My Investments: Mutual Funds

Over and over again, I've stressed the importance of building the core of your portfolio out of low-cost, passively-managed index mutual funds.  This is important enough that I wrote a seven-part series on it.

I've been telling you to do this and do that all month long, so in the spirit of full transparency I think it's only fair that I share what I actually do with my own money.

Put the money... there!  Definitely over there.
This is an article about how I follow my own advice.

My Accounts

Step one is, has been, and always will be save as much money as reasonably possible.

I have a number of different types of accounts spread between Vanguard (my brokerage of choice) and Fidelity (my historical brokerage):

Roth IRA - the most important type of account to have; anyone with a wage can get one!
529 Plan - a stop-gap tax minimization measure for my stay in graduate school
Taxable Brokerage - a regular old taxable investment account; no limits and no requirements

Roth IRA - multiple Roth IRAs at different companies? sure, but no contribution limit increase
Rollover IRA - rolled over from the 401(k) retirement plan at my old employer
457(B) Plan - the retirement plan at my current employer; contributions are made pre-tax
Taxable Brokerage - a regular old taxable investment account; no limits and no requirements

Lending Club - peer-to-peer lending investment experiment
Mosaic - solar installation investment experiment

Why haven't I consolidated all of my accounts at Vanguard?
  1. My current employer utilizes Fidelity for their 457(b) plan, so I can't move that
  2. I have a credit card that offers 2% cashback in the form of Fidelity brokerage contributions
  3. I am loathe to pay Fidelity's transfer-out fees
  4. Fidelity offers index mutual funds that are cost-competitive with Vanguard's offerings
(Basically: I am somewhat locked in and it's not really hurting anything.)

My Funds

Because my accounts have grown organically over a long period of time and I was learning all the while, I make no claim that these allocations are in any way optimized; in fact, a couple things are the way they are solely for historical, hard-to-change-because-of-taxes reasons.  This highlights the importance of having a plan from the very beginning and sticking to it!

Without further qualification, here is my current arsenal:

VanguardBrokerage$961Total Stock MarketVTSMX0.18%
Vanguard529 Plan$8,434Total Stock MarketVTSMX0.25%
FidelityRoth IRA$19,846Total Stock MarketFSTVX0.06%
FidelityRollover IRA$17,454Extended StockFSEVX0.07%
FidelityRoth IRA$16,238Small-Cap StockFSSVX0.09%
VanguardBrokerage$406Total InternationalVGTSX0.18%
Vanguard529 Plan$3,614Total InternationalVGTSX0.25%
FidelityBrokerage$18,042Total InternationalFSGDX0.18%
VanguardBrokerage$6,543Emerging InternationalVEIEX0.33%
VanguardRoth IRA$5,012Small InternationalVFSVX0.45%
VanguardBrokerage$122Total Bond MarketVBMFX0.18%
VanguardBrokerage$30International BondVTIBX0.18%
FidelityUC 457(B)$7,659Real Estate TrustVGSNX0.08%

I have $104,000 invested in mutual funds, plus an additional $7,500 in Lending Club and $500 in Mosaic.  I'm experimenting with nontraditional investments, but mutual funds are 93% of my total portfolio.  Note also that every fund on this list is a low-cost index mutual fund, and my averaged expense ratio is only 0.15%.  In other words: I eat my own cooking.

The table above is a bit of a mess, so let's break it down by the type of fund:

Total Domestic Stock Market$29,24028%
Small- and Mid-Cap Domestic Stock Market$17,45417%
Small-Cap Domestic Stock Market$16,23816%
Domestic Stock Market$62,93260%
Total International Stock Market$22,06221%
Small-Cap International Stock Market$5,0125%
Emerging International Stock Market$6,5436%
International Stock Market$33,61732%
Total Domestic Bond Market$1220%
Total International Bond Market$300%
Bond Market$1520%
Domestic Real Estate Investment Trust$7,6597%
International Real Estate Investment Trust$00%
Real Estate Investment Trusts$7,6597%

If you read my article on asset allocation, you might be able to recognize that this is a very aggressive asset allocation: all stocks, a relatively heavy international weighting and a sizable helping of REITs, tilted toward small- and mid-capitalization domestic stocks and small- and emerging-market international stocks.  If you can't stomach a 40% drop in asset value like we experienced in 2008, don't try this at home.  Try something a little more conservative, or invest in a target-date fund and set it all to autopilot.

Going Forward

I'll continue to keep doing what I'm doing, shoveling in as much money as possible to maintain approximately the same allocation.  Some funds will upgrade my shares as I hit certain minimum investment amounts, so my average expense ratio should continue to fall with time.  Starting next year, I will begin to increase my fixed income (bonds) proportion by 2% per year for the next fifteen years; by age 40, I should be 30% in bonds (and 100% retired!).

To avoid boring you with regular updates, I'll add a static page to the navbar and plot my progress every few months.