Looking for input on my portfolio

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Topic Author
changinginthebigsky
Posts: 2
Joined: Mon May 17, 2021 10:36 am

Looking for input on my portfolio

Post by changinginthebigsky »

Hi everyone!

I have spent the past few years learning about savings, retirement, lurking here and PF on reddit (which led me here) and slowly building my own investment plan. With that said, I am still quite new to all of this, and I have a few specific questions regarding some of choices. I am wondering if I am in a position to be more aggressive with my retirement funds by moving off of TDF to a 3 fund strategy, and what to do (if anything) with my stock holdings, as well as cash on hand. Also curious for anyone's thoughts on my less than ideal 401k situation...

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Details:
Tax Filing Status: Single
Tax Rate: 22%
State of Residence: Texas
Age: 29
Emergency Fund: Easily over 1 year of living expenses saved
Debt: No debt
Salary: $60k+ gross earnings
Desired Asset Allocation: 90% stocks / 10% bonds
Current Total Portfolio: ~$100k
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Portfolio:
401k
23.8% - BlackRock LifePath® Dynamic 2055 Fund Investor A Shares (LPVIX) (.90% ER, 2055 Target Date Fund)

Roth IRA
18.8% - Schwab Target 2060 Index Fund (SWYNX) (.08% ER, 2060 Target Date Fund)

HSA
5.9% - Vanguard Total Stock Market Index Fund Institutional Shares (VITSX) (.03% ER, Total Stock Market Index Fund)
-Cash in the account to cover my deductible has been left out

Taxable
4.6% - Applied Materials (AMAT)
4.7% - McDonalds (MCD)
2.2% - Cash

Savings Account
10% - quick access EF

High Interest Savings Account
30% - .50% interest rate, 2-3 day transfer for EF access
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Retirement Plan Options & Contributions:
401k
-Contributing 22%; company puts 4% in with or without match, and also matches up to an additional 4%
-On pace to fill 2/3 of 401k this year; planning to increase contributions to 32% soon so I can easily max next year
Roth IRA
-Contributing every month; on pace to max by March 2022
HSA
-Contributing every month, as well as my employer; on pace to max by December 2021
Taxable/High Interest Savings Account
-Any cash left over goes into either of these

Plan Options: Yes.. I know there are terrible and quite high
Specialty
Invesco Oppen Gold & Spec Min R (OGMNX) - 1.42%
Invesco Real Estate R (IARRX) - 1.48%
The Hardford Healthcare R3 (HGHRX) - 1.63%
International/Global
American Funds Europac Growth R1 (RERAX) - 1.58%
Invesco Oppen Dev Markets R (ODVNX) - 1.50%
MFS Research International R2 (MRSRX) - 1.36%

Small Cap
Bny Mellon Nsl Sm Cp Stock IX R - .86%
Invesco Small Cap Equity R (SMERX) - 1.56%
MFS New Discovery R2 (MNDRX) - 1.56%
Victory Sycamore Small Co Opp R (GOGFX) - 1.44%

Mid Cap
Fidelity Advisor Lvgd Comp Stk M (FLSTX)- 1.32%
MM S&P Mid Cap Index R3 (MDKTX) - .93%

Large Cap
Allianzgi Dividend Value R (PNERX) - 1.30%
American Century Growth R (AGWRX) - 1.48%
Invesco Dividend Income R (IRTCX) - 1.21%
Jpmorgan US Equity R2 (JUEZX) - 1.19%
MM S&P 500 Index R3 (MMINX) - .87%
The Hartford Equity Income R3 (HQIRX) - 1.36%

Asset Allocation/Balanced
BlackRock LifePath Dyn Retire A (LPRAX) - .90%
BlackRock LifePath Dyn 2055 A (LPVIX) - .90%
Franklin Conservative Alloc R (FTCRX) - 1.13%
Franklin Growth Allocation R (FGTRX) - 1.19%
Franklin Moderate Allocation R (FTMRX) - 1.13%
The Hartford Balanced Income R3 (HBLRX) - 1.27%

Bond
AB High Income R (AGDRX) - 1.28%
Bnym Mellon Nsl Aggr Bond IX R (MPBFX) - .74%
Franklin High Income R (FHIRX) - 1.11%
PIMCO Total Return R (PTRRX) - 1.29%
The Hartford Inflation Plus R3 (HIPRX) - 1.17%
Stable Value/Money Market
Jpmorgan US Gov Money Mrkt SERV - 1.04%
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401k/Roth Questions:
Ideally, I would like to restructure my holdings into a 3 fund portfolio.

I want to move my 401k and Roth IRA to more aggressive holdings ... but my 401k has terrible, limited options. However, MMINX seems to be the other "good" choice available. So, I could use MMINX to build the US portion of my stock portfolio...

...and then break up SWYNX into the 3 Schwab funds shown here. This would get me lower ERs than my current TDF ... though the difference is quite small.

Should I consider moving around just my 401k, and leaving my Roth IRA in the TDF? I say this because LPVIX is 80:20 stocks/bonds, and MMINX has a .03% lower ER.

I pay no additional fees in my 401k and my employer matches 4%, but also provides an additional 4% regardless of matching. This sort of helps with the less than ideal plan situation. Also, I do not see myself working for this company long term.
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Taxable/Cash Questions:

I am looking for any suggestions on what I should do with my two individual stock holdings, if anything? I don't follow either company very closely, so I feel like there is some risk holding these and just letting them run... even though it's worked very well for me so far. I didn't pick them- they were gifted to me by my father. How long can the luck continue... or would a be a moron to give up MCD holdings?

I want to invest the cash I have available in my brokerage account - so I am looking at VTI. I am also considering selling the stocks I hold, and moving to VTI for peace of mind- thoughts?

Am I potentially holding "too much" cash in my savings accounts, considering I have no upcoming large expenses and my current age? Is there a smarter way to position this cash for better returns? Maybe a bond ladder? I don't foresee any large expenses for 5+ years.

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Well, that's about it. If you read this far... thank you!! Please let me know if I need to add or adjust anything. Any insight is appreciated!
chassis
Posts: 2182
Joined: Tue Mar 24, 2020 4:28 pm

Re: Looking for input on my portfolio

Post by chassis »

Congratulation on no debt and a strong savings behavior. This will serve you well.

I'm not a fan of target date funds. They are too conservative, especially at your age. My preference is large cap growth equities, either stocks or funds. If that isn't your preference, then an index fund, but not a target date fund. You will be exposed to the market for 30 years and your portfolio will thank you for investing in growth.

I know almost nothing about AMAT and I don't like the stock chart. Materials in general are volatile and I don't think the AMAT return justifies the volatility. I hold materials stocks and the sector can be rewarding. On the surface AMAT doesn’t appear attractive to me.

MCD is a classic long term growth and dividend stock. My opinion is to keep it with dividends reinvested.
rhubarbpie
Posts: 82
Joined: Mon May 03, 2021 9:18 am

Re: Looking for input on my portfolio

Post by rhubarbpie »

Given the choices in your 401k, I think the target date fund is fine. The only other option I might pick would be MM S&P 500 Index R3 (MMINX) - .87% - which you could use as the US stock portion of a three-fund portfolio, and put the other two funds in your IRA, HSA, and taxable account as you've thought about. The only problem with that is that you would preferably put your bond funds in your 401k, and none of the ones you have access to look particularly amazing. Maybe the stable value fund, but you're kinda young for one of those. If you're likely changing jobs in the next few years, don't worry too much about allocation, since you'll be able to roll it over to your IRA when you leave.

If I were you, since the costs are so high in your 401k, I'd contribute just enough to it to get the full match, then max out your IRA and HSA next, then go back to max the 401k after you've achieved those. Also, you've got a lot in a savings account - max out your 401k, IRA and HSA *now* and use some of that money to cash flow your expenses for the rest of the year if you need to.

Given you've got a year of emergency fund saved up, I don't think you need to keep cash in your HSA - I'd invest the whole amount, and plan to never touch your HSA balance unless a major medical crisis occurs. Pay for your medical costs out of savings and allow the whole balance in the HSA to grow for years.

Overall you're doing great, with no debt and a high savings rate. I'd work to get some of that 30% in the HYSA into I bonds, given the current rate, or just into a taxable brokerage account invested in index funds or their ETF equivalents. If you want to sell the stock, look into what'd cost you in LTCG and maybe sell it off over time if you need to.
tashnewbie
Posts: 4283
Joined: Thu Apr 23, 2020 12:44 pm

Re: Looking for input on my portfolio

Post by tashnewbie »

Welcome to the forum.

You're doing great by not having any debt and maxing your Roth IRA and HSA!! Well done.

In your 401k, I'd either keep using the TDF or use combo of MMINX and MPBFX, to get your desired bond allocation.

I would probably sell the individual stocks you have in taxable and buy VTI (or VTSAX if at Vanguard), if there are not a lot of capital gains to pay. Or, at the very least, turn off automatic reinvestment of dividends, and use dividends to purchase VTI/VTSAX or whatever other fund you decide to use in taxable.

I think you're holding quite a bit of cash (~$43k). That seems like a hefty EF. You'll have to decide what amounts makes you comfortable. If you decide you want to invest some of the cash in your savings accounts, then I'd either increase the 401k contribution percentage (and use the cash to pay regular living expenses, if the paychecks become too small to pay them) or buy more VTI/VTSAX in taxable.
Topic Author
changinginthebigsky
Posts: 2
Joined: Mon May 17, 2021 10:36 am

Re: Looking for input on my portfolio

Post by changinginthebigsky »

Thank you to everyone who has replied so far!

I am thinking I want to proceed with breaking up my TDFs into a 3 fund portfolio. In my head, it makes sense to build around the 10 percent bond allocation with MPBFX in my 401k, and a set 30% allocation to SWISX in my Roth IRA. Then, the rest leftover to invest just gets dumped into MMINX in my 401k and SWTSX in my Roth.

I am also going to proceed with moving some of my cash into VTI in my taxable, but also increase my 401k contributions. I'll use that cash to cover expenses should my paychecks get to small. Also going to carve out a 6 month EF, which I will not "include" in overall portfolio going forward, since it won't be touched.
wetgear
Posts: 859
Joined: Thu Apr 06, 2017 10:14 am

Re: Looking for input on my portfolio

Post by wetgear »

changinginthebigsky wrote: Wed May 26, 2021 4:29 pm Thank you to everyone who has replied so far!

I am thinking I want to proceed with breaking up my TDFs into a 3 fund portfolio. In my head, it makes sense to build around the 10 percent bond allocation with MPBFX in my 401k, and a set 30% allocation to SWISX in my Roth IRA. Then, the rest leftover to invest just gets dumped into MMINX in my 401k and SWTSX in my Roth.

I am also going to proceed with moving some of my cash into VTI in my taxable, but also increase my 401k contributions. I'll use that cash to cover expenses should my paychecks get to small. Also going to carve out a 6 month EF, which I will not "include" in overall portfolio going forward, since it won't be touched.
This is a great strategy. I think you found the best path forward. Making the best of the available funds in your 401k and maxing everything you can at only the expense of drawing down an overfunded EF to a more reasonable level. Only other change that might be worth making depending on how much they have appreciated is to swap the 2 individual stocks for more VTI in your taxable. If they have large gains then it's probably not worth it but if they don't it's probably best just to switch now.
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