2017 First Quarter Update

Welcome to another quarterly financial update. In this article, we'll review how our investments did in the first quarter of 2017.The first quarter of 2017 is in the books. That means it’s time for another quarterly financial update. In this article we’ll take a look at our investment portfolio, how it has done so far, and what we have planned for the future. Before we get going, be sure to check out my previous quarterly update here.

But first, a quick blog update. I apologize for the not-so-consistent posting schedule. I’ve hit a busy stretch recently in regards to work and taking care of Little Random Guy. Things seem to have settled down a bit, so I should be able to get back to a more consistent publishing schedule. I’ve also been trying out new themes for the site. It took me a while but I think I’ve found one that I’m happy with. But bear with me as I work out some of the kinks.

With that out of the way, let’s move on to the 2017 First Quarter Update.

 

OUR PORTFOLIO

As I mentioned in the previous update, we invest primarily in passive index funds and ETFs with a target asset allocation of 75% equities and 25% fixed income. Here’s a summary of our investment accounts:

Random Guy

  • Schwab 401(k)
  • Vanguard Roth IRA and joint taxable account
  • HSA Bank/TD Ameritrade

Random Gal

  • Fidelity 401(k)
  • Vanguard Roth IRA and joint taxable account
  • Schwab taxable account

As you can see, we have a total of seven accounts with three different financial institutions. I would prefer to have less accounts, but three of them are tied to our jobs. Outside of those, we just have holdings with Vanguard and Schwab.

Equities

Our equity holdings are a combination of domestic and international stocks with a smattering of small cap value and REITs. My wife’s old Schwab taxable account also came along with some individual stocks, which I’ll talk about later.

Here’s a summary of our equities:

For those of you counting, that’s 10 different equity funds. For someone who likes to keep investing simple, that’s a bit too much for my taste. But like I said before, having our retirement accounts with two different financial institutions complicates things a bit. Also, the bulk of our investments are still in our 401k retirement accounts, so we still need to have some equity holdings there in order to keep our allocation near the 75/25 goal.

Excluding the individual stocks, there are five different equity categories: total domestic stock, total international stock, small cap value, REIT, and “other” (high dividend yield fund). Our tilt towards small cap value stocks and REITs are currently at 5% and 7% respectively. International stocks account for 21% of our equities.

 

Fixed Income

Our fixed income holdings are more straightforward. We essentially have total bond index funds in additional to some California municipal bonds.

 

2017 FIRST QUARTER PERFORMANCE

I think that we did pretty well during the first quarter of this year. Our portfolio saw a return of about 4.8% as compared to the 5.5% return of the S&P 500. This really isn’t an apples to apples comparison as about one-fourth of our portfolio is in bonds. That being said, I’m happy with our performance so far.

Other tidbits from the past quarter:

  • International has done well with a return of about 8%.
  • REITs, on the other hand, have returned just 0.8%.
  • Overall, our investment portfolio grew by 10.8% in the quarter.

 

PLANS GOING FORWARD

I don’t foresee making any drastic changes to our portfolio, at least for the time being. Our current asset allocation of 76/24 is pretty close to our target, and I like where we’re at in terms of our small cap and REIT tilts. I may, however, increase our international allocation to something like 25% of equity holdings.

Over the long term, I want to eventually simplify our portfolio and cut down on the number of funds that we own. My plan is to have our retirement accounts hold our bond, small cap, REIT, and “other” funds while our taxable account will be used for total stock and municipal bond funds. I might also shift the international holdings to taxable as well.

Finally, our individual stocks* will be left as is. I’m not a fan of this investment style, so I won’t be actively purchasing more shares. Instead, I’ll just let these ride and enjoy the automatic dividend reinvestments along the way.

 

 

IN CONCLUSION

The first quarter ended up being a good one for investors, particularly those with international holdings. Market returns weren’t too shabby as well, although I’m hoping that small caps and REITs will pick up some momentum as the year goes on. It will be interesting to see how the second quarter pans out, but in the end it’s all about sticking with your investment plan.

 

Readers, how was your first quarter? Did you beat the market? Are you even trying to? Comment and share below!

 

Enjoyed the article? Be sure to subscribe and receive email notifications about new posts and content. Thanks for reading!

 

* Individual stocks are Apple, Bank of America, Citigroup, General Electric, Intel, Microsoft, and Disney.

16 comments

  • Sounds like a pretty good quarter for you!

    I’m a little bit worried about the market as Trump doesn’t seem to be delivering on his promises. Also, there are some funny things going on with the Fed (balance sheet reduction), which could put some additional volatility into the marketplace.

    I was up 6.4% in my 401k, though I’m a little more aggressive in my asset allocation (13% bonds, 30% international, and the rest large/small cap.)

    • Thanks for stopping by, Erik. Yes the market does seem a bit tenuous out there, but I just try my best tune out all of the noise. Sounds like you had a good quarter as well.

  • The first quarter has gone by so fast. I agree that you can’t compare your returns to the S&P 500. I don’t even track how my portfolio is doing — I assume it’s doing fine, and maybe I’ll check at the end of the year when it’s time to rebalance or make other year-end tax moves.

    • Thanks for the comment, WSP! Kudos to you for not checking your portfolio much. I kind of like updating my spreadsheets. I guess I’m a bit of a nerd. 🙂

  • Nice results on your Q1. I also like your chosen asset allocation of 75/25. I think it will serve you well in the coming years!

    • Thanks, Magic Bean Counter! The 75/25 mix is a compromise between my 80/20 preference and my wife’s 70/30. I agree and think it will be good for us for several years.

  • Those 401k holdings can really put limits on our overall strategy for sure! This is true for us and we have to choose from what is available. True confession time, I actually participate in the selection process of the 401k options at my company and have a large say in what we include in our line-up. I know some people think that the wizard behind the curtain makes those decisions in a vacuum, but it’s up to real people at each company and I’m one of them. We are currently doing another comprehensive review of the number offered (too many, I think).
    I am nudging Mr.Need2Save to consolidate some of his 401k/IRA holdings to simplify as well.
    Sounds like a decent quarter for you guys though!

    • Thanks for visiting, Mrs. N2S! Yes 401k’s can add a bit of complexity to your investment portfolio, especially if you have two accounts with two different financial institutions.

  • Sounds like an awesome quarter for you. Our quarterly performance slightly outperformed the market. We have a nice mix between the S&P 500 and the Nasdaq. Obviously the Nasdaq has been in on fire so we’ve are riding the gains 🙂 Should be interesting to see how the market reacts to Trump’s proposed tax plan moving forward.

  • Awesome first quarter. Having a plan and sticking to it over the long-term = good things will happen.
    My 401k is suffering with only a 2.3% growth. I have about 10% in my company stock. We are a large retailer so that is hurting me quite a bit. Other than that, vanguard funds for me.
    My wife gets an awesome match but has most of her money in a fidelity target date fun. It is not my favorite option, but she has very limited choices in her plan.
    Great update, keep it up!

  • Don’t worry too much about for posting frequently enough. You provide great content on your site, and oftentimes it takes a long time to write a great post. I think we (the readers) understand and will keep supporting you. 🙂

  • We slightly outperformed the market at around 6%. I guess I’m trying to beat the market, otherwise I would invest everything in a simple S&P 500 index.

    Here’s a breakdown of my first quarter:
    Wealthfront taxable account: 6.19%
    Rollover IRA’s from previous jobs: 6.47%
    401k: 5.81%
    Individual stocks in taxable account: 2.35% (Mostly due to Berkshire tanking in March. I have a sneaking suspicion they’ll recover though. Only a small part of my portfolio anyways).
    Fundrise: 8.25%
    Lending Club: 9.5%

    • Congrats on edging out the market, GFY! Thanks for sharing your numbers. Looks like you have a pretty diversified portfolio. I’m looking to add some crowdfunding real estate holdings in the future.

Leave a Reply

Your email address will not be published. Required fields are marked *