About a month ago I wrote a post where I had been thinking about why I had not revealed more of my/our financial situation to the blogosphere. I mean I have been pretty open about the financial mess that I have gotten myself into and how this blog is a means of keeping tabs as I dig my way out. I also have discussed why I don’t discuss specific aspects of Mrs. ROB’s finances. The basic point is that she wants aspects of her financial life private. I respect her wishes and will continue to do that.
So as I have been thinking about this for the past month I am still not totally comfortable with revealing specific amounts of our assets. I think part of this fear stems from being judged. I mean I can certainly be judged by the stupidity of the mistakes I made, but for whatever reason I am not fully comfortable sharing any success, if any, that we have had. Maybe it is a defense mechanism. Maybe it is I don’t want to be accused of bragging (not that there is anything to brag about, I mean check out my series on How I Got Here and you will see I have nothing to brag about.
Anyway, enough about my thought process. I have been thinking about it and decided I would make the small step of revealing the investments that I have in my retirement portfolio, percentages within that portfolio, and the specific rationale behind those investments.
My Investment Portfolio
So I have three accounts in which I invest. I have a 401(a), a 403(b), and a Roth IRA. I would eventually like to open up at 457 as well and really take advantage of the tax-deferred benefits of the retirement plan. I didn’t know this, but found out that if your employer offers a 401(k) and/or a 403(b) with a 457. You can actually contribute up to $18,000 to both accounts. That is $36,000 that is tax deferred.
If we didn’t have so much debt I would actually do this in a heartbeat to take advantage of the tax deferred status of my assets. And it would lower my tax bill.
*As a side note check out the blog Root of Good (one of my favorites) to see how this family brought home six-figure incomes and only paid $150 in taxes. It is a great blog, a great post, and everything they did was totally legal (and really smart too).
Anyway, so I am required to contribute basically 11% of my income to my 401(a) and I receive a match of 5%. The choices for my 401(a) aren’t great, but here is what I am invested here. The percentages indicated are how much money, for each account, is in each fund.
Fidelity Contrafund (FCNTX)–30%
Vanguard Mid-Cap Index Fund (VIMAX)–25%
Vanguard Small-Cap Index Fund (VSMAX)–25%
Fidelity Balanced (FBALX)-20%
I would invest most of my assets into just one large index fund, but that is not one of the choices for my my 401(a). So I decided to diversify my holdings across a Large Cap, Mid-Cap, and Small-Cap mutual funds.
*If you don’t know the difference between Large Cap, Mid-Cap, and Small Cap funds that is ok. Part of learning anything new is learning basic vocabulary. Go to Investopedia.com to get some great background information on the subject. I think I might even start posting some “vocabulary lessons” to help others understand what all these terms mean because it can be confusing.
I chose Fidelity Contrafund because it is the best Large Cap Fund I am offered. I chose the Vanguard Mid-Cap and Small-Cap Index funds because I love index funds. They are cheap, easy to use and understand, and provide me diversification in my portfolio. And I chose Fidelity Balanced because it is one of the best “balanced” funds out there. I wanted a fund that doesn’t have much volatility and has some bond investments in it. This was my best choice and it is a GREAT investment.
My 403(b) Investment Choices
So I am mandated to invest 11% into my 401(a) account. However, that will not get me to 15% of my income in investments. So I contribute a set monetary amount so that I can get to maximizing my tax-deferred accounts. BTW, if you have a 401(k) and/or 403(b) you can only contribute $18,000 max of your own money to those accounts combined.
I cannot add more percentage points to my 401(a) so to get close to the $18000 I invest in a 403(b). In my 403(b) I can basically choose any Fidelity Fund that I want, but I have only chosen two. My investments are:
Fidelity Growth (FGCKX) (50%)
Fidelity Spartan Total Market Index (FSTVX) 50%
I have the Fidelity Growth fund because I love the way this fund has performed over its history. I only invest in mutual funds that have track records of at least 10 years. Their fund has over a 30-year track record and has an average growth rate of 13%.
I chose the Fidelity Spartan Total Index Fund because this index fund (unlike the other two I have above) buys the entire market. I eventually will move all of my 403(b) to this index fund. But for now I am splitting the two. I just like the growth and track record of the Fidelity Growth Fund, but I am also convinced that Index funds are the BEST way for the average consumer to invest.
Roth IRA Investments
I have a Roth IRA and I only have one fund here:
Dodge and Cox International Fund (DODFX)–100%.
I have this fund (and I have had it the longest) because I wanted an exclusive international fund. This fund has low fees and is one of the best international funds out there. It has an excellent track record. I will move my money, eventually, to an index fund. However, I just haven’t pulled the trigger yet. I like the performance, the management, etc.
The Bottom Line
So these are my investments. They represent what I have right now. Eventually, my plan is to move most of my investments to index funds because they have extremely low fees and generally out-perform actively managed funds. I am somewhat limited in my 401(a), so until I get better choices (e.g. a Total Stock Market Index Fund) I will probably keep what I have.
So what do you think of my choices?