SRGO Portfolio: A Closer Look

Now that I”m back to posting more regularly, I thought it would be interesting to give you guys a detailed look at our portfolio. I already touched on our holdings in a previous post. This time around, however, I’ll provide a breakdown of all of our investment accounts.  I’ll also talk about how our portfolio came to be as well as some of my thoughts and plans going forward.

 

Risk Tolerance and Asset Allocation

Before diving into the specifics of the SRGO portfolio, I wanted to talk about our asset allocation. Based on our risk tolerance, financial goals, and investment style, we have decided on the following allocation:

  • Overall:  75% stocks, 25% bonds
  • International:  20-30% of stocks (I know, kind of a broad range)
  • Small Cap Value:  5% of portfolio
  • REIT:  5% of portfolio

 

Our Portfolio

Here’s a snapshot of our entire investment. Sorry that it’s a bit blurry, but if you click on the table it will expand to a much clearer image.

 

SRGO, blurry edition

 

Breakdown of our stock holdings

 

How are we in relation to our targets?

  • Overall:  76% stocks, 24% bonds (75/25)
  • International:  21% of stocks (20-30% of stocks)
  • Small Cap Value: 3% of portfolio (5%)
  • REIT:  5% of portfolio (5%)
  • Mid Cap:  Where did this come from? More on that later.

 

Things I Like

Low Fees

Since the majority of our holdings are index funds, our fees are pretty low with an overall weighted expense ratio of 0.05%. That’s pretty darn cheap.

 

Diversification

Another benefit of investing in index funds is the diversification that they provide. I don’t have all my eggs in one basket, so to speak. I do have a collection of individual stocks that were in my wife’s old brokerage account, but they make up just 8.5% of our portfolio.

 

Tax Efficiency

Overall, I think I have things in the right location for tax efficiency. At least, for the most part. There are a few tax inefficient funds where they shouldn’t be, however. For instance, we have two actively managed funds (Invesco Comstock and Lord Abbett Mid Cap) and dividend-generating individual stocks in our taxable account.

 

Things I Don’t Like

Complexity

I’m a fan of keeping thinks simple, but our portfolio currently is anything but. We have a total of 15 different holdings along with a collection of individual stocks. We also have six investment accounts spread across four different financial institutions.

 

Too Much in Pre-Tax Accounts

As it stands, we have almost two-thirds of our investments in pre-tax accounts. This isn’t too much of an issue now since we are many years from retirement and are focusing on paying off my student loans. I would, however, want to have a more even distribution of pre-tax, after-tax, and tax-free monies as we get closer to retirement.

 

WTF Holdings

I’m not a fan of our Invesco Comstock and Lord Abbett Mid Cap holdings. They have high expense ratios, are actively managed, and are tax-inefficient. While they make up a very small percentage of our portfolio (0.5% and 0.7% respectively), they annoy me nonetheless. Selling these investments is not as straightforward as it may seem. Their cost bases are unknown, so selling them would be treated as a $0 cost-basis transaction. For now, we’re just letting these ride. At some point in the future, however, they are getting kicked to the curb.

 

Things I’m Neutral About

Roth IRA Holdings

LifeStrategy Growth Fund is an all-in-one fund from Vanguard. It basically is set at an 80/20 stock to bond asset allocation with a mix of domestic and international stocks. I kind of like this fund in our Roth IRA because it automatically rebalances itself, but I may exchange it for some other fund in the future.

 

Individual Stocks

We’re just letting these ride with automatic dividend reinvestments. There is a bit of tax drag given they are in our brokerage account, but at least they’re taxed at the qualified dividend rate.

 

Final Thoughts

Overall, I think our portfolio is pretty solid. It is a bit too complicated for my taste with 15 different investments spread across several accounts. On the other hand, we have an asset allocation that we can stick with, we’re pretty diversified, and our investment fees are pretty low.

 

Readers, what do you think about our investment portfolio? What do you think are some strengths? Weaknesses? Let me know in the comments below!

 

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8 thoughts on “SRGO Portfolio: A Closer Look

  • October 2, 2017 at 9:05 am
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    Nice blended ER on the portfolio. I agree with you that the portfolio is probably more complex than necessary but since the ER is so low, if you’re fine with it then just leave it alone. Thanks for sharing!

    Reply
    • October 2, 2017 at 7:55 pm
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      Thanks for stopping by, InvestingDoc. Yes our portfolio is a bit complicated. A result of mixing finances with marriage I guess. A lot of the complexity comes from having two different 401k’s through our jobs. My wife also had her own brokerage from before we even met. It is what it is, but at some point in the future I’d like to simplify things a bit more.

      Reply
  • October 2, 2017 at 10:01 am
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    Thanks for sharing.
    It doesn’t look terrible.
    You could make it simpler and less costly with just a few changes.
    Personally I have a lower stock % right now. I know market timing is tough, but 9 years of a bull may be all our economy can handle.

    Reply
    • October 2, 2017 at 7:58 pm
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      Thanks for the comment, WealthyDoc! Yeah I think I like our 75/25 target for now since we have several years until we reach FI. Although once we reach that point I don’t think I’ll cut back on my equities too much… maybe something like 70/30.

      Reply
  • October 2, 2017 at 11:13 am
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    If it makes you feel better mine is much more complex. I hate to sell in my taxable account.

    Reply
    • October 2, 2017 at 8:00 pm
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      Thanks for visiting, Hatton1. Makes me feel a little bit better. 🙂 Haha!

      I don’t like selling in taxable either, but at some point those WTF funds need to go. Maybe once our income drops low enough for tax purposes.

      Reply
  • October 2, 2017 at 6:31 pm
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    I don’t understand how you can own something with an unknown cost basis. It’s impossible to not know when it was bought or passed to you isn’t it? I mean was it left on your porch in a basket?

    Reply
    • October 2, 2017 at 8:08 pm
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      Thanks for stopping by! Those holdings that are missing cost basis information are from my wife’s old brokerage account. Unfortunately, they were bought way before I even knew her. The year 2004 to be exact. The Invesco Comstock, for example, has missing cost basis info for every quarter from 2004 until 2010. You can check the historical prices for each date that is missing, but I don’t even have the option of manually entering that information online. I guess I could call the brokerage company, but that’s WAY too much work for my taste.

      Reply

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