My Investments

Before we dive deep into the world of investments, I want to make clear I am not a financial adviser. What I write should not be taken for advice. I don't even know if I'm doing this thing right!

That being said, I've received a few emails asking me what I invest in, what my investments look like, and what Bartholomew likes to eat for breakfast.

Rather than reply individually, I've promised a post that delves into the nitty-gritty details. But first… a bit of background.

I was exposed to the stock market fairly early in life. My 5th grade teacher did a project where we “got” $100k to invest in whatever stocks we chose. We checked the stock prices each day in the newspaper for a month. I think the winner won a candy bar. I didn't come anywhere near winning, but it was a great first lesson on the market.

Several years later, I remember my mom and stepdad being furious when their K-Mart shares became worthless in the blink of an eye (Sears bought them out). That was an excellent teachable moment and they answered all the questions I had about the process. We also never shopped at K-Mart or Sears again!

Then, of course, came my senior year of high school, better known as 2008 and the start of the Great Recession. I was mostly unaffected as I had only cash to my name. I did have a small inheritance from my grandma, but it stayed flat. Grab a pencil and draw as straight a line as you can imagine. That's what my account balance looked like. I have no idea what it was invested in but I didn't lose any money. I also didn't see any gains in the recovery. That account became the basis for my taxable investment account several years later.

I transferred that money over to a taxable investment account started by my stepdad's broker after I discovered MMM in college and started getting serious about my money. I also started a Roth IRA with the second payment of my military sign on bonus around that time.

A short time after that, I started my internship and opened my 401(k). I didn't get to put much in it, since I was “just” an intern. I am grateful, though, that not only were we allowed to open a 401(k), but we also got the match from MegaCorp. When I started with them full-time, I added an HSA.

That is the full breadth of accounts I have: 401(k), Roth IRA, Taxable Investment Account, and an HSA.

As for what that $110,893.83 is invested in…..

I follow the JL Collins' method of investing: KISS. Keep It Simple, Stupid. If you haven't read The Simple Path to Wealth or his Stock Series, you need to do that ASAP. It doesn't have to be done all in one sitting. Take your time, really read what he's saying, and absorb it.

I invest in the best option possible for the account. My 401(k) is with Fidelity, so I invest in their S&P 500 Index Fund, ER .01%. One of the best benefits of working for a very large company is super low fees! At the very beginning, I also bought some bonds but quickly stopped doing that. It's like, 99% Index Funds now. My HSA is through Wells Fargo, I think, and required a minimum of $3k to invest. I get charged $7.99 per trade, so I convert the cash into shares of VTSAX twice yearly. Not ideal, but it's triple taxed advantaged so I deal with it.

My Roth IRA and taxable investment account are with my broker at Baird. I have been meaning to move this account to Fidelity but haven't gotten around to it yet. One day.

Why Fidelity over Vanguard? It's where my 401k and HSA are, so it's more for the ease of my use than any other reason. Fidelity and Vanguard have very comparable fees nowadays.

I use Personal Capital for the sole reason of tracking my investments. Mint isn't very great at that, in my opinion. PC can't track my 401k either, but at least it creates less of a stink about it than Mint does. Plus, PC does this really cool thing where it tells you what your asset allocation is.

Obviously, I'm a weeeee bit heavily weighted towards US Stocks. Not very surprising when I invest the vast majority in VTSAX and my Fidelity S&P 500 Index Fund.

Currently, my investments make up the vast majority of my net worth. I would like to think I'm prepared to weather a recession, but I won't know that until I actually go through one. Since I'm so heavily weighted towards the US Market, I'd be particularly susceptible to any downturn.

Hence, the reason I am diversifying my investments and turning towards real estate! Having at least one property in my portfolio will help out a ton, so just imagine what 3-4 properties will do for me! If I weren't in a place to buy a property, I would invest in a REIT. However, great deals are everywhere around me and should only increase in a downturn.

Currently, my investments are mostly in my 401(k). I will continue to max it out each year since I'd be a fool to pass up that tax advantaged space.

“Uhhh, Gwen…. aren't you doing just that by not having a traditional IRA?”

Kinda. Shh. I'll get there in a minute.

For now, enjoy a graph of what my overall investments look like:

Now that my attempt to distract you with pretty pictures has failed, let's revisit that whole Roth vs. Traditional discussion.

I like Roth's for the ease of getting into the money. After 5 years, I can withdraw the contributions (not the earnings!). This is super useful for somebody retiring early (i.e. me). Roth IRA's also have the added benefit of no RMD's when you hit 70 and aren't taxed extra upon taking the money out, since it was after tax money added in the first place.

I also think* my income will be lower in retirement than it is right now. That lends itself to the Traditional IRA (plus my taxes would be lower with the deduction), since I have a fairly high income now. I'm just not sure I'm under the threshold for the deduction after my raise.

It would also thoroughly complicate things in the future if I can get access to a mega backdoor Roth before Congress revokes that loophole. Plausible, but probably not going to happen.

Finally, I don't want to switch over because I've got a good setup right now and don't want to change it. I'd have to open a new account with Fidelity and recharacterize my contributions for 2016 and 2017.

So now that you've seen how my investments are laid out, please let me know what you think in the comments!

*: That's what the projections say anyways. Who knows what could happen!

Is there anything glaring that pops up? Any optimizations you would make? What do your investments look like?

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43 thoughts on “My Investments

    • I am VERY fortunate to have the vast majority of my investments in the fund with the .01% fee. I like getting to keep more of my gains. Thanks for commenting!

    • VTSAX is life! I love knowing we’re in roughly the same spot. Makes me feel a lot better to know you’ve got similar stuff going on!

  1. Hey Gwen,
    Great post you are an inspiration when it comes to personal finance / saving / retirement planning for millennials. I did have one overall question… doesn’t Modern Portfolio Theory (MPT) show that diversification is the only free lunch in investing? So someone our age should at least hold developed and emerging markets stocks at their market-capitalization weighting (US 45% and ex-US 55% I believe)? And I think also a small allocation to bonds, REITs, commodities / natural resources, etc could improve risk-adjusted returns.

  2. Gwen you can access your direct contributions to a Roth IRA tax and penalty free at any time for any reason. It is the “contributions” from the Roth conversion pipeline that are subject to the five year rule.

    And I think not wanting to switch over because you have to set up a new account and rechar your contributions is silly. It’s easy to do. I rechar every year because I’m on the border of the 15 and 25% brackets. I get that this is one reason of several for you but I don’t think this should be a reason at all.
    Fiby recently posted…I Have Unrealized Long Term Capital Gains!My Profile

  3. I did a similar stock market exercise in high school. Fortunately we had the internet to check. I remember it being freaking awesome, but I can’t for the life of me remember the mechanisms of the exercise. Sighh.

    Bravo for diversifying with real estate properties. Are you planning to reach more international stocks to decrease risk?
    Mrs. Picky Pincher recently posted…What I Did With My Rockstar #GivingCardMy Profile

    • The Internet was around, but not very widely used yet. We only used it for “special” projects lol. This was in 2001, where we were using those transparent and brightly colored Macs in the computer lab. Mine was teal!

  4. I’m with you on most of it, but I prefer 100% traditional for both 401k and IRA. The tax savings allow me to invest more elsewhere than I would if I used Roth, so I think the benefit now outweighs potential future costs. I hope to do the whole conversion ladder thing, but even if I can’t/don’t, I expect my retirement income to be comparable to my current AGI (i.e. with deductions from contributions) or lower, so I’ll either come out ahead or slightly better. Hopefully.

    I’m jealous of your new property! That sounds like a phenomenal FI move.

  5. I remember my teachers running a similar ‘game’ in primary school. It’s actually run by the Australian Stock Exchange (ASX) and you get $10,000 imaginary money to trade a few month to see who comes out on top.

    The main thing I remember was that by not touching your money and just holding that original $10k, you could end up somewhere in the top 25%. The winners struck big on an oil company and came out with something like $200k. Some of the ‘losers’ picked different oil companies and ended up with barely $1 to their name.

    Probably wasn’t the best learning experience for my young impressionable mind :p It took a lot to see the differences between stock picking, index funds and straight up guessing!

    • It can still be difficult to tell the difference some days! I’m glad I wasn’t the only one to get the stock market “experience” when I was younger.

  6. Thanks for sharing, Gwen! In Jim Collin’s book, he does mention that even though the VTSAX is with all U.S. companies – many of those companies run a global business and you inherently receive international exposure investing in them.

    Bottom line, you are off to a great start as a young millennial on your path toward FIRE!!!

  7. Hi Gwen!

    I’m trying to follow in your footsteps and retire in my 30’s too. If you move the ROTH to Fidelity, IO suggest looking into the small cap or even better, small cap value ETFS they offer commission free. I believe the tickers are IJS, IJR and IJH. All three match the S&P 600 index (small cap instead of large cap with the S&P 500) and if you look at the returns compared to the S&P 500, they basically are the same but, the highs are higher and the lows are lower. You would still be all US but, riskier asset classes like small cap and small cap value are perfect for ROTHs!

  8. Nice job! You have WAY more in your 401(k) than I did at your age. I’m jelly.

    For keeping track of asset allocation, I use my own spreadsheet. I go in once a month and enter all our investments (not too complicated since each of our accounts has only two or three funds in them). Then Excel outputs a chart for me, and also compares it against my “Ideal Asset Allocation” and shows how far off I am. I re-balance twice a year. And even my Ideal Asset Allocation is automated now because I made my Bonds % a function of my age, minus 15, and the rest (Stocks, REIT, Lending Club) calculate to get up to 100%.
    Norm recently posted…Cheapskate Analysis: What’s The Cheapest Morning Joe?My Profile

  9. Hey! We both graduated high school the same year!

    I’m sure we both wish we had the kind of money to buy properties and stocks in 2008 as we do now. Ha!

    I tried going the ROTH IRA route and was heavily invested in Vanguard (S&P500 index fund), which was fine, but I started getting antsy when I saw my portfolio do essentially nothing over the course of a year. That’s when I stumbled on all the online bloggers including Jason Fieber, MMM, JMoney, etc. Long story short, I discovered dividends and how powerful that snowball can grow. Gives me the peace of mind of not caring too much what my principle is valued at, and instead focus on the dividend payouts. Now I have a standard investment account spread out over 60 different companies from across all different sectors, mostly blue chips that pay out on average 4% per year.

    I use Robinhood for all my trading, it’s amazing. Free unlimited buying and selling. Yay! I wish I could do what you did with the triplex here in Vegas but looks like it’s a no go for now. :'(

  10. So Mr.Wow read The Simple Path to Wealth (accidentally wrote Life first rather than Wealth which I guess works too!) and then he conveniently loaned it out to someone at his work. Also conveniently he can’t remember who he gave it to and hasn’t gotten it back yet. Which means I have been waiting patiently for my turn to read it… Luckily, I took matters into my own hands (well not really, I just lucked out) and won a copy from 1500 days #ifinallywonsomething. I’ve definitely missed the bus since I haven’t read it yet, but it is next up in my cue, as soon as it arrives. Can’t wait to read it!!

    • Good thing Mr. 1500 came through for you! Otherwise I would’ve offered to lend you my copy 🙂 I got one from CMSE and promptly gave it to the guy sitting next to me on the plane on the way home! haha!

  11. 20% in bonds at any age has a very similar return to 100% stocks.

    Bonds tend to make money when stocks are losing money. They don’t offset the losses in stocks, but they lessen the downside. If stocks only went up, then 100% stocks would always win. But we know they don’t.

    I like 20% bonds as the floor. Even if you are 20. Follow an Age in Bonds – 10 (or -5). Stick to intermediate term, low cost “Total” bond funds. 100% stocks is awesome when stocks are flying. 80/20 gets a similar return when you factor in the ups/downs that will happen. Good luck!

  12. Cool to see your investment allocations. Thanks for sharing.

    Maybe I’ll share my Personal Capital screen shot like that some day on my blog. It’s BIG-time real estate heavy. I’m like 15% stocks and 10-15% cash and the rest rentals and notes against real estate. But my retirement account portions are like 50:50 stocks and real estate. I’ll be moving towards a higher stock allocation over time, but I consider myself more of a value investor who “puts all my eggs in a few great baskets and watches those baskets like crazy!” And they’re producing a bunch of income that I get to live off for now, so not complaining about that:) I like Jim Collin’s simple, broadly indexed style strategies a lot, too. Makes a lot of sense to me.

    • I look forward to seeing what your chart looks like! As someone who would also like to get into the crazy awesome baskets… why question what works best for you!?!

  13. “my senior year of high school, better known as 2008”

    Man, I feel so old now. Thanks for that 😛

    And yeah, I remember those mock stock market projects in high school. Super eye-opening but back then I had no idea what a terrible idea it was to own individual stocks and had never heard of indexing. They really need to start teaching that in schools.

    Anyhoo…thanks for sharing your investments! I agree with you that everyone needs to read JLCollin’s blog and books, because without the freaking Godfather of FI, who knows where we’d all be. Hears to you, JL! *raises glass*.

    Your investments are definitely more aggressive than ours, but given your age (again, I cannot emphasize enough how old you make me feel) and the fact that you’re in the accumulation phase, it makes sense.

    Happy investing!

  14. Thanks for sharing your investment picture. Like you, I’m also a “….weeeee bit heavily weighted towards US Stocks.” Nothing inherently wrong with that though. My focus has been on individual dividend paying stocks but I can appreciate seeing funds in a long term portfolio as well. Nice job!
    DivHut recently posted…My Best Investments And TradesMy Profile

  15. Great post, and not just because of the kind words and links in my direction.

    You are amazing and kudos on the remarkable, and remarkably early, start. So glad to have met you at Chautauqua and that we didn’t murder you as your relatives expected. Even with your cow fixation.

    Regarding this: “I would like to think I’m prepared to weather a recession, but I won’t know that until I actually go through one. Since I’m so heavily weighted towards the US Market, I’d be particularly susceptible to any downturn.”

    At your point on the curve, you should be hoping, praying and sacrificing chickens for a nice, major, huge, deep market plunge. 🙂

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