My portfolio – April update

The market has been essentially flat since my last update with a 1.2% increase in the S&P in that time frame.

I haven’t been too active since then as other things in my life have kept me busy but I did make an important move in the last month. That was moving some of my extra cash into my Roth IRA and maxing out that out for 2015. All that cash went into my REIT fund which was underweight in my asset allocation. If you’re reading this right now and still haven’t maxed out your 2015 Roth IRA then you still have a week to do so as 4/18 is the last day to do that for 2015. It’s also the last day to submit your taxes if you haven’t done that either.

The Roth is one of the best savings options as it offers tax-free growth and tax-free distributions. It’s also potentially the only other option for tax-free growth beyond a 401k especially if your income is above a certain level as the traditional IRA phase out happens a lot earlier in that scenario.

I had a big influx into my account last month with a raise and a bonus and a big contribution to my 401k but my savings rate this month dropped quite a bit. I reduced my 401k contribution to a lowly 14% as I want to make sure I keep getting my employer contribution and to do that I have to make contributions through the end of the year and I’d be in danger of maxing out my 401k and missing out on those if I went a lot higher. That means I get a bigger paycheck but it also lowers my automatic savings rate. I can and will certainly use that extra money to fund my taxable accounts but it’s always easier to just have that done automatically.

I’ll start tracking my savings rate this month just to see exactly how I’m doing there and where my expenses are going. I feel like March wasn’t a great month on that regard as I spent a bit more than average there after a huge savings month in February.

There were no individual purchases made this month – all the money went into funds and ETFs. Just like last month, I’m not seeing a ton of value out there. I’ve started working on a DCF analysis spreadsheet that I’ve been meaning to work on and have done a quick analysis on a few stocks on my watch list and nothing has piqued my interest.

Last month’s total stood at $305809.68, an 11% increase over the previous month and while this month shows growth as well; it’s far from that growth due to a slower market and much lower contributions.

I saw a 2.3% improvement in portfolio size this month. It’s always good to see growth although month to month growth isn’t something I’m concerned with as a long term saver. After all, if the market drops then I’m buying things at a lower price with my extra cash and dividend proceeds which is always going to be better for long term returns.

The total after this month stands at $312939 which is nice considering my savings rate this month probably wasn’t that high but we’ll see what it was when I do the number crunching next week.

My cash hoard went down from 9.5% to 8.1% as I moved some of that money into my REITs via my Roth IRA.

Now let’s take a look at how the asset allocation looks and where I have to make adjustments.

Still a bit off here with mid-cap, bonds and international being a bit high and the US caps being too low. It’s really hard to get a high % asset like the large cap back to snuff since 3% of my portfolio size is nearly $10000 at this point so it’ll take some time to fix that. However, I’m certainly getting closer to where I want to be compared to where I started. REITs and small-caps which were way off before are getting much closer to where I want them to be now.

Here’s where I am against where I want to be based on my asset allocation targets.

  • US Large Cap at 39.1% versus 42.5%(-3.4%)
  • US Mid Cap at 11.8% versus 10%(+1.8%)
  • US Small Cap at 8.8% versus 10%(-1.2%)
  • US REIT at 8.7% versus 10%(-1.3%)
  • International Developed at 16.4% versus 15%(+1.4%)
  • International Emerging at 5.8% versus 5%(+0.8%)
  • US Bonds at 9.4% versus 7.5%(+1.9%)
Last month I had four asset classes that were more than 2% away from their target allocation and now I’m down to just one! I started with small-cap being 5.6% underweight and we’re just 1.2% below target now.
Last month I moved some mid-cap money to small-caps and moved some bonds into REITs and this month I had some heavy contributions to REITs and all those served to remedy some issues with my asset allocation. I’m certainly still not where I want to be but I’m getting there!
I think I’m too far behind on my large caps now so I need to adjust for that. Here’s the changes I’ll make to account for that.
  • 401k contributions will be changed to about 65/35 large cap/small cap.
  • Use excess cash to look for attractively valued large cap and small cap securities.
  • Potentially move some US Bond money in my Roth IRA into a large cap fund of some sort.
The plan has always been to let my contributions fix the asset allocation and that’s mainly what I’ve done so far. I have made some moves to reduce my bond and mid cap allocation by exchanging those into classes where I was underweight and I may do the same this month to boost my large cap exposure. However, I might hold back on that since most of my individual security purchases in the future will likely be large caps so I don’t mind having that asset allocation be a bit underweight since it can swing wildly with one purchase if a good value emerges.
In a week or so, I’ll post my savings rate/budget post for March. I don’t think I did too great there. I made a conscious decision to not make any changes to my spending patterns for the next few months to make sure I’m capturing a realistic budget/savings rate in the upcoming months. I want to see what my spending patterns actually are before I make any changes at all and in order to do that, I want to get a few months of regular spending in there to get a clear pattern and an accurate regular savings rate.
See you all in a bit. Hopefully the cold will finally leave us by then!

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