Before we start, we will get one thing out of the way. We don’t intend to disclose our actual $$’s (at least not for now – kinda fits our cautious, reserved approach to at least some things in life). We do intend to provide enough context and information to make it meaningful. We hope. Feedback always welcome if we don’t.
OK, let’s get down to business and our investment portfolio.
It is made up of a mixture of tax-advantaged and taxable accounts. We don’t count emergency cash or properties we own in this table. We will cover those later.
Gotta love Personal Capital to track this stuff and allow us to mock up this table in a jiffy!
|Account||% of Total Investment Portfolio|
|Mrs. PIE company 401K||33%|
|Mr. PIE company 401K||35%|
|Mrs. PIE Traditional IRA||2%|
|Mr. PIE Traditional IRA||2%|
|Mr. PIE Pension (UK employer)||3.5%|
|529 Plans for small PIES (Vanguard)||8.8%|
|Health Savings Account||0.6%|
|Vanguard Brokerage (adult PIES)||13%|
|Vanguard Brokerage (small PIES)||0.2%|
Tax Advantaged Accounts
We both max out our 401K ($18,000 each as maximum in 2016) and of course take advantage of each company matching contribution. Who doesn’t like free money, eh? The investment choices are reasonable, some with quite low fees and we even have a few Vanguard funds to choose from! We stopped pumping money into our traditional IRA many years ago and used that money, in part, for property investment strategies. See later.
Mr. PIE has savings in a pension plan with his former UK employer. He stopped contributing when he made the move across the pond. Not with-standing the limited investment options and inability to easily change those investments, it has still grown very nicely over time. No complaints there, really. He will be able to access that at age 65. Now, how we actually do that and not pay double tax penalty (UK and US taxes) upon withdrawal is another story for a later post. If any of the readers have experience in navigating that scenario, we would love to hear from you. Mrs. PIE has a negligible pension from her brief period of employment in the UK after graduating from university – probably enough to cover the cost of a flight to go and collect it!
We have been investing in 529 plans for the kids since they were both born. As of today, there are enough funds to pay for ~75% of a good state college for each of them for 4 years. We will continue to invest in these age-based funds at Vanguard on a monthly basis for the next couple of years. And then we will make a decision on shifting that monthly investment to other area(s) of our portfolio.
The Health Savings Account (HSA) is a relatively recent addition to our portfolio, thanks to a change in Mrs. PIE’s health plan coverage through her employer. Pre-tax investment (it even avoids FICA), tax-free growth and it can be withdrawn tax-free for medical expenses. This is a triple-whammy in beating Uncle Sam!! Our strategy is to continue to pay for health expenses out-of-pocket and withdraw later. Indeed, the Ultimate Retirement Account!
Although we watch fees closely in the investment options within each of our 401K’s, we make sure to minimize fees as much as possible in our taxable accounts. Fees are simply a horrendous drag on your portfolio, nothing more needs to be said. And that is primarily why we are big fans of Vanguard. The investment choices, low fees, intuitive web-site interface and good customer service make them a winner in our minds. If you are not investing in Vanguard, that is OK but do go take a look at what they at least offer. We think you will be happy once you do. Jim Collins and his remarkable “Stock Series” will tell you everything about why investing in Vanguard is a good thing for your well-being. Within our brokerage account we invest in four different index funds with a majority investment in Total Stock Market (VTSAX) and Wellesley Income (VWIAX). Currently, we move $2,000/month directly to Vanguard across four different funds.
The small PIES each used to have an account at Bank of America (more like Bank of bleeping Frustration) where gift / birthday / Christmas money was placed. Rather than sit there idly doing nothing with only a bare modicum of growth, we elected to move the funds to their own brokerage account at Vanguard. “Daddy, Mommy – our monies have got smaller this month. Ugh! That’s OK, it will go back up”. Ah, the wisdom of a seven year-old. Seriously, using moments to teach our children about money can only be a good thing, right?
The non-traded Real Estate Investment Trust (REIT) will be subject of a stand-alone post and we’ll get into the pros and cons of that investment vehicle then. We got into these based on advice from our former financial advisor. We are currently evaluating our options for this investment.
Cash on hand
Call it the emergency fund, the holy crap fund, whatever you want fund. It hovers around $75,000 and that is where we are comfortable keeping it. We have had much larger amounts in checking/savings accounts in the past but over time have recognized that we were being overly cautious. This is a ‘hangover’ from being with our cautious financial advisor for so long, yes, the one who also got us into non-traded REITS!
Get it into Vanguard, get it to work is what we say!
Primary residence $151,000 mortgage @ 2.75%.
Mountain retreat $0 mortgage – yeah!!
Mr. PIE and Mrs. PIE have been fortunate enough to receive stock options / significant bonuses which in part have helped us to buy our vacation home. This is the home we use at weekends and for most winter / summer vacations – skiing, hiking, river kayaking, BBQing and more. It will be our FIRE (Financial Independence Retire/Rest/Relax Early) home after we sell our primary residence. Proceeds from the sale of our primary residence will go into Vanguard. We are so fortunate to have this FIRE home in place already. Yes, there are the usual running costs of two homes. We not only plan for the FUTURE as our philosophy, but we very much enjoy the NOW. Life is not a dress rehearsal. There is no secret sauce in finding the right balance between planning for the future and living for now. We seek to find that balance every day.
There you go, that is our portfolio. We will go into more detail on a number of aspects of this portfolio. Decisions we made, things we got right, things we wished that we had done differently.
What looks good to you in our portfolio? What do you not like? Is there anything in this overview that does not make any sense to you?