emergency funds:I do have at least six months of expenses set aside in cash.
I also have $125k in CDs at 5% interest with my credit union.
I have retired and have a pension (42k annually) that covers most expenses. I will also be taking SS in 2025, which will give me an additional 33k annually. Both are pretax.
Debt: I have a home in CT that my spouse lives in. Mortgage is 200k at a 3.9% interest rate. Payments are ~$1400 per month, which I pay. Spouse pays all other expenses related to the CT house. No other debt.
Tax Filing Status: Married Filing Separately Tax Rate: Federal - it has been around 18%, but I’ve just retired so it will change. I have no state income tax.
State of Residence: Florida
Age: 67
Desired Asset allocation: I simply am not sure. I am not adverse to risk. Looking for guidance.
approximate size of portfolio: 193k
current portfolio including all investment and retirement accounts:
Spouse has own retirement account, to which I am not privy. We have little communication but remain married for financial reasons.
My portfolio is as follows: Traditional IRA at fidelity (total amt and percentage of portfolio)
FMAGX = 23k 12%
Fpurx = 78.8k 41%
FSMED = 52.9k 27.5%
FXAIX= 21.7k 11.2%
CCL = $2.6k 1.3%
ROTH IRA at Fidelity
FPURX = $7k 3.6%
FBALX = 6.5k 3.4%
No new contributions anticipated.
My Questions: 1. My investments have done quite well, but I am concerned about remaining in such high risk mutual funds, but am also reluctant to make changes. I am looking for some thoughts on what funds I should consider. I do not anticipate needing these funds to live on in the near future.
2. Should I continue to put money in these accounts and for how long? Can you continue to fund an IRA even after you’re required to take distributions?
3. I am definitely a novice and would appreciate any thoughts.
Thank you for any input you might have.
OP is allocated at:
FMAGX = 23k 12% - highly concentrated LCG, ER 0.47
Fpurx = 78.8k 41% - active 67/33 stock:bond fund, ER 0.48
FSMED = 52.9k 27.5% - I'm not sure what this is, assuming FSMEX (highly concentrated medical sector fund, ER 0.65%)
FXAIX= 21.7k 11.2% - standard passive S&P 500 fund
CCL = $2.6k 1.3% - single stock in Carnival Corp
ROTH IRA at Fidelity
FPURX = $7k 3.6% - as above
FBALX = 6.5k 3.4% - active 67/33 stock:bond fund, ER 0.47. Differences between this and FPURX are small and mainly have to do with credit quality on bond side
To answer your questions: only one of your holdings (FXAIX) falls in line with the Boglehead philosophy of low cost and broadly diversified. Let's look at the worst offenders.
FMAGX holds just 57 stocks. I'm assuming you have held this fund for a very long time, which is why you are happy with it - this was a great fund to hold in the early 80s and did well in the 90s. But over the past 30 years, this fund has underperformed the S&P 500 by almost 1.5% annually. Since 2003 this fund's rolling 5-year return beat the S&P's only four times.
Similar to the above, if you have held FSMEX for a long time, congrats. And even recently, it has out-performed the total market. The risk is that this fund holds just 39 stocks, and while COVID really helped this fund out, this fund has performed horribly post-pandemic (down over 20% since 2022) and it's hard to tell what the future holds. This is off-topic, but as someone who works in the medical field and has a decent idea of how medical care is billed, my personal opinion (whatever that's worth) is that medical devices are an investment that, long-term, faces significant regulation risk.
CCL was a hot stock for years, but you probably are aware of how it's done over the past 20 years. These shares may be at a net loss, in which case they will be easy to sell.
Considering you've identified through your choices that you'd like a mix of US stocks and bonds (you hold about 2% of your total portfolio in international equities) you could consider diversifying into safer, cheaper, more broadly-diversified funds, like FXAIX or FSKAX for stocks and FTBFX or FUAMX for bonds.
Statistics: Posted by breakfastinbed — Thu Jan 02, 2025 2:26 pm