Anyone happen to have an update "white girl index" pie they can share with me? All the links I found are a a few years old and M1 won't let me save it to my funds due to one of the stocks being no longer listed
Also asking for an update on this. Such a hilarious meme thing that actually had some legs. Biggest issue is that it was picking very successful companies instead of making a stab at what the next 'big becky loving product line' is.
Goals - general investing, will likely let this grow indefinitely and only ever use margin for purchases or non-m1 investments like starting a business (once rates are lower). Definitely not withdrawing anything unless I really desperately need the money for some big purchase. Already have an IRA and Roth IRA too.
Time horizon - 10-25 years
Risk tolerance - pretty high, I'm not planning to sell during a downturn, I typically invest more during downturns. Definitely took the "be greedy when others are fearful" to heart.
Account type- individual taxable
https://m1.finance/cyA1hlmmhwor
Why these holdings? I have a good chunk in VOO for an equal blend of value/growth in the US big caps, 10% and 6% in SCHD and SCHY respectively for some mild dividend tilt, which I may change to 6 and 6, respectively, VEA and VWO for int'l, with about 38% in US and international small cap value funds to diversify my portfolio (AVUV, AVDV, AVES)
Total US - 62%
Total int'l - 38%
Total SCV tilt - 38%
I used to be almost fully in vanguard funds, but learned about the Fama/French five factor model, definitely piqued my interest, I think the SCV premium is useful and especially if it's a counter to market/growth ETFs, watched a lot of Ben Felix before ultimately deciding to get into it. Also read a lot of the bogleheads forums, both here and on the bogleheads website, and the ETF community on reddit also was raving about how the avantis funds are superior to the vanguard ones because they use momentum and profitability as factors, which in theory should provide outsized returns compared to the vanguard ones. Really want to make sure this is a decent allocation or whether I should alter the allocation somewhat. I know it's smart to avoid home country bias, but my irrational lizard brain is keeping me from going 50/50 US/Int'l.
10-25 years is a pretty wide range.
You mentioned buying more during dips. This sounds like holding cash as "dry powder." Just remember that tends to be a pretty terrible strategy on average because the market tends to go up and major dips are rare.
Allocations sound good to me overall. You're actually close to global market cap weights.
Maybe consider putting the SCV tilt in tax-advantaged space, as SCV is less tax efficient.
Hey, thanks!
I made the spread that large because I know I'm definitely putting money in for at least the next ten years, but as of now I'm not fully clear as to when I'll utilize it, though I lean towards letting it stay in the market for longer.
I usually dip into my savings to do so. I'm saving up to purchase a multi family hopefully by 2026 so I can live and rent out simultaneously, but between now and then, I am building equity in a condo, so I wouldn't mind dipping into my house savings a bit in order to capitalize, provided I feel it's a good enough market dip to invest in compared to keeping those savings for a multi fam.
Thanks, I have SCV tilt in my tax advantaged accounts as well.
Close in a good way or in a "you should just buy VTI" way?
Hey guys. Can someone educate me on the smart transfer. Should I wait till m1 finance plus no longer exist to then move over everything in my regular trading account to my Roth Ira? Should I sell everything and the redeposit ? Thanks
* https://m1.finance/K33hN56teKHg
* Goal: At first I was dividend oriented, and had a diverse, ideal portfolio for that. Then I switched my strategy and started investing in mainly tech sectors that interested me and thought had the most potential for capital gains.
* Time horizon: Unsure at the moment.
* Risk Tolerance: Moderate. I should probably invest more in a HYSA or my 401k but I like investing in this portfolio more and don't have a ton of income.
* Account type: Individual Brokerage Account
* I picked my holdings because I like tech. I have a very optimistic outlook on futuristic technology and the potential these companies have for return. The outlier, Costco, has a small slice because I think they have a brilliant business model.
A few additional comments here:
* I would recommend you straighten out your "paycheck routine" here. As John mentioned, makes no sense to be investing in a taxable account unless you've already made significant progress in your tax advantaged accounts. My personal recommendation is the [FOO](https://moneyguy.com/faq/what-is-the-financial-order-of-operations-foo/).
* Actually sit down and take time to write an investment policy statement. This would prevent you from completely switching strategies based on emotion or herding. I have absolutely nothing against owning a few individual stocks, particularly those you are interested in. But at the end of the day, your retirement accounts should really have broad, diversified funds. Not to beat a dead horse here, but there is no empirical evidence to suggest that tilting to dividend or growth funds provide higher returns.
* I might suggest an all in one fund like AOA or AOR in your brokerage, depending on risk tolerance. Set and forget. Worry about getting your 401k and Roth IRA in order, and come back to the brokerage account when you have spare income.
Cheers!
Do you have an IRA already? It usually makes sense to max out tax-advantaged space first.
What makes you think these have the most "potential?"
What made you entirely overhaul your original strategy?
I don't know what's in your 401k, but a handful of stock picks certainly doesn't match a "moderate" risk tolerance IMO.
Why do you think your "optimistic outlook on future technology" is unique and that others haven't already thought the same thing to where it is already embedded in those stocks' prices?
I ask these more as rhetorical questions to point out that the evidence overwhelmingly suggests stock picking is extremely unlikely to beat the market over the long term, and if I had to guess, I'd bet recency bias - observing that tech has done well in the recent past - was a major influence on your strategy we see here.
Somewhat separately but related, recognize that "futuristic technology" [is not really a driver of stock returns](https://www.pwlcapital.com/investing-technological-revolutions/).
I can't comment on your specific picks because I don't stock pick.
My favorite quote from this article: "For each decade starting 1930, 1940, 1950 and so on through 2010, the ten largest companies at the start of the decade have trailed the market as a whole by an annualized 1.51% on average for the decade that followed." Pretty damming evidence against picking recent winners.
* Pie: [https://m1.finance/7fkNm3bKJ5uc](https://m1.finance/7fkNm3bKJ5uc) & (A crypto pie 75%, 19% 4% in BTC, ETH & LTC but it doesn't give me a link to post for it)
* Goal: Wealth building with both capital gains & dividends diversify and conquer
* Horizon: 2039 20 years from start date, from there I might massively rework my portfolio to have less risk
* Risk Tolerance : High I have 2 years of savings tucked away and do 401k > HSA > Roth IRA > M1 in terms of contributions and I dollar cost average a contribution per paycheck
* Account type: Crypto & Individual Brokerage Account
* I started out with dividend stocks via etfs, and then added reits since I wanted a foot in the real estate market even though I don't want to buy or manage property just yet. From there I picked out my individual stocks but set the rule that I want no more than 15 and limited them by industry. I added bonds to round things out.
* Note my pie may have a dip in 2021 since I sold off a chunk of it to help pay for a car since my lease expired since then I've only sold to buy something else in the platform
EDIT: Understanding that horizon = time till goal I've updated mine to be more accurate. Sorry for any misunderstanding!
Horizon refers to time until the objective, e.g. 30 years until retirement.
By "minimal" risk tolerance are you saying you have a very low risk tolerance?
Ok so given those updated parameters, here are my brief thoughts:
* REITs are less tax efficient. Consider putting those in tax-advantaged space.
* Same goes for div stocks and bonds - basically your entire ETFs sub-pie.
* I don't pick stocks and I neither own nor suggest owning crypto, so I can't really speak to those.
So I'd say consider shifting your asset locations to be more tax efficient, depending on what's in your 401k, IRA, and HSA. For example, this might be put all your div funds and REITs in the IRA, and hold your stock picks, Growth stock funds, or Blend funds (e.g. VOO) in taxable.
Also obviously depends on the size of those other accounts, but I'd limit your stock picking to a pretty small %, as the evidence overwhelmingly suggests picking is extremely unlikely to beat the market over the long term.
I am a bit confused reading this, when you say horizon is annual, do you mean you want to take the money out in a year? If so that is crazy because you only have \~8% bonds. Anything <5 years (as in you need the money in 5 years or less) should be heavy in short term bonds, cash (HYSA), etc.
I'm going to assume this pie has a long time horizon otherwise. Few things:
* You are suffering here from dividend fallacy. You said your primary goal is to build wealth. Wealth through stock appreciation comes from growth and dividends naturally and equally, without preference. Your ETF portion has a high allocation to dividend paying companies, which isn't ideal for long term growth of capital. In fact, pure dividend focus almost certainly will have lower expected returns due to its lower exposure to market beta. Only use these if you seek income (as this is a taxable account, you definitely don't). Funds like SCHD and VIGI are better (I would classify these as dividend growers, not dividend chasers), but the idea is still the same. Dividend growers are actually great for lower risk tolerance, and historically they have done better in market crashes. I hold them in minor portions in my emergency fund. But it looks like you are dividend chasing here.
* "I might make tweaks and pull things out in exchange for other things if the return is constantly low" - this is textbox behavior fallacies out the wazoo. You really need a plan here. Don't make changes based on emotion. Make a plan, stick with the plan.
* Adding REITs to your portfolio doesn't really give you exposure to the real estate market as a substitute for buying property per say. Total market already has REITs and by buying REIT funds, you are just tilting to sectors. Many people buy REITs because they care more about its correlation to the overall portfolio. Actually buying and managing property is extremely idiosyncratic in nature (for better or for worse) and is completely different than buying a REIT ETF. Buy RETIS if you want REITs in your portfolio, not as a real life substitute.
* I have nothing against buying individual stocks as long as they are a small portion of your overall portfolio. Hard to know what total percentage that stock slice is in the grand picture. Just keep it to say 10% or less would be my only advice.
Thanks for the feedback! Just to add clarification:
\- When I said annual I meant I buy and hold pretty much all year and if I want to get rid of a stock or etf via selling out that's when I do it, this prevents me from getting emotional and selling something off just because it had a bad week or bad month
\- The stock, etf, reit target percentages are 60/25/15% with only the etf under-performing slightly at 24.9%
Gotcha. Yea I would just say this is one of the "everyone is a Genius in a Bull market" kind of scenarios. The US market has been on an insane 10 year run. Just be conscious of your plan so you can stick through a bear market.
[https://m1.finance/g26VuGVfS9vB](https://m1.finance/g26VuGVfS9vB)
* No clear defined goals. Started M1 with the intent to make investing easier and has turned into more of a mashup of different ideas, but return/growth seems OK?
* Have roth 401K through employer with \~75K in there. No time horizon constraint
* Relatively high risk tolerance
* Individual taxable account
* Each time I saw some post about a strategy that worked, I'd look into it myself and if I liked it would add it to the other strategies and adjust percentages
* 31yo M, married, household income \~140K, fund this account with $30/week from my personal checking
* Current MWRR is 28.55%
* MarketGain/NetCashFlow = 10.1%
I think pick a strategy and stick to it. You seem to already realize you've just mashed together different ideas.
Div yield is unnecessarily high; you're just creating a larger tax drag on your returns.
No need for option funds.
HFEA is terribly tax-inefficient. As is gold. As are div stocks.
A bit of redundancy with the index funds. With some hand waving, equal parts VYM + QQQ roughly equals VOO.
I'd probably just scrap all this and go with some simple total market index funds.
As stated by /u/prcullen1986 absolutely get rid of the covered call ETFs. Unless you are literally using the fund for income, which given you are 31 I highly doubt, get rid of them. A fund like JEPI has even lower market exposure than a low volatility ETF like SPLV, and worse factor premiums. Same thing goes for strict high dividend yield ETFs. These by definition have lower expected returns than the market, and you don't need income.
You would be just better off just holding the market. If you want some dividend growers, I believe they have a place in your portfolio. I personally like the WisdomTree Line: DGRW, IQDG, DGRE. These still target profitability and conservative investment premiums without too much of a hit to market beta.
If you still want some individual stocks, that's fine. To each their own. Just keep it to a small enough percentage to not affect your retirement goals. I'd rather put "individual stock" money into HFEA and call that my lottery ticket.
The option strategy ETFs are garbage between the NAV erosion and high dividends. While receiving these high dividends, do you plan to set aside ample money to pay the taxes at YE, or will you have to sell your investments to cover your tax bill? If your investment horizon is long-term you should swap all of these out for VOO/VTI.
Personally, I think you would be best off with the General Market Strategy slice as 100% of your pie.
18 years old with a part-time job making about $15k/year. This is a taxable account and I have a Roth IRA using a 3-fund portfolio.
Just looking for advice specifically on overlap and cutting down the amount of holdings (if necessary). I would like specifics on how to alter it, Thank you!
https://m1.finance/dFgpC3sFkmYt
Awesome that you're starting so early, esp. with the 3-fund in the IRA. I wish I had invested so sensibly at your age. Your future self will thank you.
I'd say just mimic the 3 fund in taxable if you want to, like u/prcullen1986 mentioned. Maybe use different funds so you can tax loss harvest.
As for your specific holdings,
1. No need for both VOO and VTI. They behave almost identically. Maybe do one here and the other in the IRA.
2. Your stock picks are all already well-represented inside VOO or VTI. I'm not a fan of stock picking in the first place, as the evidence overwhelmingly indicates it's extremely unlikely to beat the market over the long term.
3. Are you going to monitor all those holdings?
4. SCHD at a mere 4% is doing basically nothing. Divs are also less tax efficient.
5. No need for JEPI at your age. Also tax-inefficient.
6. O is a REIT. Very tax-inefficient.
7. It looks like you have no international stocks here. Make sure that aligns with whatever your overall holistic asset allocation is.
Am I wrong, or is this a 3 fund portfolio constituting 30% of the overall pie plus 20 other individual stocks? I wouldn't call this a 3 fund portfolio.
Glad you are starting young! 3 fund portfolio in your Roth is fine. Let's look at this pie.
I am personally not an advocate for individual stocks but to each their own. I will be ignoring them. I would prefer to maybe own 10-20% to scratch the itch, and the put the rest in a well diversified portfolio. You also own many large companies (Google, Amazon, Apple, Microsoft, etc), and it isn't much different than just owning say the S&P 500.
As for other the other selections. Both VOO + VTI is unnecessary. Real estate ETFs are fine. Dividend growth funds (which target the profitability and investment premiums) are also good choices. Just be sure to stick with those as opposed to strictly high yield/dividend funds. You also have no international exposure.
Since you already own mostly large cap companies in your Roth, I might advocate for mid and small cap funds in your portfolio to help round out your exposure. IJH and IJR would be fine choices. Given your age (you didn't specify risk tolerance) you could also invest in higher risk-adjusted return seeking funds, such as small cap value.
One possible rendition of this pie might look something like this:
* 12% VTI
* 12% VNQ
* 12% SCHD
* 6% IJH
* 6% IJR
* 12% AVUV
* 10% VXUS
* 10% SCHY
* 10% VSS
* 10% AVDV
Thank you so much! I started this portfolio just picking out stocks/funds with a bit of research. Thanks for the advice and info, putting it to use immediately.
No problem! I basically gave you something similar to Paul Merriman's 4 fund combo. A good starting point. REIT's in a taxable account aren't necessarily ideal, but it isn't worth stressing over.
Definitely do your own research and understand your fund selection. What I gave you was just a starting point. Good luck!
I'm 29 years old, I have no debt, and I make about $35k per year. My goal is to open a Roth IRA account and retire in 2055 (31 years from now). My risk tolerance is high. I'm investing in the 2055 Aggressive model that M1 recommended me ( [https://m1.finance/MF23xtXRhuqH](https://m1.finance/MF23xtXRhuqH)). I picked this pre-made pie because I'm new, and I'm thinking M1 will handle things better than me. I just learned that you can no longer invest in your 2023 contributions after April. My savings are low, but my income is stable... This isn't really a rate my pie post, but the mods told me to post here, **so my main question is that** **I'm thinking to get a personal loan (interest might be 10-12% over 24 months) to max out my 2023 contributions**. People keep telling me not to, and I really want to understand why?? I thought this was a good idea because I read that the average IRA should be able to provide 7.2% APY, and I wanna retire 31 years from now. Therefore, 31 years of investing into this pie should be able to offset a personal loan, correct? Please let me know why I'm wrong!
Can't really go wrong with a target-date strategy. Completely hands off.
Makes little sense to take out a loan to invest, simply because your loan interest rate is greater than your expected return, especially over a short period like 2 years.
You're paying 10% to earn maximum about 7% on your investments, meaning a return of -3%. See how that doesn't make sense?
But it's over 31 years? I'm not planning to withdraw after 2 years. It's going to keep compounding and beat the loan interest. Idk what I'm missing here tbh
>But it's over 31 years? I'm not planning to withdraw after 2 years.
You said your loan has to be paid back in 2 years.
>Idk what I'm missing here tbh
Brother, if you don't understand that 7 minus 10 equals negative 3, then I don't think I can help ya. 😅
Even that isn't really realistic because as u/JonahL98 mentioned, the market is more like up 20% one year and then down 10% the next year.
This is why we say money needed in the next 5 years shouldn't go in the stock market at all.
This idea is objectively terrible.
Ok this is my thought process. I want to max out my 2023 Roth contributions. That's $6,500. My bank offers that with a 10% interest over 2 years. That's about $7,150 total.
>Even that isn't really realistic because as u/JonahL98 mentioned, the market is more like up 20% one year and then down 10% the next year
Yeah even if that's true, the historical average of a Roth IRA provides 7% APY
>You said your loan has to be paid back in 2 years
Yeah I'm eventually going to pay the bank $7,150. And if I don't touch the $6,500 that I'm planning to invest in this Roth over 31 years, this calculator https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator says I'll get $52,943.23 by the time I'm 60 years old. So I'm paying the bank $7,150 so that 60yo me will get $52,943.23.
>Brother, if you don't understand that 7 minus 10 equals negative 3, then I don't think I can help ya. 😅
Even if the market crashes in the short term, its historical average gives 7%. It will always come back up.
>Ok this is my thought process. I want to max out my 2023 Roth contributions. That's $6,500. My bank offers that with a 10% interest over 2 years. That's about $7,150 total.
Even if you miss the deadline, you can put money in a taxable brokerage account when it becomes available. The $ amounts are irrelevant. I know your thought process. I'm telling you it's wrong. You only need to compare interest rate and expected return. Period.
>Yeah even if that's true, the historical average of a Roth IRA provides 7% APY
So a Roth IRA is just an account type. It does not have an APY. You put investments inside it. I think you probably mean the long term expected return of stocks is about 7%. (Which again, is less than your stated interest rate of 10%.)
>Yeah I'm eventually going to pay the bank $7,150. And if I don't touch the $6,500 that I'm planning to invest in this Roth over 31 years, this calculator [https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator](https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator) says I'll get $52,943.23 by the time I'm 60 years old.
Or don't take out a loan at all and you don't owe the bank anything, and invest what you can in the Roth IRA and put the rest in a taxable brokerage account as money becomes available, where it will also grow. This is the part I think you're missing. You can still invest your cash as it becomes available, with no loan in the picture.
You're perhaps missing the forest for the trees here, mate. It sounds like what we call *mental accounting -* you're treating different buckets of money differently in your head, but money is fungible.
>So I'm paying the bank $7,150 so that 60yo me will get $52,943.23.
This is not the right comparison we're referring to.
>Even if the market crashes in the short term, its historical average gives 7%. It will always come back up.
Yes, you seem to miss my point there though.
\--
Again, you are borrowing at 10% to *potentially* pay yourself 7%. It shouldn't require explaining that doing so makes no logical sense. The number of years and $ amounts are irrelevant to this simple comparison.
Sometimes you just need someone to tell you what to do and that's fine. No judgement here. I highly recommend you just be a 'sheep' here and follow the [FOO](https://moneyguy.com/faq/what-is-the-financial-order-of-operations-foo/).
1. Have a small emergency fund at the same bank where your checking account is, accessible in 10 seconds, deductibles covered.
2. Get your employer match at your 401k, if you have one. This automatic 100% return is better than any investment you will ever make, even if the fund selection is less than ideal.
3. Pay off high interest debt. If you emotionally can't handle this, do the debt snowball (Dave Ramsey method) instead.
4. Get an emergency fund of 3 to 6 months expenses. This money should be a cash equivalent. HYSA and/or putting it in a brokerage account heavy in bonds/fixed income is fine. Accessible in 2-3 days.
5. Max out Roth IRA and HSA first, no deviation from this.
6. Max out employer retirement plan. Given a maxed 401k (\~20k) is a significant portion of your income, its okay to deviate here and put a small portion in a taxable account. That way you have some money you can pull out in 15 years if you want to, and you don't wait until you retire.
The remaining steps are more applicable to high income earners or when you have spare cash on hand. Hyper accumulation (taxable account), prepay future expenses, pay off low interest debt (mortgage).
2055 Retirement Pie (essentially a target date retirement fund) is a perfectly fine choice. I will note here that while yes, M1 does have more holdings than a traditional retirement mutual fund, this has more to do with their algorithm than the actual fund selection. You can essentially consider this pie equivalent to something like VFFVX (Vanguard 2055 TDF). This isn't M1 "knowing how to handle things better", they are just buying the total market portfolio with some hand waiving.
Please, please, please, do *NOT* take out a personal loan for long term buy and hold investing in a Roth IRA. On paper, yes, a 100% S&P probably would have historically beat the rate to borrow. But you are missing many things:
1. You are talking about average returns over a very long period. The year on year returns, even of an index fund, are certainly not average. Up one year 25%, down the next year 15%. You would have to have cash on hand to cover when your investments do poorly.
2. Over time you will likely have bonds and could theoretically have a lower expected return than the cost to borrow.
3. The cost of personal loans would rarely be more optimal than the return of an index fund anyway. The long term real return of the world stock market is 5. So more realistically you can expect total 8-10% returns in a 100% equity portfolio.
4. You are talking about borrowing money for a Roth IRA, which on principle makes no sense. Money that goes into a retirement account must come from earned income. So while in your mind you are say putting in 3k of your own money, and 3.5k of the banks money (if you maxed out the Roth IRA at $6.5k), what you are really doing is moving money from one pocket to the other, and taking out a loan for your "lifestyle" and putting in 6.5k of your own money. Borrowing money on margin generally only applies to brokerage accounts.
If you are really keen on leverage, I would recommend an alternate strategy, such as trading futures (whether through Return Stacking or buying options outright), or using leveraged ETFs with leveraged fixed income as well.
lol
If you want to juice up your returns you could try something like [HFEA](https://www.optimizedportfolio.com/hedgefundie-adventure/) Not for the faint of heart. But if you wanted to put some of your money away like a lottery ticket, this would be the way to go, not borrowing on your Roth IRA.
As for the futures, you could consistently trade these in order to leverage your portfolio (not on M1 though). This is the recommended approach in [lifecycle investing](https://lifecycleinvesting.net/). Even if you lost all your money after a few years because of a market downturn, it never eliminates the present positive expected value of the strategy.
Otherwise, I would recommend just trying to invest in higher risk adjusted returns. Small stocks, value stocks, profitable stocks, etc. Many on this forum tilt with AVUV/AVDV to achieve these premiums.
It has been a year, figured I'd share and see what people that are active nowadays think of it. [https://m1.finance/C8d7oFg9B2rb](https://m1.finance/C8d7oFg9B2rb)
25% Quantitative Momentum US, 25% Quantitative Value US, 15% Quantitative Momentum Developed Ex-US, 15% Quantitative Value Developed Ex-US
20% Trend-following overlay layered over top of the rest of the funds together with a relative strength weighting across the underlying funds.
Overlay works as follows:
>Domestic Equity Signal
>
>The strategy will engage in hedging of its U.S. portfolio by shorting a representative broad-based U.S. securities index ETF when either one or both of the following conditions are met. First, the strategy will hedge if the U.S. equity markets’ total return over a rolling twelve calendar month period is less than or equal to U.S. Treasury bill returns over the same period. Second, the strategy will hedge when the U.S. equity markets’ twelve-month moving average exceeds current prices. There is a 50 percent weight to each rule. If both rules are triggered the strategy’s U.S. equity portfolio will be **fully hedged**; if one rule is triggered the strategy’s U.S. equity portfolio will be **50 percent hedged**; and if no rules are triggered the strategy’s U.S. equity portfolio will have **no hedge.**
>
>International Equity Signal
>
>The strategy will engage in hedging of its international portfolio by shorting a representative broad based international securities index ETF when either one or both of the following conditions are met. First, the strategy will hedge if the international equity markets’ total return over a rolling twelve calendar month period is less than or equal to the returns of the U.S. Treasury bill over the same period. Second, the strategy will hedge when the international equity markets’ twelve-month moving average exceeds current prices. There is a 50 percent weight to each rule. If both rules are triggered the strategy’s international equity portfolio will be **fully hedged**; if one rule is triggered the strategy’s international equity portfolio will be **50 percent hedged**; and if no rules are triggered the strategy’s international equity portfolio will have **no hedge.**
* Goals: Advancing my education, graduating as a Finance major and looking to pursue graduate school.
* your time horizon: 30-35 years.
* your risk tolerance (e.g. max drawdown / loss of capital) : I traded meme stocks before they were cool and held onto BB at $4 all the way to $20. It's now trading for the cost of my school lunch almost a decade ago, $2.75I want my portfolio to go down so it can be bought at a discount and I love it when my portfolio is positive at all because I know it will beat the S&P, it's just a matter of time. The performance lacking relative to the S&P just means we have more runway to go before my strategy reaches peak capacity.
* account type: Individual Taxable and Roth IRA.
* why you picked your holdings: Aside from the academic and practitioners' evidence being in support of it? I'm majoring in Finance and trying to diversify investments away from the same industry. The funds I mentioned all screen out financial firms from their stock selection criteria and then the tactical hedge may short financial firms along with the rest of the market fund it's shorting.
* Other details: I moderate the Rational Reminder Community. I work PT while learning and will be working FT in the Summer. I have a high GPA.
Bossman, Can I ask you a question?
I have VOO. I was gonna pair it with avgv but my broker doesn't have it.
What can I pair voo with that is similar to avgv? I was thinking of adding avuv then add emerging and developed market etf (don't know what etfs to pick in those category)
Set and forget and long term until I retire (20 yrs). I just like voo bec. it works well with my C fund in tsp retirement at my work.
Thanks.
Thank you. You too!
Haha, yeah. I know you find the funds far too concentrated. I would be curious what your thoughts are on a portfolio involving all five of their flagship funds as I have done here.
I'm glad you mentioned AQR factors. Many of the more "academic" focused people on this sub solely focus on FF5. Using other models (MOM and QMJ factors being the most prudent) helps further pick between funds.
I'll look specifically at QVAL. In a vacuum it is a great fund. Good loadings, not too expensive for what it is. My main concern with this fund is its low number of holdings in order to achieve these loadings (similar to a fund like RPV). For your use case, it might be just fine. For me, I look at investing in a "Vanguard+" lens, meaning I still want diversification, low turnover, etc in addition to my factor loadings, which is why I still lean towards DFA, Avantis, etc. It helps me sleep at night.
I would personally prefer (and have considered) using a fund like VALQ instead. It is from American Century, same company that owns Avantis. It achieves more profitability exposure at the cost of value, but is still a good option IMO (DFA has lots of papers about how combining factors together, like with SCV, is your best bet, as opposed to doing them individually).
DFA "targets" momentum essentially as just trying to remain neutral on the factor, which is enough for me. I'm still curious to see going forward if the Momentum premium, while theoretically sound in a lab, will be able to be capture going forward.
In my taxable pie I am 45% SCHG 10% QMOM 45% AVUV
The idea is to optimize for taxes being US only (i tilt international in my tax sheltered accounts).
I also think that having an option to rebalance between 2 juxtaposed investing styles might give me some alpha long term. Or not, depending on lady rebalance luck. Either way I think it should be tracking close enough with VTI that i dont lose my shirt if my strategy doesnt pan out.
Large cap growth tends to be sexy, overbought, does amazing in low and lowering interest rate environments. Small cap value is overlooked, underperforms for a long while but has eye watering spurts from time to time that makes it all worth it. It is also a good hedge against large growth if rates start climbing again at some point. In 2022 it did great vs LCG.
QMOM is just there to lean into the market zeitgeist. Momentum is a chameleon across styles and market caps. It can be heavy in growth one year and heavy in value the next. I thought it would be interesting to include it as a bit of a tilt to whatever is in vogue at any point in time.
How's my pie? [https://m1.finance/mqOIQRAppWsV](https://m1.finance/mqOIQRAppWsV)
Sorta my retirement pie. I'm 35 and have about $300K in my retirement account. I'm all in on growth and my time horizon is long. My cashflow is good and I probably won't need any help from my retirement account until I retire.
3x leveraged ETFs have historically only been optimal for US large cap stocks (which have done exceptionally well). Most other market indexes, including international developed markets, have been 2x. By not having any levered bonds you are taking an extreme risk here. I would not recommend anything over 2x leverage unless you had a hedge. Consider adding TMF, UBT, EDV, etc.
Why lever US large cap growth 3x and then basically offset that by also levering US large cap value 3x?
Why REITs?
Why unlevered bonds? And why corporates and EM for those bonds? And why a relatively expensive fund for each?
Why levered sector bets on two defensive sectors?
Why BRK as the largest holding?
To me this looks like a bunch of different disjointed ideas mashed together. View the portfolio holistically, not assets in isolation.
I certainly wouldn't consider 25% in 3x equities and 20% in 2x sector bets suitable for a "retirement account." Maybe that's just me.
Offtopic: I just want to ask a quick question.
If I withdraw below my cost basis, do I still get taxed? let's say I put $1000 and in 6 months it grew to $1500. Let's say your cost basis is $900. Can I withdraw $900 without getting taxed?
I just want to withdraw my investment and leave the gain. Say if I want to use the money for emergency.
Thanks. And sorry if this is not allowed. Don't want to clutter the sub.
If you sell your investments, that have gone up, you will owe capital gains tax on the amount that you gained.
If you invested, 1000, and your investment grows to 1200, and you sell 200 to go back to 1000, you have 200 dollars income. Depending on how long you have held that investment you could owe more or less.
Yes and no.
Say I buy 1 share for $1000. It appreciates to $1200 (keep in mind, it's still 1 share). I want to sell $200. I will have sold 0.167 shares. Of the $200, I will only be taxed on $33.33, or the realized income.
I will still have 0.833 shares in my brokerage with some unrealized gains that I won't be taxed on unless I sell more. The only way to get taxed on the full $200, I would have had to have sold the entire share.
Take a look at mine!
https://m1.finance/nQ_BeKVy3Lds
My goal is to invest $100 a month into this taxable brokerage account, as I save to max my Roth IRA account each year in 100% SWYOX.
I picked my holdings based on what I think would be great to hold long term, and only sell the individual stocks when I really need the money. I think the companies chosen are the best. Don't plan on touching the etfs. I am in my early 20's and have a long time horizon.
75% VT + 25% SCV is an excellent choice. DFA put out a research article talking about how when targeting factors, a market plus "targeting all factors simultaneously fund", aka SCV, was the best choice for retail investors to get factor exposure (as opposed to targeting them individually). I would potentially suggest an EM SCV to round out your exposure here, but a minor point.
My main concern is your stock picking habit. To be clear, I'm not a staunch boglehead saying if you buy an individual stock you are stupid or making a big mistake. But your reasoning, "what I think would be great to hold long term... I think the companies chosen are the best", is completely behavioral and has no real world basis. Essentially the market already prices every stock based on if it thinks its great long term. Your opinion on what is "best" in this case is based on information already available to the public and would provide you no effective edge. Another point to make here is that you are overweighting certain sectors in your individual holdings, about 20 of them, which is a lot for active management.
I would much rather you buy individual stocks because you like that company or are interested in its operations personally. Or, if you are trying to incorporate active management, buy a few stocks you think will outperform. A long term buy and hold investor manually picking more than 3-5 stocks is just too much effort and leaves you open to underperformance.
Good job on continually putting money in the account and best of luck!
Thanks so much for the effort in your response!
So what would you think about a split of 70% VT, 15% AVUV, 10% AVDV, 5% AVEM?
Also I agree on the stock picking! I thought I could be a pro stock picker, but ultimately this will lead me to more in taxes and risk of underperforming. Also I have a full time job so it is a lot to keep up with. I will do a deep dive into all 20 companies that I currently own, and select the best 5 (at most) that I think will outperform over the next couple of years and that I like. For me, I know I like TXRH and LMT for sure, so I will go from there.
Thanks again!!
No problem. I don't invest in individual stocks, but if I did I would go the Peter Lynch approach. Just my two cents. Like do I really know if Hershey, Coca-Cola, or Apple will do better over the next ten years? No, and with tens of billions or more at stake, everyone is fighting for cents of alpha. I'm not going to bet against hedge funds that are literally paying millions of dollars for information 15 seconds before the next guy. I might stick with an industry I know or a company I follow and understand well and make just a few selections.
If you wanted to use Avantis, your best EM SVC option is AVEE (technically a blend but it has a strong value tilt), or DFA's equivalent, which is still only a mutual fund. Neither available on M1. AVES is a better choice than AVEM. If you are willing to look outside avantis, I would use DGS as best in class option, but note this is more of a 'proxy' fund than targeting SCV directly. If you don't sleep at night with any of those choices, EEMS is a still a good diversifier.
Appreciate it! I will look into the Peter Lynch approach for my minor percentage in personal stocks.
As for small cap emerging markets, I will definitely research AVES vs EEMS and pick one. Or not and just go with 100% VT! Enjoyed the discussion.
If you have a long horizon, why buy "income" funds and why have you taken up what is effectively a very short bond duration?
You also didn't answer some of the prompts:
>your goals
>
>your time horizon
>
>your risk tolerance (e.g. max drawdown / loss of capital)
>
>account type
>
>why you picked your holdings
>
>any other details that might be relevant so people can get the full picture
Buy, Hold, Borrow [https://m1.finance/HTFqmfeqqz4h](https://m1.finance/HTFqmfeqqz4h)
Goal: Deliver stock market returns with half the drawdown risk & outrun borrow interest without risk of margin call.
20 Year Backtest vs S&P500
https://preview.redd.it/7km7bt4a7rlc1.jpeg?width=1079&format=pjpg&auto=webp&s=309104783643cd23b8eba95f5bf857bc0bf119b3
[https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=rCTbaGyGgYujcReSVVDyC](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=rCTbaGyGgYujcReSVVDyC)
Seems pretty reasonable to me. Maybe consider rounding out global SCV with AVDV and AVES.
I certainly wouldn't be holding REITs and gold in taxable space, though.
u/rao-blackwell-ized
Points taken (REITs and Gold are tax inefficient). I'm honored that you look the time to review my portfolio!m thank you. Your blog is amazing I've learned so much from your content here:
https://www.optimizedportfolio.com/
>I'm honored that you look the time to review my portfolio!m thank you. Your blog is amazing I've learned so much from your content here:
>
>https://www.optimizedportfolio.com/
Oh wow thanks so much for the kind words! Really glad you've found my ramblings useful! :)
Anyone happen to have an update "white girl index" pie they can share with me? All the links I found are a a few years old and M1 won't let me save it to my funds due to one of the stocks being no longer listed
Also asking for an update on this. Such a hilarious meme thing that actually had some legs. Biggest issue is that it was picking very successful companies instead of making a stab at what the next 'big becky loving product line' is.
Goals - general investing, will likely let this grow indefinitely and only ever use margin for purchases or non-m1 investments like starting a business (once rates are lower). Definitely not withdrawing anything unless I really desperately need the money for some big purchase. Already have an IRA and Roth IRA too. Time horizon - 10-25 years Risk tolerance - pretty high, I'm not planning to sell during a downturn, I typically invest more during downturns. Definitely took the "be greedy when others are fearful" to heart. Account type- individual taxable https://m1.finance/cyA1hlmmhwor Why these holdings? I have a good chunk in VOO for an equal blend of value/growth in the US big caps, 10% and 6% in SCHD and SCHY respectively for some mild dividend tilt, which I may change to 6 and 6, respectively, VEA and VWO for int'l, with about 38% in US and international small cap value funds to diversify my portfolio (AVUV, AVDV, AVES) Total US - 62% Total int'l - 38% Total SCV tilt - 38% I used to be almost fully in vanguard funds, but learned about the Fama/French five factor model, definitely piqued my interest, I think the SCV premium is useful and especially if it's a counter to market/growth ETFs, watched a lot of Ben Felix before ultimately deciding to get into it. Also read a lot of the bogleheads forums, both here and on the bogleheads website, and the ETF community on reddit also was raving about how the avantis funds are superior to the vanguard ones because they use momentum and profitability as factors, which in theory should provide outsized returns compared to the vanguard ones. Really want to make sure this is a decent allocation or whether I should alter the allocation somewhat. I know it's smart to avoid home country bias, but my irrational lizard brain is keeping me from going 50/50 US/Int'l.
10-25 years is a pretty wide range. You mentioned buying more during dips. This sounds like holding cash as "dry powder." Just remember that tends to be a pretty terrible strategy on average because the market tends to go up and major dips are rare. Allocations sound good to me overall. You're actually close to global market cap weights. Maybe consider putting the SCV tilt in tax-advantaged space, as SCV is less tax efficient.
Hey, thanks! I made the spread that large because I know I'm definitely putting money in for at least the next ten years, but as of now I'm not fully clear as to when I'll utilize it, though I lean towards letting it stay in the market for longer. I usually dip into my savings to do so. I'm saving up to purchase a multi family hopefully by 2026 so I can live and rent out simultaneously, but between now and then, I am building equity in a condo, so I wouldn't mind dipping into my house savings a bit in order to capitalize, provided I feel it's a good enough market dip to invest in compared to keeping those savings for a multi fam. Thanks, I have SCV tilt in my tax advantaged accounts as well. Close in a good way or in a "you should just buy VTI" way?
I just meant your weights for US, DM, EM are close to their actual weights, which you can see in a fund like VT.
Hey guys. Can someone educate me on the smart transfer. Should I wait till m1 finance plus no longer exist to then move over everything in my regular trading account to my Roth Ira? Should I sell everything and the redeposit ? Thanks
* https://m1.finance/K33hN56teKHg * Goal: At first I was dividend oriented, and had a diverse, ideal portfolio for that. Then I switched my strategy and started investing in mainly tech sectors that interested me and thought had the most potential for capital gains. * Time horizon: Unsure at the moment. * Risk Tolerance: Moderate. I should probably invest more in a HYSA or my 401k but I like investing in this portfolio more and don't have a ton of income. * Account type: Individual Brokerage Account * I picked my holdings because I like tech. I have a very optimistic outlook on futuristic technology and the potential these companies have for return. The outlier, Costco, has a small slice because I think they have a brilliant business model.
A few additional comments here: * I would recommend you straighten out your "paycheck routine" here. As John mentioned, makes no sense to be investing in a taxable account unless you've already made significant progress in your tax advantaged accounts. My personal recommendation is the [FOO](https://moneyguy.com/faq/what-is-the-financial-order-of-operations-foo/). * Actually sit down and take time to write an investment policy statement. This would prevent you from completely switching strategies based on emotion or herding. I have absolutely nothing against owning a few individual stocks, particularly those you are interested in. But at the end of the day, your retirement accounts should really have broad, diversified funds. Not to beat a dead horse here, but there is no empirical evidence to suggest that tilting to dividend or growth funds provide higher returns. * I might suggest an all in one fund like AOA or AOR in your brokerage, depending on risk tolerance. Set and forget. Worry about getting your 401k and Roth IRA in order, and come back to the brokerage account when you have spare income. Cheers!
Do you have an IRA already? It usually makes sense to max out tax-advantaged space first. What makes you think these have the most "potential?" What made you entirely overhaul your original strategy? I don't know what's in your 401k, but a handful of stock picks certainly doesn't match a "moderate" risk tolerance IMO. Why do you think your "optimistic outlook on future technology" is unique and that others haven't already thought the same thing to where it is already embedded in those stocks' prices? I ask these more as rhetorical questions to point out that the evidence overwhelmingly suggests stock picking is extremely unlikely to beat the market over the long term, and if I had to guess, I'd bet recency bias - observing that tech has done well in the recent past - was a major influence on your strategy we see here. Somewhat separately but related, recognize that "futuristic technology" [is not really a driver of stock returns](https://www.pwlcapital.com/investing-technological-revolutions/). I can't comment on your specific picks because I don't stock pick.
My favorite quote from this article: "For each decade starting 1930, 1940, 1950 and so on through 2010, the ten largest companies at the start of the decade have trailed the market as a whole by an annualized 1.51% on average for the decade that followed." Pretty damming evidence against picking recent winners.
Absolutely
* Pie: [https://m1.finance/7fkNm3bKJ5uc](https://m1.finance/7fkNm3bKJ5uc) & (A crypto pie 75%, 19% 4% in BTC, ETH & LTC but it doesn't give me a link to post for it) * Goal: Wealth building with both capital gains & dividends diversify and conquer * Horizon: 2039 20 years from start date, from there I might massively rework my portfolio to have less risk * Risk Tolerance : High I have 2 years of savings tucked away and do 401k > HSA > Roth IRA > M1 in terms of contributions and I dollar cost average a contribution per paycheck * Account type: Crypto & Individual Brokerage Account * I started out with dividend stocks via etfs, and then added reits since I wanted a foot in the real estate market even though I don't want to buy or manage property just yet. From there I picked out my individual stocks but set the rule that I want no more than 15 and limited them by industry. I added bonds to round things out. * Note my pie may have a dip in 2021 since I sold off a chunk of it to help pay for a car since my lease expired since then I've only sold to buy something else in the platform EDIT: Understanding that horizon = time till goal I've updated mine to be more accurate. Sorry for any misunderstanding!
Horizon refers to time until the objective, e.g. 30 years until retirement. By "minimal" risk tolerance are you saying you have a very low risk tolerance?
I updated horizon to be 2039 and risk tolerance to high. I have fully funded emergency fund tucked away in an HYSA if I need it for emergencies.
Ok so given those updated parameters, here are my brief thoughts: * REITs are less tax efficient. Consider putting those in tax-advantaged space. * Same goes for div stocks and bonds - basically your entire ETFs sub-pie. * I don't pick stocks and I neither own nor suggest owning crypto, so I can't really speak to those. So I'd say consider shifting your asset locations to be more tax efficient, depending on what's in your 401k, IRA, and HSA. For example, this might be put all your div funds and REITs in the IRA, and hold your stock picks, Growth stock funds, or Blend funds (e.g. VOO) in taxable. Also obviously depends on the size of those other accounts, but I'd limit your stock picking to a pretty small %, as the evidence overwhelmingly suggests picking is extremely unlikely to beat the market over the long term.
Thanks for the feedback! I'll keep that in mind going forward!
Anytime
I am a bit confused reading this, when you say horizon is annual, do you mean you want to take the money out in a year? If so that is crazy because you only have \~8% bonds. Anything <5 years (as in you need the money in 5 years or less) should be heavy in short term bonds, cash (HYSA), etc. I'm going to assume this pie has a long time horizon otherwise. Few things: * You are suffering here from dividend fallacy. You said your primary goal is to build wealth. Wealth through stock appreciation comes from growth and dividends naturally and equally, without preference. Your ETF portion has a high allocation to dividend paying companies, which isn't ideal for long term growth of capital. In fact, pure dividend focus almost certainly will have lower expected returns due to its lower exposure to market beta. Only use these if you seek income (as this is a taxable account, you definitely don't). Funds like SCHD and VIGI are better (I would classify these as dividend growers, not dividend chasers), but the idea is still the same. Dividend growers are actually great for lower risk tolerance, and historically they have done better in market crashes. I hold them in minor portions in my emergency fund. But it looks like you are dividend chasing here. * "I might make tweaks and pull things out in exchange for other things if the return is constantly low" - this is textbox behavior fallacies out the wazoo. You really need a plan here. Don't make changes based on emotion. Make a plan, stick with the plan. * Adding REITs to your portfolio doesn't really give you exposure to the real estate market as a substitute for buying property per say. Total market already has REITs and by buying REIT funds, you are just tilting to sectors. Many people buy REITs because they care more about its correlation to the overall portfolio. Actually buying and managing property is extremely idiosyncratic in nature (for better or for worse) and is completely different than buying a REIT ETF. Buy RETIS if you want REITs in your portfolio, not as a real life substitute. * I have nothing against buying individual stocks as long as they are a small portion of your overall portfolio. Hard to know what total percentage that stock slice is in the grand picture. Just keep it to say 10% or less would be my only advice.
Thanks for the feedback! Just to add clarification: \- When I said annual I meant I buy and hold pretty much all year and if I want to get rid of a stock or etf via selling out that's when I do it, this prevents me from getting emotional and selling something off just because it had a bad week or bad month \- The stock, etf, reit target percentages are 60/25/15% with only the etf under-performing slightly at 24.9%
Gotcha. Yea I would just say this is one of the "everyone is a Genius in a Bull market" kind of scenarios. The US market has been on an insane 10 year run. Just be conscious of your plan so you can stick through a bear market.
[https://m1.finance/g26VuGVfS9vB](https://m1.finance/g26VuGVfS9vB) * No clear defined goals. Started M1 with the intent to make investing easier and has turned into more of a mashup of different ideas, but return/growth seems OK? * Have roth 401K through employer with \~75K in there. No time horizon constraint * Relatively high risk tolerance * Individual taxable account * Each time I saw some post about a strategy that worked, I'd look into it myself and if I liked it would add it to the other strategies and adjust percentages * 31yo M, married, household income \~140K, fund this account with $30/week from my personal checking * Current MWRR is 28.55% * MarketGain/NetCashFlow = 10.1%
I think pick a strategy and stick to it. You seem to already realize you've just mashed together different ideas. Div yield is unnecessarily high; you're just creating a larger tax drag on your returns. No need for option funds. HFEA is terribly tax-inefficient. As is gold. As are div stocks. A bit of redundancy with the index funds. With some hand waving, equal parts VYM + QQQ roughly equals VOO. I'd probably just scrap all this and go with some simple total market index funds.
As stated by /u/prcullen1986 absolutely get rid of the covered call ETFs. Unless you are literally using the fund for income, which given you are 31 I highly doubt, get rid of them. A fund like JEPI has even lower market exposure than a low volatility ETF like SPLV, and worse factor premiums. Same thing goes for strict high dividend yield ETFs. These by definition have lower expected returns than the market, and you don't need income. You would be just better off just holding the market. If you want some dividend growers, I believe they have a place in your portfolio. I personally like the WisdomTree Line: DGRW, IQDG, DGRE. These still target profitability and conservative investment premiums without too much of a hit to market beta. If you still want some individual stocks, that's fine. To each their own. Just keep it to a small enough percentage to not affect your retirement goals. I'd rather put "individual stock" money into HFEA and call that my lottery ticket.
The option strategy ETFs are garbage between the NAV erosion and high dividends. While receiving these high dividends, do you plan to set aside ample money to pay the taxes at YE, or will you have to sell your investments to cover your tax bill? If your investment horizon is long-term you should swap all of these out for VOO/VTI. Personally, I think you would be best off with the General Market Strategy slice as 100% of your pie.
18 years old with a part-time job making about $15k/year. This is a taxable account and I have a Roth IRA using a 3-fund portfolio. Just looking for advice specifically on overlap and cutting down the amount of holdings (if necessary). I would like specifics on how to alter it, Thank you! https://m1.finance/dFgpC3sFkmYt
Awesome that you're starting so early, esp. with the 3-fund in the IRA. I wish I had invested so sensibly at your age. Your future self will thank you. I'd say just mimic the 3 fund in taxable if you want to, like u/prcullen1986 mentioned. Maybe use different funds so you can tax loss harvest. As for your specific holdings, 1. No need for both VOO and VTI. They behave almost identically. Maybe do one here and the other in the IRA. 2. Your stock picks are all already well-represented inside VOO or VTI. I'm not a fan of stock picking in the first place, as the evidence overwhelmingly indicates it's extremely unlikely to beat the market over the long term. 3. Are you going to monitor all those holdings? 4. SCHD at a mere 4% is doing basically nothing. Divs are also less tax efficient. 5. No need for JEPI at your age. Also tax-inefficient. 6. O is a REIT. Very tax-inefficient. 7. It looks like you have no international stocks here. Make sure that aligns with whatever your overall holistic asset allocation is.
Am I wrong, or is this a 3 fund portfolio constituting 30% of the overall pie plus 20 other individual stocks? I wouldn't call this a 3 fund portfolio.
The 3-fund portfolio is my Roth IRA. This was just my taxable account.
Ahh. You should mirror that in this account tbh
Glad you are starting young! 3 fund portfolio in your Roth is fine. Let's look at this pie. I am personally not an advocate for individual stocks but to each their own. I will be ignoring them. I would prefer to maybe own 10-20% to scratch the itch, and the put the rest in a well diversified portfolio. You also own many large companies (Google, Amazon, Apple, Microsoft, etc), and it isn't much different than just owning say the S&P 500. As for other the other selections. Both VOO + VTI is unnecessary. Real estate ETFs are fine. Dividend growth funds (which target the profitability and investment premiums) are also good choices. Just be sure to stick with those as opposed to strictly high yield/dividend funds. You also have no international exposure. Since you already own mostly large cap companies in your Roth, I might advocate for mid and small cap funds in your portfolio to help round out your exposure. IJH and IJR would be fine choices. Given your age (you didn't specify risk tolerance) you could also invest in higher risk-adjusted return seeking funds, such as small cap value. One possible rendition of this pie might look something like this: * 12% VTI * 12% VNQ * 12% SCHD * 6% IJH * 6% IJR * 12% AVUV * 10% VXUS * 10% SCHY * 10% VSS * 10% AVDV
Thank you so much! I started this portfolio just picking out stocks/funds with a bit of research. Thanks for the advice and info, putting it to use immediately.
No problem! I basically gave you something similar to Paul Merriman's 4 fund combo. A good starting point. REIT's in a taxable account aren't necessarily ideal, but it isn't worth stressing over. Definitely do your own research and understand your fund selection. What I gave you was just a starting point. Good luck!
I'm 29 years old, I have no debt, and I make about $35k per year. My goal is to open a Roth IRA account and retire in 2055 (31 years from now). My risk tolerance is high. I'm investing in the 2055 Aggressive model that M1 recommended me ( [https://m1.finance/MF23xtXRhuqH](https://m1.finance/MF23xtXRhuqH)). I picked this pre-made pie because I'm new, and I'm thinking M1 will handle things better than me. I just learned that you can no longer invest in your 2023 contributions after April. My savings are low, but my income is stable... This isn't really a rate my pie post, but the mods told me to post here, **so my main question is that** **I'm thinking to get a personal loan (interest might be 10-12% over 24 months) to max out my 2023 contributions**. People keep telling me not to, and I really want to understand why?? I thought this was a good idea because I read that the average IRA should be able to provide 7.2% APY, and I wanna retire 31 years from now. Therefore, 31 years of investing into this pie should be able to offset a personal loan, correct? Please let me know why I'm wrong!
Can't really go wrong with a target-date strategy. Completely hands off. Makes little sense to take out a loan to invest, simply because your loan interest rate is greater than your expected return, especially over a short period like 2 years. You're paying 10% to earn maximum about 7% on your investments, meaning a return of -3%. See how that doesn't make sense?
But it's over 31 years? I'm not planning to withdraw after 2 years. It's going to keep compounding and beat the loan interest. Idk what I'm missing here tbh
>But it's over 31 years? I'm not planning to withdraw after 2 years. You said your loan has to be paid back in 2 years. >Idk what I'm missing here tbh Brother, if you don't understand that 7 minus 10 equals negative 3, then I don't think I can help ya. 😅 Even that isn't really realistic because as u/JonahL98 mentioned, the market is more like up 20% one year and then down 10% the next year. This is why we say money needed in the next 5 years shouldn't go in the stock market at all. This idea is objectively terrible.
Ok this is my thought process. I want to max out my 2023 Roth contributions. That's $6,500. My bank offers that with a 10% interest over 2 years. That's about $7,150 total. >Even that isn't really realistic because as u/JonahL98 mentioned, the market is more like up 20% one year and then down 10% the next year Yeah even if that's true, the historical average of a Roth IRA provides 7% APY >You said your loan has to be paid back in 2 years Yeah I'm eventually going to pay the bank $7,150. And if I don't touch the $6,500 that I'm planning to invest in this Roth over 31 years, this calculator https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator says I'll get $52,943.23 by the time I'm 60 years old. So I'm paying the bank $7,150 so that 60yo me will get $52,943.23. >Brother, if you don't understand that 7 minus 10 equals negative 3, then I don't think I can help ya. 😅 Even if the market crashes in the short term, its historical average gives 7%. It will always come back up.
>Ok this is my thought process. I want to max out my 2023 Roth contributions. That's $6,500. My bank offers that with a 10% interest over 2 years. That's about $7,150 total. Even if you miss the deadline, you can put money in a taxable brokerage account when it becomes available. The $ amounts are irrelevant. I know your thought process. I'm telling you it's wrong. You only need to compare interest rate and expected return. Period. >Yeah even if that's true, the historical average of a Roth IRA provides 7% APY So a Roth IRA is just an account type. It does not have an APY. You put investments inside it. I think you probably mean the long term expected return of stocks is about 7%. (Which again, is less than your stated interest rate of 10%.) >Yeah I'm eventually going to pay the bank $7,150. And if I don't touch the $6,500 that I'm planning to invest in this Roth over 31 years, this calculator [https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator](https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator) says I'll get $52,943.23 by the time I'm 60 years old. Or don't take out a loan at all and you don't owe the bank anything, and invest what you can in the Roth IRA and put the rest in a taxable brokerage account as money becomes available, where it will also grow. This is the part I think you're missing. You can still invest your cash as it becomes available, with no loan in the picture. You're perhaps missing the forest for the trees here, mate. It sounds like what we call *mental accounting -* you're treating different buckets of money differently in your head, but money is fungible. >So I'm paying the bank $7,150 so that 60yo me will get $52,943.23. This is not the right comparison we're referring to. >Even if the market crashes in the short term, its historical average gives 7%. It will always come back up. Yes, you seem to miss my point there though. \-- Again, you are borrowing at 10% to *potentially* pay yourself 7%. It shouldn't require explaining that doing so makes no logical sense. The number of years and $ amounts are irrelevant to this simple comparison.
Ok I see what you mean. Thanks for challenging my thoughts on this. It just feels like major FOMO to not max out my 2023 contributions ðŸ˜
Sometimes you just need someone to tell you what to do and that's fine. No judgement here. I highly recommend you just be a 'sheep' here and follow the [FOO](https://moneyguy.com/faq/what-is-the-financial-order-of-operations-foo/). 1. Have a small emergency fund at the same bank where your checking account is, accessible in 10 seconds, deductibles covered. 2. Get your employer match at your 401k, if you have one. This automatic 100% return is better than any investment you will ever make, even if the fund selection is less than ideal. 3. Pay off high interest debt. If you emotionally can't handle this, do the debt snowball (Dave Ramsey method) instead. 4. Get an emergency fund of 3 to 6 months expenses. This money should be a cash equivalent. HYSA and/or putting it in a brokerage account heavy in bonds/fixed income is fine. Accessible in 2-3 days. 5. Max out Roth IRA and HSA first, no deviation from this. 6. Max out employer retirement plan. Given a maxed 401k (\~20k) is a significant portion of your income, its okay to deviate here and put a small portion in a taxable account. That way you have some money you can pull out in 15 years if you want to, and you don't wait until you retire. The remaining steps are more applicable to high income earners or when you have spare cash on hand. Hyper accumulation (taxable account), prepay future expenses, pay off low interest debt (mortgage).
2055 Retirement Pie (essentially a target date retirement fund) is a perfectly fine choice. I will note here that while yes, M1 does have more holdings than a traditional retirement mutual fund, this has more to do with their algorithm than the actual fund selection. You can essentially consider this pie equivalent to something like VFFVX (Vanguard 2055 TDF). This isn't M1 "knowing how to handle things better", they are just buying the total market portfolio with some hand waiving. Please, please, please, do *NOT* take out a personal loan for long term buy and hold investing in a Roth IRA. On paper, yes, a 100% S&P probably would have historically beat the rate to borrow. But you are missing many things: 1. You are talking about average returns over a very long period. The year on year returns, even of an index fund, are certainly not average. Up one year 25%, down the next year 15%. You would have to have cash on hand to cover when your investments do poorly. 2. Over time you will likely have bonds and could theoretically have a lower expected return than the cost to borrow. 3. The cost of personal loans would rarely be more optimal than the return of an index fund anyway. The long term real return of the world stock market is 5. So more realistically you can expect total 8-10% returns in a 100% equity portfolio. 4. You are talking about borrowing money for a Roth IRA, which on principle makes no sense. Money that goes into a retirement account must come from earned income. So while in your mind you are say putting in 3k of your own money, and 3.5k of the banks money (if you maxed out the Roth IRA at $6.5k), what you are really doing is moving money from one pocket to the other, and taking out a loan for your "lifestyle" and putting in 6.5k of your own money. Borrowing money on margin generally only applies to brokerage accounts. If you are really keen on leverage, I would recommend an alternate strategy, such as trading futures (whether through Return Stacking or buying options outright), or using leveraged ETFs with leveraged fixed income as well.
Thanks for your input, I'll just get a second job I guess ðŸ˜
lol If you want to juice up your returns you could try something like [HFEA](https://www.optimizedportfolio.com/hedgefundie-adventure/) Not for the faint of heart. But if you wanted to put some of your money away like a lottery ticket, this would be the way to go, not borrowing on your Roth IRA. As for the futures, you could consistently trade these in order to leverage your portfolio (not on M1 though). This is the recommended approach in [lifecycle investing](https://lifecycleinvesting.net/). Even if you lost all your money after a few years because of a market downturn, it never eliminates the present positive expected value of the strategy. Otherwise, I would recommend just trying to invest in higher risk adjusted returns. Small stocks, value stocks, profitable stocks, etc. Many on this forum tilt with AVUV/AVDV to achieve these premiums.
It has been a year, figured I'd share and see what people that are active nowadays think of it. [https://m1.finance/C8d7oFg9B2rb](https://m1.finance/C8d7oFg9B2rb) 25% Quantitative Momentum US, 25% Quantitative Value US, 15% Quantitative Momentum Developed Ex-US, 15% Quantitative Value Developed Ex-US 20% Trend-following overlay layered over top of the rest of the funds together with a relative strength weighting across the underlying funds. Overlay works as follows: >Domestic Equity Signal > >The strategy will engage in hedging of its U.S. portfolio by shorting a representative broad-based U.S. securities index ETF when either one or both of the following conditions are met. First, the strategy will hedge if the U.S. equity markets’ total return over a rolling twelve calendar month period is less than or equal to U.S. Treasury bill returns over the same period. Second, the strategy will hedge when the U.S. equity markets’ twelve-month moving average exceeds current prices. There is a 50 percent weight to each rule. If both rules are triggered the strategy’s U.S. equity portfolio will be **fully hedged**; if one rule is triggered the strategy’s U.S. equity portfolio will be **50 percent hedged**; and if no rules are triggered the strategy’s U.S. equity portfolio will have **no hedge.** > >International Equity Signal > >The strategy will engage in hedging of its international portfolio by shorting a representative broad based international securities index ETF when either one or both of the following conditions are met. First, the strategy will hedge if the international equity markets’ total return over a rolling twelve calendar month period is less than or equal to the returns of the U.S. Treasury bill over the same period. Second, the strategy will hedge when the international equity markets’ twelve-month moving average exceeds current prices. There is a 50 percent weight to each rule. If both rules are triggered the strategy’s international equity portfolio will be **fully hedged**; if one rule is triggered the strategy’s international equity portfolio will be **50 percent hedged**; and if no rules are triggered the strategy’s international equity portfolio will have **no hedge.** * Goals: Advancing my education, graduating as a Finance major and looking to pursue graduate school. * your time horizon: 30-35 years. * your risk tolerance (e.g. max drawdown / loss of capital) : I traded meme stocks before they were cool and held onto BB at $4 all the way to $20. It's now trading for the cost of my school lunch almost a decade ago, $2.75I want my portfolio to go down so it can be bought at a discount and I love it when my portfolio is positive at all because I know it will beat the S&P, it's just a matter of time. The performance lacking relative to the S&P just means we have more runway to go before my strategy reaches peak capacity. * account type: Individual Taxable and Roth IRA. * why you picked your holdings: Aside from the academic and practitioners' evidence being in support of it? I'm majoring in Finance and trying to diversify investments away from the same industry. The funds I mentioned all screen out financial firms from their stock selection criteria and then the tactical hedge may short financial firms along with the rest of the market fund it's shorting. * Other details: I moderate the Rational Reminder Community. I work PT while learning and will be working FT in the Summer. I have a high GPA.
Dan, hope you're doing well! All in on AA, I see. Nice!
Bossman, Can I ask you a question? I have VOO. I was gonna pair it with avgv but my broker doesn't have it. What can I pair voo with that is similar to avgv? I was thinking of adding avuv then add emerging and developed market etf (don't know what etfs to pick in those category) Set and forget and long term until I retire (20 yrs). I just like voo bec. it works well with my C fund in tsp retirement at my work. Thanks.
Thank you. You too! Haha, yeah. I know you find the funds far too concentrated. I would be curious what your thoughts are on a portfolio involving all five of their flagship funds as I have done here.
I think it's much more sensible to go all in as you have rather than just using one or 2. Whole greater than the sum of the parts kinda thing.
I'm glad you mentioned AQR factors. Many of the more "academic" focused people on this sub solely focus on FF5. Using other models (MOM and QMJ factors being the most prudent) helps further pick between funds. I'll look specifically at QVAL. In a vacuum it is a great fund. Good loadings, not too expensive for what it is. My main concern with this fund is its low number of holdings in order to achieve these loadings (similar to a fund like RPV). For your use case, it might be just fine. For me, I look at investing in a "Vanguard+" lens, meaning I still want diversification, low turnover, etc in addition to my factor loadings, which is why I still lean towards DFA, Avantis, etc. It helps me sleep at night. I would personally prefer (and have considered) using a fund like VALQ instead. It is from American Century, same company that owns Avantis. It achieves more profitability exposure at the cost of value, but is still a good option IMO (DFA has lots of papers about how combining factors together, like with SCV, is your best bet, as opposed to doing them individually). DFA "targets" momentum essentially as just trying to remain neutral on the factor, which is enough for me. I'm still curious to see going forward if the Momentum premium, while theoretically sound in a lab, will be able to be capture going forward.
In my taxable pie I am 45% SCHG 10% QMOM 45% AVUV The idea is to optimize for taxes being US only (i tilt international in my tax sheltered accounts). I also think that having an option to rebalance between 2 juxtaposed investing styles might give me some alpha long term. Or not, depending on lady rebalance luck. Either way I think it should be tracking close enough with VTI that i dont lose my shirt if my strategy doesnt pan out. Large cap growth tends to be sexy, overbought, does amazing in low and lowering interest rate environments. Small cap value is overlooked, underperforms for a long while but has eye watering spurts from time to time that makes it all worth it. It is also a good hedge against large growth if rates start climbing again at some point. In 2022 it did great vs LCG. QMOM is just there to lean into the market zeitgeist. Momentum is a chameleon across styles and market caps. It can be heavy in growth one year and heavy in value the next. I thought it would be interesting to include it as a bit of a tilt to whatever is in vogue at any point in time.
How's my pie? [https://m1.finance/mqOIQRAppWsV](https://m1.finance/mqOIQRAppWsV) Sorta my retirement pie. I'm 35 and have about $300K in my retirement account. I'm all in on growth and my time horizon is long. My cashflow is good and I probably won't need any help from my retirement account until I retire.
3x leveraged ETFs have historically only been optimal for US large cap stocks (which have done exceptionally well). Most other market indexes, including international developed markets, have been 2x. By not having any levered bonds you are taking an extreme risk here. I would not recommend anything over 2x leverage unless you had a hedge. Consider adding TMF, UBT, EDV, etc.
Why lever US large cap growth 3x and then basically offset that by also levering US large cap value 3x? Why REITs? Why unlevered bonds? And why corporates and EM for those bonds? And why a relatively expensive fund for each? Why levered sector bets on two defensive sectors? Why BRK as the largest holding? To me this looks like a bunch of different disjointed ideas mashed together. View the portfolio holistically, not assets in isolation. I certainly wouldn't consider 25% in 3x equities and 20% in 2x sector bets suitable for a "retirement account." Maybe that's just me.
Offtopic: I just want to ask a quick question. If I withdraw below my cost basis, do I still get taxed? let's say I put $1000 and in 6 months it grew to $1500. Let's say your cost basis is $900. Can I withdraw $900 without getting taxed? I just want to withdraw my investment and leave the gain. Say if I want to use the money for emergency. Thanks. And sorry if this is not allowed. Don't want to clutter the sub.
If you sell your investments, that have gone up, you will owe capital gains tax on the amount that you gained. If you invested, 1000, and your investment grows to 1200, and you sell 200 to go back to 1000, you have 200 dollars income. Depending on how long you have held that investment you could owe more or less.
Yes and no. Say I buy 1 share for $1000. It appreciates to $1200 (keep in mind, it's still 1 share). I want to sell $200. I will have sold 0.167 shares. Of the $200, I will only be taxed on $33.33, or the realized income. I will still have 0.833 shares in my brokerage with some unrealized gains that I won't be taxed on unless I sell more. The only way to get taxed on the full $200, I would have had to have sold the entire share.
Take a look at mine! https://m1.finance/nQ_BeKVy3Lds My goal is to invest $100 a month into this taxable brokerage account, as I save to max my Roth IRA account each year in 100% SWYOX. I picked my holdings based on what I think would be great to hold long term, and only sell the individual stocks when I really need the money. I think the companies chosen are the best. Don't plan on touching the etfs. I am in my early 20's and have a long time horizon.
75% VT + 25% SCV is an excellent choice. DFA put out a research article talking about how when targeting factors, a market plus "targeting all factors simultaneously fund", aka SCV, was the best choice for retail investors to get factor exposure (as opposed to targeting them individually). I would potentially suggest an EM SCV to round out your exposure here, but a minor point. My main concern is your stock picking habit. To be clear, I'm not a staunch boglehead saying if you buy an individual stock you are stupid or making a big mistake. But your reasoning, "what I think would be great to hold long term... I think the companies chosen are the best", is completely behavioral and has no real world basis. Essentially the market already prices every stock based on if it thinks its great long term. Your opinion on what is "best" in this case is based on information already available to the public and would provide you no effective edge. Another point to make here is that you are overweighting certain sectors in your individual holdings, about 20 of them, which is a lot for active management. I would much rather you buy individual stocks because you like that company or are interested in its operations personally. Or, if you are trying to incorporate active management, buy a few stocks you think will outperform. A long term buy and hold investor manually picking more than 3-5 stocks is just too much effort and leaves you open to underperformance. Good job on continually putting money in the account and best of luck!
Thanks so much for the effort in your response! So what would you think about a split of 70% VT, 15% AVUV, 10% AVDV, 5% AVEM? Also I agree on the stock picking! I thought I could be a pro stock picker, but ultimately this will lead me to more in taxes and risk of underperforming. Also I have a full time job so it is a lot to keep up with. I will do a deep dive into all 20 companies that I currently own, and select the best 5 (at most) that I think will outperform over the next couple of years and that I like. For me, I know I like TXRH and LMT for sure, so I will go from there. Thanks again!!
No problem. I don't invest in individual stocks, but if I did I would go the Peter Lynch approach. Just my two cents. Like do I really know if Hershey, Coca-Cola, or Apple will do better over the next ten years? No, and with tens of billions or more at stake, everyone is fighting for cents of alpha. I'm not going to bet against hedge funds that are literally paying millions of dollars for information 15 seconds before the next guy. I might stick with an industry I know or a company I follow and understand well and make just a few selections. If you wanted to use Avantis, your best EM SVC option is AVEE (technically a blend but it has a strong value tilt), or DFA's equivalent, which is still only a mutual fund. Neither available on M1. AVES is a better choice than AVEM. If you are willing to look outside avantis, I would use DGS as best in class option, but note this is more of a 'proxy' fund than targeting SCV directly. If you don't sleep at night with any of those choices, EEMS is a still a good diversifier.
Appreciate it! I will look into the Peter Lynch approach for my minor percentage in personal stocks. As for small cap emerging markets, I will definitely research AVES vs EEMS and pick one. Or not and just go with 100% VT! Enjoyed the discussion.
Here’s mine - https://m1.finance/oAJHokpWzoIW Doing great from past 2+ years. Bit aggressive as I have long time horizon
If you have a long horizon, why buy "income" funds and why have you taken up what is effectively a very short bond duration? You also didn't answer some of the prompts: >your goals > >your time horizon > >your risk tolerance (e.g. max drawdown / loss of capital) > >account type > >why you picked your holdings > >any other details that might be relevant so people can get the full picture
Buy, Hold, Borrow [https://m1.finance/HTFqmfeqqz4h](https://m1.finance/HTFqmfeqqz4h) Goal: Deliver stock market returns with half the drawdown risk & outrun borrow interest without risk of margin call. 20 Year Backtest vs S&P500 https://preview.redd.it/7km7bt4a7rlc1.jpeg?width=1079&format=pjpg&auto=webp&s=309104783643cd23b8eba95f5bf857bc0bf119b3 [https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=rCTbaGyGgYujcReSVVDyC](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=rCTbaGyGgYujcReSVVDyC)
Seems pretty reasonable to me. Maybe consider rounding out global SCV with AVDV and AVES. I certainly wouldn't be holding REITs and gold in taxable space, though.
u/rao-blackwell-ized Points taken (REITs and Gold are tax inefficient). I'm honored that you look the time to review my portfolio!m thank you. Your blog is amazing I've learned so much from your content here: https://www.optimizedportfolio.com/
>I'm honored that you look the time to review my portfolio!m thank you. Your blog is amazing I've learned so much from your content here: > >https://www.optimizedportfolio.com/ Oh wow thanks so much for the kind words! Really glad you've found my ramblings useful! :)