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sschullo

2017 Return, costs and asset allocation

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My 33%/67% stock-bond balanced portfolio returned 9.0% 

Every end of the year I post my portfolio returns, costs, and asset allocation. My portfolio is appropriate for a 70-year-old retired teacher who needs to make distributions last for the rest of my life. If you are younger, leaving your money to your children, or you don't have to rely on your portfolio because your pension is big enough, then, by all means, you can increase your risk by increasing the stock allocation to 60%, 70% or higher percent. 

I hope that how I constructed my portfolio will assist anybody who is wondering about portfolio organization. My portfolio is extremely low cost, only .07% fee! I paid approximately $1102.00 last year! 

Happy New Year everybody,

Steve

End of Year 2017 RETURNS.JPG

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Pie Chart of my Asset Allocation

5a5a7e5a7bc73_EndofYear2017PieChartAS.thumb.JPG.bffd9c6719226ad5f019df044ac06f3b.JPG

 

 

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I'm not up to typing in as detailed an account of my investments as Steve did, but my (roughly) 70/30 equity/fixed portfolio (to which I am still contributing) appreciated by 15% in 2017.  

My investments are index funds, tilted toward small and value, with above-market weightings of REITs (which did relatively poorly this year) and Emerging Markets (which did very well).  I still have one individual stock holding--Berkshire Hathaway--which is about 8% of the portfolio; that did well, a bit better than the S&P 500.  As retirement approaches for me (still 3 - 5 years away, most likely), I've begun to add to fixed investments (mostly, for now, a stable value fund)—last year, the allocation was closer to 75/25.

PS: Steve suggests we include costs: I'm not sure of the overall total, but my Vanguard account (roughly 3/4 of the total portfolio) averages .10% ER, according to Vanguard.  The Berkshire stock has a zero ER, the stable value has unknown costs baked in (+ a .25% admin fee). 

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I won't present as elegantly as you Steve . You make us all look like amateurs with your great graphic presentation which I 'm too lazy  to try and replicate.

Our 2017 return was  13.4%  Our cost averages 0.08%  according to Morningstar  . We are  invested in all Vanguard index funds :Total Stock, Total International, Total Bond, and significant stake in Vanguard Small  Cap Index. I also have some cash in prime Money market. My allocation last time I checked was 55 Stocks 40 Bonds 5 % cash or there about. With the run up in stocks that may have changed. We have money in Traditional IRAs, Roth IRAs, and taxable accounts .  Can't complain. 

Besides a significant retirement account, we also are receiving full pensions. I am not taking social security at the moment and the plan is to wait to 70.  WE have no money worries .  I am glad I planned in my youth .Even though I made plenty of mistakes early on, I consistently saved and I gained some wisdom as I got older through reading. That ultimately lead me to Vanguard index funds. I am glad we have no money tied up in 403bs!!

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I also fail to present as elegantly as Steve, and wish that I could. With my money spread across my Vangaurd 403b, Vangaurd ETF HSA, Vanguard 529 (used for my grad school this year, which itself gained 13%), and Schwab Roth IRA it is difficult to parse out a total return. Obviously all my investments are low cost and FeeX gives me an A+ grade. Given that I'm only 5% in bonds and another 3% in ETFs and within my Roth I did push a significant amount of money into Small Caps, I'd guess my overall return was somewhere in the low to mid teens.

In 2018, I'm going to start fooling around with equal-weighted ETFs like EQAL and RSP. Although they have a slightly higher E/R (.2 compared to the .04 and .06 that Schwab ETFs have available) I'm interested to see their performance.

I'm also more and more looking into investing with a heart. Unfortunately, most of the ethical ETFs and funds seem to have significantly higher E/R than indexes.

I would be gracious to hear experts feedback.

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I also fail to present as elegantly as Steve, and wish that I could. With my money spread across my Vangaurd 403b, Vangaurd ETF HSA, Vanguard 529 (used for my grad school this year, which itself gained 13%), and Schwab Roth IRA it is difficult to parse out a total return. Obviously all my investments are low cost and FeeX gives me an A+ grade. Given that I'm only 5% in bonds and another 3% in ETFs and within my Roth I did push a significant amount of money into Small Caps, I'd guess my overall return was somewhere in the low to mid teens.

In 2018, I'm going to start fooling around with equal-weighted ETFs like EQAL and RSP. Although they have a slightly higher E/R (.2 compared to the .04 and .06 that Schwab ETFs have available) I'm interested to see their performance.

I'm also more and more looking into investing with a heart. Unfortunately, most of the ethical ETFs and funds seem to have significantly higher E/R than indexes.

I would be gracious to hear experts feedback.

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Our asset allocation is 40% equities, 60% bonds and has been for the last 10 years. Prior to that it was 50/50 since we retired. We've been retired 25 years. 

Vanguard portfolio as of 31 Dec 2017:

1 yr, 11.2%

3 yrs, 6.1%

5 yrs, 8.0%

10 yrs, 7.2%

Vanguard (92% of investments) average ER is 0.14% as per Portfolio Watch.

TIAA (8%)

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On 1/19/2018 at 5:42 AM, DustinVoss said:

I'm also more and more looking into investing with a heart. Unfortunately, most of the ethical ETFs and funds seem to have significantly higher E/R than indexes.

I would be gracious to hear experts feedback.

I'm no expert, but my conclusion is that "ethical" funds don't make much sense.  Better to invest in widely diversified low-cost funds and use some of your income to directly support causes of your choice. 

Not only are the socially screened funds more expensive and less diversified than whole-market index funds, there's little agreement about what investment categories to avoid -- tobacco? oil? mining? ? abortion services? pharmaceuticals? subpar working conditions? etc, etc, etc...

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