Steve’s Q1 2017 Returns of his Portfolio and “Dating”

 

My blog is about sharing my portfolio to discover, first hand, the simple and easy secrets of the investing process so you can retire comfortably and secure.

2.49% Return

My uncomplicated (and boring) portfolio returned 2.49% for the first quarter 2017. Below are the details of how each index or fund performed, and the extremely low costs I pay for my investments. You will not believe how cheap it is to be a Do It Yourselfer (DIYer). I continue to be grateful that I can manage my portfolio without an adviser, and I believe you can too.

Rebalancing out of Vanguard and into TIAA Traditional Annuity (3.0% interest paid)

But you might be thinking I hate annuities. Yes, you are right, but not from my second most favorite company TIAA. Their annuities are more like low-cost mutual funds and TIAA never charges surrender fees or commissions, just like Vanguard.

Last fall I transferred about 17% of my portfolio to TIAA. I wanted to spread the risk of my Vanguard Total Bond Market Index bond fund into guaranteed stable value type fund. My problem was that almost all of my fixed accounts was invested in Vanguards Total Bond Indexes and there was no principal protection. FYI, I was able to transfer back into TIAA because this is IRA money and I had a 403(b) account with them years ago when I was working and contributing my 403(b) money to TIAA.

I love the Vanguard Total Bond fund, but I was concerned about raising interest rates and wanted to hedge my portfolio against bond value losses. TIAA Traditional Annuity pays a steady 3.0%, and unlike Vanguards Bond fund, there is a principal guarantee, a primary advantage over Vanguard’s Total Bond Market Index. Allow me to repeat, TIAA’s annuity has no surrender fees or commissions.

 

 

Since the beginning of this year, the stock market has continued to break records. Thus, the equity proportion has grown to 32%, 2.0% above my limit. But not enough to trigger a rebalance back to bonds. Most of the allocation is still sits with Vanguard Total Bond Market Index at 33.82%.  Then TIAA’s Stable Value fund at 15.68%.

 

 

 

Since January 1, my portfolio has grown about $35,000, and my portfolio investment costs about .07% or a minuscule $1,120 per year. Vanguard continues to lower its investment costs.

 

 

My Annual Portfolio Cost: $1,120.00 per year

Since January 1, my portfolio has grown about $35,000, and my portfolio investment costs about .07% or a minuscule $1,120 per year. I am so fortunate that I only pay a few hundred dollars in portfolio costs and share my plan so that you can reduce your investment costs also.

What would you rather pay $32,000 or $1,120.00 in annual investment and advisory costs?

Seems like a silly question, but it’s not. The more money you have invested the more you will pay in dollar amounts. Consider the millions of investors who trust all of their money in the big banks or “prestigious” brokerage firms. Many of those investors are paying 2% or perhaps 3.0%. If I had my portfolio in a firm that charged me 2.0%, I would pay an astronomical $32,000. I KID YOU NOT! That amount would have wiped out most of my portfolio growth since January 1st 2017. It’s not hard to find out how much you are paying. Just ask your financial adviser how much he or she charges. Find out what each of your investments charges by Googling the ticker symbols (above are the costs I got from Vanguard), and add your adviser’s fees and each investment cost. Multiple the total cost by the total value of each fund or investment you own. Next is an example.

Example of Adviser Fees Even from Fiduciary Fee-only Financial Adviser

For example, the Vanguard Wellesley Income Admiral costs .16% and a fee-only adviser charges 1.0%, add these two fees together you equals 1.16%. If you have $100,000 in Wellesley, the fee will be 1.16% x 100,000 = $1,160.00 every year ($96.66 per month)! That’s a lot of money for an adviser to manage one fund which just sits there because it already manages itself. You also have to add the hourly fee, up to $250.00 per hour. This is why I am a DIYer, and you can too with a little effort learning the investing process.

Other News: Vanguard attracted $305 Billion in New Assets in 2016!

Vanguard continues its explosive grow. During February 2017, Vanguard announced that it grew over $4 Trillion in assets with over 20 million clients. It has been the largest and most respected mutual company in the world devoted to the regular client.

Filing Taxes

For the 2nd year, I employed Turbo Tax to file my taxes for 2016. I am impressed with the program again, as it does all of the calculations and inserts the dividends and capital gains taxes from its connection to Vanguard. Since I have already inserted my personal information into the program last year for the first time, I spent less time this year. While Dan loved filing the taxes by hand, I think he would have appreciated Turbos fast and accurate calculations.

 

Steve’s Bio

*Stephen A. Schullo, Ph.D. (UCLA ’96) taught in the Los Angeles Unified School District (LAUSD) for 24 years and UCLA Extension teaching educational technology to student teachers. Steve wrote investment articles for the United Teacher-Los Angeles (UTLA) newspaper for 13 years. Thrice featured retirement plan advocate in the Los Angeles Times and U.S. News and World Report. He co-founded an investor self-help group (403bAware with a colleague, Sandy Keaton) for teacher colleagues and wrote 6,500 posts in three investment forums since 1997. Frequently quoted by the media, testified at California State legislative hearings and honored with the “Unsung Hero” award by UTLA for his retirement planning advocacy.

For the last eleven years, he continues to serve on LAUSD’s Investment Advisory Committee as a “Member-at-Large” and former co-chair. The committee monitors the district’s 457b/403b/PARS of 55,000 former and current LAUSD employees, worth $2.2 billion in total assets. Lastly, Steve and his late husband, Dan, were featured participants for the award-winning documentary, PBS Frontline: The Retirement Gamble, aired April 23, 2013.

Steve is the author of an additional new book, released last year, “Fighting Powerful Interests: Educators Challenge Tax-sheltered Annuities and WIN!” A story of how a handful of LAUSD educators struggled for years to improve the 403(b) to no avail. But we never quit! We were instrumental in LAUSD’s implementation of the new 457(b) plan, and ended up with a “Plan Design” award.