This post will take a closer look at our investment portfolio. The purpose is not to influence your decision on investment options or to suggest you should follow our approach. The intention is to share a strategy that we’re comfortable with and works for us.

Background

When we started investing, our understanding of the stock market was non-existent. We heard terrible things about losing your money, the need for high $$ to get started and how you were better off hiring a financial advisor to minimize your chances of screwing up. These 3 myths (except for the risk of losing money in the stock market), led to fear that kept us away from investing.

When I finished graduate studies, I got a job offer with a company that offered a 401(k) plan. Despite my lack of knowledge and/or interest, I knew enough about a 401(k) plan and how we needed to take advantage of the match (essentially free money). As a result, I set my contribution to 10% which was actually above the company match of 6%.

Since I couldn’t remember what I did in 2009, I downloaded my account history at Fidelity only to be shocked (I shouldn’t be) by my findings. The table below shows my investments from 2009-2014.

2009	2010-2012
AF Europac Growth R5	AF Europac Growth R5
FID 500 Index Inv	Company Stock
FID Ext Mkt Idx Inv	FID Freedom 2045
FID Freedom 2045
FID Tot Mkt Idx Inv
PIM Total Rt Inst

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2013	2014
AF Europac Growth R6	AF Europac Growth R6
AF Grth Fund Amer R6	Company Stock
Company Stock	FID 500 Index Inv Inst
FID ContraFund K	FiD Ext Mkt Idx Pr
FID Freedom K 2030	VANG Tot Bd Mkt Adm
FiD Growth CO K	VANG Tot Intl Stk Ad
PIM Total RT Inst	VANF Val Index Inst

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At the end of 2013, my employer announced a partnership with Financial Engines (FE). Fees for the first year were covered by my employer; however, point forward they were estimated at 53 basis points of assets under management (AUM). Not bad right?

We let them manage my 401(k) and soon after we started to see the adjustments they were making along the way. It wasn’t until I came across the FIRE community that I realized I wanted to learn more about how all this stuff worked. The more I learned, the more I realized this was no rocket science.

We realized the only thing we could control was investing expenses. There was simply no need to put a foot on the brake while the other one was hitting the gas. Looking back we paid FE a total of $2,088.71.

Today we manage all our accounts and try to keep fees as low as humanly possible.

Without further ado, let’s get to it.

Pre-Tax/Roth/After-Tax 401(k)

The difference between pre-tax, Roth and after-tax 401(k) is beyond the scope of this post. I will probably write an article targeting how we manage these three options. For now, let’s stay focused on our asset allocation.

Below our current investments including fees.

Current Employer

On a weighted average, our fees are sitting at 0.024%.

Symbol	Description	Portfolio %	Fees %
BITSX	Total US Stock Market Index Fund	69.45	0.03
NA	Company Stock	25.89	NA
BDOIX	Total International Stock Market Index Fund	2.86	0.08
BMOIX	US Bond Index Fund	1.80	0.04

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Previous Employer

On a weighted average, our fees are sitting at 0.028%.

Symbol	Description	Portfolio %	Fees %
FSKAX	FID Total US Stock Market Index Fund	60.38	0.015
VTSNX	Vanguard Total International Stock Market Index Fund	27.64	0.08
VBTIX	Vanguard US Bond Index Fund	11.99	0.035

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Roth IRAs

We opened two Traditional IRAs at Vanguard. Initially, we chose target-date retirement funds but the following year, transitioned to VTSAX. Currently, the expense ratio sits at 0.04%

Health Savings Account (HSA)

This type of account when used properly, can provide the benefits of both a Traditional IRA and a Roth IRA. You can contribute pre-tax dollars as you would in a Traditional but enjoy tax-free growth and tax-free distributions you get with a Roth. If you want to learn more about this type of account check this post by the Mad Fientist … definitely one of his best!

My employer is awesome and contributes $1,500/per year. As you may imagine we contribute up the annual limit and just like our Roth IRAs, we keep things simple using Fidelity’s FSTVX. This fund is equivalent to Vanguard’s VTSAX but has even a lower expense ratio of 0.015%.

529 – College Fund 

In case you’re clueless about this type of account then this post should provide some guidance. We live in Colorado and we love it; however, it comes at a price … a 4.63% state income tax of our federal taxable income to be more specific.

One way to lower our state-income tax is by contributing to a state-sponsored 529 plan. We’ve been taking advantage of this deduction since we moved to Colorado in 2015. Even though we invest in a Vanguard total stock index fund the fees are not the lowest (0.36%).

The benefit of being able to deduct contributions from state-income tax is definitely a plus for us.  In addition, you get tax-free growth and tax-free withdrawals as long as you use the money for qualified education expenses.

We’re aware this limitation scares some people away from a 529; however, as long as we remain Colorado residents we will continue to invest in this plan.

Taxable

We invested with Betterment for ~ 4 years. After some time we decided to move our portfolio to Vanguard.

If you’re wondering about the number of ETFs please know these were sitting at Betterment. One of their offerings is tax-loss harvesting. As a result, there’s some redundancy that we need to manage.

Eventually, we’ll simplify this portfolio; however, we need to make sure we minimize triggering taxable events especially those related to short-term capital gains.

The current weighted expense ratio is a little high at 0.06%.

Symbol	Description	Portfolio %	Fees %
VEA	VANGUARD FTSE DEVELOPED MKTS ETF	0.36	0.05
VWO	VANGUARD FTSE EMERGING MARKETS ETF	5.49	0.10
VBR	VANGUARD SMALL CAP VALUE ETF	9.38	0.07
VTI	VANGUARD TOTAL STOCK MARKET ETF	18.83	0.03
IWN	ISHARES RUSSELL 2000 VALUE ETF	1.01	0.24
IWS	ISHARES RUSSELL MID CAP VALUE ETF	1.80	0.24
IVE	ISHARES S&P 500 VALUE ETF	3.14	0.18
SCHF	SCHWAB INTL EQUITY ETF	37.63	0.06
SCHB	SCHWAB US BROAD MARKET ETF	22.37	0.03

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Final Thoughts

• Better late than never … It took us a while to get our shit together and start taking the bull by the horns.
• Watch for those fees! … This is the only thing we can control,
• We are passive investors; however, you can’t forget about your investments and hope that everything will be fine.
• Just because this portfolio works for us, it doesn’t mean it will work for you. Think about your financial plan and adjust accordingly.
• If you haven’t considered investing in an HSA (assuming you’re eligible) I strongly recommend evaluating enrolling in this awesome account.
• We invest in individual stocks, and real estate; however, they are relatively small amounts compared to our investment portfolio.

Until next time … JJ