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  • Help with designing my portfolio

    I am a new attending making $350,000/yr with a goal of investing 20% of my income.

    My desired asset allocation is 50% US stocks (with a small value tilt), 30% international stocks (with an emerging markets tilt), 10% REIT, and 10% Bonds.

    The retirement investment accounts I have available to me are employer 401k and 457b (both through Fidelity) which I will max out first.  I also intend to fully contribute to a backdoor Roth IRA and HSA, then utilize a private investing account for the remainder.

    I have not yet set up the Roth, HSA, or private accounts but I am leaning towards utilizing Fidelity as well to keep things simple.

    Here are the list of index funds and ETF’s available through my Fidelity BrokerageLink 401k and 457b accounts, which compare fairly to Vanguard equivalents.

    https://www.fidelity.com/mutual-funds/investing-ideas/index-funds

     

    Here are my two questions:

    1- Do these look like appropriately selected funds to achieve my desired asset allocation?

    US Stocks (50%)

    Total Market Index Premium (FSTVX) 35%

    Small Cap Index Premium (FSSVX) 15% - unfortunately the small value index fund through Fidelity has been closed

    International (30%)

    Total Index Premium (FTIPX) 20%

    Emerging Market Index Premium (FPMAX) 10%

    REIT (10%)

    Real Estate Index Premium (FSRVX) 10%

    Bonds (10%)

    US Bond Index Premium (FSITX) 10%

    2 – What is the best way to distribute these funds among the accounts I have available to me considering their respective tax-efficiencies?

    Thanks in advance.

  • #2
    Generally speaking I like the funds and your allocation.  I'd be careful about overlap.  For example, the total index has 4% real estate already in it - are REITs included already?  See the following regarding tax-efficient fund placement:

    https://www.bogleheads.org/wiki/Tax-efficient_fund_placement

     

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    • #3




      Generally speaking I like the funds and your allocation.  I’d be careful about overlap.  For example, the total index has 4% real estate already in it – are REITs included already?  See the following regarding tax-efficient fund placement:

      https://www.bogleheads.org/wiki/Tax-efficient_fund_placement

       
      Click to expand...


      REITs were recently added to the SP 500, so I imagine lots of people are now over weighted REITs and this is likely not the most favorable next few years for REITs anyway.

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      • #4
        I'll add an opinion at variance with many here.   When emerging markets rise, they REALLY rise;  like 75% - 150% over 1-3 years.  I use >15% EM in all my portfolios.

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        • #5
          So 20% of $350k is $70k and it looks like you'll have about $45k in tax-protected accounts including the HSA and Roth IRA. The remaining ~$25k or so will have to be in your taxable/brokerage account. Your planned asset allocation is fine, it's just a matter of divvying it up between all of your accounts. If you are just starting out (literally have $0 in retirement accounts) it may make more sense to build up the basic portfolio first (total US stock, total Int'l, and bonds) until your balance gets high enough that it makes sense adding the additional slices in years to come.

          WCI has some good articles on Asset LOCATION like https://www.whitecoatinvestor.com/my-two-asset-location-pet-peeves/ that would make for good reading.

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