Steve’s Portfolio Report Q2 2019

Hey folks,

Great news! My Portfolio of broadly diversified stock and bond index funds returned: 6.9%

Before looking at my portfolio, lets glance over the major returns of the asset classes for the last six months–January 1st to June 30th 2019. These returns are posted on the Morningstar.com website.

• DJIA: 15.4%

• US Core: 18.44%

• Large-Cap: 18.09%

• Mid-Cap: 20.97%

• Small-Cap: 18.87%

• NASDAQ: 20.66%

• Barkleys Aggregate U.S. Bond: 6.11%

• International Bonds: NA

• International Stocks MSCI  EAFE: 14.03%

• FTSE Global All Cap ex-US Index: 13.6%

Because of the domestic and international markets were way up, my portfolio was up too. Its been a great year so far. If this holds up till December 31st, I will be a happy camper.

Let’s break down how my portfolio follows the broad market returns listed above.

• The highest return is from Vanguard’s Extended Market Index (VEXAX) at 19.49%. This investment has both mid-cap and small-cap stocks. My returns shown in the blue table below at 19.49% is in between the small-cap return shown above at 18.87% and Mid-cap at 20.97%. Extended Market Index is performing EXACTLY as expected because it contains both mid-cap and small-cap stocks.
• The next highest return is Vanguard’s total stock market exchange-traded fund (ETF) at 18.67% (Recall that this investment contains all three asset classes, small-cap, mid-cap, and large-cap stocks). The US Core return is 18.44%. Once again, this return is expected because that is why I chose the passive investment strategy. My investments follow the broad averages. There are no expensive managers trying to beat the market averages listed above.
• The third highest return is Vanguard’s Total International Stock Index (VTIAX) at 13.27%. I use two benchmarks the MSCI EAFE which returned 14.03% and FTSE Global All Cap ex-US index which returned 13.6%. Once again my investment return is almost identical to those benchmarks.
• The fourth highest return is Vanguard’s Wellesley Income at 10.64%. There is no specific benchmark for this balanced fund. Wellesley contains about 65% bonds and 35% large-cap stocks. We know the large-cap return benchmark from the above list returned 18.09% and the bond benchmark Barkleys Aggregate U.S. Bond returned 6.11%, so Wellesley’s return of 10.64% is a reasonable and expected return given the internal asset allocation of the fund.
• The fifth highest return is Vanguard’s Total Bond Market Index at 6.07% which is almost exactly in line with the Barkleys Aggregate U.S. Bond at 6.11%.
• Treasury Direct iBond, Vanguard’s Prime Money Market Investor, and Tiaa Traditional Annuity all returned less than 2.0% which is expected. TIAA investment returns a static 3.0% per year. All of these funds are part of my fixed account and I have them to keep my overall portfolio a lot less volatile and less risky than a high stock allocation.

For the last 12 years, my Portfolio consists of 33% stocks and 67% bonds or fixed accounts. The stock-bond split meets with my willingness and appropriateness to take risks for a 71-year-old. A young investor should have the reverse stock-bond split, 70% stocks / 30% bonds for example.

 

 

 

 

 

Have a great rest of the summer and see you with my 3rd Quarter report in early October.

Steve

 

 

 

Steve’s bio

*Stephen A. Schullo, Ph.D. (UCLA ’96) taught elementary students in the Los Angeles Unified School District (LAUSD) for 24 years and UCLA Extension teaching educational technology to student teachers. Because of his negative experience with annuity agents, unions, and his school district benefits personnel over the most horrific tax-deferred plan in history, the 403(b), Steve wrote investment articles for the United Teacher-Los Angeles (UTLA) newspaper for 13 years. 

So he became a 403(b) activist and talked to anybody who listened about reforming this terrible plan. He simply wanted to inform his colleagues that districts and the insurance industry are looking out for their best interests, and not the teachers. The media began listening for the first time in the entire history of the 403(b) plan commonly known as the TSA in 1998. From 1961 to 1998, nobody in or out of education ever talked about this terrible 403(b) specifically with k-12 school districts. I kid you not!

Consequently, he was thrice featured retirement plan advocate for reformed 403(b) plans for public k-12 colleagues that were 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. He also wrote 7,000 helpful posts in three online investment forums since 1997. Frequently quoted by the media, testified at California State legislative hearings and honored with the “Unsung Hero” award by United Teachers Los Angeles (UTLA) for his retirement planning advocacy.

For the last twelve years, he continues to serve on LAUSD’s Retirement Investment Advisory Committee (RIAC) as a “Member-at-Large” and former co-chair. The committee monitors the district’s 457b/403b of 55,000 former and current LAUSD employees, worth $2.5 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 two books, “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 earned a very rare “Plan Design” award. 

Steve is the co-author with his late husband Dan of a book on learning the investment process from the ground up, Late Bloomer Millionaires. It’s a heartfelt story about two ordinary chaps and how they discovered investing and money management without a professional financial adviser. They list all of their successes and massive mistakes and they still retired earlier than most Americans.

For a copy of both books, email Steve at steve.schullo@latebloomerwealth.com and he will happily email you both books, FREE with no obligation except to read them and get informed, in a pdf file format.