
Location: chicago

Re: 28 yo portfolio checkup

Post by B3GINN3R »

lakpr wrote: Fri Jan 08, 2021 12:46 pm I am not sure what VBI etf is, I am unable to locate it through quick google search. But with only $12k in that ETF, really does not matter.

Question 1: Only you can tell what your SWAN (sleep-well-at-night) factor is. I recommend Age-20 allocation to bonds. By that token you should have 10% in bonds.

You have a mortgage, or renting? If you have a mortgage, the money intended for "bonds" can be used to pay down the mortgage principal and you will be in the exact same position as before risk wise.

If you are not even sure whether the available investment should be in stocks or bonds, there's the classic "split in half" solution. Half goes to investments, half goes to paying off the debt.

$133k is approximately 21 months of expenses based on your $75k yearly-expense figure; to me it does sound a bit excessive. I would hold 1-year expenses in cash. Rest should be allocated for near-term expenses and investments.

One last comment I want to make is for you to be prepared for tax loss harvesting opportunities. That means not investing in the same exact ETFs or funds in your 401k, IRA and taxable. It sounds like you have chosen VTI everywhere. Since you can exchange funds or ETFs in the 401k plan and Roth IRA without tax consequences, I suggest you move away from VTI in those accounts. As to what to move to in the 401k plan, that would depend on the choices available in the plan. For the Roth, either you can use 50% growth index ETF + 50% value index ETF (VUG and VTV), or a 80:20 split between large-cap index ETF and small-cap index ETF (VV and VB).
I meant BND, edited in main post.

I currently rent and have no other debts.

I like the idea of variation for the tax loss harvesting, I'll start diversifying funds a bit, was trying to keep it as three fund as possible.

I think I am goign ot keep the 133k of cash in high yield savings, where it currently is, and just wont add any more to it.
nsherman2006
Posts: 14
Joined: Wed Jun 14, 2017 11:53 am

Re: 28 yo portfolio checkup

Post by nsherman2006 »

Since you said down payment savings, I'm assuming a sizable part of that 133k is intended as a down payment on a house.

If that's the case, I would think about what your asset allocation would look like after a purchase like that and decide if that's what you want. If not, you can start adjusting now :)
justsomeguy2018
Posts: 1258
Joined: Wed Oct 03, 2018 8:11 pm

Re: 28 yo portfolio checkup

Post by justsomeguy2018 »

How are you 28 with a $320k salary??
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geerhardusvos
Posts: 2046
Joined: Wed Oct 23, 2019 10:20 pm
Location: heavenlies

Re: 28 yo portfolio checkup

Post by geerhardusvos »

B3GINN3R wrote: Fri Jan 08, 2021 11:53 am Just want to do a yearly check in to see if you guys have any advice on changes to make, or whether to just keep on chuggin', also a couple questions below.

Married 28 y.o.'s, a kid on way, HCOL
His income - $320k+ (depending on bonus)
Her income - $60k
Total yearly expenses - ~$75k

Cash - $133,000 (combined emergency fund together with downpayment savings)
Investments spread amongst Roth (Backdoor), 401ks, brokerage-$400k
-VTI - $300k
-BND - $12k
-International - $11.3k
-Money Market getting DCA'd into VTI - $66k
-Individual stocks - $10k

1. Main question is that I like being all stock (or mostly all stock), but do I need to switch to higher bond now that I am coming up on 30?

2. Am I making a mistake holding 133k in cash even if I plan on using it in the near term?
With your income level and no debt, you can have whatever asset allocation you want. Just understand that an all equity portfolio, while likely being the best long term, can be tough to stick with if you don't have the stomach. I am in my early 30s, make good money, rent, have no debt, and we have an almost 100% equity portfolio, mostly VTI and VEA. We don't need our portfolio for a while, so we want the growth and can take the volatility. When we retire in our mid-30s we will likely go down to a 90/10 or 80/20 stock/bond mix, and we wouldn't go less that 80% equities since our portfolio needs go the distance (50ish years). We may stay in all equities forever, we shall see. You staying in equities is a reasonable option, but keep in mind, that cash is part of your overall asset allocation. I would invest your cash and not buy a house (that's what we have done to much success). I have no interest in buying a house in HCOLAs. Keep investing aggressively, and sounds like you're on a good path. Best wishes!
VTSAX and chill
ddurrett896
Posts: 1550
Joined: Wed Nov 05, 2014 3:23 pm

Re: 28 yo portfolio checkup

Post by ddurrett896 »

At 28, you're fine either way.

I'd maybe hold 100 till 30, then re balance to 90/10 at age 30.
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